“Both the index and the margin is spelled out in the loan.”
I was surprised to find out that I couldn’t find either the index or the margin on regular ARMs advertised on a major prime lender website. So we’re not even talking here about suicide loans, just plain vanilla ARMs at prevailing market rates. And not some fly-by-night mortgage broker, but a fairly reputable lender.
I read the fine print, I read everything, it simply wasn’t there. They only published the initial rate and the APR (these are required by law, I believe). I’m sure the final paperwork the borrower signs has all the details, but… come on! Is it so hard to write “6 month Libor + 1.75%”, or whatever it is? The index and the margin are the two most essential pieces of information on a loan, and somehow they “forgot” to post them.
