I think I know the answer but I want second (and third) opinions.

From our PREVIOUS origination system, we used the current APR in the system to calculate the Rate Spread. The current APR usually matched the FINAL TIL that was provided to the borrower, so we had no issues between the data and the source document.

With our NEW origination system, the APR includes Prepaid Interest (our old system did not), therefore if the prepaid interest amount is changed after the FINAL TIL at doc draw, the current APR in the system may no longer match the FINAL TIL or source document.

Most everything I'm reading for Rate Spread calculation just generally states to "use the APR on the loan". It does not specifically say to use the current APR, nor does it say to use the disclosed APR.

So, which then is the correct APR to use for Rate Spread calculation then? The current APR after doc draw or the APR on the FINAL TIL?

Appreciate your feedback!

You're supposed to use the APR as of the date the rate was last set. For us (and it sounds like you), that would be the APR as of the date you draw up loan docs.

Yup, that is correct.

Our challenge will be how to report that APR in an automated fashion since we cannot rely on the current APR to reflect that definition.

You're supposed to use the APR as of the date the rate was last set.

This is not correct. You use the date the interest rate was last set for comparison to the APOR as of that date but you must use the APR disclosed at consummation for that comparison.

To determine whether
the rate spread meets this
threshold, use the average
prime offer rate in effect for the
type of transaction as of the
date the interest rate was set,
and use the APR for the loan,
as calculated and disclosed to
the consumer under § 226.6
or 226.18, as applicable, of
Regulation Z (12 CFR part 226).

You are of course correct Dan. My apologies for the error.