Loan Guaranty: Adjustable Rate Mortgage Notification Requirements and Look-Back Period, 4812-4816 [2015-01681]

Agencies

• DEPARTMENT OF VETERANS AFFAIRS

[Federal Register Volume 80, Number 19 (Thursday, January 29, 2015)]
[Proposed Rules]
[Pages 4812-4816]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-01681]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 36

RIN 2900-AP25


Loan Guaranty: Adjustable Rate Mortgage Notification Requirements 
and Look-Back Period

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend the Department of Veterans 
Affairs (VA) Loan Guaranty Service (LGY) regulations that govern 
adjustable rate mortgages made in conjunction with the Home Loan 
Guaranty program. These revisions would align VA's disclosure and 
interest rate adjustment requirements with the implementing regulations 
of the Truth in Lending Act (TILA), as recently revised by the Consumer 
Financial Protection Bureau (CFPB). Specifically, the rule would amend 
the timing, content, and format requirements for the disclosures 
provided to borrowers prior to an interest-rate adjustment. The 
proposed regulation would also require that an interest-rate adjustment 
correspond with the interest rate index available 45 days prior to the 
adjustment. This proposed rulemaking would ensure VA's consistency with 
other applicable consumer finance and housing regulations governing 
adjustable rate mortgages.

DATES: Comments must be received by VA on or before March 30, 2015.

ADDRESSES: Written comments may be submitted through 
www.Regulations.gov; by mail or hand-delivery to Director, Regulation 
Policy and Management (02REG), Department of Veterans Affairs, 810 
Vermont Ave. NW., Room 1068, Washington, DC 20420; or by fax to (202) 
273-9026. Comments should indicate that they are submitted in response 
to ``RIN 2900-AP25, Loan Guaranty: Adjustable Rate Mortgage 
Notification Requirements and Look-Back Period.'' Copies of comments 
received will be available for public inspection in the Office of 
Regulation Policy and Management, Room 1068, between the hours of 8:00 
a.m. and 4:30 p.m., Monday through Friday (except holidays). Please 
call (202) 461-4902 for an appointment. (This is not a toll-free 
number.) In addition, during the comment period, comments may be viewed 
online through the Federal Docket Management System at 
www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: John Bell III, Assistant Director for 
Loan Policy (262), Veterans Benefits Administration, Department of 
Veterans Affairs, 810 Vermont Ave. NW., Washington, DC 20420, (202) 
632-8786. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: VA's regulations governing adjustable rate 
mortgages are set forth at 38 CFR 36.4312(d). VA proposes two 
amendments in this rulemaking to ensure VA regulations remain aligned 
with TILA and the implementing regulations set forth by the CFPB. 
First, VA proposes amending 38 CFR

[[Page 4813]]

36.4312(d)(6) so that the requirements for the disclosures and 
notifications that must be provided to borrowers prior to an interest-
rate adjustment are cross-referenced to those set forth in the TILA 
implementing regulations at 12 CFR 1026.20(c) and (d). The requirements 
of Sec.  1026.20(d) govern an initial interest-rate adjustment, while 
the requirements in Sec.  1026.20(c) govern subsequent interest-rate 
adjustments. Second, in an effort to remain consistent with Department 
of Housing and Urban Development (HUD) regulations, VA would amend 38 
CFR 36.4312(d)(2) to require that lenders adjust interest rates based 
on the most recent interest rate index figure available 45 days prior 
to the interest rate adjustment, instead of the interest rate index 
available 30 days prior to the interest rate adjustment, as is 
currently required in VA's regulations. (In the mortgage industry, the 
period of time between an interest rate adjustment and the date the 
interest rate is selected is commonly called the ``look-back period.'')

