The League – Fostering Financial Wellbeing for All

WCUL releases updated loan forms: 81101, 82014 and 82018

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The League has released updated versions of three WCUL lending forms to facilitate compliance with state and federal regulations.

* Please note that WCUL #82018 and WCUL #81101 will be available in laser-printed format only, not pre-printed paper stock.

Availability

  • For credit unions that are licensed for laser-printed, reusable .pdfs of the affected forms, the president or other designated person will receive those files by email. New licenses may be purchased through the On-Line Store at www.theleague.coop > Products & Services > On-Line Store
  • The updated forms are now available in single-use fillable .pdf format through the On-line Store.
  • Credit unions may now order preprinted paper versions of the revised Consumer Note and Federal Truth in Lending Disclosures (WCUL #82014), through the On-line Store.

The other two updated forms, the Variable Interest Rate Addendum (WCUL #82018) and the Consumer Note and Federal Truth in Lending Disclosures (Credit Sale) (WCUL #81101) will not be available in preprinted paper format.

Updates

The updates include important changes to two loan forms to avoid a loan unintentionally being subjected to the new federal mortgage regulations that took effect in 2013 and 2014, and address other compliance complications. The Consumer Variable Interest Rate Addendum is renamed and revised to allow its use on non-Wisconsin Consumer Act loans as well as those subject to the Act.

Credit unions should switch to the revised forms, designated (Rev. 2/14), at their earliest convenience. These forms have been reviewed and approved as compliant with the Wisconsin Consumer Act by the Bureau of Consumer Affairs at the Wisconsin Department of Financial Institutions (DFI).

Links to final “proof” copies of the new forms are provided above; just click on the form titles. Yellow highlighting on the linked final proofs shows the locations of new or revised text; pink shows new or revised fields in laser forms. There may be some additional changes not highlighted (deleted text or fields, change in number of characters in fields, etc.).

The League has also updated its WCUL Closed-End Loan Form Selection Chart (provided here in 11×17 format) to help you use the appropriate forms in different situations. A color printed copy of the chart will be included in the April League Mail.

Obtaining the forms

The League’s On-Line Store at www.theleague.coop > Products & Services offers the forms in several formats. Each is described below.

  • Licensed, reusable .pdf format. The League will send the 2/14 revised .pdf files to the president or other designated person at the credit unions currently licensed for this format.

Credit unions may forward the licensed .pdf files to their data processor if they choose for installation and mapping for use on the credit union’s system. Credit unions may also share this Compliance Courier with its data processor if it will aid in mapping fields. Laser forms should be printed and reviewed for proper display. Compare to the final proofs linked to this Compliance Courier.

Keep in mind that the license permits use of the same .pdf files for manual completion on a desktop. This option is valuable during the time it takes for a data processor to map the fields when putting an updated form on the system.

Cost: The fees for each licensed .pdf file for laser-printed forms are based on credit union membership size:

MEMBERSHIP

INITIAL FEE

(1st CALENDAR YEAR)

ANNUAL

MAINTENANCE FEE
Up to 5,000 MEMBERS $ 350 $ 70
5001-10,000 $ 450 $ 90
10,001 + $ 575 $ 115

CREDIT UNIONS ARE RESPONSIBLE FOR PROPER MAPPING AND ASSOCIATED COSTS FOR THE FIELDS ON LICENSED LASER FORMS.

  • Single-use fillable laser format. The 2/14 revised forms have been uploaded to the On-Line Store and are now operational. Look for the 2/14 revision date in the On-Line Store listing when placing your order.

Cost: $2.00 per form, per use.

  • Preprinted paper forms. The 2/14 revised Consumer Note and Federal Truth in Lending Disclosures (#82014), is available for order. Delivery of the paper product may take 2-3 days.

This pre-printed paper format is no longer available for two forms, the Variable Interest Rate Addendum (#82018), and the Consumer Note and Federal Truth in Lending Disclosures (Credit Sale) (#81101). Please switch to the single-use or licensed reusable laser format.

Please address form order questions to Cathy Bosch, at ext. 6003 and questions about completion of the forms and compliance to John C. Engel at ext. 6007.

