We have recently acquired 2 new branches of another bank. We do not do ARM loans but have inherited a few from the other bank. Can someone tell me how these work and what the requirements are or where I can find information on them. I have looked in Reg Z and also at the model disclosure. We are not planning on adding this product but we will have to maintain the loans that we have inherited. Any information will be helpful.

See 226.19(b) for the disclosures required up front and 226.20(c) for subsequent requirements. Make sure that the each loan is booked on your system exactly like the contract states (index, rate change frequency, rounding method, etc.) and review your rate change notice to make sure it includes the requirements in 226.20.

Thanks for the information. I appreciate it.

If you don't do the product, that increases the chances of costly errors & regulatory violations (which can also be costly.) I'd consider selling these loans to someone who's set up to handle ARMs.