Would appreciate any help ! We are starting up a new ARM program. I need some direction on how to price, we have decided on a 1 year. Do we use the most current 1 year treasury rate at the time of disclosure and then recalculate and redisclosed if that rate changes by closing

Once you prepare your initial ARM Disclosures they are good for 1 year, unless your program changes.

Paragraph 19(b)(2).

5. Revisions. A creditor must revise the disclosures required under this section once a year as soon as reasonably possible after the new index value becomes available. Revisions to the disclosures also are required when the loan program changes.

Your closing documents will reflect the current index, margin and rate.

We use the "Average weekly yield on US Securities with a constant maturity of 5 years" plus a margin if the product is a 5-year ARM.
The initial rate could be higher or lower than the current rate + margin. For example, the average weekly yield with a constant maturity of 5 years is currently (5/2/03 and released 5/12/03) is 2.88. If you add a margin of 2.75% the initial rate would be 5.63% or rounded to the nearest 1/8th - 5.625%. If you want to offer this product at 5.50%, the initial rate would be considered a discounted rate with subsequent adjustments true to the index and margin. Check out:

http://www.federalreserve.gov/releases/h15/data.htm scroll down to "Treasury Constant Maturities"

Cheeez - kinda got off track......if the customer locks-in the rate we use the rate quoted.....if not; we give the rate using the current index, margin and any discount or premium and in our committment letter we state that the interest rate will be determined 5 days prior to closing.