NY Renews Adoption of Emergency Regulation for Subprime Loan Thresholds
On June 22, 2014, the state of New York adopted an emergency regulation, Part 42 of the General Regulations, relating to the definition of “subprime” mortgage loan. The emergency regulation is identical in nature to an emergency regulation adopted in March 2014.

Subprime status is based primarily on the annual percentage rate of a loan compared to the Freddie Mac Weekly Primary Mortgage Survey (“PMMS”). Previously the determination of the subprime threshold was made by adding 1.75% for first-lien mortgages, or 3.75% for subordinate-lien mortgages, to the PMMS.

The adopted regulation amends that threshold by .75%. As such, the subprime threshold will now be 2.5% and 4.5% for first and subordinate lien loans respectively.

The announcement of the change in threshold includes a detailed decision tree for determining the subprime status of various loan products.
Can anyone guide me as to whether section 35 of reg Z supersedes the above rule from NYS? Also does NYS have a jumbo rule?

NY Banking Law 6-m doesn't have a provision for "jumbo" loans. Not sure as to your question about superceding HPML rules. We run both tests and typically don't make 6-m loans; we have come close but because we know the PMMS rates going into the upcoming week products are priced accordingly.
We do have the occasional HPML.