CFPB Continues APOR Updates
The Consumer Financial Protection Bureau (CFPB) has committed to continue its weekly publication of Average Prime Offer Rate (APOR) tables. This ensures the ongoing stability and transparency of key mortgage lending benchmarks.
Regulation Z (Truth in Lending) uses the APOR to determine whether a mortgage loan qualifies as a "higher-priced mortgage loan" by comparing its Annual Percentage Rate (APR) to the average market rate for similar loans. In addition, the APOR tables determine the interest rate boundaries for qualified mortgages (QM), which are exempt from certain regulatory requirements. The APOR benchmark is based on average interest rates, fees and other terms on mortgages offered to borrowers; the benchmark is used for mortgage lending by financial institutions to comply with the Ability-to-Repay rules.
APORs are also used in the Home Mortgage Disclosure Act (HMDA) to calculate the rate spread between a mortgage's annual percentage rate (APR) and a comparable prime mortgage loan.
Key Points:
The CFPB's Chief Legal Officer directed the continuation of APOR publication.
APORs are crucial for determining "higher-priced mortgage loans" under Regulation Z (Truth in Lending).
They also establish interest rate boundaries for qualified mortgages (QM).
APORs are used in Home Mortgage Disclosure Act (HMDA) calculations of rate spreads.
APORs are used for financial institution compliance with Ability-to-Repay rules.
Significance:
The ongoing updates maintains stability in mortgage lending by providing a consistent benchmark.
It also ensures lenders can accurately assess loan pricing and compliance and provides crucial information for regulatory compliance.
Link for further info:
We encourage all lenders to stay informed about these crucial updates to ensure compliance and maintain efficient operations, and to reach out to us at Spillane Consulting Associates should you have any questions.
