Hello all! I really need your help. We have a situation here that I just came across where our ARMs have no written policy on floors or ceilings. Someone arbitrarily set the floor and ceiling into our software (we are not sure who that was) and that is how our disclosures are printing out. We have no written policy at this time. How are other banks setting their floors and ceilings? Any help would be GREATLY appreciated as I have never had to set pricing policy before and have no idea where to begin.

If I need to clarify anything further I would be happy to...

Just thought I would bump this up again. I really need some expertise on this situation...

Just an idea - my former bank and current bank both use floor & ceiling limits of 3% +/- of original rate with individual adjustments not more than 1% +/-. If the initial rate was discounted or at a premium, these adjustments and floors/ceilings were based on the non-discounted/non-premium rate. Current bank - because our employee rates are so low, our employee ARMs have 4% floor & ceiling limits.

Thank you Dorothy! I appreciate it!


Anyone else do things differently?

We checked around the bank's in our area, and State regulation, and decided on a 4% floor, an 18% ceiling, a 2% yearly cap and a 6% life of loan cap.

So, in reality, the ceilings are actually much lower than 18% right now.

If we settle a loan at say 5% with the 6% life of loan cap the ceiling will be only 11%