Bulletin W13-093 - Compliance Guidance on the Determination of Subprime Home Loans under New York Banking Law and New York’s Temporary Order for Calculating APR on Government Loans

Topic included in Bulletin W13-093:

• New York’s Department of Financial Services (DFS) issued a TEMPORARY ORDER relating to the determination of thresholds for Subprime Home Loans
• Doc Magic has temporarily programed their system to calculate the revised New York Subprime Home Loan APR rules. 
  • WARNINGS  will be displayed if the system determines that the loan is a New York Subprime Home Loan
• Determination of Subprime Home Loans under New York Banking Law
  • The DFS  has provided specific dates to use to determine the “fully indexed rate” for purposes of determining whether an adjustable rate or fixed rate mortgage loans is a subprime loan
  • Adjustable Rate Mortgage Loan:
    • The APR should be calculated using the index rate on the loan based on the “date the Lender provides the “good faith estimate” under RESPA (plus the margin to be added to it after the expiration of any introductory period or periods, if applicable”
  • Fixed Rate Mortgage Loan:
    • The APR should be calculated at the time the “Lender issues its commitment”
• 60 Day Temporary Order for Calculating APR Based on new FHA’s MIP Changes
  • Lenders advised not to use the current MIP triggers to calculate APR and fully indexed rates based on FHA’s Mortgagee Letter 2013-04, which revised FHA’s policies concerning MIP for all loans with FHA case numbers assigned on or after June 3, 2013
  • On any FHA or VA loans where the “GFE Disclosure Date” (date original GFE was sent to the borrower) is on or before Monday, September 2, 2103, MIP can be calculated using the previous MIP rates prior to June 3, 2013.

Download: Bulletin - W13-093 (PDF)