For a borrower with an ARM loan with a rate change, where the current and new contractual rate is already naturally below the 6%, what should be on the rate change notice for compliance with the rate change limits section of the required disclosure, if the life of loan cap is higher than 6%?

Reg Z section 1026.20(c)(2)(iv)
iv) Any limits on the interest rate or payment increases at each interest rate adjustment and over the life of the loan, as applicable, including the extent to which such limits result in the creditor, assignee, or servicer foregoing any increase in the interest rate and the earliest date that such foregone interest rate increases may apply to future interest rate adjustments, subject to those limits.

If the loan has a contractual rate cap of 13% and per change limits of +/-2%, shouldn't the "rate limits" section of the disclosure state this information? Does the Reg Z required notice need top mention the 6% protected rate at all (during the protected time frame)? I believe the answer would be no and stating 6% was the max would clearly be wrong. Just wanted to know others thoughts.

anyone?

The rate limits are still a part of the legal obligation whether or not you have currently fixed the rate at 6% during the time of active service. I don't see that impacting the 1026.20(c) notice. I think prior to taking them off of the 6% rate, you are going to have to drop them another notice however.

Who has a 6% mortgage these days anyway??

If I sent a standard notice stating a possible rate greater than 6%, that would be correct as the loan contract may well extend beyond the period of military service. And to avoid confusion, I would thank the borrower for their service in an attachment and remind them that while covered by the SCRA the loan will not exceed 6%, if that is what you're asking.

Thanks rlcarey and Andy Z.