The CFPB recently announced that it is revising the methodology used to determine average prime offer rates (APORs). The revised methodology is available on the website of the Federal Financial Institutions Examination Council (FFIEC). Both the revised methodology and prior methodology are available on the FFIEC website.
The CFPB has used information from the Freddie Mac Primary Mortgage Market Survey® (PMMS) on three products (30-year fixed-rate mortgages, 15-year fixed-rate mortgages, and five-year variable-rate Mortgages), and pricing data from CFPB’s own internal survey on one-year variable-rate mortgages, to calculate APORs on a weekly basis for various loan products. APORs are used for various purposes, including use in the determination for Regulation Z purposes of whether a mortgage loan is a qualified mortgage loan (QM) and, if so, whether it is a safe harbor or rebuttable presumption QM, and whether a mortgage loan is a higher-priced or high-cost mortgage loan.
The CFPB advises that Freddie Mac is changing the public version of PMMS to no longer include points, fees, and adjustable-rate data used by the CFPB to construct APORs. This required CFPB to identify an alternate source of data, and it has determined that “data from Intercontinental Exchange Mortgage Technology (ICE Mortgage Technology) is currently the most suitable option to replace PMMS.”
The CFPB will now use eight base loan products to calculate APORs. The eight products are 30-year fixed-rate mortgages, 20-year fixed-rate mortgages, 15-year fixed-rate mortgages, 10-year fixed-rate mortgages, 10/6-month adjustable-rate mortgages (ARMs), 7/6-month ARMs, 5/6-month ARMs, and 3/6-month ARMs. The revised methodology will be used by the CFPB to calculate APORs on or after April 21, 2023.