Rate Spreads on Non-Owner Occupied loans

We have identified a small problem in regards to the reporting of rate spreads and non-owner occupied HMDA loans that we feel needs some further input in order to arrive at a acceptable method of dealing with the issue. According to Regulation C “Loans on non-owner-occupied properties are generally not subject to TILA (Truth In Lending Act) and thus will not have an APR available for calculating rate spread.”, in which case Rate Spread would get set to NA. Now, according to Regulation Z, Truth In Lending Act, the regulation covers lending as long as the following 4 conditions are met: 1. The credit is offered or extended to consumers. 2. The offering or extension of credit is done regularly. 3. The credit is subject to a finance charge or is payable by a written agreement in more than 4 installments. 4. The credit is primarily for personal, family or household purposes. Now lets suppose that a person is purchasing a second home for vacation purposes. According to the rules above the loan is clearly subject to TILA, however according to HMDA the owner-occupancy is reported as 2 – Not owner-occupied as a principal dwelling. Under these circumstances, a rate spread clearly should be reported as all conditions of TILA are met. Presently, Comply computes the rate spread regardless of the owner-occupancy, however this poses an issue if the property being purchased is for investment purposes (i.e. as a rental property), where the fourth rule of TILA does not apply. So the issue we are wrestling with is how should Comply handle these non-owner occupied properties, we have several ideas and would like further feedback, our ideas are: 1. Compute the Rate Spread as is done presently, and create a RATA Quality edit that alerts the user that a loan is non-owner occupied and has a rate spread that may or may not be reportable. 2. Default all non-owner occupied loans to Rate Spread NA and create a RATA Quality edit that alerts the user that this loan may or may not require a rate spread depending on its TILA eligibility. 3. Add a field to the system to denote if an application is subject to TILA and compute the rate spread appropriately. 4. Add a field to the system that states that “Always calculate rate spread” and calculate the rate spread accordingly. Any thoughts?