Disclosing APR

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  • #5821
    Mary Frances

    We originate secondary market loans (we do not do the underwriting) and sometimes when doing a pre-qualification a borrower will request a cost fee worksheet (not a GFE). The cost fee worksheet discloses a rate but does not disclose an APR. Does the cost fee worksheet need to disclose the APR? I have researched and cannot find anything that tells me a “cost fee worksheet” has to include the APR when it includes a rate.


    Although I would prefer it be included, I can’t put my finger on anything either.

    I’ll ask Jack to offer his opinion.


    A worksheet similar to what you describe can be beneficial to the consumer, but can be a compliance nightmare – resulting in TIL, RESPA and UDAAP violations. None of the existing regulations contemplate the use of a worksheet. The new integrated disclosure, which are effective on August 1, 2015, do explain how to use such a worksheet, but it isn’t 2015 yet..

    If the form looks too much like a GFE, examiners may determine it is a GFE subject to all of the RESPA rules. If the numbers on the worksheet differ from the numbers on the actual GFE you may have a UDAAP violation.

    These RESPA arguments can also be applied to Truth in Lending issues. It may be deemed an incomplete TIL disclosure and differences between the worksheet and the actual TIL may be deemed to be a UDAAP violation. If the examiner determines that the form is an advertisement or a solicitation additional problems, such as a lack of an APR, could arise.

    Make sure the form does not resemble a GFE or a TIL. Include qualifying language that states the form is not a GFE or TIL, that numbers are preliminary estimates and that more refined estimates will be provided later in the GFE and TIL, and that form is not an advertisement of solicitation for credit.

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