Vermont Temporarily Suspends High-Rate Mortgage Loan Disclosures

On May 5, 2022, Vermont’s Department of Financial Regulation entered an order to temporarily suspend High-Rate Mortgage Loan disclosures.  According to Title 9, Section 104 of the Vermont Statutes Annotated, any first lien mortgage loan with an interest rate in excess of three percent over the rate established by Vermont’s Commissioner of Taxes is considered a “High Rate Mortgage Loan,” which have disclosure requirements pursuant to Regulation B-98-2.  Since the established rate for 2022 was declared to be at 3.25% by the State Tax Commissioner, disclosure requirements were to be triggered by any first lien mortgage loan having an interest rate in excess of 6.25%.  The purpose of the disclosures is to let prospective borrowers know when they may be eligible for a loan from another lender that may offer a lower interest rate, fewer points, or both.

However, between November 2021 and May 2022, the 30-Year Fixed Rate Conforming Mortgage Index rate has increased from 3.269% to 5.486%.  According to the Department, this substantial rise makes it increasingly likely that interest rates on Market Rate Mortgage Loans may exceed the 2022 disclosure threshold, and therefore, disclosure would be likely to “confuse and mislead borrowers and would be inconsistent with the intent of Regulation B-98-2.”

Therefore, the Commissioner has decided to suspend disclosure requirements for High Rate Mortgage Loans through December 31, 2022.  The Order will remain in effect until January 1, 2023, or “until rescinded or superseded by the Commissioner, whichever is earlier.”