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Our ARM loans do not have an introductory rate. Our initial rate is the index + the margin (no discount or premium rate) and after the fixed rate period of 5 years the rate can adjust annually. Prior to the update on Laser Pro our product on the LE & CD showed 0/1 Adjustable Rate. With this update it is now showing our adjustable rate product as 0/5 Adjustable Rate. The AIR table is still correct but we are questioning the Product. Is this the correct way to disclose the product? I’m thinking no.
The Release Notes show this example: The loan has an initial fixed rate of 5.000% and the fully-indexed rate is 5.000% but the initial rate applies for five years and then the rate adjusts every year based on the index plus a margin, then the loan would be disclosed as “0/5 Adjustable Rate,” because if no introductory period exists, then five years is the first rate adjustment period for the loan.
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