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#2183402 - 06/28/18 12:20 AM Rate Spread Reporting/Lien Threshold
Permissible Purpose Offline
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Joined: Sep 2017
Posts: 58
Hi everyone,

I searched the forums for this topic but did not find anything that answers my question. Sorry if redundant.

With regard to rate spread reporting and lien threshold, with HMDA 2018, should you consider the lien threshold? With the "old" HMDA rule you had to consider whether or not the spread was equal to, or exceeded 1.5 for first, and 3.5 for second (and "NA" if neither apply), but I don't see this anywhere in the new regulation.At least in eRegs or any CFPB guide.

I think that the confusing thing for me is that in the CFPB's Guide to Reporting, there's instruction on reporting a negative spread. If that is the case, then you would never report a negative spread due to the requirement calling for the APOR/APR difference to be equal to or exceed a lien threshold.

Of course, I could be really confused too since I am looking in three or four difference places and it's late, lol.

Could someone please confirm that the new rule also requires the same logic for rate spread reporting?

Thank you!

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#2183403 - 06/28/18 01:15 AM Re: Rate Spread Reporting/Lien Threshold Permissible Purpose
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Joined: Sep 2017
Posts: 58
Well, looking at the FFIEC's Guide to Reporting (2018 version), there's this little tidbit of info provided under Appendix A to Part 1003, see paragraph "G", number 1 (rate spread), item number "e" under this group:

e. If the difference between the APR and the average prime offer rate is less than 1.5 percentage points for a first-lien loan and less than 3.5 percentage points for a subordinate-lien loan, enter “NA.”

So this mirrors the old reporting requirements. Are you guys following this at all? I go back to the CFPB's Guide to Reporting and their examples of having a negative spread entered on the LAR.

Just thought that I would add this additional info. Again any thoughts on this would be greatly appreciated!

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#2183404 - 06/28/18 01:25 AM Re: Rate Spread Reporting/Lien Threshold Permissible Purpose
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Joined: Jun 2005
Posts: 1,338
You don't need to consider the lien status anymore when reporting a rate spread. Any loan for which Reg Z applies (with some exceptions) will have a rate spread reported.

I'm seeing the Appendix A under the regulation though. That's wrong from my understanding.
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#2183414 - 06/28/18 12:27 PM Re: Rate Spread Reporting/Lien Threshold Permissible Purpose
RR Joker Offline
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Joined: Nov 2002
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From the FIG

Enter, as a percentage, to at least three (3) decimal places, the difference between the covered loan’s annual percentage rate (APR) and the average prime offer rate (APOR) for a comparable transaction as of the date the interest rate is set.
Numbers calculated to beyond three (3) decimal places may either be reported beyond three (3) decimal places or rounded or truncated to three (3) decimal places. Decimal place trailing zeros may either be included or omitted.
 If the APR exceeds the APOR, enter a positive number.
Example: If the APR is 3.678% and the APOR is 3.25%, enter 0.428. If the APR is 4.560% and the APOR is 4.25%, enter either 0.31 or 0.310
 If the APR is less than the APOR, enter a negative number.
Example: If the APR 3.1235% and the APOR is 3.25%, enter
-0.1265. Alternatively, the rate spread may be truncated to
-0.126 or rounded to -0.127.
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#2183417 - 06/28/18 12:30 PM Re: Rate Spread Reporting/Lien Threshold Permissible Purpose
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The Swamp
For a thorough discussion, look to pages 85-89 of the 2018 GIR.
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#2183419 - 06/28/18 12:46 PM Re: Rate Spread Reporting/Lien Threshold Permissible Purpose
RR Joker Offline
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Oh...I think I see where your confusion comes into play. Appd A is only still there [will be removed next year] due to the transitional reporting of apps taken in 2017, reported in 2018. It doesn't apply to loans with apps taken in 2018 forward.
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Say you'll haunt me - Stone Sour

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#2183444 - 06/28/18 01:52 PM Re: Rate Spread Reporting/Lien Threshold RR Joker
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Awesome, thanks for the info!

Yes, Appendix A in the FFIEC Guide is what led to the confusion.

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#2183450 - 06/28/18 02:00 PM Re: Rate Spread Reporting/Lien Threshold Permissible Purpose
RR Joker Offline
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RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
That is actually Appendix A to the regulation...not the guide wink
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My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

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