What is the maximum allowable increase for annual percentage rates (APR) under TILA for closed-end credit transactions?

The maximum allowable increase for annual percentage rates (APR) under the Truth in Lending Act (TILA) for closed-end credit transactions is set at 0.15%. This means that if there are any adjustments to the APR after the initial disclosure, as long as the increase does not exceed 0.15%, it complies with TILA regulations. This allowance is in recognition of possible variances in interest rates due to market conditions or other factors, while still protecting consumers from excessive rate hikes.

Understanding this cap is crucial for Mortgage Loan Originators, as it ensures that they maintain compliance with federal regulations designed to protect consumers from potential abuses in lending practices. A thorough knowledge of these limits helps MLOs better inform borrowers about possible costs associated with their loans and adhere to required disclosure practices.