Q: When providing HELOC Application Disclosures, how does a creditor disclose the historical example for indices, such as the SOFR indices, that do not yet have 15 years of values?
A: On the HELOC Application Disclosures, Regulation Z, 12 CFR § 1026.40(d)(12)(xi) requires that creditors disclose a historical example illustrating how the APRs and payments would have been affected by index value changes over the past 15 years.
For indices, such as the SOFR-based indices, that have not been available for 15 years, the creditor may start the example at the year for which the index values are first available. Comment 40(d)(12)(xi)-1. For example, index values for the “30-day Average SOFR Index,” published by the Federal Reserve Board of New York, are available beginning on May 2, 2018. Index values for May 2, 2018 through February 28, 2020 can be found on the Federal Reserve Board of New York’s website in this downloadable excel spreadsheet. Index values for March 2, 2020 to the present can be found here. Information about the index and using these values can be found here.
The historical values used must be reflective of the method of choosing index values for the plan. However, a creditor must only provide one index value per year, even if adjustments occur more than annually, and must use the same date or period for each year. Comment 40(d)(12)(xi)-2.