I didn't give enough context before...
I am reviewing a consumer land only purchase loan. Our internal pricing sheet did not have a rate ceiling/limit for that type of variable rate loan. When reviewing the TRID docs and Note, a ceiling of 18% was disclosed. When I asked the Credit Department about the rate, they said it was the limit under law. However, because I keep up with the usury laws for the state I know that the limit is much higher than 18%. So either they decided on 18% at some point but did not document this decision,
maybe when the limit under law increased, they chose not do increase the limit internally, or maybe they just aren't aware the limit under usury is higher than 18%. But either way, I couldn't find in our own policies/procedures/pricing sheets/guides, etc. this ceiling rate for a consumer land only purchase loan.
For comparison, I reviewed a commercial variable rate loan without a ceiling; besides what would be allowable under state law; to see how this information was being disclosed on the Note.
From what I can see, our loan system requires us to input a ceiling for a consumer land only variable rate loan in the same manner it would for a dwelling secured variable rate loan. I asked to processor to do a test consumer land only loan to see if the system would automatically insert the usury limit (since we have to select the usury law we lend under on the admin side of the system), but the system required a manual input for the rate ceiling.
All this being said, my question is basically - Does a FI have to establish a rate ceiling on all non-dwelling secured variable rate loans or in the absence of a FI establishing a rate ceiling, would it always default to the max rate allowable under state law?
Always learning something new...