Nothing in 1026.35(c)(2)(i) alters the definition of a qualified mortgage under regulations of the Bureau, HUD, VA, USDA, or RHS. 1026.17 General disclosure requirements. Section 1026.35(c)(2) provides exemptions solely from the requirements of section 1026.35(c)(3) through (6). See interpretation of Paragraph 35(a)(2) in Supplement I. A creditor must obtain two written appraisals under paragraph (c)(4)(i) of this section unless the creditor can demonstrate by exercising reasonable diligence that the requirement to obtain two appraisals does not apply. These rules are substantively identical to the Board's and the OCC's higher-priced mortgage loan appraisal rules published separately in 12 CFR 226.43 (for the Board) and in 12 CFR part 34, subpart G and 12 CFR part 164, subpart B (for the OCC). 2. Construction-permanent loans. Affiliate is defined in 1026.32(b)(5) as any company that controls, is controlled by, or is under common control with another company, as set forth in the Bank Holding Company Act of 1956 (12 U.S.C. ii. (vii) An extension of credit that is a refinancing secured by a first lien, with refinancing defined as in 1026.20(a) (except that the creditor need not be the original creditor or a holder or servicer of the original obligation), provided that the refinancing meets the following criteria: (1) The credit risk of the refinancing is retained by the person that held the credit risk of the existing obligation and there is no commitment, at consummation, to transfer the credit risk to another person; or. (B) The consumer currently is not delinquent or in default on the underlying debt obligation. For example: i. See interpretation of Paragraph 35(c)(2)(viii)(B) in Supplement I. To determine whether County Y is rural under the Bureau's definition during calendar year 2017, the creditor can use USDA-ERS's 2013 UIC designations. Read the Notice of Availability of Revised Methodology for Determining Average Prime Offer Rates. When a creditor is required to obtain an additional appraisal under 1026(c)(4)(i), the creditor must comply with the requirements of both 1026.35(c)(3)(i) and 1026.35(c)(4)(ii) through (v) for that appraisal. (3) Not designated as located in an urban area, as defined by the most recent delineation of urban areas announced by the Census Bureau, by any automated address search tool that the U.S. Census Bureau provides on its public Web site for that purpose and that specifically indicates the urban or rural designations of properties. In the United States, the prime lending rate is the average rate of interest charged on short term loans by commercial banks to companies. Average prime offer rate Definition | Law Insider 5. Data must be numeric up to 3 digits, with up to 4 decimal places. See interpretation of 35(c)(6)(i) In General in Supplement I. For guidance on the meaning of refinancing costs, see comment 23(f)-4. Which disclosure option a creditor elects under 1026.17(c)(6)(ii) does not affect the determination of whether the permanent phase of the transaction is subject to 1026.35. ii. 7001 et seq.). PUDs usually have a homeowners' association or some other governing association, analogous to a condominium association and with similar authority and obligations. in Supplement I. What is a "higher-priced mortgage loan?" | Consumer Financial The price the consumer is obligated to pay to acquire the property from the seller does not include the cost of financing the property. When the creditor discloses the two phases as separate transactions, the annual percentage rate for the permanent phase must be compared to the average prime offer rate for a transaction that is comparable to the permanent financing to determine whether the transaction is a higher-priced mortgage loan under 1026.35(a). i. (1) For a new manufactured home, the manufacturer's invoice for the manufactured home securing the transaction, provided that the date of manufacture is no earlier than 18 months prior to the creditor's receipt of the consumer's application for credit; (2) A cost estimate of the value of the manufactured home securing the transaction obtained from an independent cost service provider; or. For purposes of 1026.35(c)(3)(ii), the appraiser's certification refers to the certification specified in item 9 of appendix N. See also comment 35(c)(1)(i)-2. Qualifying for exemption subsequent changes. For example, assume a creditor makes first-lien covered transactions in County Y during calendar year 2016, and the most recent HMDA data are for calendar year 2015, published in the third quarter of 2016. 