If we offer a HELOC product with an introductory rate period of 0.00% for the first 90 days of the agreement, and then the interest rate increases to an index rate of 4.50%, which interest rate do we report for HMDA 2018....the teaser rate offered at closing or the index rate offered after the introductory rate period?

1003.4

(21) The interest rate applicable to the approved application, or to the covered loan at closing or account opening.

We have a similar product to Dixie (HELOC with 90 day intro rate of 0%). Based on the section Dan pointed out, we should be reporting 0 as the interest rate, correct? The problem is in the 2018 FIG it clearly states that the interest rate must be a number greater than 0 or else you receive a validity error (V677). We reached out to our HMDA Wiz contact at WK and they told us to contact the CFPB. Anyone else have any thoughts (or maybe show me something I'm missing)?

The problem is in the 2018 FIG it clearly states that the interest rate must be a number greater than 0....

Where?

Randy, it's on page 123 under the Validity Error 677.

This is another example of the Validity Error instructions conflicting with the regulatory language.

The regulation plainly states you report the interest rate at closing or account opening.

Thanks - it would have helped if I was looking at the 2018 version of the FIG versus the 2017 - need more coffee apparently.

We submitted the question to the CFPB and to the shock of absolutely no one, they failed to answer the actual question. I'm not sure which intern responded, but all we got was a rehash of basic HMDA regs, and the helpful reminder to report the interest rate as a percentage. Ummm, thanks CFPB?

I sent the following this morning so I'll see what type of response I get. Most likely it will be similar to yours


From Regulation C 1003.4:

(a) Data format and itemization. A financial institution shall collect data regarding applications for covered loans that it receives, covered loans that it originates, and covered loans that it purchases for each calendar year. A financial institution shall collect data regarding requests under a preapproval program, as defined in § 1003.2(b)(2), only if the preapproval request is denied, is approved by the financial institution but not accepted by the applicant, or results in the origination of a home purchase loan. The data collected shall include the following items:

(21) The interest rate applicable to the approved application, or to the covered loan at closing or account opening.

From page 123 of the Filing instructions guide for HMDA data collected in 2018:

V677

Interest Rate

Interest Rate; Action Taken

An invalid Interest Rate was reported. Please review the information below and update your file accordingly. 1) Interest Rate must be a number greater than 0 or NA, and cannot be left blank. 2) If Action Taken equals 3, 4, 5, or 7; then Interest Rate must be NA.


A Home Equity Line of Credit has an introductory rate of 0.00% for 6 months at the time of account opening. 1003.4(a)(21) tells us to report the applicable interest rate at the time of closing or account opening but the FIG contradicts the regulatory language in that it states the rate has to be greater than 0. What interest rate do we report on the LAR?

Thanks,

Thanks Dan. We had also asked one of our compliance consultants at TCA the same question. He just received the following response back from the CFPB:

The CFPB has responded as follows:
• They concur that 0% should be what is entered in as interest rate; however, platform will not accept 0%
• They acknowledge that it is a known flaw in the system.
• The platform will eventually be upgraded to accept 0%, but the timing of this platform upgrade is unknown at this time
• Until such time that the platform is upgraded to accept 0%, we are instructed to use NA in the interest rate field.

Thanks for the update. I haven't received a response yet.

Until such time that the platform is upgraded to accept 0%, we are instructed to use NA in the interest rate field.

What happens once the platform is updated? Will you have to go back and change all the NAs to 0?

Makes be glad we don't have to report HELOCs.

I just received a call from a paralegal at the CFPB and she gave the same instructions given to Burlington. Almost verbatim.

She said, ".... for 2018 report NA."

If the CFPB plans to update the HMDA Platform to accept zero in the future, why would we record an NA value in the file today instead of a zero? Since we don't have to report these until next year, I would assume the CFPB will have this fixed by then. That saves me from having to figure out down the road which NA's are intentional, and which were just in lieu of a zero. Just a thought...

I asked if the NAs would have to be changed to 0 if the platform was fixed during the reporting year. She said she did not have an answer but her opinion would be we would not. It's a moot point for me though.

If you are concerned about which NAs were intentional as you put it or as result of a 0% interest rate I think that would be pretty easy to track by running a report for loans that opened with the 0% rate.

Thanks for the info everyone. So NA for a 0% interest rate for the time being but we still calculate a rate spread?

I don't see where this was answered. Would we still calculate the rate spread even though the Intro rate is 0% or would it also be N/A? If calculated it would be a negative.