In addition to the mortgage periodic statement requirement per Regulation Z , we are also addressing the changes required for ARM notices. The CU*Answers product team recently approved updates to our existing variable rate change notice. In the regulation, the sample form is in the appendix under “H-4(D)(2) Sample Form for § 1026.20(c)”. After discussions with the CFPB, we altered the verbiage in our notice and it will not exactly match the sample per the regulation. This is because the sample form in the regulation refers to the first time that a payment has ever changed and it is possible that the borrower’s payment may have already changed in the past. To view the proposed notice please click on the link at the bottom of this post.
We have also been asked if we are going to address the one time notice required to be sent 210 to 240 days prior to the very first change date. This is not something we are considering at this time because these notices require human intervention and estimating what the rate will be at the time of the first change.
So what do credit unions need to do? Since most credit unions are configured to print the existing notice 45 days prior to the payment change, maintenance will need to be performed to the “Rate change notice” days for variable rate loans. The regulation specifically states that the notice must go out at least 60 days and no more than 120 days prior to the rate change.
To perform the notice days maintenance, do the following:
- Go to the Loan Products (MNLOAN) menu
- Choose Miscellaneous Loan Maintenance (#5)
- Enter the loan account number and type
- Check the “Variable rate loan” box to proceed to the Variable Rate Loan Contract Info screen
- Update the “Rate change notice” days. (must be between 60 and 120 days per the regulation)