What would be the proper steps in rectifying when the APR is shown as 0 on the Closing Disclosure?

https://www.fdic.gov/news/financial-institution-letters/1997/fil9719.html#attachment1

Violations Involving the Non-Disclosure of the APR or Finance Charge


In cases where an APR was required to be disclosed but was not, the disclosed APR shall be considered to be the contract rate, if disclosed on the note or the Truth in Lending disclosure statement.

For HMDA purposes, would it best to send out a post closing CD that shows the accurate APR? If the rate should be what's on Note or Loan Estimate, do we need to reimburse fees to equal that? Just want to make sure we do what is needed. This is the first time we have had this happen.

You would not issue a post-closing CD - you would refund the amount to make the APR/Note Rate correct. From a TRID perspective, there is nothing to correct.

I am not sure how HMDA comes into this?

Agreed. Your institution just made an interest-free loan. APR and FC accuracy is the central theme of the Truth in Lending Act, which officially made it a law for creditors to honor what they disclosed. That final disclosure is binding, and if the loan has closed, there is no way to re-disclose your way out of it. Doing so is tantamount to the creditor going back on its word.

The result: The APR stated on the TILA disclosure is what the borrower gets. If you charge more than that, you are in violation of TILA, subject to civil liability (the customer can sue you for actual damages - all finance charges and fees - and legal fees) and administrative liability (examiners making you give restitution, and citing you for the violation).

It does not matter if it was an inadvertent error. The CFPB sums it up most succinctly: "The TILA authorizes federal regulatory agencies to require financial institutions to make monetary and other adjustments to the consumers’ accounts when the true finance charge or APR exceeds the disclosed finance charge or APR by more than a specified accuracy tolerance. That authorization extends to unintentional errors, including isolated violations (e.g., an error that occurred only once or errors, often without a common cause, that occurred infrequently and randomly). CFPB Manual - see page 140

Your only choice is to make reality match the disclosure.

I am giving a presentation on "Reimbursements for Reg Z Violations" at next week's BOL Lending Triage. I'll go over this matter in depth!
2022 BOL Triage agenda

This is a hypothetical, yes? Who would actually close the loan with a 0% APR and with today's software that should translate to 0 interest and no finance charge fees.

If it happened I'd be interested in how.

Oh, and I'm looking forward to that Reg Z Reimbursement session. This is valuable knowledge. When your tire goes flat, you should know if you have a spare, if you have a jack, and how to use it or you're stranded. Reimbursements are like that.

^ Rebekah's link
2022 BOL Triage agenda

I think Reg Z use to have a 60 day cure period if the bank identifies an error. Since TRID invalidated that for Real Estate secured loans does it still stand for Non-Real Estate secured loans? Can you point me in the direction of the rule?

TILA has a 60 day cure period in which the lender can avoid liability for statutory damages, attorney fees, etc., if the lender cures the error by refunding/making adjustments as necessary to ensure that the borrower doesn't pay more than the disclosed APR/Finance Charge. In other words, it's a cure period, not a "no liability" defense. TILA also includes a "bona fide error" defense for certain types of errors (such as misprints) if the error occurs despite procedures and practices reasonably designed to prevent that type of error.

Those provisions deal with liability to the consumer, not regulator-imposed remedial actions. You won't find them in the regulation; you have to look at the statute (15 USC 1640). Anyone dealing with a non-trivial disclosure error should probably check with counsel familiar with TILA, Reg. Z, and regulatory enforcement actions before taking action.