Figuring a HMDA rate spread? Just choose from among three calculators (depending on ‘final action date’)

Financial institutions, consumers or others attempting to calculate rate spreads for loans reportable under the Home Mortgage Disclosure Act (HMDA) should use one of three online calculators, depending on when “final action” for the loan was taken, the umbrella group for federal financial institution regulators said Tuesday.

The Federal Financial Institutions Examination Council (FFIEC) advised:

The FFIEC also said a batch rate spread calculator is also available to allow institutions to calculate the rate spread on multiple Loan Application Registers (LARs).

According to the Exam Council, the rate spread calculators generate the spread between the Annual Percentage Rate (APR) and a survey-based estimate of APRs currently offered on prime mortgage loans of a comparable type. The survey-based estimate uses an “average prime offer rates” fixed or adjustable table, action taken, amortization type, lock-in date, APR, fixed term (loan maturity) or variable term (initial fixed-rate period), and lien status.

The group emphasized that rate spread is a calculated field and is “NOT simply the APR on the loan application.”

The FFIEC also warned that a rate-spread calculator should not be used to calculate Home Ownership and Equity Protection Act (HOEPA) status, noting that HMDA and HOEPA are two different fields which require two different calculations.

FFIEC Rate Spread Calculator

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