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#1903773 - 03/10/14 04:17 PM heloc with floor rate/ hoepa
bay7272 Offline
Junior Member
Joined: Dec 2010
Posts: 33
Indiana
Our Heloc's are tied to the prime rate, with a floor of 5%,reading the commentary for 1026.32 (a)(3) & (a)(4)it sounds as if I have a rate that varies other than in accordance with an index and would use our highest possible rate for Hoepa testing. Is that correct?

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HOEPA and Homeowner Counseling Rule
#1904079 - 03/11/14 02:36 PM Re: heloc with floor rate/ hoepa bay7272
bay7272 Offline
Junior Member
Joined: Dec 2010
Posts: 33
Indiana
My concern is the commentary 1026.32(a)(3)(ii) "provided that, following the first rate adjustment, the interest rate for the transaction varies solely in accordance with an index." and commenytary 1026.32(a)(3)(iii) "applies to any other adjustable-rate loan where the interest rate may vary but according to a formula other than the sum of an index and a margin."

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#1904107 - 03/11/14 03:15 PM Re: heloc with floor rate/ hoepa bay7272
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,959
Galveston, TX
Comment 32(a)(3)-3.iii provides several examples to illustrate the rule. As described in the examples, creditors should use § 1026.32(a)(3)(ii) notwithstanding the existence of a rate floor or a rate cap on a variable-rate transaction that otherwise varies in accordance with an index. The Bureau believes that the clarification concerning rate floors and rate caps is useful and will promote clarity in applying the rule, notwithstanding the removal of the requirement that the index must be outside the creditor’s control for § 1026.32(a)(3)(ii) to apply.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1904693 - 03/12/14 07:56 PM Re: heloc with floor rate/ hoepa bay7272
bay7272 Offline
Junior Member
Joined: Dec 2010
Posts: 33
Indiana
Thank You for your help, very much appreciated!

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