When is it required to reevaluate an APR?

The requirement to reevaluate an Annual Percentage Rate (APR) is guided by regulations aimed at ensuring that consumers are informed about changes that affect their loan terms. When an APR is increased and a change in terms notice is necessary, it indicates that the lender is obligated to formally notify the consumer of this adjustment in the APR. This requirement is rooted in the principles of transparency and consumer protection under the regulations set forth by the Consumer Financial Protection Bureau (CFPB).

When a lender raises the APR, it can significantly impact the overall cost of the loan for the borrower. The need for a change in terms notice not only protects consumers by keeping them informed but also provides them with clarity regarding their obligations under the loan agreement. This aspect of compliance ensures that consumers have the opportunity to understand and evaluate their financial decisions regarding their mortgage, fostering a more transparent lending environment.

Other situations mentioned, such as when a consumer is late on payments or when terms revert after legislation like the Servicemembers Civil Relief Act ceases to apply, might carry different requirements or implications but do not entail the same mandatory notification process as an increase in APR that requires a formal change in terms notice.