I'm circling back on this one. 37(a)(10) Staff Commentary has the following:
i. Adjustable rate. When disclosing an adjustable rate product, the disclosure of the loan product must be preceded by the length of the introductory period and the frequency of the first adjustment period thereafter. Thus, for example, if the loan product is an adjustable rate with an introductory rate[/b] that is fixed for the first five years of the loan term and then adjusts every three years starting in year six, the disclosure required by §1026.37(a)(10) is “5/3 Adjustable Rate.†If the first adjustment period is not the period for all adjustments under the terms of the legal obligation, the creditor should still disclose the initial adjustment period and should not disclose other adjustment periods. For example, if the loan product is an adjustable rate [b]with an introductory rate that is fixed for the first five years of the loan term and then adjusts every three years starting in year six, and then annually starting in year fifteen, the disclosure required by §1026.37(a)(10) would still be “5/3 Adjustable Rate.â€
A. No introductory period. If the loan product is an adjustable rate with no introductory rate, the creditor should disclose “0†where the introductory rate period would ordinarily be disclosed. For example, if the loan product is an adjustable rate that adjusts every three years with no introductory period, the disclosure required by §1026.37(a)(10) is “0/3 Adjustable Rate.â€
I do think the first number is tied to an introductory rate and not just the change the period of time; otherwise, there would be never be a 0/3 product. They definitely seem to differentiate between period and rate. Agree?
Rory Flynn CRCM
Last edited by RegResource; 11/11/16 09:35 PM.