Skip to content
BOL Conferences
Thread Options
#2009210 - 04/21/15 03:06 PM ARM - Date of Change
Norman Paperman Offline
Diamond Poster
Norman Paperman
Joined: Aug 2012
Posts: 1,700
48.934476, -114.343735
Looking to see how many of you out there are offering closed end ARMS that adjust "date of change". We currently have products that can only adjust once per year, but are looking to hedge the eventual increase in WSJP.

So, how many are offering ARMs adjusting "date of change"?

I'm thinking through §1026.20(c)

(2) Timing and content. Except as otherwise provided in paragraph (c)(2) of this section, the disclosures required by this paragraph (c) shall be provided to consumers at least 60, but no more than 120, days before the first payment at the adjusted level is due. The disclosures shall be provided to consumers at least 25, but no more than 120, days before the first payment at the adjusted level is due for ARMs with uniformly scheduled interest rate adjustments occurring every 60 days or more frequently and for ARMs originated prior to January 10, 2015 in which the loan contract requires the adjusted interest rate and payment to be calculated based on the index figure available as of a date that is less than 45 days prior to the adjustment date. The disclosures shall be provided to consumers as soon as practicable, but not less than 25 days before the first payment at the adjusted level is due, for the first adjustment to an ARM if it occurs within 60 days of consummation and the new interest rate disclosed at consummation pursuant to § 1026.20(d) was an estimate. The disclosures required by this paragraph (c) shall include:
_________________________
Maybe you just wanna fly the plane yourself. Well good luck pressing take off, then auto pilot, then land.


CRCM

Return to Top
Lending Compliance
#2011205 - 04/30/15 01:59 PM Re: ARM - Date of Change Norman Paperman
Norman Paperman Offline
Diamond Poster
Norman Paperman
Joined: Aug 2012
Posts: 1,700
48.934476, -114.343735
I'm going to bump this one.

So, let's say I have a loan that is on the books and Prime changes tomorrow. Do I send the notice tomorrow, and then wait at least 25 days before enforcing the new payment at the new rate? Just want to make sure I interpret this correctly, as we have always had loans that adjust once annually.
_________________________
Maybe you just wanna fly the plane yourself. Well good luck pressing take off, then auto pilot, then land.


CRCM

Return to Top
#2011208 - 04/30/15 02:08 PM Re: ARM - Date of Change Norman Paperman
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
So, let's say I have a loan that is on the books and Prime changes tomorrow. . . . .we have always had loans that adjust once annually

When you can make the adjustment will depend on the contract language in the note. You cannot unilaterally change that provision.

If prime changes to 10% tomorrow and your contract only allows an annual change you cannot increase the rate until the next scheduled change date under the contract.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#2011210 - 04/30/15 02:13 PM Re: ARM - Date of Change Norman Paperman
Norman Paperman Offline
Diamond Poster
Norman Paperman
Joined: Aug 2012
Posts: 1,700
48.934476, -114.343735
Thanks Dan. I get that part. We are talking about developing a new loan product that would change monthly with prime, as opposed to adjusting annually.

This will not affect loans currently on the books.

I'm just thinking ahead about disclosures for the new product.

Admittedly, my scenario above did not clarify the fact that this is a new product.
Last edited by Norman Paperman; 04/30/15 02:14 PM.
_________________________
Maybe you just wanna fly the plane yourself. Well good luck pressing take off, then auto pilot, then land.


CRCM

Return to Top
#2011222 - 04/30/15 02:36 PM Re: ARM - Date of Change Norman Paperman
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
The following is from the Commentary.

Paragraph 20(c)(2).

1. Timing. The requirement that § 1026.20(c) disclosures be provided to consumers within a certain timeframe means that the creditor, assignee, or servicer must deliver the notice or place it in the mail within that timeframe, excluding any grace or courtesy periods. The requirement that the § 1026.20(c) disclosures must be provided between 25 and 120 days before the first payment at the adjusted level is due for frequently-adjusting ARMs, applies to ARMs that adjust regularly at a maximum of every 60 days.


As I read this I would have to opine you must provide the notice at least 25 days before the new payment takes effect.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#2011229 - 04/30/15 02:49 PM Re: ARM - Date of Change Norman Paperman
Norman Paperman Offline
Diamond Poster
Norman Paperman
Joined: Aug 2012
Posts: 1,700
48.934476, -114.343735
Gotcha. That's what I was thinking but I've been way off before.

Thanks for your input, Dan. Have a good day.
_________________________
Maybe you just wanna fly the plane yourself. Well good luck pressing take off, then auto pilot, then land.


CRCM

Return to Top

Moderator:  Andy_Z