Well we've decided to offer ARMs.
From Reg Z Commentary
Paragraph 19(b)(2)(ii).
1. Identification of index or formula. If a creditor ties interest rate changes to a particular index, this fact must be disclosed, along with a source of information about the index. For example, if a creditor uses the weekly average yield on U.S. Treasury Securities adjusted to a constant maturity as its index, the disclosure might read, "Your index is the weekly average yield on U.S. Treasury Securities adjusted to a constant maturity of one year published weekly in the Wall Street Journal." If no particular index is used, the creditor must briefly describe the formula used to calculate interest rate changes. 2. Changes at creditor's discretion. If interest rate changes are at the creditor's discretion, this fact must be disclosed. If an index is internally defined, such as by a creditor's prime rate, the creditor should either briefly describe that index or state that interest rate changes are at the creditor's discretion.
(1) Do we have to define an index?
(2) Can we simply state the rate is based on basic underwriting standards and future changes will be at the creditor's discretion? (Rates and pymts will change every 5 years)
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The opinions expressed are mine and do not necessarily reflect those of my employer.