[Angie Cowell]

I have attended many HMDA seminars and when it comes to rate spread they always state this is for primary residences only. Basically they are referencing the Reg. Z, section 35 requirement. However, I was recently questioned by an associate because HMDA does not reference section 35 of Reg. Z, it simply refers to rate spread and discusses the spread and does not state primary residence only. If we have a loan that is secured by a secondary residence which would not fall under the Reg Z definition, but under Reg C it has a rate spread, are we to report the rate spread on the LAR?

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[rcooper]

If the loan is subject to Reg Z, regardless of whether it is an HPML, you would report rate spread. Please see the information from the regulation and HMDA guide, below.

1003.4(a)(12)(i) states: “For originated loans subject to Regulation Z, 12 CFR part 1026, the difference between the loan’s annual percentage rate (APR) and the average prime offer rate for a comparable transaction as of the date the interest rate is set, if that difference is equal to or greater than 1.5 percentage points for loans secured by a first lien on a dwelling, or equal to or greater than 3.5 percentage points for loans secured by a subordinate lien on a dwelling.”

Effective January 1, 2018 this part reads: “For covered loans subject to Regulation Z, 12 CFR part 1026, other than assumptions, purchased covered loans, and reverse mortgages, the difference between the covered loan’s annual percentage rate and the average prime offer rate for a comparable transaction as of the date the interest rate is set.”

Also when looking at the Guide to HMDA Getting it Right it discusses when and what to disclose on p. A-8: https://www.ffiec.gov/hmda/pdf/2013guide.pdf

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