Text changes in the forms

See the updated WCUL Closed-End Loan Form Selection Chart (provided here in 11×17 format) to help clarify which of the various WCUL closed-end lending forms to use in different situations. The chart also lists the most significant recent changes to each form in side-by-side columns.

Consumer Note and Federal Truth in Lending Disclosures (#82014) is designed to be used with fixed-rate Wisconsin Consumer Act loans, not secured by real estate or a dwelling. Do not use this form for loans secured by real estate or a dwelling (such as a mobile home). The updates include important changes to avoid a loan unintentionally being subjected to the new federal mortgage regulations that took effect in 2013 and 2014, flood insurance regulations, and other compliance complications. The revisions to the form include:

  • Revised the caption to clarify that the updated form is not for use on a loan secured by real estate or a dwelling.
  • Added to the top of the form: “Boxes not checked are inapplicable.”
  • At top of the form, revised the borrowers’ address lines, to clarify that the spaces are not for the borrowers’ names. (Borrowers’ names are at the bottom of the form.)
  • Removed the recitation of the principal sum in words. The amount is shown in figures only.
  • Clarified that interest is charged daily on the unpaid principal balance.
  • Added a checkbox to make the interest-rate-after-maturity clause optional, rather than mandatory.
  • Added a space to identify the parties signing security agreement that provides collateral for the loan. A subsequent space permits identifying another security agreement.
  • Revised the cross-collateral clause to provide 1) that the note is not secured by any dwelling or real estate and 2) that the borrower represents and covenants that the collateral is not and will not be used as a dwelling.
  • Revised the “Notice to Customer” at the bottom of the form, to conform to Wisconsin Consumer Act language.
  • Added a space for “Additional Provisions” desired by the credit union and add seals for the borrowers’ signatures.
  • Added a field in the footer on both sides of the form in case the credit union wants to insert the borrowers’ names, form title, date, or other useful information.
  • Added that a default shall occur when any surety of the Note dies, ceases to exist, changes marital status, changes marital domicile, or becomes insolvent.
  • Added that “all notices of every kind except notices required by law are waived by each and every Borrower, endorser, surety or guarantor.”

Variable Interest Rate Addendum (#82018) is designed for use with loans that have variable interest rates. It is used when the note or loan agreement does not have the language or space for the variable rate clause that the credit union chooses. The credit union must insert its own properly drafted variable rate clause into the form. The loan document must cross-reference the addendum to make it a part of the loan agreement terms. This form is no longer limited to Wisconsin Consumer Act loans. The revisions to the form include the following:

  • Removed references to the Wisconsin Consumer Act or any of its provisions.
  • Revised the caption to clarify that the updated form is designed for use with variable-rate loans, whether consumer or non-consumer.
  • At the top right, revised borrowers’ address lines, to clarify that the spaces are not for the borrowers’ names. The borrowers’ names are inserted in fields below the signature lines at the bottom of the form.
  • Revised the introductory clause to allow use of this form with loan agreements other than a Note, such as a Kwik-Cash or HELOC loan agreement.
  • Expanded the size of the space provided for the variable rate clause the credit union chooses to use.
  • Deleted all six checkboxes, their accompanying text, and the next two paragraphs at the bottom of the page. These checkbox clause options are being deleted to encourage use of a clearly written variable rate clause.
  • Deleted an extra date line from bottom of the form (since another remains at the top).
  • Revised the “Notice to Customer” at the bottom of the form, to conform to Wisconsin Consumer Act language.

Consumer Note and Federal Truth-In-Lending Disclosures (Credit Sale) (#81101) is designed to be used for credit to finance the sale of the credit union’s personal property, other than a dwelling, when the credit is subject to the Wisconsin Consumer Act. Do not use this form for loans secured by real estate or a dwelling (such as a mobile home). The updates include important changes to avoid a loan unintentionally being subjected to the new federal mortgage regulations that took effect in 2013 and 2014, flood insurance regulations, and other compliance complications. The revisions made to the form include:

