Question: We are going to originate a variable rate vacant lot loan. The loan will be secured by the vacant lot and a second lien on the borrower’s primary residence. The loan term is 12 months. Do I need to give the CHARM Booklet or an ARM disclosure. Are there any other disclosures besides the Loan Estimate and Closing Disclosure required due to the fact of using the variable rate? Any other early disclosures that would be needed?
Answer: The CHARM booklet is needed since the loan is secured by the consumer’s principal dwelling. The LE will provide all of the other information needed to be disclosed. However, if the loan term is greater than 1 year, then you must provide (an) early ARM disclosure(s) at time of application. If the bank has more than one product, then you must provide as many ARM disclosures as the customer is interested in.
Disclosures must be provided at the time an application form is provided or before the consumer pays a non-refundable fee, whichever is earlier (except that the disclosures may be delivered or placed in the mail not later than three business days following receipt of a consumer’s application when the application reaches the creditor by telephone, or through an intermediary agent or broker)
The residence only needs to be their primary residence, lien position does not matter.
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