New CHARM Booklet Available

John Zasada, Compliance Consulting Director, Financial Institutions Group

On June 4, 2020, the Consumer Financial Protection Bureau (CFPB) issued a notice of availability concerning the Consumer Handbook on Adjustable Rate Mortgages (CHARM) booklet. The CHARM booklet is required by the Real Estate Settlement Procedures Act and the Truth in Lending Act. Under 12 CFR 1026.19(b), if the annual percentage rate may increase after consummation in a transaction secured by the consumer’s principal dwelling with a term greater than one year, the CHARM booklet must be provided when an application form is provided for an adjustable rate mortgage loan or before the consumer pays a non-refundable fee, whichever is earlier (except that the disclosures may be delivered or placed in the mail not later than three business days following the receipt of the consumer’s application when the application reaches the creditor by telephone, or through an intermediary agent or broker).

The CFPB last updated the CHARM Booklet in 2014. The newest update is intended to make the CHARM booklet more concise and improve its readability and usability. Among the changes is a comparison table that describes adjustable rate mortgages and their differences in relation to fixed-rate loan products and a description of the risks that come with different types of adjustable rate mortgages.

Financial institutions can immediately begin using the revised CHARM booklet. Your institution does have the option of using up existing stock of the CHARM booklet until existing supplies are exhausted. After your current supply is exhausted, then you should transition to the revised CHARM booklet.

For any questions, please contact Doeren Mayhew’s regulatory compliance specialists.