Has there been a change to the HMDA final rule regarding the rate spread calculation? My copy says "use the Treasury yield for a comparable period of maturity as of the 15th day of the month preceding the month in which the application for the loan was received". At a recent seminar we received this explanation: "The rate spread will always be based on the rate on the prior 15th of the month. Example: On October 30th, the rate should be compared to the October 15th Treasury Rate. For November 14th, the rate should be compared to the October 15th rate.

Which is correct? I thought HOEPA and HMDA were the same and that it is supposed to be the 15th of the month preceding the month the application was taken.

In reply to:

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Example: On October 30th, the rate should be compared to the October 15th Treasury Rate. For November 14th, the rate should be compared to the October 15th rate.

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This is correct for HMDA.

203.4(12)....Treasury security with a comparable peroid of maturity (as of the 15th day of the month immediately predecing the month in which the application for the loan was received by the financial institution)......

Whoa! Now that I re-read this I'm not so sure. When the proposl first came out it was to be: Example: On October 30th, the rate should be compared to the October 15th Treasury Rate. For November 14th, the rate should be compared to the October 15th rate.

But this (as of the 15th day of the month immediately predecing the month in which the application for the loan was received by the financial institution)...... reads the same as Sec. 32.

Now I'm confused Any other thoughts out there.

You should look to the June 27, 2002 final rule where 203.4(12) states "the lender shall use the yeild on Treasury securities as of the 15th day of the preceding month if the rate is set between the 1st and 14th day of the month and as of the 15th day of the current month if the rate is set on or after the 15th day..."

Thank you, I was looking at the 2/15/02 copy.

Thought I was loosing my mind

This is a confusing matter. First it was consistent with HOEPA, then it was changed. Ultimately for HMDA the matter should be fairly easy. The FFIEC website will contain (but doesn't yet) a page that will show the appropriate value for a particular time period.