For first liens, add 1.5 % to the listed index if the loan was locked in (or re-locked) during the week following the date. For example, if your APR is 7.09 and you subtract 1.5 your answer is 5.59. If your answer **is higher than the posted index**, which is currently 5.09 your loan is classified as an HPML.

Contents

- 1 What is considered a HPML?
- 2 How is APOR calculated?
- 3 What is a rate spread calculator?
- 4 What are HPML requirements?
- 5 Does HPML apply to FHA?
- 6 How is an APR calculated?
- 7 What is the difference between APR and APOR?
- 8 What is the current prime rate?
- 9 What loans are exempt from HPML?
- 10 Who determines APOR?
- 11 What is the rate spread?
- 12 Do HPML require 2 appraisals?
- 13 What is Section 35 HPML?
- 14 Does HPML require escrow?

## What is considered a HPML?

A higher-priced mortgage loan, or HPML, is a mortgage with an annual percentage rate (APR) that’s higher than the average prime offer rate (APOR) provided to well-qualified borrowers. HPML loans typically come with higher interest rates, closing costs and monthly payments.

## How is APOR calculated?

Average Prime Offer Rate is based on average interest rates, fees, and other terms on prime mortgages. Prime mortgages are loans that are to highly qualified borrowers. FFIEC calculates APOR by using the data obtained from multiple sources which includes: Freddie Mac’s Primary Mortgage Market Survey (PMMS).

## What is a rate spread calculator?

The rate spread calculator generates the spread between the Annual Percentage Rate (APR) and a survey-based estimate of APRs currently offered on prime mortgage loans of a comparable type utilizing the “Average Prime Offer Rates” fixed or adjustable table, action taken, amortization type, lock-in date, APR, fixed term

## What are HPML requirements?

The HPML Appraisal Rule applies to residential mortgages–which are not otherwise exempt from the rule–if the APR exceeds the average prime offer rate (APOR) by 1.5 percent for a first-lien or conforming loans, 2.5 percent for first-lien jumbo loans1 and 3.5 percent for subordinate loans.

## Does HPML apply to FHA?

FHA Loan HPML if the Annual Percentage Rate (APR) exceeds the APOR plus 1.15% plus on-going Mortgage Insurance Premium (MIP) rate. Not allowed on non-credit qualifying loans such as: FHA Streamlines and VA IRRRLs.

## How is an APR calculated?

To calculate APR, you can follow these 5 simple steps:

- Add total interest paid over the duration of the loan to any additional fees.
- Divide by the amount of the loan.
- Divide by the total number of days in the loan term.
- Multiply by 365 to find annual rate.
- Multiply by 100 to convert annual rate into a percentage.

## What is the difference between APR and APOR?

The annual percentage rate exceeds the average prime offer rate (APOR) by a given amount. Typically, for a 1st lien mortgage, a mortgage loan is considered “higher priced” if the APR (annual percentage rate) surpasses the APOR (average prime offer rate) by 1.5% or more.

## What is the current prime rate?

The Prime Rate Today is 3.25%.

## What loans are exempt from HPML?

The rule exempts from the HPML escrow requirement any loan made by a bank or credit union and secured by a first lien on the principal dwelling of a consumer if: the institution has assets of $10 billion or less (as of Dec. 31 in the preceding year);

## Who determines APOR?

Both the five-year and one-year variable-rate products adjust to an index based on the one-year Treasury rate plus a margin and adjust annually after the initial, fixed-rate period. The Consumer Financial Protection Bureau (Bureau) makes available the survey data used to calculate APORs.

## What is the rate spread?

The net interest rate spread is the difference between the interest rate a bank pays to depositors and the interest rate it receives from loans to consumers. The net interest rate spread is instrumental to a bank’s profitability. It can be useful to think of the net interest rate as a profit margin.

## Do HPML require 2 appraisals?

If the consumer is applying for an HPML to buy a flipped property, an additional appraisal is required if the price reflected in the consumer’s purchase agreement is a certain amount higher than the seller’s acquisition price.

## What is Section 35 HPML?

Regulation Z Section 35 defines an HPML as a loan secured by a primary residence where the APR exceeds Freddie Mac’s “average prime offer rate.

## Does HPML require escrow?

Regulation Z continues to require creditors to establish an escrow account for an HPML secured by a first lien on a principal dwelling, to help ensure the borrower sets aside funds to pay property taxes, premiums for homeowners insurance, and other mortgage-related insurance required by the creditor.