2013 TILA Servicing Rule

    In addition to the laws and regulations administered by VA, lenders 
making VA-guaranteed adjustable rate mortgages must comply with TILA 
and the Real Estate Settlement Procedures Act (RESPA), both of which 
are administered by CFPB. The changes VA proposes in this rulemaking 
are necessary to align VA's adjustable rate mortgage regulations with 
amendments to the regulations implementing TILA that were published in 
the Federal Register by the CFPB on February 14, 2013 (78 FR 10902), 
titled ``Mortgage Servicing Rules Under the Truth in Lending Act 
(Regulation Z),'' hereinafter called the ``2013 TILA servicing rule''.
    The 2013 TILA servicing rule revised the requirements of 12 CFR 
1026.20(c) and (d) relating to the disclosures and notices that must be 
provided to borrowers before an adjusted payment is due. Paragraph (c) 
of section 1026.20 requires that borrowers be provided certain specific 
disclosures in connection with an adjustment in the interest rate at 
least 60 days, but not more than 120 days, before the first payment at 
the adjusted level is due. In publishing the 2013 TILA servicing rule, 
CFPB stated in the rule's preamble that 25 days was insufficient notice 
for borrowers with adjustable rate mortgages to react to increased 
mortgage payments. See 78 FR 10924. Requiring that lenders provide 60 
days' advance notice of a payment increase to borrowers will improve 
borrowers' ability to better able to manage their finances following 
the interest rate adjustments. See id. CFPB explained that this longer 
notice period will ensure that borrowers may budget adequately for the 
increase or pursue loss-mitigation resources that lenders may offer to 
borrowers facing financial hardship, such as home sale, loan 
modification, forbearance, deed-in-lieu of foreclosure, or, in 
particular, refinancing. See 78 FR 10919, 10924. CFPB found that 60 
days' notice ``more closely reflects the time needed for consumers to 
refinance a loan.'' 78 FR at 10924.
    Additionally, 12 CFR 1026.20(c) governs the content and format of 
the disclosures that must be sent to borrowers prior to the periodic 
interest rate adjustments. Under the revised 12 CFR 1026.20(c), such 
disclosures must include, amongst other information, the term of the 
borrower's adjustable rate mortgage, an explanation that the interest 
rate and mortgage payment will change, and a table displaying relevant 
information about the borrowers' current and future interest rates and 
payments. (For the full list of requirements, see 12 CFR 1026.20(c)(2) 
and (c)(3).) CFPB explained in the rule's preamble that providing 
borrowers with this information would help them understand that their 
interest rates were subject to periodic changes and allow them to 
easily compare current and future payments. See 78 FR 10928-29. This 
would enable borrowers to better manage the changes to their mortgage 
payments. See 78 FR 10902, 10928-29. All of the required disclosures 
must be in a format substantially similar to the sample formats 
prescribed in the 2013 TILA servicing rule, which includes sample forms 
and disclosures. See 78 FR 11009-10.
    The 2013 TILA servicing rule also revised 12 CFR 1026.20(d), which 
provides separate disclosure requirements for the initial interest rate 
adjustment on an adjustable rate mortgages. This rule requires that the 
first time an adjustment in the interest rate will cause a change to 
the monthly payment on an adjustable rate mortgage, borrowers must be 
provided appropriate disclosures at least 210, but not more than 240, 
days before the first payment at the adjusted level is due. If the new 
interest rate (or new payment calculated from the new interest rate) is 
not known as of the date of the disclosure, Sec.  1026.20(d) provides 
that an estimate shall be disclosed and labeled as such. Section 
1026.20(d) also contains the requirements for the content and format of 
the initial disclosures. These disclosures, the accompanying 
information, and any related tables must include details such as, but 
not limited to, an explanation of the terms of the borrower's 
adjustable rate mortgage, the effective date of the interest rate 
adjustment and when additional future interest adjustments are 
scheduled to occur, and the telephone number of the lender for 
borrowers to call if they anticipate not being able to make their new 
payments. (For a full list of requirements, see 12 CFR 1026.20(d)(2).) 
All disclosures required under 12 CFR 1026.20(d) must be made in a 
format substantially similar to that prescribed by the 2013 TILA 
servicing rule, which includes sample formats for such disclosures. See 
78 FR 11011-12.
    Additionally, the preamble to the 2013 TILA servicing rule explains 
that adjustable rate mortgages with look-back periods of less than 45 
days would not be able to comply with the new 60 day minimum notice 
requirement for the disclosures regulated under 12 CFR 1026.20(c). See 
78 FR 10910. It noted that adjustable rate mortgages guaranteed by VA 
and insured by FHA had look-back periods of between 15 and 30 days. See 
78 FR 10926. In explaining why a 45-day look-back period would be 
necessary for compliance with the 1026.20(c) minimum 60-day notice 
requirement, the preamble stated that a look-back period of 45 days 
would allow lenders to prepare the required interest-rate adjustment 
documents for borrowers 45 days in advance of the interest rate 
adjustments. The typical mortgage billing cycle is 30 days, which means 
that there would be 30 days between the first date the adjusted 
interest rate would take effect and the date the new payment is due. 
These combined timeframes would give lenders an estimated 75 days 
between the date the interest rate index figure is chosen and the date 
that the borrower's first adjusted payment is due. 78 FR 10924. CFPB 
explained in the preamble that it had determined 75 days should be 
sufficient time to prepare the required disclosures and comply with the 
requirement that borrowers receive notice of the interest-rate 
adjustment no later than 60 days before their adjusted payments are 
due. See id.
    The preamble also explained that a revised look-back period of 45 
days would be consistent with the business practices of the majority of 
adjustable rate mortgage loan servicers, as many utilized a 45 day 
look-back period even prior to the 2013 TILA servicing rule taking 
effect. See 78 FR 10924. Further, the preamble described CFPB research 
showing that changing the length of the look-back period from 30 to 45 
days would not meaningfully affect the way

