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Regulation Z- ARM notices

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  • #3966
    Golfing12
    Participant

    January 10, 2014, the rate adjustment disclosure is required at least 60 days, but no more than 120. How can I do this if my “Current Index” can not be set until 45 days before according to my note?

    The index information in a Fannie Mae notes states “Beginning with the first Change Date, my interest rate will be based on an Index. The “Index” is the weekly average yield on United States Treasury securities adjusted to a constant maturity of one year, as made available by the Federal Reserve Board. The most recent Index figure available as of the date 45 days before each Change Date is called the “Current Index.”
    If the Index is not longer available, the Note Holder will choose a new index which is based upon comparable information. The Note Holder will give me notice of this choice.

    #3971
    rcooper
    Keymaster

    The notice is required at least 60 days before the first payment at the adjusted level. In most situations, this should allow time as the payment correlated with the new rate won’t be due until the month following the interest rate change. So, typically, a creditor will have the new rate 45 days before the rate change, but approximately 75 days before the payment at the new rate, which should give the creditor plenty of time to send the rate change notice before the new payment is due.

    1026.20(c)(2): Timing and content. Except as otherwise provided in paragraph (c)(2) of this section, the disclosures required by this paragraph (c) shall be provided to consumers at least 60, but no more than 120, days before the first payment at the adjusted level is due. The disclosures shall be provided to consumers at least 25, but no more than 120, days before the first payment at the adjusted level is due for ARMs with uniformly scheduled interest rate adjustments occurring every 60 days or more frequently and for ARMs originated prior to January 10, 2015 in which the loan contract requires the adjusted interest rate and payment to be calculated based on the index figure available as of a date that is less than 45 days prior to the adjustment date. The disclosures shall be provided to consumers as soon as practicable, but not less than 25 days before the first payment at the adjusted level is due, for the first adjustment to an ARM if it occurs within 60 days of consummation and the new interest rate disclosed at consummation pursuant to § 1026.20(d) was an estimate.

    #4073
    elebra
    Participant

    I went to a lending seminar Jack did and he brought up that our notes may need to be modified and the customers notified in regards to the new ARM notices and when the rate is calculated…this was the first I’ve heard about this. What exactly would our notes need to say or not need to say in order to need to be modified? I am so confused about this part.

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