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We have attended several conferences/webinars in which Jack has spoken about MDIA. It was our understanding that if the APR became inaccurate under 1026.22, that we would need to provide new disclosures and wait 3 business days prior to closing (assuming the redisclosures are hand delivered).
The inaccuracy threshold is 1/8 of 1 percentage point above or below the annual percentage rate for regular transactions. We have been redisclosing and waiting the required waiting period regardless if the inaccuracy was over or under 1/8 of 1 percent.
My question is if the APR is originally overstated, do we still have to wait the required waiting period? We believe that there may be some instances in which redisclosure is required, but we may not have to wait the 3 business days. Any help would be appreciated.
There may be some instances where you are not required to redisclose and wait the 3 business days to close.
This statement from the Fed’s Consumer Compliance Outlook article sums it up pretty well: An overstated APR that corresponds directly with an overstated finance charge is within tolerance and redisclosure is not required. However, not every overstatement of an APR is caused by an overstated finance charge. If there is no finance charge overstatement and the disclosed APR exceeds the 1/8 of a percent tolerance (1/4 of a percent for irregular transactions), or if the disclosed APR exceeds the APR corresponding to an overstated finance charge, redisclosure with a three-business-day waiting period is required.
Here’s the link to the full article which provides more detail on specifically when redisclosure is required:
https://consumercomplianceoutlook.org/2011/first-quarter/mortgage-disclosure-improvement-act/
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