We have a 5/1 ARM with an initial premium rate for the first 5 years and thereafter the rate changes annually based on LIBOR. We took an application and locked the "initial" rate on 4/01/10. We issued the early TIL on 4/01/10. On 5/25/10 we lower the initial rate. Loan consummation is 6/15/10 and we issue a Final TIL. For the final TIL, for the "second payment stream" which is tied to LIBOR, do we use the LIBOR that was in effect at loan application or the LIBOR that is in effect at consummation?

Thank you in advance.

Generally you will use the index value at consummation (easier to document for auditors and examiners), but you can go back as for as your stated look back period.