Confused on the Ability to Repay (ATR)/Qualified Mortgage (QM) Rule and its impact on the Higher-Priced Mortgage Loan (HPML) requirements? Remember that some QM’s have special rate thresholds:
A Small Creditor Portfolio QM or Balloon Payment QM isn’t a higher-priced covered transaction (HPCT) unless it exceeds the Average Prime Offer Rate (APOR) by 3.5% or more, first liens included. This means, rather than having a safe harbor for compliance, you have a rebuttable presumption of compliance. However, first-lien Small Creditor Portfolio QMs and Balloon-Payment QMs with an APOR rate spread of 1.5 or more must still follow the HPML escrow requirements, (unless you’re exempt from them). While QMs are exempt from the HPML appraisal requirements, don’t forget about the Regulation B appraisal requirements! And don’t forget, if you have a non-QM HPCT, you must consider any balloon payment in the repayment analysis, regardless of when it occurs.
Still confused? Join us for our Ability to Repay (ATR), Qualified Mortgage (QM), High Cost Mortgage (HCM) and Higher-Priced Mortgage Loan (HPML) webinar on April 26, 2017. We will dive right into the What, Where, When and How with plain English instruction and answers.