Yes, we recommend delaying the rate change as well as the payment adjustments.

The initial ARM notice must be provided at least 210 days “before the first payment at the adjusted level is due” (or at the loan consummation, if the first adjustment is scheduled to occur within the first 210 days after consummation). The required notification period of 210 days applies only to the “first payment” and not to the rate increase itself.

However, we recommend delaying the rate increases until the 210 day notification period has passed. Otherwise, your bank could be viewed as exacerbating its mistake (and possibly as exploiting a loophole in the rule) by increasing the interest rate without increasing the payment amount. One example of a potential problem is that customers’ loan balances would increase if the current payment amount does not cover the increased interest owed under the adjusted interest rate.

For resources related to our guidance, please see:

• Regulation Z, 12 CFR 1026.20(d)(1) (“Initial rate adjustment. The creditor, assignee, or servicer of an adjustable-rate mortgage shall provide consumers with disclosures, as described in this paragraph (d), in connection with the initial interest rate adjustment pursuant to the loan contract. . . . The disclosures shall be provided to consumers at least 210, but no more than 240, days before the first payment at the adjusted level is due. If the first payment at the adjusted level is due within the first 210 days after consummation, the disclosures shall be provided at consummation.”)