Posted by Terrie Sliger on 12/9/09 6:56am
Msg #313599

fixed rate or variable

What papers will show if a borrowers loan is a variable rate or fixed rate? I had a packet last night where it appeared on truth and lending. I thought the note.

Reply by Shoshana/AZ on 12/9/09 7:31am
Msg #313601

It should show on the note. It will appear on the TIL because they break down the payments.

Reply by CopperheadVA on 12/9/09 7:51am
Msg #313602

I always point to the bottom of the Note (I'm referring to the very bottom footnote section that identifies the document) where it will say fixed rate note or adjustable rate note. People with fixed rates want to see those words in black and white. Of course I also point out their interest rate in the body of the Note and if it's a variable, when the change dates are scheduled for as well as other info stated there.

Reply by MistarellaFL on 12/9/09 8:08am
Msg #313604

Don't confuse MIPs with ARM's

Unless the box is checked on the TIL, the payment changes listed on the TIL MAY be due to MIPs.
I don't know if this is the issue, but there seems to be alot of confusion with this.

Reply by PAW on 12/9/09 8:18am
Msg #313607

Don't confuse MIPs with ARM's and ...

Don't confuse MIP with PMI. Two different items with two different methods of payment. ARM's may have MIP or PMI as well as fixed rate loans.

Reply by PAW on 12/9/09 8:16am
Msg #313606

The Note should explicitly state it is a Variable Rate Note in the title. It will only specify "Note" for a fixed rate. While many standard Note forms (prepared by a LOS package) will state the type of Note on the bottom document identification, not all Notes, Mortgages or Deeds of Trust will.

The definitive answer lies within the Note itself. Just look to see if there is a section explaining the interest rate and the date of change. Typically, an Adjustable Rate Loan will also have an Adjustable Rate Rider with the Mortgage or DOT. Finally, the TIL should show the terms of the loan (fixed or adjustable).

The new GFE (effective January 1st) will explicitly show what type of loan, fixed or adjustable, it is. See page 1 - Summary of the Loan of the GFE. Also, page 3 of the new HUD-1 will show the loan terms where the type, fixed or adjustable, is shown.

Reply by hp/MD on 12/9/09 8:24am
Msg #313611

"Typically, an Adjustable Rate Loan will also have an Adjustable Rate Rider with the Mortgage or DOT."

That is it. Only Paul has all the answers. Thanks Paul

Reply by MW/VA on 12/9/09 9:17am
Msg #313623

Great explanation, Paul, as always.

Reply by LindaP/OH on 12/9/09 8:22am
Msg #313608

If the note is reflecting an adjustable rate, it will say that in big bold letters at the top of the form; you should be able to indicate without a doubt that this is an adjustable rate. The borrower probably already knows, but it behoves you to be able to point that out to them as a responsible and competant signing agent. Might this have been an FHA loan??? On the TIL, it will reflect the amount of the p&i and the mortgage insurance combined, frequently the mortgage insurance will be gradually reducing therefore the reduction in payment until the mortgage insurance finally drops off. This is all basic, if you have doubts, contact whoever hired you!! JMO

Reply by mwm143 on 12/9/09 8:51am
Msg #313617

ALL notes are fixed unless they state otherwise. n/m

Reply by Terrie Sliger on 12/9/09 9:18am
Msg #313624

Re: ALL notes are fixed unless they state otherwise.

Thanks everyone for your input it really helps. Last night the borrower wanted to see it and it was a FHA loan. I did finally find it on the TIL

Thanks everyone

Reply by LisaWI on 12/9/09 9:42am
Msg #313628

Re: I was Watching a PBS Documentory

a couple of weeks ago, where an elderly gentleman had obtained a loan and did not realize he had an adjustable. Now he is having problems making the rising payments. A lady who was trying to help him from some agency was interviewed and stated that no where on the docs could she define it was an adjustable. That the wording was too confusing for the average consumer. In my opinion, a fixed or an adjustable loan are clearly defined especially on the note and the rider to the mortgage. Not sure how you could miss the word "adjustable".

Wisconsin is now experiencing numerous foreclosures in the Milwaukee area. Here is the part that really threw me, lenders are foreclosing on properties, therefore making the homeowners move out, and then walking completely away from the property. I really dont understand this concept. Why not work with the homeowners and keep them in the home if they are capable of making some kind of a payment.

Reply by jba/fl on 12/9/09 11:27am
Msg #313645

Re: I was Watching a PBS Documentory

"Why not work with the homeowners and keep them in the home if they are capable of making some kind of a payment."

Because, then, when my neighbors pull out, I will find out why, call my lender and say I can no longer pay until you make adjustments for me. Then my neighbor will want to do the same thing, and pretty soon the entire neighborhood will have to be rewarded for not making their agreed to payments and instead, blackmailing the lenders/banks.

Many times people who have been struggling to make these rising payments have let their maintenance go, so now the house has been further devalued - along with the neighborhood.

Watching empty houses pop up in my own neighborhood, I have given this a lot of thought. I also wondered if something could have been done if the banks/lenders had assisted the homeowner and this is the one reason I can think of. Another: the homeowner has not lived up to their promise to pay - what makes anyone think they will do so in the future?

The downside, another real dirty underbelly of all this: many will now go to live in apartments. My DIL does collections for apts. and she says the leases are so lopsided in favor of the landlords that the tenants are getting screwed big time in their desperation just to find a place to live. They come in with battered credit, the apt. mgmt. pushes their lease across the table to be signed and seldom do people read them. What the heck - have they not learned to read? That is what got them in trouble in the first place.

Reply by JanetK_CA on 12/9/09 8:13pm
Msg #313782

Re: I was Watching a PBS Documentory

I think what might have thrown some people are those loans that don't simply say "adjustable", but say something like "Fixed Adjustable Blah Blah Blah..." I always point out that statement at the top and often had people say that they thought their loan was fixed when it said "fixed adjustable..." Those were the ARMs that were fixed for 3 or 5 years, then converted.

To the original poster: as Paul said, the content of the Note will also unequivically show what the terms are - and I think we should be familiar with those terms. If it's adjustable, it will show things like change date(s), margin, index, etc. which don't, of course, apply to fixed rate notes. I also think it's a good idea to walk the borrower through the key terms of their loan - unless they seem to be very comfortable it - so they don't have any question about what kind of loan it is. I'm not talking about "explaining" it, just pointing out the key elements. If you're not familiar with these things, take the time to read the Note and study up before you go to your next appointment. It will give you lots more confidence.

BTW, I am still seeing a few ARMs coming through. I even saw at least one interest-only Note recently.

Reply by ReneeK_MI on 12/10/09 5:06am
Msg #313812

With all due respect -

I don't think it's fair to clients or borrowers for a notary public to represent themselves as an NSA, and actually state in your profile that you're specifically experienced with FHA loans - and yet are not able to absolutely determine when a loan IS an FHA, or a Fixed, or any other loan product. Determining the type of loan you're presenting is, IMHO, fundamental.

Reply by mwm143 on 12/10/09 7:22am
Msg #313817

Nooooo Kidding!! n/m