Under the new HMDA regulation, an institution must now report the introductory interest rate period. If there is one involved in the transaction, you must report the number of months from the day the loan closed until the first day that the interest rate may change. If the introductory interest rate period is measured in days, then the institution should report the number of whole months that the period meets and disregard any of the remainder. For instance, if the introductory interest rate period is 40 days, then the institution should report the term as being “1” on their HMDA LAR. If the period is less than one whole month, then the institution should still report the period as being “1”.
There are circumstances where “not applicable” will be reported on the HMDA LAR. One instance is with preferred rates. This data point is not required to be reported when the introductory interest rate period is based on preferred rates. That is unless the terms of the loan provide that the preferred rate will expire at a defined time. Preferred rates occur when the terms of the loan state that the initial rate is fixed but that it may increase or decrease if a certain event occurs, for example if an employee of the financial institution decides to find other employment. The other instance where this data point is reported as “not applicable” is when you are reporting on a fixed rate transaction.
For more information on HMDA regulations, 2018 data point changes or our HMDA compliance services, please call Rhonda Wannemuehler or Betsy Reynolds at 855-734-7655.