So are you saying that in my scenerio that you would take the 15.50% loan rate and then take the Treas. security rate of 2.50% and add the Board approved percentage of say 3% for 1st lien to come up with 5.50% and then take the 5.50% and subtract from 15.50% and come up with a rate spread of 10% and report the 10% on the HMDA Lar?

The new reg says you report:
"(12)For loans in which the ... APR exceeds the yield on a Treasury security with a comparable period of maturity ... by [3 ] percentage points for a loan secured by a first lien and by [5 ] percentage points for a loan secured by a junior lien, the difference between the APR and the yield on the comparable Treasury security."

Clearly this means you only use the 3% to determine the threshold of coverage. Using the 2.50% + 3.00% example, you have a threshold of 5.50%. Since an APR of 15.50% exceeds that threshold, you report the difference between the APR and the USTreas yield: 15.50% - 2.50% = 13.00%

Richard, I read the calc as you do -- In this case, report 13%, the difference between the APR and the T-yield, not 10%, the difference between the APR and T-yield plus threshold.

But I also notice that wording in the Regulation and the LAR instructions differ on the pricing reporting trigger. While the Reg says "exceeds" as you note, the instructions say "report the rate spread if the difference between the APR and the applicable Treasury yield is EQUAL to or greater than."

Does this requirement have anything to do with the HOEPA trigger? or is it just to take the APR minus the uield and if that difference exceeds the greater of the Board spread, you would report the spread then.
Say a loan APR is 15.50% and the yield was 3.5% which would be 12%. If 12% is greater than 3%pts. by Board which most loans would be, you would report the difference on these loans which would be back to reporting 12% on the Lar. Somehow this doesn't seem right.
Does the 10% pts. or now 8% pts. of Section 32,HOEPA loans enter into this calculation at all? Thanks. This is really confusing.

HOEPA status does not enter into the spread calculation at all. It is a separate reporting requirement.

O.K. that was what was confusing. After just reading Section 32, HOEPA triggers of 8 and 10%, that sticks in your mind. But if this has nothing to do with HOEPA,it will be easier to do. So I did an average of 9.00% APR Loan from one of our loans with a 4.10% Treas. yield, (for 11-15-01--last one I had copied) and added the 4.10% to the 3%Board rule to get 7.10% threshold, and then determined that it triggered the reporting of the rate spread and will then go back since it does and subtract 4.10% from the 9.00% to get 4.90% to record on the HMDA Lar as the rate spread.
I just finished reading all 76 pages plus the comment part of the new HMDA and someone else is working on the Section 32 memo, and I think it will be next to impossible for a large bank to implement all of this by 10 most due to many system, procedural changes not to mention the cost in a very tight cost control year. Any chance of trying to get the Federal Reserve to extend the effective date to 2004??

Richard -- I just reread this string, and particularly, your calcs above and now I have another thought. There are 2 keys to this reporting: (1) The trigger that causes reporting, and (2) the amount to be reported. While I agree (as I said above) with you on the figure to be reported on the LAR (the dif between the APR and the T-Yield), I'm unsure about your determination of the trigger (in the example above, where you added 2.5 to the proposed 3% threshold). Why are you adding those together? I'm reading the reg/LAR instructions to say:
APR minus T-yield = X
Does X equal or exceed threshold?
If yes, report X

So using the examples above:
15.5 - 2.5 = 13
Does 13 equal or exceed threshold of 3?
Yes, report 13

I'm anxious to get clear on this, because my read would cause more loans to be reported than yours.

Let's see.........

The reg says:
"(12)For loans in which the ... APR exceeds the yield on a Treasury security with a comparable period of maturity ... by [3 ] percentage points for a loan secured by a first lien and by [5 ] percentage points for a loan secured by a junior lien, the difference between the APR and the yield on the comparable Treasury security."

Translating this into a program, I would have something like:
>Enter data>
APR = 15.50
SpreadTrigger = 3.00
USTYield = 2.50
>Perform HMDA test>
IF ((APR - USTYield) > SpreadTrigger) THEN
ReportableSpread = APR - USTYield
ELSE (do nothing)
ENDIF
>End program>

Substituting the data, we would have:
IF (15.50 - 2.50) > 3.00 THEN
ReportableSpread = 15.50 - 2.50 = 13.00
ENDIF

Since the test is true, you would report 13.00% as the rate spread on your LAR.

[This message has been edited by Richard Insley (edited 02-15-2002).]