I think I'm having a brain freeze here, but I can't seem to figure this out nor can I find it in the regulation.

When disclosing the APR on, for example, a 5/1 ARM loan, I know you use the note rate for the first 5 years and then the "current" index plus margin for the remaining term, subject to any caps in place. What I'm trying to figure out is what is the "current" index? Is it the index in effect as of the date of closing, or the index in effect on the rate lock date (we actually do lock our loans). It seems we would have to use the index currently in effect on the date of closing, but for some reason I have it in my head it's the lock date! Plus, most of the time we prepare the TIL days before the actual closing date, so we don't necessarily know what the index will be the day of closing.

So, for example:

Loan locked on 8/13 with a current LIBOR index of .96%
Loan closes on 9/13 with a current LIBOR index of .83%

Would we use .96% or .83% on the final TIL? Why am I so confused by this!

An if anyone can point me to the section of the regulation that deals with this that would be much appreciated! Thanks!

See commentary 226.17(c)(1) - Comment 10(i):

When creditors use an initial interest rate that is not calculated using the index or formula for later rate adjustments, the disclosures should reflect a composite annual percentage rate based on the initial rate for as long as it is charged and, for the remainder of the term, the rate that would have been applied using the index or formula at the time of consummation. The rate at consummation need not be used if a contract provides for a delay in the implementation of changes in an index value. For example, if the contract specifies that rate changes are based on the index value in effect 45 days before the change date, creditors may use any index value in effect during the 45 day period before consummation in calculating a composite annual percentage rate.

THANK YOU!!! I don't know why in the world I couldn't find that, but I knew it was there somewhere!