Which document is typically provided for ARM disclosures?

Which document is typically provided for ARM disclosures?

• A. CHARM Booklet
• B. Truth in Lending Disclosure
• C. Closing Disclosure
• D. HUD-1 Settlement Statement

Answer: (A)

When a loan is an adjustable-rate mortgage, borrowers need a clear explanation of how the rate and payments can change over time. The document that provides that focused explanation is the CHARM Booklet, which stands for the Consumer Handbook on Adjustable Rate Mortgages. It lays out how the rate is determined (the index and margin), how often it can adjust, what the rate and payment caps are, and whether negative amortization could occur. It also gives an initial rate vs. the fully indexed rate and includes example payments to help borrowers anticipate future costs. Other disclosures serve different purposes. The Truth in Lending Disclosure explains the loan’s APR and total finance charges, not the mechanics of rate adjustments. The Closing Disclosure shows the actual final closing costs, and the HUD-1 is the old settlement statement replaced by that Closing Disclosure in TRID rules. So for ARM-specific information, the CHARM Booklet is the typical disclosure provided.

When a loan is an adjustable-rate mortgage, borrowers need a clear explanation of how the rate and payments can change over time. The document that provides that focused explanation is the CHARM Booklet, which stands for the Consumer Handbook on Adjustable Rate Mortgages. It lays out how the rate is determined (the index and margin), how often it can adjust, what the rate and payment caps are, and whether negative amortization could occur. It also gives an initial rate vs. the fully indexed rate and includes example payments to help borrowers anticipate future costs.

Other disclosures serve different purposes. The Truth in Lending Disclosure explains the loan’s APR and total finance charges, not the mechanics of rate adjustments. The Closing Disclosure shows the actual final closing costs, and the HUD-1 is the old settlement statement replaced by that Closing Disclosure in TRID rules. So for ARM-specific information, the CHARM Booklet is the typical disclosure provided.