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Has the CFPB Broken Reg. Z Rules?

There is a lot of talk this week about the new “rate” portal introduced by the CFPB. Consumers can see what rates are available in their area based on:

 Credit Score Range

  • State
  • House Price
  • Down payment
  • Loan Amount
  • Rate Type
  • Loan Term
  • Loan Type

 Displayed in the CFPB system after input of this information is:

  • Rate and Interest Cost for 5 years and 30 years
  • Range of Rates available in the market

 Disclaimer:

  • Assumes -0.5 to 0.5 discount points
  • 60-Day Rate Lock

 So, I re-visited the Reg Z. rules for advertising rate and here is what I found:

 (a) Actually available terms. If an advertisement for credit states specific credit terms, it shall state only those terms that actually are or will be arranged or offered by the creditor.

 (b) Clear and conspicuous standard. Disclosures required by this section shall be made clearly and conspicuously.

 (c) Advertisement of rate of finance charge. If an advertisement states a rate of finance charge, it shall state the rate as an “annual percentage rate,” using that term. If the annual percentage rate may be increased after consummation, the advertisement shall state that fact. If an advertisement is for credit not secured by a dwelling, the advertisement shall not state any other rate, except that a simple annual rate or periodic rate that is applied to an unpaid balance may be stated in conjunction with, but not more conspicuously than, the annual percentage rate. If an advertisement is for credit secured by a dwelling, the advertisement shall not state any other rate, except that a simple annual rate that is applied to an unpaid balance may be stated in conjunction with, but not more conspicuously than, the annual percentage rate.

 (d) Advertisement of terms that require additional disclosures–

   (1) Triggering terms. If any of the following terms is set forth in an advertisement, the advertisement shall meet the requirements of paragraph (d)(2) of this section:

   (i) The amount or percentage of any downpayment.

   (ii) The number of payments or period of repayment.

   (iii) The amount of any payment.

   (iv) The amount of any finance charge.

   (2) Additional terms. An advertisement stating any of the terms in paragraph (d)(1) of this section shall state the following terms,49 as applicable (an example of one or more typical extensions of credit with a statement of all the terms applicable to each may be used):

 So to all of the attorneys or Reg. Z experts in this group, I have these questions:

 Is the CFPB exempt, if so, why?

  1. Does this break State disclosure rules?

 I would love to hear your feedback whether on this discussion group or privately!

Tammy Butler, Master CMB

Author Tammy Butler, Master CMB

More posts by Tammy Butler, Master CMB

Join the discussion One Comment

  • Gary Walters says:

    I have no idea how even lenders can quote any accuracy in rates with the LLPA from the agencies and overlays from the investors. There should be a ban on internet pricing altogether because most of the rules are being broken and the regulators cannot police it all.

    Gary Walters
    Vice President
    [CWMortgageLogo-color-sigs]
    3100 23rd Street, Suite 25
    P.O. Box 66
    Columbus, NE. 68601
    Phone 402-564-1200
    Fax 402-562-8031
    Email: gwalters@charterwest.com
    NMLS ID #491155

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