What does HPML apply to?
The HPML Appraisal Rule applies to higher-priced, first-lien or subordinate-lien closed-end loans secured by a consumer’s principal dwelling, which are not otherwise exempt under the rule. It is a subordinate-lien with an APR that exceeds the APOR at the time the APR is set by 3.5 percentage points or more.
How is HPML determined?
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.
What types of loans are exempt from HPML?
Which loans are exempt from HPML requirements?
- Construction loans. HPML rules don’t extend to construction loans to finance a newly built home.
- Rural and underserved areas.
- Planned unit development or condo association insurance.
Can a HPML be a QM?
These types of QM’s can be first-lien HPML’s and still qualify for the safe harbor. First-lien Small Creditor Portfolio QMs and Balloon Payment QMs with an APOR rate spread of 1.5 or more must still follow the HPML rules.
Does HPML apply to Investment Property?
An HPML does not include a second home or Investment Property.
Can a borrower be charged for two appraisals?
The lender must obtain a second appraisal from another appraiser and the cost of the second appraisal may not be charged to the homebuyer. The second independent appraisal must be completed by a FHA roster appraiser selected by the lender that is underwriting the mortgage.
How is APR calculated?
APR is calculated by multiplying the periodic interest rate by the number of periods in a year in which it was applied. It does not indicate how many times the rate is actually applied to the balance.
How is APOR determined?
The Average Prime Offer Rate (APOR) is an annual percentage rate that is based on average interest rates, fees, and other terms on mortgages offered to highly qualified borrowers.
Does HPML apply to investment property?