Notice of Availability of Revised Methodology for Determining Average Prime Offer Rates, 64142 [2016-22504]

Agencies

• BUREAU OF CONSUMER FINANCIAL PROTECTION

[Federal Register Volume 81, Number 181 (Monday, September 19, 2016)]
[Notices]
[Page 64142]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22504]



[[Page 64142]]

=======================================================================
-----------------------------------------------------------------------

BUREAU OF CONSUMER FINANCIAL PROTECTION


Notice of Availability of Revised Methodology for Determining 
Average Prime Offer Rates

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Notice of availability.

-----------------------------------------------------------------------

SUMMARY: The Bureau of Consumer Financial Protection (Bureau) announces 
the availability of a revised methodology statement, entitled the 
``Methodology for Determining Average Prime Offer Rates.'' The 
methodology statement describes the methodology used to calculate 
average prime offer rates for purposes of Regulation C and Regulation 
Z. The Bureau removed from the methodology statement the references to 
the sources of survey data used to calculate average prime offer rates.

ADDRESSES: The revised methodology statement is available on the Web 
site of the Federal Financial Institutions Examination Council (FFIEC) 
at https://www.ffiec.gov/ratespread/newcalchelp.aspx#4.

FOR FURTHER INFORMATION CONTACT: Terry J. Randall, Counsel, Office of 
Regulations, at 202-435-7700.

SUPPLEMENTARY INFORMATION: The average prime offer rates (APORs) are 
annual percentage rates derived from average interest rates, points, 
and other loan pricing terms offered to borrowers by a representative 
sample of lenders for mortgage loans that have low-risk pricing 
characteristics. APORs have implications for data reporters under 
Regulation C and creditors under Regulation Z. Regulation C requires 
covered financial institutions to report, for certain transactions, the 
difference between a loan's annual percentage rate (APR) and the APOR 
for a comparable transaction.\1\ Under Regulation Z, a creditor may be 
subject to certain special provisions if the difference between a 
loan's APR and the APOR for a comparable transaction exceeds certain 
thresholds.\2\
---------------------------------------------------------------------------

    \1\ 12 CFR 1003.4(a)(12)(i).
    \2\ 12 CFR 1026.35(a) and 1026.32(a)(1)(i).
---------------------------------------------------------------------------

    The Bureau calculates APORs on a weekly basis according to a 
methodology statement that is available to the public and posts the 
APORs.\3\ To calculate APORs, survey data on four mortgage products are 
used and posted on the FFIEC Web site weekly: 30-year fixed rate 
mortgage, 15-year fixed rate mortgage, five-year variable rate 
mortgage, and one-year variable rate mortgage.\4\ Currently, both the 
methodology statement and the FFIEC Web page that lists the survey data 
used to calculate APORs identify the sources of the survey data used to 
calculate APORs.
---------------------------------------------------------------------------

    \3\ See FFIEC, Average Prime Offer Rate Tables, available at 
https://www.ffiec.gov/ratespread/aportables.htm.
    \4\ See FFIEC, Mortgage Rate Survey Data Used to Calculate Rate 
Spreads for Loans Reportable under HMDA, available at https://www.ffiec.gov/ratespread/mortgagerates.htm.
---------------------------------------------------------------------------

    The Freddie Mac Primary Mortgage Market Survey[supreg] (PMMS) 
previously provided survey data for all four of the mortgage products 
that were used to calculate the weekly APORs. Earlier this year, 
Freddie Mac discontinued publishing the result for the one-year 
variable rate mortgage product. However, it provided the Bureau with 
data on the one-year variable rate mortgage product obtained using the 
same survey and calculation techniques as the PMMS. Beginning on July 
7, 2016, the Bureau started using data provided by a survey conducted 
by HSH Associates (HSH) for the one-year variable rate mortgage product 
together with PMMS data on 30-year fixed rate mortgage, 15-year fixed 
rate mortgage, and five-year variable rate mortgage products to 
calculate the weekly APORs. The Bureau updated both the methodology 
statement \5\ and the FFIEC Web site to note the change in the source 
of survey data for the one-year variable rate mortgage product and 
continued to post the survey data used to calculate APORs on the FFIEC 
Web site on a weekly basis.\6\ The Bureau has learned that, this month, 
HSH will discontinue collecting mortgage survey data, including data on 
the one-year variable rate mortgage product. The Bureau has identified 
a replacement source of survey data on the one-year variable rate 
product: Data obtained from Freddie Mac using the same survey and 
calculation techniques as PMMS, although the official PMMS no longer 
publishes results for the one-year variable rate mortgage product. The 
Bureau will use these data to calculate APORs beginning on September 
22, 2016.
---------------------------------------------------------------------------

    \5\ Notice of Availability of Revised Methodology for 
Determining Average Prime Offer Rates, 81 FR 52831 (Aug. 10, 2016).
    \6\ See FFIEC, Mortgage Rate Survey Data Used to Calculate Rate 
Spreads for Loans Reportable under HMDA, available at https://www.ffiec.gov/ratespread/mortgagerates.htm.
---------------------------------------------------------------------------

    The Bureau will continue to post the survey data used to calculate 
APORs on the FFIEC Web site every week at https://www.ffiec.gov/ratespread/mortgagerates.htm and will continue to identify the source 
of the survey data on that Web page. However, to streamline how the 
Bureau provides notice of the sources of survey data, the Bureau will 
no longer revise the methodology statement each time it is necessary to 
change the source of survey data. Accordingly, the Bureau revised the 
methodology statement to remove the references to the sources of survey 
data. In addition to this change to the methodology statement, the 
Bureau corrected the methodology statement to clarify that the survey 
data reflect only points and do not include fees. There are no other 
substantive changes to the methodology statement.

    Dated: September 13, 2016.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2016-22504 Filed 9-16-16; 8:45 am]
BILLING CODE 4810-AM-P