Just to confirm...

When calculating the rate spread on an approved not accepted HELOC, I use the most recent APR that's disclosed in our 15 history table (from our early disclosure). We do not use the current APR.

Is that correct?

Thanks.

Why would you use a rate other than what they were approved for?

4 (a)(12) -8
8. Application or preapproval request approved but not accepted. In the case of an application or preapproval request that was approved but not accepted, § 1003.4(a)(12) requires a financial institution to report the applicable rate spread. In such cases, the financial institution would provide early disclosures under Regulation Z, 12 CFR 1026.18 or 1026.37 (for closed-end mortgage loans), or 1026.40 (for open-end lines of credit), but might never provide any subsequent disclosures. In such cases where no subsequent disclosures are provided, a financial institution complies with § 1003.4(a)(12)(i) by relying on the annual percentage rate for the application or preapproval request, as calculated and disclosed pursuant to Regulation Z, 12 CFR 1026.18 or 1026.37 (for closed-end mortgage loans), or 1026.40 (for open-end lines of credit), as applicable. For transactions subject to Regulation C for which no disclosures under Regulation Z are required, a financial institution complies with § 1003.4(a)(12)(i) by reporting that the requirement is not applicable.

If I'm reading this correctly, I have to use the most recent APR disclosed on the early disclosure and not the rate that we approved the applicant. I would have thought that we would have used the APR that we approved the applicant but this appears to be telling me differently.

Thanks.

Any thoughts?

Thanks.

Seems to be pretty clear to me that you are correct based on that commentary.

Would you agree that for a variable rate HELOC under the same situation (Approved not Accepted) would be disclosed as Not Applicable for the Rate Spread here? It doesn't really quite fit the definition of "for which no disclosures are required," as you still have to provide the 1026.40 disclosures, it is just that there is no actual APR that's required to be disclosed for a variable rate. However, one could assume that "for which no disclosures are required" could also mean that the particular feature (APR) disclosure is not required.