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#1836344 - 07/25/13 03:37 PM
Understated APR
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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?
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#1836347 - 07/25/13 03:41 PM
Re: Understated APR
waldensouth
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TN
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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.
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#1836481 - 07/25/13 05:45 PM
Re: Understated APR
waldensouth
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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! ![shocked shocked](/forum/images/graemlins/default/shocked.gif)
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#1836501 - 07/25/13 06:00 PM
Re: Understated APR
waldensouth
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Galveston, TX
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Oh boy - miss read that. Yes - understated presents a real problem.
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#1836534 - 07/25/13 06:43 PM
Re: Understated APR
waldensouth
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Joined: Nov 2001
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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.
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#1836710 - 07/26/13 01:29 PM
Re: Understated APR
waldensouth
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If the finance charge was initially overstated, how was the APR initially understated? I don't understand.
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#1836740 - 07/26/13 01:55 PM
Re: Understated APR
waldensouth
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Joined: Nov 2001
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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.
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#1836743 - 07/26/13 01:58 PM
Re: Understated APR
waldensouth
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And I would agree with their memo.
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#1836744 - 07/26/13 01:57 PM
Re: Understated APR
waldensouth
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even tho the APR is greater than .125% now
6.25% is greater than 6.50%?????
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#1836747 - 07/26/13 02:02 PM
Re: Understated APR
waldensouth
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LOL! I missed it!!! ![laugh laugh](/forum/images/graemlins/default/laugh.gif) ...wait...all she's meaning is it's greater than .125 up OR down. I gotcha walden! ![wink wink](/forum/images/graemlins/default/wink.gif) 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.
Last edited by RR Joker; 07/26/13 02:03 PM.
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#1836753 - 07/26/13 02:03 PM
Re: Understated APR
waldensouth
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Galveston, TX
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OK - got it.
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#1837255 - 07/29/13 03:04 PM
Re: Understated APR
waldensouth
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Joined: Aug 2010
Posts: 528
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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....?
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#1837261 - 07/29/13 03:27 PM
Re: Understated APR
Indy Banker
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Joined: Oct 2009
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State of Confusion
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Where is the like button?
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#1837326 - 07/29/13 05:18 PM
Re: Understated APR
waldensouth
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Posts: 84,154
Galveston, TX
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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.
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#1837385 - 07/29/13 07:17 PM
Re: Understated APR
waldensouth
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Joined: Nov 2002
Posts: 20,656
The Swamp
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::DOUBLE LIKE::
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#1837542 - 07/30/13 01:14 PM
Re: Understated APR
Oursisnottoreasonwhy
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oursnotoreason why - i liked your post, but it is in quotation marks - what is the source so i can quote it?
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