Loan Types Requiring Interest Rate Spread Reporting
Question
On which of these loans does First National have to report the interest rate spread on its HMDA LAR?
Answers
Explanations
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A. B. C. D.D
HMDA (Home Mortgage Disclosure Act) requires certain financial institutions to maintain and disclose loan data to ensure that lenders are not discriminating against certain protected classes. One of the required data elements is the interest rate spread, which is the difference between the annual percentage rate (APR) and a comparable Treasury rate for a mortgage. The interest rate spread is reported on the HMDA LAR (Loan Application Register) for certain types of loans.
Out of the given options, the loan that requires First National to report the interest rate spread on its HMDA LAR is option D, which is a home improvement loan secured by a principal dwelling.
Option A, which is a loan to remodel a 60-unit apartment complex, is a commercial loan and is not covered by HMDA reporting requirements.
Option B, which is a loan to renovate a rental property, is also a commercial loan and is not covered by HMDA reporting requirements.
Option C, which is an unsecured loan to purchase an investment property, is not a home purchase loan and is not covered by HMDA reporting requirements.
Therefore, only option D, a home improvement loan secured by a principal dwelling, requires First National to report the interest rate spread on its HMDA LAR.
