For our "wealth" customers, we want to give a .25% discounted rate on a mortgage loan. (This rate will act like an employee rate discount and could increase when they are no longer a wealth client.) We should know at the time of loan application if they are a wealth customer. Based on what I've read in earlier threads, we should disclose the discounted rate in the Loan Estimate, with a product as 0/0 adjustable. The AIR table will not appear because the rate change is not tied to the index. My question is that this will be a 10/1 ARM product. I understand that this won't change the product type since the rate could change immediately and even though the rate re-set is in 10-years, the rate could still change in the meantime when no longer a wealth client. For those who have done a similar product, is there anything special that we need to make sure to disclose in the Loan Estimate or Closing Disclosure related to this type of transaction? (A 10/1 ARM with a .25% rate discount as long as a wealth customer.)?

If we DON'T know within the 3 business days that the customer will qualify for the .25% discount, we should disclose the higher rate in our Loan Estimate, correct? Then when we determine their eligibility, a revised LE is not required. But our Closing Disclosure will reflect the changed APR. Is that correct?

We're new to mortgages and I'm just not clear on how this should be disclosed. Thank you!!

You are going to need a customized early ARM disclosure that addresses this variable rate feature.

This statement is not correct either: The AIR table will not appear because the rate change is not tied to the index.

The AIR table is required regardless of what a possible change in the interest rate is based on.

Thank you for that clarification! One of our lenders has asked if we can provide 2 sets of Loan Estimates up front - one with the discount and one without. I don't think we can do that as it would confuse the customer - they wouldn't know what they are getting! Is that right?