Recently we polled our Compliance Master Group members on the Ability-to-Repay/Qualified Mortgages rules. There were no huge surprises, but we got a lot of confirmation of what we expected to see:

  • Most creditors use a mix of ATR/QM options;
  • The Small Creditor QM is the most popular ATR/QM option;
  • Adopting the ATR/QM rules was a challenge, but did not reduce loan volume for most creditors; and
  • Most creditors have not yet adopted Appendix Q, but plan to do so in the future.

Do you meet the Ability to Repay rules by complying with:

  1. The 8 factors                   38%
  2. The 8 factors and the QM options                   52%
  3. Only the QM options     5%
  4. We no longer originate mortgage loans                      5%

Is the safe harbor and/or rebuttable presumption of compliance important for your financial institution to attain?

  1. Yes, we only make non-HPCT QM loans in order to attain the safe harbor                     11%
  2. Yes, we ensure we meet the requirements for the safe harbor or the rebuttable presumption of compliance                      17%
  3. We prefer to attain safe harbor or rebuttable presumption of compliance status, but it isn’t a deal breaker if we don’t                    50%
  4. No, we don’t expect all loans that we originate to qualify for the safe harbor or rebuttable presumption of compliance                 22%

Has your institution used the Refinancing of a Non-Standard Mortgage exemption?

  1. Yes                       5%
  2. No             95%

Which QM option do you use most frequently?

  1. General QM                                            17%
  2. Temporary GSE QM                  11%
  3. Small Creditor QM                                 55%
  4. Balloon Payment QM                17%

What level of change did you experience as a result of the ATR/QM rules?

  1. We had to make significant changes in our underwriting process.                        33%
  2. We had to make moderate changes in our underwriting process.              48%
  3. We were able to comply with our current process and have only had to make minor  adjustments.         19%

Describe your financial institution’s transition to Appendix Q:

  1. It has been extremely difficult                         0%
  2. It has been somewhat difficult                         35%
  3. It has been easy since Appendix Q is similar to our existing standards.               20%
  4. We do not use the General QM option so we don’t use Appendix Q.                   45%

Does your financial institution plan to use Appendix Q in the future?

  1. Yes                       58%
  2. No                         42%

Has complying with these rules had a negative impact on the number of loans you are able to originate?

  1. Yes                       33%
  2. No                         67%

Have you been through an audit or exam on the ATR/QM rules?

  1. Yes                       20%
  2. No                         80%