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6-1004.2

H-4(C)—Variable-Rate Model Clauses

This disclosure describes the features of the adjustable-rate mortgage (ARM) program you are considering. Information on other ARM programs is available upon request.
How Your Interest Rate and Payment Are Determined
  • Your interest rate will be based on [an index plus a margin] [a formula].
  • Your payment will be based on the interest rate, loan balance, and loan term.
    • [The interest rate will be based on (identification of index) plus our margin. Ask for our current interest rate and margin.]
    • [The interest rate will be based on (identification of formula). Ask us for our current interest rate.]
    • Information about the index [formula for rate adjustments] is published [can be found]
      .
    • [The initial interest rate is not based on the (index) (formula) used to make later adjustments. Ask us for the amount of current interest-rate discounts.]
How Your Interest Rate Can Change
  • Your interest rate can change (frequency).
  • [Your interest rate cannot increase or decrease more than 
    percentage points at each adjustment.]
  • Your interest rate cannot increase [or decrease] more than 
    percentage points over the term of the loan.
How Your Payment Can Change
  • Your payment can change (frequency) based on changes in the interest rate.
  • [Your payment cannot increase more than (amount or percentage) at each adjustment.]
  • You will be notified in writing 
    days before the due date of a payment at a new level. This notice will contain information about your interest rates, payment amount, and loan balance.
  • [You will be notified once each year during which interest-rate adjustments, but no payment adjustments, have been made to your loan. This notice will contain information about your interest rates, payment amount, and loan balance.]
  • For example, on a $10,000 [term] loan with an initial interest rate of 
    [(the rate shown in the interest-rate column below for the year 19 
    )] [in effect (month) (year)], the maximum amount that the interest rate can rise under this program is 
    percentage points, to
    %, and the monthly payment can rise from a first-year payment of $ 
    to a maximum of $ 
    in the 
    year. To see what your payments would be, divide your mortgage amount by $10,000; then multiply the monthly payment by that amount. (For example, the monthly payment for a mortgage amount of $60,000 would be: $60,000 ÷ $10,000 = 6; 6 × 
     = $ 
    per month.)]
[Example
The example below shows how your payments would have changed under this ARM program based on actual changes in the index from 1982 to 1996. This does not necessarily indicate how your index will change in the future.
The example is based on the following assumptions:
Payments would have changed under this ARM program based on actual changes in the index from 1982 to 1996
Amount

$10,000 Caps
[periodic interest-rate cap]
Term



lifetime interest-rate cap
Change date



[payment cap]
Payment adjustment

(frequency) [Interest-rate carryover]
Interest adjustment

(frequency) [Negative amortization]
[Margin]*


[Interest-rate discount]**
Index

(identification of index or formula)
Payments would have changed under this ARM program based on actual changes in the index from 1982 to 1996
Year Index
(%)
Margin
(percentage points)
Interest Rate
(%)
Monthly Payment
($)
Remaining Balance
($)
1982          
1983          
1984          
1985          
1986          
1987          
1988          
1989          
1990          
1991          
1992          
1993          
1994          
1995          
1996          
To see what your payments would have been during that period, divide your mortgage amount by $10,000; then multiply the monthly payment by that amount. (For example, in 1996 the monthly payment for a mortgage amount of $60,000 taken out in 1992 would be: $60,000 ÷ $10,000 = 6; 6 × 
 = $ 
 per month.)


* This is a margin we have used recently, your margin may be different.

** This is the amount of a discount we have provided recently; your loan may be discounted by a different amount.

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