The Consumer Financial Protection Bureau (CFPB) recently published a revised version of the Consumer Handbook on Adjustable Rate Mortgages (CHARM) booklet. This booklet is required under the Real Estate Settlement Procedures Act (RESPA) implemented by Regulation X, and the Truth in Lending Act (TILA) implemented by Regulation Z. The CFPB states that the booklet has been updated to align with the CFPB’s educational efforts, to be more concise, and to improve readability and usability. The revisions to the CHARM booklet include the following items:
• Reduction in number of pages (the previous version issued in 2014 is 41 pages, while the most recent version is only 13 pages)
• Addition of a comparison table that depicts the differences between an adjustable rate mortgage (ARM) and a fixed-rate loan product
• Addition of an explanation of how an ARM works
• Addition of a tutorial on how to review an ARM Loan Estimate and a lender’s ARM program disclosure
• Addition of a comparison table for the various ARM and fixed-rate loan offers the consumer has received or will receive
• Addition of a description of the risks that come with different types of ARMs
• Removal of references to the London Inter-Bank Offered Rate (LIBOR) index due to the anticipated upcoming discontinuance the LIBOR index
The previous version of the CHARM booklet may be used until existing supplies are exhausted. Then the revised version should be used. Alternatively, the updated version may be used immediately.
Link to CFPB Notice of Availability
Link to Federal Register Notice
Link to Revised CHARM Booklet