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CUNAs McLain covers mortgage payment disclosures
WASHINGTON (11/8/10)--In a recent Credit Union Magazine column, Credit Union National Association (CUNA) Senior Compliance Counsel Mike McLain addressed the Federal Reserve’s interim rule that revises disclosure requirements for closed-end mortgages under its Regulation Z. According to McLain, the new Fed rule alters existing disclosure requirements by requiring disclosure of how mortgage payments can increase, decrease or otherwise change over time. Information on both the rates and various features of the loans must be disclosed. Specifically, initial interest rates, and the corresponding monthly cost of the mortgage payments, associated taxes and insurance costs, must be included. Variable rate loan disclosures must contain information on the potential maximum rate that the loan could take on in the first five years and over the lifetime of the loan. Features of the loans, including information on balloon payments or other payment options, must be included, and a disclosure stating that mortgageholders are not guaranteed the right to refinance their mortgages must also be packaged alongside the other statements. “The interim rule applies to all transactions secured by a dwelling (principle residence or second home) and transactions secured by real property that don’t include a dwelling or other structures. Timeshare plans aren’t covered,” McLain added. Overall, the format of the disclosures must be “substantially similar to the model forms and clauses that are provided with the rule,” McLain said. For more on the disclosures, see this month’s edition of Credit Union Magazine.


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