Guidance requested: I remember something about 60 months vs 62 months to first adjustment on 5/1 ARMs from when the ATR/QM rules first came out. But I can't remember why we would go with 62 vs 60 months.

The greater than 60 months was a small creditor balloon loan issue and not for fully amortizing ARMs.

It also comes into play for Ability-to-Repay standards, from what I understand, as the final Balloon Payment is included in the analysis of monthly obligations if it takes place within a 5-year time frame. This is one of the primary reasons, in addition to the Balloon QM rules, that banks structure the reset date of a 5/1 ARM at 61 or 62 months, rather than 60 exactly.

a 5/1 ARM isn't ballooning in 5 years, as Randy explained above. The 62 months only comes into play for balloon loans and ATR/QM.

Duh. Sorry, it took my thick skull a minute to get that, lol. It wouldn't matter for 30 year term loans with a 5 year reset date. You have to use the fully-indexed rate regardless.