Office of Loan Programs
Graduated Payment Mortgage Origination Program (GP-MOP)
The Graduated Payment Mortgage (GP-MOP) provides a first deed of trust loan with a reduced interest rate (Borrower Rate) during the initial years of the loan (Rate Differential Period). At no time will the Borrower Rate be less than 3.25 percent. The difference between the MOP Standard Rate and the Borrower Rate (Interest Rate Differential) becomes smaller each year by a stated amount until the MOP Standard Rate is reached. This provision results in a lower initial monthly payment, thereby expanding the range of purchase prices affordable to those prospective participants who expect their income to rise in subsequent years. At the end of the Rate Differential Period, the GP-MOP component will cease and the loan interest rate will be adjusted in the same manner as a Standard MOP loan. Here is an example of how the GP-MOP Rate changes.
Eligibility and terms must be authorized at the campus level. Central funds are not available for this program. Each campus determines the funding source for GP-MOP loans.
Below is a recap of Program definitions related to a GP-MOP loan:
|Standard Rate: The Mortgage Origination Program (MOP) loan interest rate, which is calculated as the four-quarter average earnings rate of the University’s Short-Term Investment Pool (STIP), plus an administrative fee of 0.25 percent. At no time will the Standard Rate be less than 3.25 percent.
|Borrower Rate: The interest rate paid on a GP-MOP loan during the initial years of the loan. This rate is a stated percentage below the Standard Rate, subject to a minimum Borrower Rate of 3.25 percent.|
|Interest Rate Differential: The reduction in the Standard Rate that is used to derive the Borrower Rate. The Interest Rate Differential will gradually decrease according to the terms of the loan as set forth in the Promissory Note.
|Rate Differential Period: The number of years the Interest Rate Differential will be in effect.