Are any of you experiencing this problem and what are you doing about it? We have a borrower who is currently in an adjustable rate loan. They want to refi to a fixed rate. They do not meet any of the 7 examples for a net tangible benefit and the loan is less than 42 months old. I think we will be seeing a lot of this now that we are in a rising rate environment. People feel more comfortable in a fixed rate program. I have asked our legal counsel for guidance and she is researching it for me, but I wanted to get feedback from other lenders as well. Thanks!

Item number six in the list - (vi)there is a change from an adjustable rate loan to a fixed rate loan, taking into account costs and fees and the costs can be recouped within two years - is specifically to address this issue. The only stipulation is that the costs and fees for the refi need to be able to be recouped in two years. If the fees you're charging for the switch from adjustable to fix cannot be recouped in two years, then this seems to be the very type of loan this act was designed to prevent.

Keep in mind, too, that the list of 7 items demonstrating tangible net benefit is not all inclusive. You can have other ways of showing that benefit.