Here. An excerpt:
The ING Direct loan is called a 5/1 Orange Mortgage, and as of early September, it came with a 3.25 percent interest rate for the first five years and a projected interest rate of 3.375 percent for the 25 years after that.
Yes, you read that right, under 3.5 percent for the next 30 years.
But that is not right, in any number of ways. First of all, by not using the words “adjustable rate mortgage” or similar terms to describe the loan, ING Direct violated a simple Federal Reserve disclosure rule that was revised in 2008.
And that “projected” interest rate suggesting that today’s record low rates will continue for a generation? It is utter nonsense. But ING Direct seems to have had no choice but to use the numbers that it did, because of another relatively new Federal Reserve rule.
For more on the problems with the Truth in Lending disclosures, see my forthcoming Ohio State Law Journal article at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1531781.