  • Added a caption to clarify when the form must be used.
  • At top of the form, revised the borrowers’ address lines, to clarify that the spaces are not for the borrowers’ names. (Borrowers’ names are at the bottom of the form.)
  • Clarified that payments are paid to the order of the credit union.
  • Clarified that interest will be charged daily on the unpaid principal balance each day.
  • Removed the recitation of the principal sum in words. The amount is shown in figures only.
  • Added a checkbox to make the interest-rate-after-maturity clause optional, rather than mandatory.
  • Added an optional returned check charge clause.
  • Added a clause in which the Borrower represents and covenants that the collateral will not be used as a dwelling.
  • Added the missing word “scheduled” to the Total of Payments box in the Truth in Lending disclosure.
  • Struck the credit insurance premium disclosure and inserted a clause indicating that the credit union may offer credit insurance or debt suspension/cancelation products with proper disclosures.
  • Revised the “NOTICE TO CUSTOMER” to conform to the Wisconsin Consumer Act.
  • Added space for “Additional Provisions,” to be customized by the credit union using the form.
  • Added a signature line for an additional borrower.
  • Added fields for the borrowers’ typed names below the signature lines at the bottom.
  • Added that a default shall occur when any surety of the Note dies, ceases to exist, changes marital status, changes marital domicile, or becomes insolvent.
  • Removed default language that only applies to a transaction for an agricultural purpose, since this form is not appropriate for such loans.
  • Removed a reference to collecting attorneys’ fees, since Wisconsin Consumer Act loans may not include such clauses.
  • Added a waiver of the right to notice of acceleration.
  • Clarified that the Note’s holder may accept late or partial payments without notice to, and without affecting the liability of, any borrower, guarantor, etc.
  • Added that any forbearance by the Credit Union in exercising any right or remedy shall not constitute a waiver of any right or remedy available to Credit Union unless agreed to by the Credit Union in writing.

There are other non-substantive changes to the text of the forms as well, including the form number format, revision date, copyright date, and the removal of copy labels.

On the technical side

The laser-printed versions of these forms have been reduced from multiple copies to single copy sets. The credit union may specify the proper number of copies it will need when printing a form. Preprinted labels identifying original versus copy have been eliminated and replaced by fillable fields, to be used at the credit union’s discretion.

A long field has been added to the footer at the bottom of these forms, allowing the credit union to display other information at its option. One possibility is the names of the parties and the date of the document on each page of a multi-sided form.

WCUL loan notes, mortgages, security agreements and Truth in Lending disclosures are designed to be printed on 8½ x 14 inch (legal-size) paper. Printing on a smaller size may result in improper margin sizes for recording purposes or compliance violations for non-compliant font sizes. Multi-page forms must be laser-printed.

A word about cross-collateral clauses

Changes have been made recently (11/13) to other forms, the Chattel Security Agreement (#82005), Consumer Mortgage (#82020) and Mortgage (Non-Consumer) (#82043), as to what loans they secure. They each have cross-collateral clauses, which have been modified to avoid compliance complications. Please read the language carefully when you seek to rely on cross-collateral as security. Either the mortgage or the “unsecured” note may have language that disclaims cross-collateral rights in a given type of situation. This is necessary to help avoid violations by inadvertently triggering rules relating to right of rescission, TIL disclosures, restrictions on non-purchase security interests in household goods, flood insurance regulations, and other issues.

On the other hand, when you intend to cross-collateralize and are certain you can deal with the compliance issues raised, you may generally complete the mortgage and note with specific cross-references to each other to ensure cross-collateralization.

As a general matter, if you want cross-collateral for security on a loan:

  • Review the mortgage/security agreement for appropriate cross-collateral language,
  • Write the note to cross-reference the desired security agreement/mortgage, and
  • Comply with the regulations that may be triggered, such as:
    • Right of rescission,
    • TIL disclosure issues (disclosures of security interests, payment schedules vs. interest & payment summaries, application disclosures, etc.),
    • Restrictions of liens on household goods, and
    • Flood insurance regulations.

Never attempt to enforce cross-collateral rights without a careful review of all the documentation to be sure the cross-collateral clause applied in the particular case and all compliance issues were properly addressed.

Important reminders

Please keep in mind that WCUL forms are designed for use in transactions subject to Wisconsin law and applicable federal law.

Please remember that the forms you use are important legal documents. Credit unions are responsible for reviewing forms to determine that they are appropriate for the transaction. Users should read and become familiar with the terms of each form they use and how they must be completed in compliance.

Data processing must be consistent with the terms spelled out in the agreement, as they set the terms of the legal obligation agreed to by the parties.

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