1. Mortgages last reviewed: AUG 18, 2022 What is a "higher-priced mortgage loan?" In general, a higher-priced mortgage loan has an annual percentage rate (APR) that's higher than a specified amount over a benchmark rate called the Average Prime Offer Rate. The threshold amount is adjusted effective January 1 of each year by any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that was in effect on the preceding June 1. However, the creditor is not required to obtain an additional written appraisal that includes analysis under 1026.35(c)(4)(iv)(A) of the difference between the price at which the seller acquired the property and the price that the consumer is obligated to pay to acquire the property. viii. PDF Bur. of Consumer Financial Protection 1026 (i) In general. Only the assets of a creditor's affiliate that regularly extended first-lien covered transactions during the applicable period are included in calculating the creditor's assets. or have questions about the content, (iv) Required analysis in the additional appraisal. PDF Billing Code: 4810-am -p Consumer Financial Protection Bureau Agency The property securing the transaction would be located in a rural county for purposes of 1026.35(c)(4)(vii)(H) if the county is on the table of rural counties published by the Bureau at the end of 2014. 3. For purposes of 1026.35(b)(2)(iv)(A)(1), adjacent has the meaning applied by the USDA-ERS in determining a county's UIC; as so applied, adjacent entails a county not only being physically contiguous with a metropolitan statistical area but also meeting certain minimum population commuting patterns. 1026.22 Determination of annual percentage rate. For example, assume that a creditor is able, following reasonable diligence, to determine that the date on which the seller acquired the property occurred between 91 and 180 days prior to the date of the consumer's agreement to acquire the property. 1. See interpretation of 35(c)(4)(v) No Charge for Additional Appraisal in Supplement I, (vi) Creditor's determination of prior sale date and price , See interpretation of 35(c)(4)(vi) Creditor's Determination of Prior Sale Date and Price in Supplement I. 1026.9 Subsequent disclosure requirements. B. The methodology statement has been revised to address the upcoming unavailability of certain data the CFPB previously relied on to calculate APORs. 1841 et seq. Fees and mark-ups. Except as provided in paragraph (b)(3)(ii) of this section, a creditor or servicer may cancel an escrow account required in paragraph (b)(1) of this section only upon the earlier of: (A) Termination of the underlying debt obligation; or. First, the threshold in 1026.35(b)(2)(vi)(B) is 1,000 loans secured by first liens on a principal dwelling, while the threshold in 1026.35(b)(2)(iii)(B) is 2,000 loans secured by first liens on a dwelling. 2. See 1026.35(c)(2)(viii). The holder of credit risk under 1026.35(c)(2)(vii)(A)(1) does not mean individual investors in a mortgage-backed security or providers of private mortgage insurance. in Supplement I. See interpretation of 35(c)(6) Copy of Appraisals in Supplement I. 2. If the creditor must obtain two appraisals under paragraph (c)(4)(i) of this section, the creditor may charge the consumer for only one of the appraisals. Appendix A to Part 1026 Effect on State Laws, Appendix B to Part 1026 State Exemptions, Appendix C to Part 1026 Issuance of Official Interpretations, Appendix D to Part 1026 Multiple Advance Construction Loans, Appendix E to Part 1026 Rules for Card Issuers That Bill on a Transaction-by-Transaction Basis, Appendix F to Part 1026 Optional Annual Percentage Rate Computations for Creditors Offering Open-End Credit Plans Secured by a Consumer's Dwelling, Appendix G to Part 1026 Open-End Model Forms and Clauses, Appendix H to Part 1026 Closed-End Model Forms and Clauses, Appendix J to Part 1026 Annual Percentage Rate Computations for Closed-End Credit Transactions, Appendix K to Part 1026 Total Annual Loan Cost Rate Computations for Reverse Mortgage Transactions, Appendix L to Part 1026 Assumed Loan Periods for Computations of Total Annual Loan Cost Rates, Appendix M1 to Part 1026 Repayment Disclosures, Appendix M2 to Part 1026 Sample Calculations of Repayment Disclosures, Appendix N to Part 1026 Higher-Priced Mortgage Loan Appraisal Safe Harbor Review, Appendix O to Part 1026 Illustrative Written Source Documents for Higher-Priced Mortgage Loan Appraisal Rules, Comment for 1026.1 - Authority, Purpose, Coverage, Organization, Enforcement and Liability, Comment for 1026.2 - Definitions and Rules of Construction, Comment for 1026.5 - General Disclosure Requirements, Comment for 1026.6 - Account-Opening Disclosures, Comment for 1026.8 - Identifying Transactions on Periodic Statements, Comment for 1026.9 - Subsequent Disclosure Requirements, Comment for 1026.11 - Treatment of Credit Balances; Account Termination, Comment for 1026.12 - Special Credit Card Provisions, Comment for 1026.13 - Billing Error Resolution, Comment for 1026.14 - Determination of Annual Percentage Rate, Comment for 1026.15 - Right of Rescission, Comment for 1026.17 - General Disclosure Requirements, Comment for 1026.18 - Content of Disclosures, Comment for 1026.19 - Certain Mortgage and Variable-Rate Transactions, Comment for 1026.20 Disclosure Requirements Regarding Post-Consummation Events, Comment for 1026.21 - Treatment of Credit Balances, Comment for 1026.22 - Determination of Annual Percentage Rate, Comment for 1026.23 - Right of Rescission, Comment for 1026.26 - Use of Annual Percentage Rate in Oral Disclosures, Comment for 1026.27 - Language of