Common use of Adjustable Rate Mortgage – Specific Loan Terms Clause in Contracts

Adjustable Rate Mortgage – Specific Loan Terms. If the proposed Non-Prime Loan includes an Adjustable Rate Mortgage, Ameriquest Parties’ Sales Personnel shall provide an oral disclosure in substantially the following form: “The loan we have been discussing is an adjustable rate loan for $[insert loan amount], with an initial interest rate of [insert initial interest rate]%. Your initial monthly payment would be $[insert initial monthly payment], which does [or does not] include escrows for property taxes or insurance. Your loan does [or does not] include a prepayment penalty. Because this is an adjustable rate loan, the initial interest rate and monthly payment I quoted you are only guaranteed for the first [insert length of initial fixed rate period] of the loan. After that, your interest rate can increase by up to [insert rate adjustment cap] percent each year. But, your interest rate can never be higher than [insert lifetime cap] percentage points over your initial interest rate.” [NOTE: If the Sales Person has not previously discussed a specific Fixed Rate Mortgage proposal with the Potential Borrower, the Sales Person shall also provide an additional oral statement in substantially the following form.] “You may be eligible for a loan with an interest rate that does not change.”