[TheBank]

We use the general analysis ATR rule for our in house consumer mortgage loans that we retain and do not sell. We do not go through the QM steps. Our mortgage division originates loans under the QM rules.

My question is for our in house loans that we retain and do not sell. Does the 10/1/2022 change to the ATR / WM rule affect the general analysis ATR criteria? I am thinking it does not, but want to be sure.

[Kimberly Boatwright, CAMS, CRCM]

I would agree with your assessment, it makes sense, but there doesn’t seem to be a consideration for loans sold verse loans kept. As you know, the current ATR/QM Rule requires a lender to make a reasonable, good faith determination of the borrower’s ability to repay the mortgage and defines several categories of Qualified Mortgages (QMs). Loans that meet the definition of a Qualified Mortgage are considered to have met the Ability-to-Repay requirements and enjoy certain protections from liability.

In the General QM change, the original definition of General QM required that DTI must not exceed 43% and Appendix Q must be used to verify debts/income to be considered QM, among other criteria. In December 2020, the CFPB issued a revision to the General QM Rule, removing the DTI limit and Appendix Q and replacing it with limits on the loan’s pricing. Under the amended rule, a loan will meet the General QM definition if the annual percentage rate (APR) exceeds the average prime offer rate (APOR) for a comparable transaction by less than 2.25% (or up to 6.5% depending on the loan amount and transaction type) at the time the interest rate is set.

With out solid guidance, IMO make sure whatever you do is documented in policy/procedures and consistent.

NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646 and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege.

THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE

[Author]

Posts