If a lender does not provide applicants with CHARM Booklets, who is at risk?

The risk primarily lies with the bank if it fails to provide applicants with CHARM Booklets. These booklets are mandated under the Truth in Lending Act and provide essential information about adjustable-rate mortgages (ARMs). The purpose of the CHARM Booklet is to ensure that consumers understand the features, risks, and costs associated with ARMs, such as how interest rates may fluctuate over time.

If the bank does not provide these informational materials, it can result in the potential for regulatory action, compliance violations, and penalties. Failing to deliver the CHARM Booklet means the bank is not fulfilling its obligation to educate applicants about important aspects of ARMs, which could undermine consumer protection efforts and lead to an increase in customer complaints or lawsuits.

While customers and applicants may also be adversely affected by not receiving the booklet—due to lack of information or understanding their mortgage options—the primary legal and regulatory responsibility lies with the bank to ensure compliance with the governing laws. Therefore, the bank takes on the risk of non-compliance, which can have broader implications for its operations and reputation.