If you have a product that is a 1 year interest only followed by a 7/1 ARM - would you need a program disclosure in addition to the "standard" 7/1 ARM? I would think so because the description of the program isn't going to be correct because the first change will be a year later than a standard 7/1 ARM. Right?

If it is just interest only and not construction - yes.

Good deal - so you can just ignore the construction phase if under a year -- right?

And... this is only for initial construction, right?

Correct - see comment 1 under 19(b) Certain Variable-Rate Transactions.

If you don't care whether or not you are making a Qualified Mortgage, there would be no prohibition in doing interest only for the first year on a permanent mortgage.

Please pardon my "denseness" here -- the fact that the overall term of the combined transaction has no bearing, right? As long as the construction phase is one year or less - it can essentially be "excluded" from the ARM program disclosure?

Yes