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#2164825 - 02/15/18 09:46 PM HOEPA APR and Pricing Adjustments.
Permissible Purpose Offline
Member
Joined: Sep 2017
Posts: 58
Hello,

I have a question about how to handle the calculation of the HOEPA APR when there are credits, or negative pricing adjustments made to the margin.

For example, if I have an index of 4 and a margin of 4, the reg says to use the fully indexed rate which is 8% in this scenario.

However, if I have a pricing adjustment that lowers the rate, should I exclude this credit and continue to use 8%? For example, credit score increase after repull of credit which adds a -.25 BPS hit to pricing. So now I can offer the borrower a rate of 7.75.

Should I still use 8% or what will actually be signed at the time of closing? 8 is (or was) the highest rate at one point during the transaction.

I have heard a few different opinions on this and was wondering what other may think.

Thank you.

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HOEPA and Homeowner Counseling Rule
#2164832 - 02/15/18 10:07 PM Re: HOEPA APR and Pricing Adjustments. Permissible Purpose
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
HOEPA is based on the final contract.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2164917 - 02/16/18 04:19 PM Re: HOEPA APR and Pricing Adjustments. rlcarey
Permissible Purpose Offline
Member
Joined: Sep 2017
Posts: 58
Great, thank you.

I assumed so, but have heard from a few in the industry that since "true" margin in my example is 4, that this be used. I suppose that they're considering LLPA's/adjustments to be separate even though the adjustments are applied directly to the margin.

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