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Changing Term from Fixed Rate to Variable Rate

Answered by: 
David A. Dickinson

Question: 
We are changing the term from fixed rate to variable rate on a work-out consumer term loan secured by their residence which is a manufactured home on leased land. We prepared change in terms documents consisting of Promissory Note and Disclosure document. The document states "disclosures about the variable rate feature have been provided to me earlier." (actually they were not). Are any other disclosures required?
Answer: 

You should have provided a CHARMs booklet and ARM Program Disclosure at application. You may argue there is no formal application process, but when the work-out was first discussed with the borrower, this is your application date. The ARM disclosures should have been provided at that time.

First published on BankersOnline.com 3/5/12

First published on 03/05/2012

Filed under: 
Compliance
Filed under compliance as: 
ARM
Disclosures

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