[[Page 4814]]

that adjustable rate mortgages are priced at the time of loan 
origination. See id.
    Most provisions of the 2013 TILA servicing rule became effective 
January 10, 2014. However, CFPB delayed the effective date of the 
notification requirements for VA-guaranteed loans until January 10, 
2015, to give VA time to amend its regulations to eliminate the 
conflicts between VA's existing regulations and the updated TILA 
implementing regulations. 78 FR 10927. The delayed effective date means 
that VA adjustable rate mortgages with a note date before January 10, 
2015, may comply with VA's current requirements, but any VA-guaranteed 
loans with a note date on or after January 10, 2015, must comply with 
the requirements of the 2013 TILA servicing rule.

HUD Notice and Look-Back Rule

    Loans insured by the Federal Housing Authority (FHA) in HUD must 
also comply with the 2013 TILA servicing rule as of January 10, 2015. 
HUD published a final rule on August 26, 2014, at 79 FR 50838, entitled 
``Adjustable Rate Mortgage Notification Requirements and Look-Back 
Period for FHA-Insured Single Family Mortgages,'' hereinafter called 
the ``HUD notice and look-back rule.'' This rule made two changes to 
HUD's regulations at 24 CFR 203.49. First, the HUD notice and look-back 
rule amended 24 CFR 203.49(h) to cross-reference the timing, content, 
and format requirements of 12 CFR 1026.20(c) and (d) for the 
disclosures provided to borrowers with adjustable rate mortgages. 
Second, the HUD notice and look-back rule amended 24 CFR 203.49(d)(2) 
to implement a 45-day look-back period for all loans originated on or 
after January 10, 2015. The final rule adopted the proposed rule 
(published May 8, 2014, at 79 FR 26376) without change.
    In the preamble to its final rule, HUD explained that its proposed 
rule would revise the look-back period for FHA-insured adjustable rate 
mortgages from 30 to 45 days, and require that mortgagees of an FHA-
insured adjustable rate mortgage provide at least a 60 day, but no more 
than 120 day, advance notice of an adjustment to a mortgagor's monthly 
payment. 78 FR 50838. The preamble stated that these changes were made 
in response to the 2013 TILA servicing rule. Id. It explained that that 
the 2013 TILA servicing rule set the adjustable rate notice requirement 
to a period of between 60 and 120 days before the newly adjusted 
payment is due and established 45 days as the minimum adjustable rate 
mortgage look-back period. Id. HUD noted that the preamble to the 2013 
TILA servicing rule had stated that FHA's 30 day look-back period did 
not provide sufficient time to notify the mortgagor of an interest rate 
and monthly payment adjustment. Id. In the preamble to the proposed HUD 
notice and look-back rule, HUD further explained that ``[r]evising the 
current 30-day look-back period to 45 days would enable FHA-approved 
mortgagees to meet the 60 to 120-day notification period prior to any 
adjustment to a mortgagor's monthly payment that may occur, as required 
by the 2013 TILA Servicing Rule.'' 79 FR 26377.

