Description
Mistakes happen. Even strong compliance programs can have a slip-up, and you may find your bank has wrongfully disclosed the Annual Percentage Yield (for a deposit product) or Annual Percentage Rate (on a loan). So what? What does it really matter if the number is wrong? Plenty!
Both TISA (Reg DD) and TILA (Reg Z) mandate accuracy in disclosures. There are consequences when that doesn’t happen, and you need to know how to make things right. Join this two-part on-demand series to take a deep dive into the rules and tools to ensure Annual Percentage accuracy.
Part I: Annual Percentage Yield
The Truth In Savings Act
- Congress passed the Truth in Savings Act to require banks be truthful in the information they provide, as well as provide standardized terms to enable informed shopping. Reg DD provides the rules for accomplishing this, and it doesn’t joke around. After all, failure to be less than truthful – even inadvertently – causes consumer harm. If the consumer isn’t earning the interest yield you told them they’d earn (APY) that creates both a violation with the law itself, and UDAP trouble.
- Checking the accuracy of the Annual Percentage Yield scares a lot of bankers, which is understandable! The calculations presented in Regulation DD look complicated, and hey, software vendors get it right… right?! Even if the software is *always* right, humans enter data into it – and to err is human. A reliance on vendor software doesn’t solve anything – many errors are a result of GIGO – garbage in / garbage out.
- Certainly, it can be difficult to even know you have a problem, until an examiner checks your disclosures. By then, the damage is done. Thankfully, the FFIEC provides a great tool – for free – to confirm your figures for advertisements, disclosures, and periodic statements.
- Learn how to navigate the FFIEC calculator through a series of case studies that start simple and take you through increasing complex rate structures (tiered and variable rates, I’m looking at you.) It is a forgotten skill that you don’t want to miss! I’ll also show you how to make things right for your customer, to mitigate regulatory consequences.
Part II: Annual Percentage Rate
The Truth in Lending Act
- TILA has severe consequences for making APR / Finance charge errors and then failing to correct them. Indeed, it is no understatement that APR and FC understatements are to be taken seriously… civil and criminal liability is at stake, as is mandatory restitution. So, it is imperative to get it right – APR and Finance Charge accuracy is the central theme of the Truth In Lending Act, which officially made it a law for creditors to honor what they disclose.
- Yikes! What are we to do?
- There is a Joint Agency Statement of Policy from 1998 that remains the de-facto instruction guide for making APR / Finance Charge restitution, but it is not an easy read. Luckily, the FFIEC’s APY calculator is very helpful – don’t let it intimidate you!
- This two-hour session will give you the practical knowledge to confidently understand APR and Finance Charge accuracy: Figure out why, when, and how to determine if your figures are right. If not, I’ll show you how to determine the right amount of reimbursement required, using the Agency’s Statement of Policy on Restitution and the FFIEC APR calculator.
- Walking step-by-step through case studies (including a TRID loan!), you’ll come away with a clear understanding of:
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- Why do I have to reimburse? It was an unintentional error – can’t I just re-disclose?
- How to understand and use the FFIEC calculator – even on the most complex real estate loan!
- Why you must cut a reimburse check for the borrower, rather than just crediting the loan.
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* Please note that the recording links will be delivered to you via a downloadable PDF in your confirmation e-mail. The PowerPoint that corresponds with the recording will be automatically delivered upon purchasing via email from the website.
