Skip to content

LAR Variable Rate Reporting and Prepayment Penalties

Answered by: 

Question: 
Our HELOCs are variable rate, but don’t have an “introductory rate." The rate is just subject to change on the first business day of every month. Is that reported on the LAR or do we just put NA since we don’t technically have an introductory rate? Additionally, if we require in the loan contract that the borrower reimburse fees we as the lender paid if the loan is paid off in the first 36 months, does that number need to go under Prepayment Penalty term if we aren’t technically charging a “prepayment penalty”?
Answer: 

Introductory rate - IMO you would report 1 if the beginning (introductory) rate can change in the first month. (As a disclaimer we are not subject to reporting open-end credits.)

Prepayment penalty definition - 1003.4(a)(22) defers to Reg. Z 1026.32(b)(6)(ii).

First published on 09/25/2022

Filed under: 
Filed under lending as: 

Search Topics