CFPB Announces Revised Methodology for Determining Average Prime Offer Rates

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Article Highlights:

On April 14, 2023 the Consumer Financial Protection Bureau (CFPB) announced that it had revised its methodology for determining average prime offer rates (APORs) for the purposes of federal mortgage rules. “APORs are annual percentage rates derived from average interest rates, points, and other loan pricing terms currently offered to consumers by a representative sample of creditors for mortgage loans that have low-risk pricing characteristics.”

“The methodology statement has been revised to address the upcoming unavailability of certain data the CFPB previously relied on to calculate APORs. On or after April 21, 2023, the CFPB will begin using ICE Mortgage Technology data and the CFPB’s revised methodology to calculate APORs.”

What are APORs used for?

  • APORs are used to determine whether a loan is a higher-priced mortgage loan. The result could mean the need for a full appraisal or another appraisal. It could also mean the loan requires an escrow account of at least 5 years.
  • APORs are used to determine the rate spread that is used to identify non-QM loans. The rate spread is also reportable under HMDA.

What other resources are available about the change?