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#2190844 - 08/28/18 04:04 PM HELOC Rate Spread
Dawn Fly Offline
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Joined: Jul 2008
Posts: 16
Trying to read through the rule but still a bit unsure on this so wanted to get the group input.

For calculating rate spread on HELOCs that the rates adjust quarterly, would you use the variable option and put in 1 year since it asks for a year or would you use the fixed option and calculate off the closest fixed product?

Dawn

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#2190864 - 08/28/18 04:48 PM Re: HELOC Rate Spread Dawn Fly
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
would you use the variable option and put in 1 year since it asks for a year

Yes.

When a covered loan’s term to maturity (or, for a variable-rate transaction, the initial fixed-rate period) is not in whole years, the financial institution uses the number of whole years closest to the actual loan term or, if the actual loan term is exactly halfway between two whole years, by using the shorter loan term. There is an exception for a loan term shorter than six months (including variable-rate covered loans with no initial, fixed-rate periods), which should be rounded to 1.
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The opinions expressed are mine and they are not to be taken as legal advice.

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