Our HMDA Software is giving me a Quality check that says "Loan may not be subject to Reg Z and Rate Spread not NA." All of the loans that this comes up on are Funded Second Homes. My interpretation of this message is that Second Homes may not be subject to Reg Z, so the Rate Spread should be reported as NA.
I cannot find anything in Reg Z about Second Homes being exempt from rate spread calculations or disclosures and there is nothing in Reg C, the FIG or HMDA Getting it Right that addresses this. Reg C states that the Rate Spread is to be reported as NA if the loan is not subject to Reg Z, but it does not indicate a specific section (seems to indicate exemption from ALL of Reg Z).
7. Rate spread - not applicable. If the covered loan is an assumption, reverse mortgage, a purchased loan, or is not subject to Regulation Z, 12 CFR part 1026, a financial institution complies with § 1003.4(a)(12) by reporting that the requirement is not applicable. If the application did not result in an origination for a reason other than the application was approved but not accepted by the applicant, a financial institution complies with § 1003.4(a)(12) by reporting that the requirement is not applicable.
My thoughts at this point are that we disclosed on our Second Home loans the same way we disclosed on our Primary Residence loans, therefore I am reporting the Rate Spread for funded loans.
Does anyone here have any thoughts about what this Quality check is getting at?