We sent a new disclosure to inform a consumer of an inadvertent APR error. Is this OK?

Answered by:

Question:

If we find a loan’s APR is outside of tolerance, can’t we just send a new disclosure showing the correct APR to fix this inadvertent error?

Answer:

Absolutely NOT! No matter how much your lender wants to re-disclose this problem away, you 100% cannot do this. The APR disclosed at loan closing, and accepted by the borrower when they signed the loan documents, is now the truth of the loan. You must make reality match the disclosure, by giving cash to the borrower to make the loan’s calculated APR paid match what you told them it would be. There is no way around this. The Truth in Lending Act mandates such restitution, and failing to take this corrective action could lead to civil, criminal, or regulatory penalties.
Alarmed at this? Join the upcoming webinar “APY and APR Accuracy (Bonus! Using the FFIEC Calculator on TRID Loans)” on May 23, 2024!
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Learn more about Rebekah Leonard’s
APY and APR Accuracy (Bonus! Using the FFIEC Calculator on TRID Loans) webinar.