Answer: Yes, unless the reverse mortgage is a HELOC, for which lenders are not required to report rate spread. . Transition to average prime offer rates --- rate spread. How are the rate spread FAQs affected by the final rule published on October 24, 2008, 73 FR 63329? Board’s Answer: The final rule is effective October 1, 2009. For loans with applications dated on or after that date, the new rules apply. This change affects two of the rate spread use of FAQs: “Required Board-published Treasury security and loans --- rate In the former yields” “Balloon spread.” case, average prime offer rates replace Treasury security yields as benchmarks under the new rate spread determination rules. Use of the prime offer rates tables, however, is Board’s average not mandatory for loans subject to the new rules. Lenders may use the methodology published with the tables to determine average prime offer rates. In the latter case, the FAQ remains valid under the new rules for fixed-rate loans. For variable-rate loans subject to the new rules, however, the applicable average prime offer rate is based on the fixed-rate period, loan’s initial, regardless of whether the loan has a balloon feature. Subsidiaries of depository institutions. How should a sale to a subsidiary of a depository institution be coded? Answer: Use code '6' if the subsidiary is, itself, a depository institution (a commercial bank, savings bank, or savings association). If the subsidiary is not a depository institution, such as a mortgage company or finance company, use code '7'. If the subsidiary is an institution of a type other than the types identified in codes '6' and '7', however, use code '9.' Notwithstanding the foregoing, if the subsidiary is an affiliate of the seller, itself, then use code '8'. HOEPA Status - 05/04/2007 Reverse Mortgages --- HOEPA Status. If a lender reports an application or loan for a reverse mortgage, should a lender report HOEPA status? Answer: Reverse mortgages are not subject to the Home Ownership and Equity Protection Act of 1994 (HOEPA). . Therefore, a lender should enter the code for for HOEPA “not applicable” status. COMPLIANCE RESOURCES Source:
Answer: Yes, unless the reverse mortgage is a HELOC, for which lenders are not required to report rate spread. . Transition to average prime offer rates --- rate spread. How are the rate spread FAQs affected by the Board’s final rule published on October 24, 2008, 73 FR 63329? Answer: The final rule is effective October 1, 2009. For loans with applications dated on or after that date, the new rules apply. This change affects two of the rate spread FAQs: “Required use of Board-published Treasury security yields” and “Balloon loans --- rate spread.” In the former case, average prime offer rates replace Treasury security yields as benchmarks under the new rate spread determination rules. Use of the Board’s average prime offer rates tables, however, is not mandatory for loans subject to the new rules. Lenders may use the methodology published with the tables to determine average prime offer rates. In the latter case, the FAQ remains valid under the new rules for fixed-rate loans. For variable-rate loans subject to the new rules, however, the applicable average prime offer rate is based on the loan’s initial, fixed-rate period, regardless of whether the loan has a balloon feature. Subsidiaries of depository institutions. How should a sale to a subsidiary of a depository institution be coded? Answer: Use code '6' if the subsidiary is, itself, a depository institution (a commercial bank, savings bank, or savings association). If the subsidiary is not a depository institution, such as a mortgage company or finance company, use code '7'. If the subsidiary is an institution of a type other than the types identified in codes '6' and '7', however, use code '9.' Notwithstanding the foregoing, if the subsidiary is an affiliate of the seller, itself, then use code '8'. HOEPA Status - 05/04/2007 Reverse Mortgages --- HOEPA Status. If a lender reports an application or loan for a reverse mortgage, should a lender report HOEPA status? Answer: Reverse mortgages are not subject to the Home Ownership and Equity Protection Act of 1994 (HOEPA). . Therefore, a lender should enter the code for “not applicable” for HOEPA status. COMPLIANCE RESOURCES Source:
HMDAHO1ML121615.docx