There is a bank sending out a memo to all it's lenders that they don't have to redisclose when the APR is understated any longer now that the CFPB has clarified Reg. Z and MDIA. I seem to have missed this clarification and cannot find any evidience of a regulatory change. Does anyone know if this is true?

I haven't seen anything like this, Walden. Of course sometimes I feel like I'm under a rock, but I'm sure it would have been posted here.

The only clarification I have ever seen is that from the Philadelphia Federal Reserve:

http://www.philadelphiafed.org/bank-reso...ovement-act.cfm

And while true under most normal circumstances, it is not always true.

Agree. We don't (haven't had to) re-disclose for overstatements...because they've been 'legit'.

But walden, you say 'understated'! Say it ain't SO! Really? They are gonna be in deep doodoo!

Oh boy - miss read that. Yes - understated presents a real problem.

I went digging back into their memo. Apparently they've decided to do what the law has always allowed - not redisclose when the new APR is different from the initially disclosed
APR because of an initially overstated Finance Charge.

If the finance charge was initially overstated, how was the APR initially understated? I don't understand.

Yeah...I'm lost. I think Walden is just crossing up her over and under's.

Okay - example: Inital TIL: Finance charge $5000 APR 6.5


Initial til FC OVERSTATED BY $100 and APR is overstated.

They adjust the FC for the final TIL to be correct at $4900
APR is now 6.25%

No corrected TIL is necessary with the additional days even tho the APR is greater than .125% now becasue it was a FC OVERSTATED error.

This is how I'm understanding their memo.

And I would agree with their memo.

even tho the APR is greater than .125% now

6.25% is greater than 6.50%?????

LOL! I missed it!!! ...wait...all she's meaning is it's greater than .125 up OR down. I gotcha walden!

Also, I will add this, walden. I would 'normally' agree that if the initial APR was 6.5%, but the final APR was 6.25%, no waiting period is necessary UNLESS the 6.5% was a result of the lender 'guessing' at the FC (plugging in an estimated amount instead of what they truly thought it would be).

Actually, the example my examiner (at the time/FRB) used (and he said this really did happen years ago, probably before computer-generated disclosures) was 'estimating' the APR because it almost always = X%. That, even overstated, would not fly.

OK - got it.

"Lenders must be very careful in assuming that overstated APRs do not trigger redisclosure and a three-business-day waiting period. Make sure your system is not automatically set up to generate corrected TILA disclosures only if the disclosed APR is understated. To apply the MDIA rules correctly and avoid violations of Regulation Z, lenders must determine the cause of the overstatement. An overstated APR that corresponds directly with an overstated finance charge is within tolerance and redisclosure is not required. However, not every overstatement of an APR is caused by an overstated finance charge. If there is no finance charge overstatement and the disclosed APR exceeds the 1/8 of a percent tolerance (1/4 of a percent for irregular transactions), or if the disclosed APR exceeds the APR corresponding to an overstated finance charge, redisclosure with a three-business-day waiting period is required."

I've never understood the rationale as to why the Feds feel a 3-day additional waiting period in (some) situations with an initially overstated APR is a benefit to the consumer. If I get through the checkout line at the grocery store and the cashier tells me they had a few items priced too high and they're marking down the price accordingly, should they also be required to make me come back in 3-days to buy the items just to make sure I'm o.k. with that....?

Where is the like button?

Considering 99.9% of consumers don't really care about anything more than what their monthly payment is going to be, the billions of money spent on all these disclosures would be better channeled to consumer financial education.

::DOUBLE LIKE::

oursnotoreason why - i liked your post, but it is in quotation marks - what is the source so i can quote it?