Our HELOC product requires an automatic payment to obtain the disclosed rate, which is an index plus a margin of -.25%. In our disclosures we indicate the preferred rate will increase by 1%, including the floor rate, if automatic payments are discontinued.
In the agreement/disclosure under Current Rates...we list the Margin Added to Index as .750%, rather than -.25%. I am told this is done to disclose the highest possible margin. We also list a 6% floor (rather than the 7% it would be without the preferred rate).
This doesn't seem right to me. Am I just confused? Or should we be disclosing the margin as -.25% - which it will be unless the customer discontinues their automatic payment?