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HMDA Rate Spread Formula:
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The HMDA (Home Mortgage Disclosure Act) Rate Spread represents the difference between a loan's annual percentage rate (APR) and the Average Prime Offer Rate (APOR) for a comparable transaction. It helps regulators identify potentially discriminatory lending practices.
The calculator uses the HMDA Rate Spread formula:
Where:
Explanation: The rate spread calculation helps identify loans with rates significantly higher than average prime offers, which may indicate higher-risk lending or potential discrimination.
Details: HMDA requires lenders to report rate spreads to help regulators monitor fair lending compliance, identify potential redlining, and ensure equal access to credit markets for all borrowers.
Tips: Enter the loan's annual percentage rate and the applicable Average Prime Offer Rate. Both values should be expressed as percentages. The calculator will compute the difference between these two rates.
Q1: What is APOR?
A: Average Prime Offer Rate is an annual percentage rate derived from average interest rates and points for loans offered to borrowers with strong credit.
Q2: When is HMDA rate spread reporting required?
A: For first-lien loans, report if spread is 1.5+ percentage points; for subordinate-lien loans, report if 3.5+ percentage points above APOR.
Q3: How often are APOR rates published?
A: The Federal Financial Institutions Examination Council (FFIEC) publishes APOR tables weekly for various loan types and terms.
Q4: Are there exemptions from HMDA reporting?
A: Yes, certain types of loans and lenders below specific thresholds may be exempt from HMDA reporting requirements.
Q5: Why is rate spread monitoring important?
A: It helps identify potential fair lending violations and ensures borrowers receive equitable treatment in mortgage lending markets.