Is it ok to advertise/market ".125% interest rate discount to borrowers who open an account at the bank prior to closing
and have their monthly payment auto-debited from this account"?

Sure, if that is a true statement. What happens when they cancel the autopayment or close the account?

That is a heck of an expensive benefit being given away by the bank. That is going to cost the bank $500 in the first year alone on a $400,000 loan. Pretty expensive wallet building if you ask me.

Thank you,

I asked the question above because if you would cancel the discount, then these loans would become ARMs with the early disclosure and subsequent notice requirements would apply.