VA's Proposed Rule

    To ensure consistency with other Federal housing agency 
regulations, VA is proposing two amendments to its regulations at 38 
CFR 36.4312(d).

Section 36.4312(d)(6) Disclosures.

    This rulemaking proposes to amend 38 CFR 36.4312(d)(6), which 
addresses the disclosures and notifications that must be provided to a 
borrower prior to an interest-rate adjustment. This change would ensure 
that VA's regulations are consistent with the disclosure and 
notification requirements published in the 2013 TILA servicing rule by 
cross-referencing to the timing, content, and format requirements of 
the CFPB regulations at 12 CFR 1026.20(c) and (d). This cross-reference 
follows the example of the HUD notice and look-back rule, as set forth 
at 24 CFR 203.49(h) and explained above.
    Specifically, VA proposes changing the title of paragraph (d)(6) 
from Annual disclosure to Disclosures. This change reflects that, in 
cross-referencing to the timing, content, and format requirements of 12 
CFR 1026.20(c) and (d), VA is regulating both the disclosures provided 
to borrowers prior to the initial interest-rate adjustment and prior to 
all subsequent interest-rate adjustments. VA would remove the 25-day 
notice period and the list of VA-specific disclosures that must be 
provided to a borrower in current Sec.  36.4312(d)(6). VA would replace 
this text with a cross-reference to the 2013 TILA servicing rule 
requirements published at 12 CFR 1026.20(c) and (d) so that proposed 
Sec.  36.4312(d)(6) would state ``[t]he lender must provide the 
borrower with disclosures in accordance with the timing, content, and 
format required by the regulations implementing the Truth in Lending 
Act (15 U.S.C. 1601 et seq.) at 12 CFR 1026.20(c) and (d). A copy of 
these disclosures will be made a part of the lender's permanent record 
on the loan.''
    Cross-referencing to the requirements of 12 CFR 1026.20(c) and (d) 
would lead to more detailed disclosures than VA currently requires. The 
first time a change to an interest rate would adjust a monthly payment 
on a VA-guaranteed adjustable rate mortgage, the lender would be 
required to provide appropriate disclosures to the borrower at least 
210, but not more than 240, days before the first payment at the 
adjusted level is due. For subsequent changes to interest rates, the 
lender would need to provide the borrower certain specific disclosures 
at least 60 days, but not more than 120 days, before the first payment 
at the adjusted level is due. The content and format requirements for 
the disclosures can also be found at 12 CFR 1026.20(c) and (d).
    By cross-referencing to the timing, content, and format 
requirements of 12 CFR 1026.20(c) and (d), VA would eliminate any 
discrepancies in the disclosures required by VA's regulations and the 
TILA implementing regulations published by CFPB, both of which are 
applicable to VA-guaranteed mortgages. Additionally, the cross-
reference to the TILA requirements would ensure that VA's regulations 
remain current in the event that CFPB revises 12 CFR 1026.20(c) or (d), 
without VA having to amend its rule. Further, the cross-reference to 12 
CFR 1026.20(c) and (d) would ensure consistency with the HUD notice and 
look-back rule, which revised 24 CFR 203.49(h) to specifically cross-
reference to the disclosure timing, content, and format requirements 
under 12 CFR 1026.20(c) and (d). This alignment should ensure certainty 
and simplify any process or system updates required by private industry 
in response to the 2013 TILA servicing rule.

Section 36.4312(d)(2) Frequency of Interest Rate Changes

    VA would amend 38 CFR 36.4312(d)(2), Frequency of interest rate 
changes. VA is proposing to remove the last sentence of current Sec.  
36.4312(d)(2), which sets a look-back period of 30 days. VA would 
remove the sentence that states: ``[t]he current index figure shall be 
the most recent index figure available 30 days before the date of each 
interest rate adjustment.'' VA would add two sentences to the end of 
paragraph (d)(2). The first sentence would clarify that loans with a 
note date before January 10, 2015, would retain the 30 day look-back 
period. The next sentence would explain that loans with a note date on 
or after January 10, 2015, would have a look-back period of 45 days.
    The proposed regulation text added to paragraph (d)(2) would state 
that for loans where the date of the note is

