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Feb 06, 2023 •8 likes •628 views

How to Float Like a Social Media Butterfly Without Getting Stung by the CFP Bee Presented By: Howard A. Lax Bodman PLC Detroit, Troy, Ann Arbor, Cheboygan, MI Dallas, TX Affiliate Office Melissa K. Bridges www.bodmanlaw.com Bodman, PLC Mr.

  1. How to Float Like a Social Media Butterfly Without Getting Stung by the CFP Bee Presented By: Howard A. Lax Bodman PLC Detroit, Troy, Ann Arbor, Cheboygan, MI Dallas, TX Affiliate Office Melissa K. Bridges www.bodmanlaw.com Bodman, PLC

  2. Mr. Lax, Counsel to Bodman PLC, concentrates his practice in financial institutions consumer compliance and regulatory affairs and real property law. Mr. Lax has written numerous articles on residential mortgage lending issues. Mr. Lax participates in numerous seminars for the American Bankers Association, AllRegs, CMPS Institute, MMLA, the Michigan Bar, and various title insurance and real estate trade groups. Mr. Lax’s articles are found in RESPA News, The Dodd- Frank Update, and Mortgage Compliance Magazine . Mr. Lax is rated AV by Martindale Hubbell, and he was recognized as a “Michigan Super Lawyer” and “Top Lawyer.” Mr. Lax is an Adjunct Professor at Wayne State University Law School teaching Banking Law. HOWARD A. LAX Bodman PLC 201 West Big Beaver Road, Suite 500 , Troy, Michigan 48084 Tel: (248) 743-6011 Fax: (248) 743-6002 Email: hlax@bodmanlaw.com 2 2

  3. Ms. Bridges is a frequent speaker on financial institution regulatory topics and served as the moderator of the Michigan Bankers Association’s Compliance Forum. She has also presented on topics including the SAFE Act, the Bank Secrecy Act, federal and state garnishment rules, the Fair Credit Reporting Act, Truth in Lending credit card rules, mortgage compensation rules, and the implementation of Dodd-Frank Act. Ms. Bridges also regularly contributes articles on regulatory changes to both state and federal law to the Financial Institutions Compliance Cooperative newsletter. Before joining Bodman, Ms. Bridges worked as a regulatory compliance consultant in charge of conducting Bank Secrecy Act and Regulatory Compliance reviews for financial institutions in Michigan, Florida, and California. MELISSA K. BRIDGES Bodman PLC 229 Court Street , Cheboygan, MI 49721 Tel: (231) 627-8001 Fax: (231) 627-3477 Email: mbridges@bodmanlaw.com 3 3

  4. Today’s Agenda  The Rules, only the Rules, and nothing but the Rules:  Trigger terms to avoid;  Required Disclosures when you use a trigger term; and  Disclosures needed whether or not you use a trigger term.  Building advertising text – what you do not recognize will hurt you.  RESPA and marketing through referral sources. 4/19/2017 4

  5. CFPB Guidance The CFPB has stated that whenever you use social media, you must have a risk management program that allows you to identify, measure, monitor, and control the risks related to that activity. The size and complexity will be dependent on your involvement in social media. It should include compliance, technology, information security, legal, human resources, and marketing. The CFPB has also stated that you should provide training to your employees regarding official use. Specifically, you must have an oversight program for monitoring information posted to social media that you administer. 5

  6. Regulation Z/General Requirements  Advertisements are “messages inviting, offering, or otherwise announcing generally to prospective customers the availability of credit transactions.”  Specific credit terms stated in an ad must be the terms that the creditor actually is offering or will arrange to offer. 4/19/2017 6

  7. Regulation Z/Closed End Triggers  Amount or percentage of any down payment (only in credit sale transactions).  Number of payments or period of repayment.  30 year loan; or  60 fixed monthly payments  Amount of any payment.  Payments as low as $365.  Amount of any finance charge (positive or negative finance charge).  $99 closing fee; or  $200 off closing costs. 4/19/2017 7

  8. Regulation Z Advertising: Rate Restrictions  Only a simple interest rate applied to the unpaid balance may be advertised.  Add-on rates are prohibited.  Triggers:  Rates as low as 4%.  Rates fixed at 3% for the first year.  2% rate on the first $20,000.  If an ad states a rate of finance charge (an interest rate), the ad must CLEARLY and CONSPICUOUSLY state:  The rate as an “annual percentage rate.”  The APR may increase (if applicable). 4/19/2017 8

