incorrect info on TILA paperwork

[angel83]

I just realized that not only has the interest I would expect to pay over the life of the loan been underestimated by an enormous amount, but the payments I would be expected to pay are listed as:

60 at 2200
299 at 2800 +
1 at 2900

if I were to calculate the payments correctly at the assumed interest rates, they would be in the 3600 - 4900 range based on the interest rates stated, so is this another issue I have to use as leverage perhaps? Please tell me YES!

[Moe Bedard]

your payments will follow the adjustable rate note and the adjustable rate rider with the interest only period if this is the type of loan you have.
The TILA itself is not an accurate prediction of what the payment will be thruout the entire loan because there are times when the rate will not adjust or will go down because of the Libor Index it follows.

[angel83]

So then, how does a violation in the loan docs such as total interest paid (if it is incorrect) differ if it is reflected on the same document?

[LHarveyMadman]

Originally Posted by angel83

So then, how does a violation in the loan docs such as total interest paid (if it is incorrect) differ if it is reflected on the same document?

I don't quite understand your question, but what *** was trying to say in her response is that with adjustable rate mortgages, it is impossible to predict what the total amount of interest will be paid over the life of the loan. When you get your loan docs for an ARM, they first calculate the interest paid during the fixed rate period. This number is firm and easily calculated, because there is no variation in interest rate.

The interest on the remainder of the loan term, however, is completely unpredictable. No one has the ability to accurately project what interest rates will be 5 years in the future. What the lenders do is calculate the interest rate that would result if the rate adjusted ON THE DAY they make the estimate.

Let's say you opened an ARM today, with a rate fixed for 5 years at 5.25%. You can calculate the amount of interest that will be paid during those first 5 years. Let's also say that the adjustable rate part of the loan is based on a formula of (1-year LIBOR + 4%). There's no way to tell what the 1-year LIBOR will be on January 20, 2014. So they take today's rate (1.83%) and add the margin (4%), for an interest rate of 5.83%.

They then take this 5.83% and calculate the interest paid for the remainder of the loan WITH THE ASSUMPTION THAT THE NEW RATE WILL NOT CHANGE. This is how they come up with the interest paid.

It should be obvious that the odds of the sum that they calculate being correct 30 years later, or even 5 years later, is virtually zero. But it's not because the lender is being deceptive. It's because there is no way to really know how much interest will be paid over the life of an ARM.

So, the difference between estimate and reality vis-a-vis the total interest paid cannot really be a truth-in-lending violation, unless perhaps they miscalculated the amount of predicted interest based on the available market data at the time the estimate was prepared.

[Moe Bedard]

Thank you LHarvey.............that is exactly where my thought process was heading.........but I had to keep getting up from my computer and lost my train of thought........