If the annual percentage rate may increase after consummation in a transaction secured by the consumer's principal dwelling with a term greater than one year, the following disclosures must be provided at the time an application form is provided or before the consumer pays a nonrefundable fee, whichever is earlier:
(2) A loan program disclosure for each variable-rate program in which the consumer expresses an interest. The following disclosures, as applicable, shall be provided:
(A) The fact that the interest rate, payment, or term of the loan can change.
(B) The index or formula used in making adjustments, and a source of information about the index or formula.
(C) An explanation of how the interest rate and payment will be determined, including an explanation of how the index is adjusted, such as by the addition of a margin.
(D) A statement that the consumer should ask about the current margin value and current interest rate.
(E) The fact that the interest rate will be discounted, and a statement that the consumer should ask about the amount of the interest-rate discount.
(F) The frequency of interest-rate and payment changes.
(G) Any rules relating to changes in the index, interest rate, payment amount, and outstanding loan balance including, for example, an explanation of interest-rate or payment limitations, negative amortization, and the interest-rate carryover.
(H) At the option of the creditor, either of the following:
(i) A historical example, based on a $10,000 loan amount, illustrating how payments and the loan balance would have been affected by interest-rate changes implemented according to the terms of the loan-program disclosure. The example shall reflect all significant loan-program terms, such as negative amortization, interest-rate carryover, interest-rate discounts, and interest-rate and payment limitations, that would have been affected by the index movement during the period.
(ii) The maximum interest rate and payment for a $10,000 loan originated at the initial interest rate (index value plus margin, adjusted by the amount of any discount or premium) in effect as of an identified month and year for the loan-program disclosure assuming the maximum periodic increases in rates and payments under the program; and the initial interest rate and payment for that loan and a statement that the periodic payment may increase or decrease substantially depending on changes in the rate.
(I) An explanation of how the consumer may calculate the payments for the loan amount to be borrowed based on either -
(i) the most recent payment shown in the historical example in paragraph (b)(2)(H)(i) of this section; or
(ii) the initial interest rate used to calculate the maximum interest rate and payment in paragraph (b)(2)(H)(ii) of this section.
(J) The fact that the loan program contains a demand feature.
(K) The type of information that will be provided in notices of adjustments and the timing of such notices.
(L) A statement that disclosure forms are available for the creditor's other variable-rate loan programs.