We have a loan where the loan was approved and met all underwriting and customary conditions. They decided not to go through with the loan so we reporting it as a ANA. However, we have a question on the spread. An LE was issued and no lock was in place. Normally, we would use the date on the LE as our date to use in the rate spread calculation. However, the loan amount was reduced by the borrower so new LE was issued.

The question is: the APR used in the rate spread calculation is based upon a higher loan amount on the LE issued. So we do not have an APR based upon the lower amount. Can we use the APR reflect on the only LE we have even though the loan amount is different?

I don’t think so. Whether you have a rate lock is not relevant for rate spread. You should use the rate that was set whether this was disclosed or not. You should then calculate an APR that would have been provided had the loan closed.

Here are some citations and info to help with my explanation:
“The relevant date to use to determine the average prime offer rate for a comparable transaction is the date on which the interest rate was set by the financial institution for the final time before final action is taken (i.e., the application was approved but not accepted or the covered loan was originated).” [Commentary to §1003.4(a)(12) #5]

If no lock-in agreement
is executed, then the relevant date is the date on which the institution sets the rate for the final time before closing or account opening.” [Commentary to §1003.4(a)(12) #5(i)]

Utilize the APR disclosed on the last set of disclosures provided. If no disclosures were provided, report N/A. [Commentary to §1003.4(a)(12) #8]

For the loan amount, you should report “the amount that was approved.” [Commentary to §1003.4(a)(7) #2]

David,

Thank you so much. We were turning in circles on this one.