Good Morning:

I have a situation where our APR increased by .25% for a regular transaction between LE & CD due to a change in the interest rate, which would normally be a violation. However, the loan amount also decreased significantly between the two transactions, so the finance charge is actually lower on the CD. So, do I still have a violation for the APR increase per 1026.22(a)(4)? The more I've been reading, the more I'm turning around in circles!

Thanks,

R. Shackleford

There is no APR test between an LE and a CD - only between an initial CD and the final.

Well that's certainly welcome news! So, to recap, there shouldn't be any problem with the simple interest rate increasing between the LE and the initial CD either, correct?

Yes. If the rate is not locked, it floats with the market. Any change after you issue the initial CD is your only concern.

Randy, thank you so much. Have a great weekend!