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.