I know the topic of APR accuracy has been discussed at legnth, but I would really appreciate it if someone could read through the rest of my post and comment on whether I my restatement and understanding of .22(a) is accurate.
.22(a)(4) For mortgage transactions, in addition to the .125% APR tolerance (or .25% for irregular transactions), the disclosed APR is considered accurate if it varies from the actual APR if the disclosed APR was based on the disclosed finance charge and the disclosed finance charge is understated by no more than $100 (or the formula in .23(g) or (h) for rescindable transactions) or is overstated.
.22(a)(5) For mortgage transactions, in addition to the .125% APR tolerance (or .25% for irregular transactions), if the disclosed finance charge is calculated incorrectly but is understated by no more than $100 (or the formula in .23(g) or (h) for rescindable transactions) or is overstated, the disclosed APR is considered accurate if it is closer to the actual APR than it would have been if it was based on the disclosed finance charge. [This section only applies of the disclosed APR was not based on the disclosed finance charge.]
An ARM with an introductory rate that is not tied to the index is an irregular transaction.
Interest is part of the finance charge. If the disclosed finance charge is calculated correctly but becomes overstated because the loan amount decreases without any other change to the terms of the loan, it is still considered accurate under .18(d) and .23(g) and (h).
Thanks!!!