Topic: Truth in Lending Act (TILA)
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We want to implement three new fees for all of our loan customers: an NSF fee, an expedited payoff fee (for sending payoff statements via fax or courier), and a check-by-phone payment fee. How should we disclose these new fees? We are considering doing this for all of the types of consumer loans that we make.
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In general, if you charge any new types of fees, your customers must agree to them. First, you should check your controlling loan agreements for provisions that might apply to the unilateral imposition of these new fees, as well as for any terms regarding the disclosure of new fees. It may be that there are…
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We would like to renew our balloon loans that are maturing soon by raising the interest rates and extending the loan terms to thirty years. Do we need to treat these as refinances?
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While we can provide you with some guidance on determining whether a renewal will be considered a refinancing, the issue is very fact-specific, and we cannot advise as to whether a specific balloon loan modification would be considered a refinancing (subjecting the transaction to Regulation Z and the new ability-to-repay (ATR) requirements). The general rule…
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We cap the amount of compensation a loan originator can earn for a loan that is held in portfolio, but we do not apply the cap for loans that are sold. Does this violate the loan originator compensation rules? Our loan originators do not have lending authority and do not decide whether loans are held in portfolio or sold on the secondary market.
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We believe that this policy would violate the loan originator compensation rules, as your institution is varying loan originator compensation based on a proxy for a term of the mortgage loan transactions. Regulation Z prohibits loan originator compensation in connection with a consumer credit transaction secured by a dwelling that is based on a “term…
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On a rescindable loan under Regulation Z, can the bank charge interest on the loan from the date of the note, even though as a creditor we cannot disburse loan proceeds to the customer?
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Yes, the bank can charge interest on the loan from the date of the note. Regulation Z allows interest to accrue at the loan closing and does not require you to wait until the expiration of the rescission period (provided that your loan agreement allows for this). Official Staff Commentary, 12 CFR 1026.15(c), 12 CFR 1026.23(c),…