I have ran across a couple of loans that are variable rates however the payment stream only shows one stream plus the final payment.

Here is an example as I see it happening on our system:

The loans are tied to Wall Street Prime with no margin and the initial rate is Wall Street Prime. They may be fixed for 1, 3 or 5 years however the initial rate at that time is equal to what it would adjust to after the initial fixed rate period. Since it is calculating the changes on these equal rates, is the payment stream correct?

If not, any suggestions to get it to stream correctly?

Thanks

I have come across something like this on a couple of mortg loans. The fully indexed rate is same as the initial rate the payment stream would show as you indicated above.

Yes, the payment stream is correct as you've stated. The lending staff is not required to attempt to guess what the rate would do, you just need to disclose that the loan IS variable rate and COULD change, and then it's up to the borrower to pay attention to what rates are doing.

(However, with all the uproar about ARMs, who knows what will be required of us in the future. If anyone finds a good deal on crystal balls, let me know.)