The initial and locked Loan Estimate (LE) on an ARM loan was based off the WSJP index. When it was time to issue the initial Closing Disclosure (CD), the WSJP index had increased causing the APR on the CD to be about 1/2% higher than on the last LE. Should we adjust the index value on the CD to match the index value used on the LE to keep the APR within tolerance, or do we need to update the index value to the current value and redisclose the LE and then inssue an initial CD?
We recently discovered that we have a few ARM loans that were set up on our system incorrectly. The payment was not set to change when the rate changed. As a result, we have basically extended the amortization on these loans by not increasing the payment along with the corresponding rate increase. How would you suggest we rectify this error?
Regarding (possible) ARM loan disclosures and terms, we effectively give employees a lower rate on their loan while they are employed here. What we do is disclose the fixed contract rate and they pay those scheduled payments. The system however, is programmed with the lower discounted employee rate and the loan just prepays and when paid long enough, pays off early.
If the borrower leaves our bank, we remove the discount from the system and revert to the contractual rate. The payment never changes except for the final payment which may then be less than scheduled.
Would this be considered an adjustable rate mortgage? Is this an acceptable way to handle employee loans?
As an independent mortgage banker disclosing an Adjustable Rate Mortgage, is it necessary to provide the consumer an ARM disclosure or are we covered by disclosing the Loan Estimate and Closing Disclosure which provide ARM details?
I have a question pertaining to an existing ARM loan that is currently tied to LIBOR. For this particular loan the rate adjustment period is annually in April understand that LIBOR will no longer be available after December 31, 2021, but can the bank wait to adjust the index until April 2022?
If a residential ARM loan does not have a rate change, and therefore, does not have a payment change, is the bank still required to send the ARM notice?
Regarding the APR on the Closing Disclosure: our ARM rates are set at application. Our Note provides for a 45-day look-back for rate changes. I'm conflicted reading the regulation and want to verify that we should be using the index within that 45-day period before consummation to calculate the APR on the CD?
The initial rate is not determined by "index + margin," but changes are based on index/margin/caps. I think they should be using the most current index when the CD is issued. Often times the application date is greater than 45 days from consummation. I believe this is the most conservative approach.
If an interest rate adjustment occurs on the mortgage at the same time escrow analysis is completed, can these notices be combined?
Should the payment change date on the table for the Interest Rate Adjustment reflect the payment change for escrow analysis if that date is before the date the payment changes for the interest rate? Ex. Rate changes May 1st. Payment would change June 1st, but the payment also changes May 1st for escrow analysis. The table shows payment change for May 1st.
All of our TRID loans are on a variable rate that changes monthly. I thought the required rate cap was an increase or decrease of 2% each time it changes. Now I cannot find any documentation regarding this issue. I know we have to disclose the ceiling but is the adjustment under our discretion?
On ARM loans, is the first interest rate change calculated from the loan date or in the case of recission, the disbursement date?