Variable Rate Disclosure-Auto Payment Deduction

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Question:

Are the variable rate disclosures of Regulation Z Section Section 1026.18 and .19 applicable to fixed rate mortgages and consumer loans that provide an interest rate discount if the consumer signs up for automatic payment deduction?

Answer:

Preferred rate loans where the rate may increase after consummation meet the definition of a variable rate loan and you must disclose what events will cause the rate to increase.

Contact your document preparation software customer service. They should be able to direct you how to properly set up a preferred rate loan in your system and guide you to the proper disclosures within the software.

First published on BankersOnline.com 11/26/12