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The section listed below is what concerned me about not listing a margin in the initial disclosure.
1026.19 Certain mortgage and variable-rate transactions
1026.19(b)(2)(viii)(A)3. Selection of margin. For purposes of the disclosure required under § 1026.19(b)(2)(viii)(A), a creditor may select a representative margin that has been used during the six months preceding preparation of the disclosures, and should disclose that the margin is one that the creditor has used recently. The margin selected may be used until a creditor revises the disclosure form.Regarding the same scenario listed above. After the initial locked period, if the rate will be based on an index plus a margin, does the initial ARM notice have to show a representative margin that the creditor has used recently?
Is it compliant if the initial ARM disclosure only states, “the interest rate is based on the Index value, plus a margin?” However, a representative margin is not listed on the disclosure (even in the “Payment Example” section)?
