High Cost Home Loans

A high-cost home loan is one in which the annual percentage rate (APR) of the loan at consummation is:

  • 8 percentage points (for a first lien loan) over the yield on U.S. Treasury securities having a comparable maturity, measured on 15th day of the month in which an application for credit is received by the lender;
  • 9 percentage points (for a subordinate lien loan) over the yield on U.S. Treasury securities having a comparable maturity, measured on 15th day of the month in which an application for credit is received by the lender;
  • one whose total points and fees exceed five percent of the total loan amount if the total loan amount is fifty thousand dollars or more;
  • one whose total points and fees exceed six percent of the total loan amount if the total loan amount is fifty thousand dollars or more and the loan is a purchase money loan guaranteed by the FHA or the VA or
  • one whose total points and fees exceed the greater of six percent of the total loan amount or fifteen hundred dollars if the total loan amount is less than fifty thousand dollars.

With regard to high-cost home loans and veterans, residual income is the amount of net income remaining (after deduction of debts and obligations and monthly shelter expenses) to cover family living expenses such as food, health care, clothing, and gasoline.

Subprime Lending

A subprime home loan is one in which the initial interest rate or fully indexed rate, whichever is higher, exceeds by more than 1 3/4 percentage points (for a first lien loan) or 3 3/4 percentage points (for a subordinate lien loan) the average commitment rate for loans in the northeast region with a comparable duration to the duration of a home loan as published by Freddie Mac in its weekly Primary Mortgage Market Survey (PMMS) posted in the week prior to the week the lender provides the "good faith estimate."

The comparable duration for a home loan shall be determined as follows: for an adjustable or variable home loan with an initial rate that is fixed for less than three years, the Freddie Mac survey result for a one-year adjustable rate mortgage; for an adjustable or variable home loan with an initial rate that is fixed for at least three years, the Freddie Mac survey result for a five-year hybrid adjustable rate mortgage; for a fixed rate home loan with a term of fifteen years or less, the Freddie Mac survey result for a fifteen-year fixed rate mortgage; and for a fixed rate home loan with a term of more than fifteen years, the Freddie Mac survey result for a thirty-year fixed rate mortgage.

[UPDATE: JANUARY 2016]

On January 1, 2016, FreddieMac ceased publishing regional rates in its weekly Primary Mortgage Market Survey (PMMS). Accordingly, when calculating interest rate thresholds for mortgage loans in the State of New York, lenders and consumers should use the following publicly-reported average commitment rates:

  • For an adjustable or variable home loan with an initial rate that is fixed for at least three years, the Freddie Mac national survey result for a five-year hybrid adjustable rate mortgage;
  • For a fixed rate home loan with a term of fifteen years or less, the Freddie Mac national survey result for a fifteen-year fixed rate mortgage;
  • For a fixed rate home loan with a term of more than fifteen years, the Freddie Mac national survey result for a thirty-year fixed rate mortgage; and
  • For an adjustable or variable home loan with an initial rate that is fixed for less than three years, the Federal Financial Institutions Examination Council's (FFIEC) 1-year adjustable Average Prime Offer Rate (APOR).

Consistent with the method for calculating the subprime threshold in New York State prior to January 2016, a subprime home loan is one in which the initial interest rate or fully indexed rate, whichever is higher, exceeds by more than 1 3/4 percentage points (for a first lien loan) or 3 3/4 percentage points (for a subordinate lien loan) the average commitment rates as set forth above, posted in the week prior to the week the lender provides the "good faith estimate."

Please note, however, in circumstances involving a home loan insured by the Federal Housing Administrations (FHA), where annual mortgage premiums are collected by the FHA for the maximum duration permitted under federal statute, and where such loan is neither a Title 1 home improvement loan nor a home equity conversion, a subprime home loan is one in which the initial interest rate or fully indexed rate, whichever is higher, exceeds by more than 2 1/2 percentage points (for a first lien loan) or 4 1/2 percentage points (for a subordinate lien loan) the average commitment rates as set forth above, posted in the week prior to the week the lender provides the "good faith estimate."

Freddie Mac Survey results (Freddie Mac site):

FFIEC Survey Results (FFIEC site):

* Primary Mortgage Market Survey® data provided by Freddie Mac.

* By use of this data, the user agrees that the data is provided "as is" with no warranties of any kind, express or implied, including, but not limited to, warranties of accuracy or implied warranties of merchantability or fitness for a particular purposes. Use of this data is at the user's sole risk. In no event will Freddie Mac or the Department of Financial Services be liable for any damages arising out of, or related to the data, including, but not limited to, direct, indirect, incidental, special, consequential, or punitive damages, whether under contract, tort, or any other theory of liability, even if Freddie Mac or the Department is aware of the possibility of such damages.