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#1507914 - 02/10/11 02:36 PM Rate Spread rounding discrepancy
RR Becca Offline
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out of the frying pan...
I use the FFIEC Rate Spread calculator to validate the rate spreads that Wiz generates on our LAR. Usually that is not a problem - as long as everything is entered correctly, they match up. Today I ran across what appears to be a rounding problem. The FFIEC calculator only acepts x.xxx, and it rounds that to x.xy. Wiz accepts the full x.xxxx APR format that our LOS generates. The one in front of me has an APR of 8.3946, which the FFIEC calculator rounds to either 8.39 (if you enter 8.394) or 8.4 (if you enter 8.395) depending on your rounding. Wiz accepts 8.3946. Consequently, I'm looking at three rate spread possibilities. Knowing that the examiners will use the FFIEC calculator to verify anything I enter, should I round the APR up to 8.395 or accept the calculator's limitation of 8.394?

My gut says "round up," but something about this one is making me hesitate.
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#1507921 - 02/10/11 02:42 PM Re: Rate Spread rounding discrepancy RR Becca
raitchjay Offline
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OK
I agree that the FFIEC calculator should have the final word. Isn't the format that it wants xx.xx? In that case, the way i look at it, 08.39 should be your APR as the "4" isn't enough to bump you to 08.40. (If i'm following correctly.)
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#1507922 - 02/10/11 02:45 PM Re: Rate Spread rounding discrepancy raitchjay
RR Becca Offline
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out of the frying pan...
Yeah, that's where I'm stuck. I can't decide if that last 6 makes the 8.394 into 8.395, therefore becoming 8.4 for the calculator.
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#1507923 - 02/10/11 02:47 PM Re: Rate Spread rounding discrepancy RR Becca
hmdagal Offline
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Check out the rate spread instructions in Appendix A of GIR (it's pg A-10 in my printed copy). You should use 2 decimal places and you have the option to round or truncate the positions after the second one. It sounds like you're ok using the Wiz results.

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#1507930 - 02/10/11 02:54 PM Re: Rate Spread rounding discrepancy hmdagal
RR Becca Offline
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out of the frying pan...
Usually you make perfect sense to me, but I guess I'm especially dim this morning....I don't follow. crazy
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#1507936 - 02/10/11 02:59 PM Re: Rate Spread rounding discrepancy RR Becca
hmdagal Offline
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You only report 2 decimal places on the LAR. You can either round up to 8.40 or truncate - drop the extra numbers - to 8.39.

Clear as mud?

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#1507937 - 02/10/11 03:02 PM Re: Rate Spread rounding discrepancy hmdagal
RR Becca Offline
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out of the frying pan...
Oh. What you are saying is that I can defend either one? That's......obnoxiously vague. (ETA: the reg is obnoxiously vague, not you wink I'm looking at that section now.)



I hate judgement calls. There should be more black & white and less light-black & almost-white. But I suppose then compliance wouldn't be nearly as interesting.
Last edited by RR Becca; 02/10/11 03:03 PM.
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#1507943 - 02/10/11 03:06 PM Re: Rate Spread rounding discrepancy RR Becca
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#1507946 - 02/10/11 03:10 PM Re: Rate Spread rounding discrepancy hmdagal
RR Becca Offline
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out of the frying pan...
Thanks for helping me think this one through. smile
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#1507952 - 02/10/11 03:13 PM Re: Rate Spread rounding discrepancy RR Becca
Kathleen O. Blanchard Offline

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Originally Posted By: RR Becca
Oh. What you are saying is that I can defend either one? That's......obnoxiously vague. (ETA: the reg is obnoxiously vague, not you wink I'm looking at that section now.)



I hate judgement calls. There should be more black & white and less light-black & almost-white. But I suppose then compliance wouldn't be nearly as interesting.

laugh
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#1507967 - 02/10/11 03:24 PM Re: Rate Spread rounding discrepancy Kathleen O. Blanchard
raitchjay Offline
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OK
Even if you round though (and this is just my own logic speaking), 8.3946 could never be rounded to 8.40, right? So, if you truncate, you're at 8.39 and if you round, you're at 8.39 (the way i see it).
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#1507971 - 02/10/11 03:28 PM Re: Rate Spread rounding discrepancy raitchjay
RR Becca Offline
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out of the frying pan...
Depends. If you round 8.3946 to 8.395, you could then round again to 8.4. That's what our doc prep girls did when they tested for HPML, so I think I'm going to keep their numbers for consistency's sake.
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#1507977 - 02/10/11 03:32 PM Re: Rate Spread rounding discrepancy RR Becca
raitchjay Offline
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OK
I like math too much i guess.....8.9947 could then be rounded to 8.995 which could then be rounded to 9.00. To me, that isn't accurate.
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#1507979 - 02/10/11 03:32 PM Re: Rate Spread rounding discrepancy raitchjay
RR Becca Offline
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out of the frying pan...
Didn't say it was accurate. Hence my dithering over it this morning. But, according to the GIR section hmdagal quoted, it is acceptable.
Last edited by RR Becca; 02/10/11 03:34 PM. Reason: rearrange my thought
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#1507993 - 02/10/11 03:43 PM Re: Rate Spread rounding discrepancy RR Becca
raitchjay Offline
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OK
Not trying to be argumentative and it's probably not a big deal, but i'm saying i don't see the language that says you can "double round". It says you can truncate (which gets you to 8.39) or round (which, since you have only two decimal figures you can enter, to me still gets you to 8.39).
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#1508003 - 02/10/11 03:52 PM Re: Rate Spread rounding discrepancy raitchjay
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Ditto on the rounding issue. Maybe I do not completely understand the situation, but you can not knowingly double round a number. If you are rounding to 2 places, then you round based on the 3rd number only.

It seems to me that when using the FFIEC calculator, perhaps you should be looking at the whole number, 8.3946, round to 2 places yourself (8.39) and only enter that number to the system.
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#1508005 - 02/10/11 03:52 PM Re: Rate Spread rounding discrepancy raitchjay
RR Becca Offline
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out of the frying pan...
Dangit, raitch - that's the thought pattern that got me into this mess this morning. Now I'm talked right back 'round the circle again. crazy

Maybe I should go with the 8.39 after all.
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#1508015 - 02/10/11 03:58 PM Re: Rate Spread rounding discrepancy RR Becca
raitchjay Offline
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OK
I always enter mine (i thought you had to?) as 08.39 or 07.67 or whatever. That forces me to round it myself.
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#1508027 - 02/10/11 04:11 PM Re: Rate Spread rounding discrepancy raitchjay
RR Becca Offline
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out of the frying pan...
I only have to enter them myself if there's something wrong with what was already done (entered by loan staff or HPML test by doc prep).
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