In reviewing loan files, I've stumbled upon something that I'm not sure is an issue or not so I'm looking for help.

In our ARM environment, margins are fixed at a min of 2% and max of 3%. At rate adjustment time, fixed margin is added to the current index (pretty much standard). Maximum increase or decrease is 5% over life of the loan. So if a loan is closed with a rate of 5% and a capped margin of 3% that means that their rate can never be more than 10% or less than 3% (assuming index would be 0).

I've found several ARM rider documents that have the high end rate (10%) but the low end is left blank - I assume because the software is looking at 5% rate with lifetime decrease of 5% would equal a rate of 0%.

Is this a disclosure violation because the wording "my rate will never be less than _________ is not showing 3%?

That is how ARM's work but our software is inserting the margin in the ________ . I'm not sure if it is a violation. Is your ARM Disclosure and TIL correct?

PS: Since our loans are adjsuting so low right now all new loans have a 4% floor, so now the _____ states 4%.

The ARM disclosure and TIL are correct and technically the rider is too because the rate will never be less than "blank" or 0. Just not sure if it is an issue that there is nothing in that field when in actuality the rate will never be less than 3%