  9. Regulation Z/Closed End Disclosures  If an ad contains a trigger, it must CLEARLY and CONSPICUOUSLY state the following, as applicable:  Amount or percentage of the down payment.  Terms of repayment (reflect repayment over full term of loan including any balloon payment),  The “annual percentage rate” or “APR” and, if it may increase, that fact.  Other required disclosures:  If first lien mortgage, the ad must also state that payments do not include tax/insurance premiums and the actual payment obligation will be greater (if applicable). 4/19/2017 9

  10. Regulation Z/Closed End Disclosures  If ad states a simple annual rate of interest and more than one rate will apply over the loan’s term, ad must disclose each simple annual interest rate, period of time each applies, and loan’s APR. For variable rate transactions, the rate must be determined based on a reasonably current index and margin and the APR must be “accurate.”  Equal prominence and close proximity as well clear and conspicuous standards apply.  Not applicable to TV, radio, or “envelopes.” 4/19/2017 10

  11. Examples of Fixed and ARM Disclosures  Fixed Rate Loan  1/1 ARM Loan 11

  12. Clear and Conspicuous Defined  The definition of “clear and conspicuous” disclosures is defined by the CFPB as “clearly and prominently” in CFPB consent orders. Disclosures must not be contradicted by, mitigated by, or inconsistent with anything else in the communication with the consumer.  The CFPB expects that disclosures and disclaimers will be presented in the following manner in advertising:  In textual communications (e.g., printed publications or words displayed on the screen of an electronic device), the disclosure must be of a type size and location sufficiently noticeable for a reasonable consumer to read and comprehend, in print that contrasts with the background on which it appears; 12

  13. Clear and Conspicuous Defined  In communications disseminated orally or through audible means (e.g., radio or streaming audio), the disclosure must be delivered in a volume, speed, and cadence sufficient for a reasonable consumer to hear and comprehend it;  In communications disseminated through video means (e.g., television or streaming video), the disclosure must be in writing in a form consistent with the requirements for printed material, and must appear on the screen for a duration sufficient for a reasonable consumer to read and comprehend it; 13

  14. Clear and Conspicuous Defined  In communications made through interactive media such as the Internet, online services, and software, the disclosure must be unavoidable and presented in a form consistent with the format for printed communications. Furthermore, a disclosure is not clear and conspicuous if a consumer must take any action, such as clicking on a hyperlink or hovering over an icon to see it;  In communications that contain both audio and visual portions, the disclosure must be presented simultaneously in both the audio and visual portions of the communication;  In all instances, the disclosure must be presented before the consumer incurs any financial obligation, and use diction and syntax that is understandable to a reasonable consumer, in each language in which the representation that requires the disclosure appears. 14

  15. Regulation Z/Closed End Restricted Terms  Don’t use “fixed” when rates and payments can change (unless meet additional requirements).  Don’t make misleading comparisons.  Don’t make misleading claims re government endorsements.  Don’t make misleading claims of debt elimination.  Don’t use “counselor” when referring to lender, broker or their employees.  Don’t falsely imply that you are or represent current lender. Specific disclosures required.  Watch foreign language ads. 4/19/2017 15

  16. Regulation Z/HELOC Triggers  HELOC disclosure triggers are:  The amount of any finance charge or any other charge;  Circumstances when finance charge is imposed, and an explanation of how the finance charge is determined;  Amount of any other charge that may be imposed as part of plan or explanation of how determined; and  Payment terms (but only for certain triggered terms).  Affirmative and negative statements are triggers (e.g. “closing costs no more than $50”, or “no closing costs”).  Special rules for TV and radio ads. 4/19/2017 16

  17. Regulation Z/HELOC Disclosures  If a trigger is in ad, it must also CLEARLY and CONSPICUOUSLY state: 1. Any minimum, fixed, transaction, activity or similar charge that is a finance charge that could be imposed under the plan. 2. Any membership or participation fee that could be imposed under the plan. 3. Any period rate that may apply (as APR) and statement rate is variable (if applicable). 4. Any periodic rate used to compute the finance charge (as APR). 5. Any fee that is a percentage of credit limit and an estimate of any other fee imposed for opening the account. 6. Maximum APR in variable rate plan.  Payment terms are triggers for disclosures 4, 5 and 6 only. 4/19/2017 17

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