We are considering creating a new product that would be a 10 year balloon morgage loan amortized over 30 years. The rate structure would be on a tier. For example, 2 year fixed at 4%, then the remaining 8 years fixed at 6%. Would a disclosure like an ARM disclosure need to be created to give at application or would it being disclosed on the Truth in Lending be satisfactory?

This is not an ARM - it is a stepped rate transaction.

Thanks for the information. I am not familiar with "stepped rate transactions". Are there any special disclosure?

You just have to make sure that your TIL disclosure matches your contract, i.e., 24 payments at XX and 96 payments at xx.

As strange as this sounds, your product could be both a stepped-rate loan AND an ARM! It's a stepped-rate for sure. See the OSC to Section 226.19(b), #5(i)(A) to determine whether you also must call it an ARM.