1. What is HMDA Rate Spread?

The HMDA (Home Mortgage Disclosure Act) Rate Spread is the difference between a loan's Annual Percentage Rate (APR) and the Average Prime Offer Rate (APOR) for a comparable transaction. It's used to identify higher-priced mortgage loans under Regulation C.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( APR \) — Annual Percentage Rate (%)
• \( APOR \) — Average Prime Offer Rate (%)

Explanation: The rate spread helps identify loans that are significantly higher than the average prime offer rate, which may indicate higher-risk lending practices.

3. Importance of Rate Spread Calculation

Details: HMDA requires lenders to report rate spread data to help regulators and the public identify potential discriminatory lending patterns and monitor compliance with fair lending laws.

4. Using the Calculator

Tips: Enter both APR and APOR as percentage values (e.g., 4.25 for 4.25%). The calculator will compute the difference between these two rates.

5. Frequently Asked Questions (FAQ)

Q1: What is considered a reportable rate spread under HMDA?
A: For first-lien loans, a rate spread of 1.5 percentage points or more above APOR is reportable. For junior-lien loans, the threshold is 3.5 percentage points.

Q2: Where can I find current APOR values?
A: The Federal Financial Institutions Examination Council (FFIEC) publishes APOR tables weekly on their website.

Q3: Are all mortgage loans subject to HMDA rate spread reporting?
A: No, only covered loans originated by HMDA-reporting institutions are subject to these requirements.

Q4: How does rate spread relate to HOEPA loans?
A: While both identify higher-priced mortgages, HOEPA has different thresholds and triggers additional consumer protections beyond HMDA reporting.

Q5: What time period should APOR match for accurate calculation?
A: Use the APOR that was in effect as of the date the interest rate was set for the loan, typically around the time of closing.