Like several other posts, we are a small community bank and do not have the capacity to escrow, therefore we have to be certain we avoid Sec. 35 loans. I have created a table with the applicable APOR's plus the spreads to provide a maximum APR, but I don't know how to determine rates which, when the PPFC's and spreads are added, will not exceed the maximum APR's. We have to quote rates and use rates to create early disclosures and loans in ARTA.

Murphy Brown

This is not real blonde hair.

IMO - There are too many possible variations of Amount and Term (that effect the APR calculation) to be able to say . . .

" For a 10 year 1st lien loan, this week's APOR plus 1.5 is 6.25 APR = Therefore our maximum Note Rate is X "

For example if you charge a $300 Origination Fee; that would push up the APR on a $10,000 10 year loan a lot more (maybe .60) than it would push up the APR on a $70,000 10 year loan (maybe .1) ???

As I have struggled with this & how can our loan processors work with this - - - The only answer I have come up with is the worksheet that you describe.
I have a spreadsheet that I will update weekly and it gives the Max APR without becoming a HPML, for our standard loan products.
The processors will just have to work with the Early TIL to determine if it is close & go from there to get the lender to lower the note rate if necessary.

:: Steps up on Soap Box ::
The effect of more government regulations :
1. More community banks will stop lending on Resideces
2. Those who stay in the market will have to lower their desired loan rates to avoid the required escrow = Less Income for the bank

You wouldn't say the maximum note rate is X. You would say the maximum APR is X. If the APR after adding all your fees and other charges creates an APR > X then the fees, charges or note rate will have to be adjusted to bring the APR below X.

Dan,
Exactly what I was trying to say - - - The APOR is compared to the APR on your TIL, and therefore the nice procedure for the lenders & processors would be to say . . .
"Well if this weeks max APR, without being a HPML, is 6.37 then we can back into a max note rate of X"

But the variables in calculating an APR, make this thought of backing into a max rate unrealistic / unattainable.

Buy escrow software......start escrowing....forcing loans to conform to standard to avoid the loan being an HPML will be harder than escrow procedures and making rates and fees low enough to achieve that goal will cause these loans to be unprofitable. To me, there are two choices....adopt escrow procedures or quit making loans that might be subject to HPML rules. IMO...

Moat likely your core loan servicing software has this module.



That would be just about any closed-ended consumer "mortgage" loan. If you choose this option then please take the time to write your congressmen and senators to inform them that due to the regulatory burden and costs they have placed on you that you have chosen to no longer offer the consumer any type home secured consumer loan. This should be done by any financial institution that decides to exit the consumer mortgage lending business because of these new rules.

My main beef is that I will now have to learn RESPA Escrow rules. I don't wanna!!!!