When a rate has been locked via a rate lock agreement, and the Borrower later requests for points to be paid so that the rate decreases, what is the the reportable Date Rate Set for use in calculating the Rate Spread on the HMDA LAR?
Last edited by pp1865; 06/27/22 07:37 PM.
Example: The rate was originally locked on 03/29 (6.250%), but on 04/05 the Borrower chose to pay points to decrease the interest rate to 6.000%.
Despite the original rate of 6.250% still serving as the base rate and not being expired, would you say the date the points were applied to achieve the Net Rate of 6.000 would be a HMDA reportable reset date...meaning 04/05...or is there a case to be made for keeping it at 03/29 (for HMDA...not speaking of TRID)? Thanks for your help...
5. Rate-set date. 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).
i. Rate-lock agreement. If an interest rate is set pursuant to a “lock-in” agreement between the financial institution and the borrower, then the date on which the agreement fixes the interest rate is the date the rate was set. Except as provided in comment 4(a)(12)-5.ii, if a rate is reset after a lock-in agreement is executed (for example, because the borrower exercises a float-down option or the agreement expires), then the relevant date is the date the financial institution exercises discretion in setting the rate for the final time before final action is taken. The same rule applies when a rate-lock agreement is extended and the rate is reset at the same rate, regardless of whether market rates have increased, decreased, or remained the same since the initial rate was set. 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 final action is taken.