What is the Cost-of-Savings Index (COSI)?


Cost-of-Savings Index (COSI) is one of the most popular ARM indexes. It is known as one of the most stable ARM indices in history and COSI-indexed mortgages are one of the most common Option ARMs.

The Cost-of-Savings Index (COSI) used to come in two flavors: the GDW COSI and the W-COSI.

The Golden West Financial Corporation Cost of Savings Index (GDW COSI) is known as the Original COSI. As of recently, since the merger of Wachovia and World Savings the GDW COSI will no longer be used as the originating index for adjustable rate mortgages; however, the GDW COSI gets to be published for existing mortgage loans.

The new W-COSI (Wachovia COSI) will be used for COSI-based mortgages. The possibility of having their original COSI loans converted to the new W-COSI index exists for the majority of consumers holding COSI ARMs.

Common traits of the original Cost-of-Savings Index (COSI) and the new W-COSI index are that they adjust each month, get reported with one-month delay and allow for negative amortization. Most COSI-indexed ARMs have minimum payment change cap, lifetime rate cap and no adjustment rate cap.

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