[[Page 4815]]

before January 10, 2015, the current index figure will be the most 
recent index figure available 30 days before the date of each interest 
rate adjustment. It would also state that for loans where the date of 
the note is on or after January 10, 2015, the current index figure will 
be the most recent index figure available 45 days before the date of 
each interest rate adjustment.
    VA is proposing to use the term ``date of the note'' instead of 
referring to the date of mortgage loan origination because the date of 
the note is the legal date on which the obligations between the 
borrower and lender are established. This is a precise date for lenders 
to track. Accordingly, VA is also proposing to revise the sentence in 
(d)(2) that currently states ``[t]he initial index figure shall be the 
most recent figure available before the date of mortgage loan 
origination.'' Under the proposed rule, VA would remove the phrase 
``mortgage loan origination'' and replace it with ``the note.'' The 
revised sentence would read: ``[t]he initial index figure shall be the 
most recent figure available before the date of the note.'' This change 
in language is not intended to be substantive, but rather is meant to 
provide further certainty for lenders determining the regulatory 
requirements applicable to VA-guaranteed adjustable rate mortgages.
    This proposed change to the look-back period would help ensure 
lender compliance with the 2013 TILA servicing rule 60 day minimum 
notice requirement before the first adjusted payment is due. This 
change would also ensure VA regulations remain consistent with other 
Federal housing agency regulations, thereby adding certainty and 
clarity for program participants that originate and service VA and FHA-
backed adjustable rate mortgages.
    As explained above under the heading TILA 2013 Servicing Rule, the 
2013 TILA servicing rule has been effective for a large portion of the 
mortgage market since January 10, 2014. CFPB explained in the preamble 
to the 2013 TILA servicing rule, however, that it would ``grandfather'' 
FHA and VA adjustable rate mortgages with look-back periods of less 
than 45 days originated prior to one year after the effective date of 
the final rule. 78 FR 10927. Accordingly, the final rule provides until 
January 10, 2015, for VA-guaranteed adjustable rate mortgages to 
satisfy the notice and disclosure requirements of the 2013 TILA 
servicing rule. See id. Since VA is merely conforming its look-back 
period to accord with TILA, VA is proposing to use the date that is one 
year after the effective date of the 2013 TILA servicing rule to 
determine which look-back period should apply to a given loan. For 
loans where the note is dated before January 10, 2015, the current 30-
day period would apply. For loans where the note is dated on or after 
January 10, 2015 the 45-day look-back period would apply.

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, and other advantages; distributive impacts; 
and equity). Executive Order 13563 (Improving Regulation and Regulatory 
Review) emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
Executive Order 12866 (Regulatory Planning and Review) defines a 
``significant regulatory action'' requiring review by the Office of 
Management and Budget (OMB), unless OMB waives such review, as ``any 
regulatory action that is likely to result in a rule that may: (1) Have 
an annual effect on the economy of $100 million or more or adversely 
affect in a material way the economy, a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local, or tribal governments or communities; (2) 
Create a serious inconsistency or otherwise interfere with an action 
taken or planned by another agency; (3) Materially alter the budgetary 
impact of entitlements, grants, user fees, or loan programs or the 
rights and obligations of recipients thereof; or (4) Raise novel legal 
or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in this Executive Order.''
    The economic, interagency, budgetary, legal, and policy 
implications of this regulatory action have been examined, and it has 
been determined not to be a significant regulatory action under 
Executive Order 12866. VA's impact analysis can be found as a 
supporting document at https://www.regulations.gov, usually within 48 
hours after the rulemaking document is published. Additionally, a copy 
of the rulemaking and its impact analysis are available on VA's Web 
site at https://www.va.gov/orpm/, by following the link for VA 
Regulations Published from FY 2004 to FYTD.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any one year. This proposed rule would have no such 
effect on State, local, and tribal governments, or on the private 
sector.

Paperwork Reduction Act

    Although this document contains a provision constituting a 
collection of information at 38 CFR 36.4312(d)(6), under the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501-3521), no new or proposed revised 
collections of information are associated with this proposed rule. The 
information collection provisions for this proposed rule are currently 
approved by OMB and have been assigned OMB control number 3170-0015.

Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed rule would not 
have a significant economic impact on a substantial number of small 
entities as they are defined in the Regulatory Flexibility Act (5 
U.S.C. 601-612).
    This proposed rule aligns the disclosure and look-back requirements 
for adjustable rate mortgages to the revised requirements in the 2013 
TILA servicing rule. VA does not have discretion not to align these 
requirements with the new TILA requirements established by CFPB and 
implemented by CFPB in the 2013 TILA servicing rule. The revised 
disclosure and look-back requirements would apply to VA adjustable rate 
mortgages in January 2015, whether or not VA takes action. VA has 
initiated this rulemaking because it is important for VA regulations to 
be consistent with TILA. In this rule, VA would adopt the minimum 45 
day look-back period to clarify that lenders must meet the TILA minimum 
requirements governing notification to borrowers. As discussed in this 
preamble, CFPB noted in its rulemaking that the majority of adjustable 
rate mortgages in the conventional market have look-back periods of 45 
days or longer. With the 2013 TILA servicing rule having taken effect 
on January 10, 2014, any lenders making adjustable rate mortgages in 
the conventional market have adjusted to the new TILA requirements. 
Additionally, the revisions to the

[[Page 4816]]

disclosure requirements simply conform VA requirements to the 2013 TILA 
servicing rule and the procedures currently followed in the 
conventional mortgage lending market.
    Accordingly, the Secretary certifies that the adoption of this 
proposed rule would not have a significant economic impact on a 
substantial number of small entities as they are defined in the 
Regulatory Flexibility Act, 5 U.S.C. 601-612. Therefore, under 5 U.S.C. 
605(b), this rulemaking is exempt from the initial and final regulatory 
flexibility analysis requirements of sections 603 and 604.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number and title for the 
program affected by this document are 64.114, Veterans Housing--
Guaranteed and Insured Loans.

Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this 
document and authorized the undersigned to sign and submit the document 
to the Office of the Federal Register for publication electronically as 
an official document of the Department of Veterans Affairs. Jose D. 
Riojas, Chief of Staff, Department of Veterans Affairs, approved this 
document on January 23, 2015, for publication

List of Subjects in 38 CFR Part 36

    Condominiums, Flood insurance, Housing, Indians, Individuals with 
disabilities, Loan programs-housing and community development, Loan 
programs--Indians, Loan programs--veterans, Manufactured homes, 
Mortgage insurance, Reporting and recordkeeping requirements, Veterans.

    Dated: January 26, 2015.
William F. Russo,
Acting Director, Office of Regulation Policy & Management, Office of 
the General Counsel, U.S. Department of Veterans Affairs.

    For the reasons set out in the preamble, VA proposes to amend 38 
CFR part 36 as follows:

PART 36--LOAN GUARANTY

0
1. The authority citation for part 36 continues to read as follows:

    Authority:  38 U.S.C. 501 and as otherwise noted.

0
2. Revise Sec.  36.4312(d)(2) and (d)(6) to read as follows:


Sec.  36.4312  Interest rates.

* * * * *
    (d) * * *
    (2) Frequency of interest rate changes. Interest rate adjustments 
must occur on an annual basis, except that the first adjustment may 
occur no sooner than 36 months from the date of the borrower's first 
mortgage payment. The adjusted rate will become effective the first day 
of the month following the adjustment date; the first monthly payment 
at the new rate will be due on the first day of the following month. To 
set the new interest rate, the lender will determine the change between 
the initial (i.e., base) index figure and the current index figure. The 
initial index figure shall be the most recent figure available before 
the date of the note. For loans where the date of the note is before 
January 10, 2015, the current index figure shall be the most recent 
index figure available 30 days before the date of each interest rate 
adjustment. For loans where the date of the note is on or after January 
10, 2015, the current index figure shall be the most recent index 
figure available 45 days before the date of each interest rate 
adjustment.
* * * * *
    (6) Disclosures. The lender must provide the borrower with 
disclosures in accordance with the timing, content, and format required 
by the regulations implementing the Truth in Lending Act (15 U.S.C. 
1601 et seq.) at 12 CFR 1026.20(c) and (d). A copy of these disclosures 
will be made a part of the lender's permanent record on the loan.
* * * * *

(The Office of Management and Budget has approved the information 
collection requirements in this section under control number 3170-
0015.)

[FR Doc. 2015-01681 Filed 1-28-15; 8:45 am]
BILLING CODE 8320-01-P