Disclosures, Comment for 1026.28 - Effect on State Laws, Comment for 1026.30 - Limitation on Rates, Comment for 1026.32 - Requirements for High-Cost Mortgages, Comment for 1026.33 - Requirements for Reverse Mortgages, Comment for 1026.34 - Prohibited Acts or Practices in Connection With High-Cost Mortgages, Comment for 1026.35 - Requirements for Higher-Priced Mortgage Loans, Comment for 1026.36 - Prohibited Acts or Practices and Certain Requirements for Credit Secured by a Dwelling, Comment for 1026.37 - Content of Disclosures for Certain Mortgage Transactions (Loan Estimate), Comment for 1026.38 - Content of Disclosures for Certain Mortgage Transactions (Closing Disclosure), Comment for 1026.39 - Mortgage Transfer Disclosures, Comment for 1026.40 - Requirements for Home-Equity Plans, Comment for 1026.41 - Periodic Statements for Residential Mortgage Loans, Comment for 1026.42 - Valuation Independence, Comment for 1026.43 - Minimum Standards for Transactions Secured by a Dwelling, Comment for 1026.46 - Special Disclosure Requirements for Private Education Loans, Comment for 1026.47 - Content of Disclosures, Comment for 1026.48 - Limitations on Private Education Loans, Comment for 1026.52 - Limitations on Fees, Comment for 1026.53 - Allocation of Payments, Comment for 1026.54 - Limitations on the Imposition of Finance Charges, Comment for 1026.55 - Limitations on Increasing Annual Percentage Rates, Fees, and Charges, Comment for 1026.56 - Requirements for Over-the-Limit Transactions, Comment for 1026.57 - Reporting and Marketing Rules for College Student Open-End Credit, Comment for 1026.58 - Internet Posting of Credit Card Agreements, Comment for 1026.59 - Reevaluation of Rate Increases, Comment for 1026.60 - Credit and Charge Card Applications and Solicitations, Comment for 1026.61 - Hybrid Prepaid-Credit Cards, Comment for Appendix A - Effect on State Laws, Comment for Appendix B - State Exemptions, Comment for Appendix C - Issuance of Official Interpretations, Comment for Appendix D - Multiple-Advance Construction Loans, Comment for Appendix F - Optional Annual Percentage Rate Computations for Creditors Offering Open-End Credit Plans Secured by a Consumer's Dwelling, Comment for Appendix G - Open-End Model Forms and Clauses, Appendices G and H - Open-End and Closed-End Model Forms and Clauses, Comment for Appendix H - Closed-End Forms and Clauses, Comment for Appendix J - Annual Percentage Rate Computations for Closed-End Credit Transactions, Comment for Appendix K - Total Annual Loan Cost Rate Computations for Reverse Mortgage Transactions, Comment for Appendix L - Assumed Loan Periods for Computations of Total Annual Loan Cost Rates, Comment for Appendix O - Illustrative Written Source Documents for Higher-Priced Mortgage Loan Appraisal Rules. Minimum durations. The existing obligation includes the unpaid principal balance of the existing first lien loan, any earned unpaid finance charges, and any other lawful charges related to the existing loan. (d) Evasion; open-end credit. 1026.41 Periodic statements for residential mortgage loans. A creditor shall provide to the consumer a copy of each written appraisal pursuant to paragraph (c)(6)(i) of this section: 1. The table of average prime offer rates published by the Bureau indicates how to identify the comparable transaction. Because the creditor did not extend during 2016 a first-lien covered transaction secured by a property that is located in a rural or underserved area, and the application was received on or after April 1, 2017, the creditor does not meet this condition for exemption. A creditor that (together with its affiliates that regularly extended first-lien covered transactions) did not meet the applicable asset threshold on December 31, 2015 satisfies this criterion for a higher-priced mortgage loan consummated during 2016 if the application for the loan was received before April 1, 2016 and the creditor (together with its affiliates that regularly extended first-lien covered transactions) had total assets of less than the applicable asset threshold on December 31, 2014. Creditors that had total assets of less than $2,060,000,000 on December 31, 2014, satisfied this criterion for purposes of any loan consummated in 2015 and, if the creditor's assets together with the assets of its affiliates that regularly extended first-lien covered transactions during calendar year 2014 were less than that amount, for purposes of any loan consummated in 2016 for which the application was received before April 1, 2016. Thus, for example, a creditor of a loan secured by a new manufactured home and land could comply with 1026.35(c)(3)(i) by obtaining an appraisal conducted by a state-certified or -licensed appraiser based on plans and specifications for the new manufactured home and an inspection of the land on which the property will be sited, as well as any other information necessary for the appraiser to complete the appraisal assignment in conformity with the Uniform Standards of Professional Appraisal Practice and the requirements of FIRREA and any implementing regulations.