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#1884945 - 01/10/14 12:18 AM ARM Note and Forecast Days
Everest Offline
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Joined: Jan 2012
Posts: 281
I am just trying to learn and play catch up as quickly as possible on information regarding ARM loans and am wondering about the following:

Does every ARM loan (closed end home equity mortgage) have to have a forecast date listed on the Note that informs the customer of which day the index will be selected from when their rate changes?

I am asking as all the ARM mortgages that I have worked with in the past has included a forecast date, usually 45 days, but I am now looking at a set of ARM Notes that do not contain a forecast date. The note still contains the source if the rate (1 year WSJ, 3 year LIBOR, etc.) but no verbiage pertaining to which index figure would be used, not even daily or the day the change takes effect.

Is this ok? I cannot find any information on the requirements for what information is required to be on the Note.

Is it allowable for us to change these loans to reflect a 45 day forecast?

Wouldn’t we need to adjust these to a 45 day forecast to ensure the ARM notices get sent out per the new timing requirements?

Just questions I am trying to figure out. I am already concerned how these were serviced in the past for providing rate change notices but will review for that after I can figure out what we can do to move forward and ensure we are compliant with the new servicing requirements.

Any thoughts and comments greatly appreciated.

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#1884951 - 01/10/14 12:32 AM Re: ARM Note and Forecast Days Everest
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 78,973
Galveston, TX
These are contractual issues and you need to engage your legal counsel. How can you possibly abide by and defend a challenge to a contract if a question arises as to whether the bank changes the rates correctly without the note containing the details of how and when a change occurs?.
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