TILA Escrow Rule - What is a higher-priced mortgage loan (HPML)?

Compliance > Regulation Z - TILA > Escrow Rule, Eff. June 2013

Q:  What is a higher-priced mortgage loan (HPML)? (§ 1026.35(a)(1))

A:  A mortgage loan is “higher-priced” if:

  •           It is a first-lien mortgage with an annual percentage rate (APR) that exceeds the
                 Average Prime Offer Rate (APOR) by 1.5 percentage points or more.
  •           It is a first-lien mortgage with an APR that exceeds the APOR by 2.5 percentage
                 points or more, if the principal amount of the mortgage exceeds Freddie Mac’s limit
                 for mortgages it will purchase (“jumbo loan”) in effect as of the date the interest
                 rate for the transaction is set.

For example, if the APOR is 5 percent, a first-lien mortgage is higher-priced if it has an APR of 6.5 percent or more and is not a jumbo loan.

The APOR is published at http://www.ffiec.gov/ratespread.

When comparing the transaction’s APR to APOR, use the rate in effect on the last date you set (or lock) the interest rate before consummation.

This can be found in the CFPB's TILA Escrow Rule, Small Entity Compliance Guide - http://www.consumerfinance.gov/regulatory-implementation/

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