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ARM Notice After the Fact Circumstances

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We have a HELOC originated in 2008 that moved into the repayment phase in May 2018. The initial rate was WSJ prime and remains at WSJ prime (no margin) throughout the repayment phase. The loan has a interest floor of 3.75 percent so the rate has been set at that since May 2018. Since there is no set change date to enter in our system the CFPB ARM notice will not generate to give advance notice if the rate increases. Are we required to provide the ARM notice, and if so are these circumstances that allow the notice to go after the fact?

HELOCs are not covered under the ARM closed-end notice rules. If the HELOC's repayment period was part of the original HELOC plan, the loan remains an open-end credit, even if they can no longer draw on the plan. The repayment period remains subject to monthly periodic statements.

First published on 06/28/2020

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