For purposes of determining whether a loan sets off the interest rate trigger under the CFPB’s new HOEPA rules, we do not believe that you would have to consider a HELOC’s rate ceiling, provided that the HELOC’s interest rate “varies solely in accordance with an index.” To determine whether such a HELOC sets off the interest rate trigger, you must consider “the interest rate that results from adding the maximum margin permitted . . . to the value of the index rate in effect as of the date the interest rate for the transaction is set.” 12 CFR 1026.32(a)(3)(ii)also see Official Interpretations, 12 CFR 1026.32, Paragraph 32(a)(3); Comment 3. (This assumes that your HELOCs do not use introductory interest rates, as you have indicated.)

For your institution’s HELOCs, you would apply the margin for each HELOC to the index rate on the date on which the loan’s interest rate is set. As you have indicated, your institution’s HELOCs do not have margins that can vary throughout the life of a loan, so you would simply apply the HELOC’s margin to the current index rate. If that number does not exceed the HOEPA interest rate trigger (6.5% for first lien loans, 8.5% for second lien loans), then the HELOC would not be considered a high-cost loan (assuming that the points and fees and prepayment penalty triggers do not apply).