To determine the applicable HMDA reportable Rate Spread, one of the variables one must know is the date the rate was set. When the loan is to be sold to an investor, I am told by our Mortgage department the rate lock must not expire before they receive the loan...even if the loan closed days prior. This sometimes forces us to extend the rate lock even on a day after the HMDA reportable Action Taken Date (Ex. Action Taken Date is 04/05/21 and the rate lock is extended on 04/06/21 to 04/15/21 to make time to deliver to the investor). That being said, do I utilize the date the rate lock was extended as the utilized Date Rate Set to facilitate such situations, or do I use the rate lock event prior?

Entering into a rate lock agreement or rate lock extension with your investor has absolutely nothing to do with your loan applicant.

I would say that the rate lock extension with a borrower would typically require a new rate set date. However, in your scenario I believe HMDA rule has language something like "the date the rate was last set prior to closing" which would make me think you never do a rate set date after the closing date.

It is our understanding from the official interpretation in Reg C, when an interest rate is set via a "lock-in" agreement between the FI and the borrower, than this is the rate set date. EXCEPT, if a rate is reset or the lock is extended for the final time before the final action is taken (even when extended at the same rate) than at that time the new rate set date would be the date the FI requests change for either of those events.

EX: rate lock-in agreement between FI and borrower dated 4.1.21, the lock is extended on 5.1.21, loan originated 5.3.21. The lock needed to be extended after origination so the investor extended the lock on 5.10.21 The rate set date would be 5.1.21.

Are we interpreting this correctly?

If you entered into a rate lock extension with the customer on 5/1, that is the last time you set the rate with the customer. Whatever transpires between you and an investor is irrelevant.

Randy, thank you for the response. Just to be clear "If you entered into a rate lock extension with the customer on 5/1" ....the bank does not have the borrower sign a revised lock-agreement to extend the expiration date, however the initial lock agreement (that is executed by the borrower's) dated 4.1.21 does have an expiration date. With these details would the final rate set date still be 5/1? I just cannot get this straight in my head and need to as we may need to change our procedures. Below is the interpretation from the regulation. I interpret this to read as when you have a lock-in agreement with the borrower, anytime the rate changes or the lock is extended the relevant date is the date the financial institution exercises discretion in setting the rate for the final time before final action is taken. A revised lock-in agreement from the borrower is not needed.


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. [b]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.

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.

That tells me that when the rate lock expired, since you did not enter into a new extension agreement with the customer and you chose to let the rate remain the same (assuming the expiration date on the original rate lock was 5/1), then you last set the rate on 5/1.

Thank you Randy.