Reg Z Disclosure Requirements for Payment Streams

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Question:

Could someone supply me with the citation in Reg Z which indicates that we must show on our arm tils fed box the different payment streams.For example: 5/l 30 year arm60 months at such and such a payment based on the initial rate300 months at such and such a payment based on the index & margin as of the date of closing.

Answer:

Answer by Jack Holzknecht:
Generally, multiple payment streams are associated with loans that have a discounted or premium initial rate (i.e.; the initial rate is not based on the index and margin used for later rate adjustments). Comment 17(c)(1)10 explains discounted/premium variablerate transactions and provides examples of appropriate disclosures.

Answer:

Answer by Lucy Griffin:
Section 17(c) and the related Commentary paragraphs explain how the underlying legal obligation affects disclosures. The provision that will change the interest rate is part of the legal obligation. You'll find all of the discussions about creative mortgage instruments just where Jack said.

First published on BankersOnline.com 11/5/01