Additionally, the CFPB noted that it is not changing the frequency of the APOR calculations, which will still be calculated on a weekly basis.
The CFPB stated in its notice that it will begin using the ICE Mortgage Technology data and the revised methodology to calculate APORs “on or after April 21, 2023.” The CFPB also indicated that it will continue to post the survey data used to calculate APORs on the FFIEC’s website and identify the source of the data on that page. Under the revised methodology, available here, the CFPB will use the following products to calculate APORs: (i) 30-year fixed-rate mortgage (ii) 20-year fixed-rate mortgage (iii) 15-year fixed-rate mortgage (iv) 10-year fixed-rate mortgage (v) 10/6-month ARM (vi) 7/6-month ARM (vii) 5/6-month ARM and (viii) 3/6-month ARM. Qualified mortgages or QM loans are mortgage products protected by the Consumer Financial Protection Bureau. Many mortgage lenders may elect not to offer non-QM loans, or may price them considerably higher than QM loans. The CFPB believes that ICE Mortgage Technology provides a data source that has sufficient pricing data for the variables and base products that the CFPB requires to calculate APORs. Non-QM loans are expected to be higher priced loans that may have features historically associated with subprime loan products, and are likely to be made to consumers with the lowest acceptable credit scores (high credit risk). To address this change, the CFPB noted that it evaluated potential alternative sources of survey data and determined that data from Intercontinental Exchange Mortgage Technology (ICE Mortgage Technology) is currently the most suitable option to replace the PMMS data.
QM LOANS DEFINITION MAC
The CFPB previously relied on Freddie Mac’s Primary Mortgage Market Survey (PMMS) data in calculating APORs, but Freddie Mac recently decided to change its process for gathering PMMS data, such that the public data no longer includes the points, fees, and adjustable rate data that the CFPB uses to construct APORs. A qualified mortgage is a mortgage that meets certain requirements for lender protection and secondary market trading under the Dodd-Frank Wall Street Reform and Consumer Protection Act, a. APORs are also used by covered financial institutions for certain reporting requirements under Regulation C. Creditors with certain designations, loans pursuant to certain programs, certain nonprofit creditors, and mortgage loans made in connection with certain Federal emergency economic stabilization programs are exempt from ability to repay requirements. APORs are used by creditors under Regulation Z to determine whether loans meet the general qualified mortgage (QM) definition, whether certain QM definitions provide the creditor with a conclusive or rebuttable presumption of compliance, and whether the creditor must comply with certain provisions for high-cost or higher-priced mortgage loans. The CFPB recently published a notice that it is revising its methodology for determining average prime offer rates (APORs).
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