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Home > News & Events > Press Releases

Press Release
October 20, 2008

Federal Reserve approves final amendments to
Regulation C that revise the rules for reporting
price information on higher-priced mortgage
loans
For immediate release
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The Federal Reserve Board on Monday approved final amendments to
Regulation C that revise the rules for reporting price information on
higher-priced mortgage loans. The changes are intended to improve the
accuracy and usefulness of data reported under the Home Mortgage
Disclosure Act.     
Regulation C currently requires lenders to collect and report the spread
between the annual percentage rate (APR) on a mortgage loan and the
yield on a Treasury security of comparable maturity if the spread is
greater than 3.0 percentage points for a first lien loan or greater than 5.0
percentage points for a subordinate lien loan. This difference is known
as a rate spread. Under the final rule, a lender will report the spread
between the loan's APR and a survey-based estimate of APRs currently
offered on prime mortgages of a comparable type ("average prime offer
rate") if the spread is equal to or greater than 1.5 percentage points for a
first lien loan or equal to or greater than 3.5 percentage points for a
subordinate-lien loan. The Board will publish average prime offer rates
based on the Primary Mortgage Market Survey® currently published by
Freddie Mac. The Board will conduct its own survey if it becomes
appropriate or necessary to do so.

In setting the rate spread reporting threshold, the Board sought to cover
subprime mortgages and generally avoid covering prime mortgages.
Applying the new, market survey-based benchmarks in place of
Treasury security yields should better achieve this purpose and ensure
more consistent and more useful data.
The changes to Regulation C conform the threshold for rate spread
reporting to the definition of higher-priced mortgage loans adopted by
the Board under Regulation Z (Truth in Lending) in July of 2008. By
implementing the same pricing threshold test under both regulations, the
Board is reducing the overall regulatory burden on mortgage lenders.
The final rule is effective October 1, 2009.   The Board's Federal
Register notice is attached.
Federal Register notice: 89 KB PDF | HTML

Last Update: October 20, 2008

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