[Federal Register Volume 85, Number 111 (Tuesday, June 9, 2020)]
[Notices]
[Pages 35292-35293]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-12467]


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BUREAU OF CONSUMER FINANCIAL PROTECTION


Notice of Availability of Revised Consumer Information 
Publication

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Notice of availability.

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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) announces 
the availability of an updated consumer publication, the Consumer 
Handbook on Adjustable Rate Mortgages booklet, also known as the CHARM 
booklet, required under the Real Estate Settlement Procedures Act 
(RESPA) implemented by Regulation X and the Truth in Lending Act (TILA) 
implemented by Regulation Z. This version of the CHARM booklet is 
updated to align with the Bureau's educational efforts, to be more 
concise, and to improve readability and usability.

ADDRESSES: The updated consumer publication is available for download 
on the Bureau's website at www.consumerfinance.gov/learnmore and can 
also be found in the Catalog of U.S. Government Publications (http://catalog.gpo.gov), maintained by Superintendent of Documents, U.S. 
Government Publishing Office, Washington, DC 20402.

FOR FURTHER INFORMATION CONTACT: Davida Farrar, Supervisory Attorney-
Advisor, Consumer Education and Engagement Division; Laura 
Schlachtmeyer, Senior Financial Education Content Specialist, Consumer 
Education and Engagement Division; Julie Vore, Originations Program 
Manager, Office of Mortgage Markets; Greg Evans, Senior Compliance 
Analyst, Consumer Education and Engagement Division; 
[email protected] or (202) 435-7700. If you require this 
document in an alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION: The Bureau is hereby publishing this notice 
of availability to inform the public of the existence of an updated 
version of the Consumer Handbook on Adjustable Rate Mortgages booklet.

Background on the CHARM Booklet

    In its enactment in 1974, section 5 of RESPA required the provision 
of ``special information booklets'' to help persons borrowing money to 
finance the purchase of residential real estate to understand better 
the nature and costs of real estate settlement services. Public Law 93-
553.
    In 1987, the Board of Governors of the Federal Reserve System 
(Board) revised Regulation Z, to require special disclosures for 
closed-end adjustable rate mortgages (ARMs) secured by the borrower's 
principal dwelling with a term greater than one year. 52 FR 48665 (Dec. 
24, 1987). The Board and the Federal Home Loan Bank Board (predecessor 
to the former Office of Thrift Supervision (OTS)) originally developed 
the CHARM booklet in 1987 to fulfill that requirement and educate 
consumers about the features and risks associated with adjustable rate 
mortgages. The Board most recently updated the CHARM booklet in 2006. 
71 FR 78437 (Dec. 29, 2006).
    Under the Dodd-Frank Act, Public Law 111-203, the responsibility 
for the CHARM Booklet transferred to the Bureau. Under 12 CFR 
1026.19(b)(1), creditors must provide the ``booklet titled Consumer 
Handbook on Adjustable Rate Mortgages, or a suitable substitute'' to 
all consumers considering an adjustable rate mortgage.
    To reflect the transfer to the Bureau and ensure consistency with 
the Bureau's rulemakings regulating practices in mortgage origination 
and servicing that took effect in January 2014, the Bureau made 
technical and conforming changes to the CHARM booklet and made the 
revised booklet available in January 2014. 79 FR 1836 (Jan. 10, 2014).

Contents of the Updated Version of the CHARM Booklet

    The Bureau is updating the CHARM booklet so that it aligns with the 
Bureau's educational efforts, to be more concise, and to improve 
readability and usability. New features include a comparison table that 
describes adjustable rate mortgages and their differences in relation 
to fixed-rate loan products; an explanation of how an adjustable rate 
mortgage works; a tutorial on how to review an ARM Loan Estimate and a 
lender's ARM program disclosure; a comparison table for the various 
adjustable and fixed-rate loan offers that reader has received or will 
receive; and a description of the risks that come with different types 
of adjustable rate mortgages. This version of the CHARM booklet 
eliminates references to LIBOR due to the forecasted cessation of 
LIBOR.
    The design of the CHARM booklet is intended to have a similar look 
and feel as Your Home Loan Toolkit (Toolkit), another consumer 
disclosure for which the Bureau is responsible and that will frequently 
be received by mortgage applicants at the same time as the CHARM 
booklet. Similar to the Toolkit's

[[Page 35293]]

treatment of the Closing Disclosure, a significant portion of the 
booklet is devoted to encouraging the consumer to review the specific 
terms offered in their Loan Estimate, which they are also likely to 
receive at the same time as the CHARM booklet. Portions of the Loan 
Estimate are reproduced and explained in the revised CHARM booklet.

Distribution and Use of the Updated CHARM Booklet

    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).
    Creditors may, at their option, immediately begin using the revised 
CHARM booklet, or a suitable substitute, to comply with the 
requirements in Regulation Z. The Bureau understands, however, that 
some may wish to use their existing stock of the CHARM booklet. 
Therefore, those who provide this publication may use earlier versions 
of the CHARM booklet until existing supplies are exhausted. When 
reprinting the CHARM booklet, the most recent version should be used.

Signing Authority

    The Director of the Bureau, having reviewed and approved this 
document, is delegating the authority to electronically sign this 
document to Laura Galban, a Bureau Federal Register Liaison, for 
purposes of publication in the Federal Register.

    Dated: June 4, 2020.
Laura Galban,
Federal Register Liaison, Bureau of Consumer Financial Protection.
[FR Doc. 2020-12467 Filed 6-8-20; 8:45 am]
BILLING CODE 4810-AM-P