Regulation X requires lenders disclose to borrowers the percent by which an interest rate can increase or decrease in an adjustable-rate mortgage. The HUD-1 and HUD-1A have been modified to display the range of each interest rate increase or decrease, when applicable. The forms previously only displayed the periodic rate adjustment, which is the maximum percent by which the rate can change on each rate change date after the first interest rate adjustment. Printing a range of values when the initial rate cap differs from the periodic rate cap brings the forms into better compliance with Regulation X (12 CFR §1024.8[b]).
For example, on an ARM loan with 5/2/5 caps, a range will print that includes the first rate adjustment cap of 5.000%, instead of just the periodic cap of 2.000%:
“Every change date, your interest rate can increase or decrease by 2.000 – 5.000%.”
These changes will take effect on May 19, 2012. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
May 15, 2012