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How To Determine Rate Spreads on HMDA Loans

Illustrated above are examples of an identified first lien rate spread loan and a
Illustrated above are examples of an identified first lien rate spread loan and a

Illustrated above are examples of an identified first lien rate spread loan and a “NA” junior lien loan on the FFIEC’s rate spread calculator. The FFIEC’s rate spread calculator can can be accessed on line at http://www.ffiec.gov/ratespread/default.aspx

The FFIEC has made calculating rate spreads easy for HMDA reporters. Rate spreads on all HMDA reportable loans can be quickly determined by using the FFIEC’s rate spread calculator, which can be found on its Web site at www.ffiec.gov/ratespread/
default.aspx. The FFIEC has developed a system that has embedded the Treasury rates of comparable maturities for all of the reporting months for HMDA reports. Lenders only have to fill in the information on loan lock-in date, annual percentage rate (APR), term, and then click on the appropriate lien status from the drop-down box, and the system will do the calculation. For example, if the rate on a first lien exceeds the comparable maturity Treasury by more than 3 percentage points, the program will identify the actual rate spread and the HMDA reporter will then place this number in the rate-spread column. Conversely, if the APR on a first lien is less than 3 percentage points greater than the comparable maturity Treasury, then the system will indicate “NA” and the HMDA reporter will place this code in the rate-spread column.

Additionally, the FFIEC has developed a batch rate spread calculator, which can be used by HMDA reporters on multiple loan application registers (LARs).

If the reporter does not wish to use the FFIEC’s rate spread calculator, it must refer to the table published at www.ffiec.gov/hmda, entitled “Treasury Securities of Comparable Maturity under Regulation C,” to determine the applicable Treasury security yield. Further instructions on calculating the rate spread can be found at Appendix A, Section I (G), to 12 CFR part 203.