Originally posted in Compliance Masters Group Forum by mbarnes:
We are a small creditor and our loan policy states that the DTI should not exceed 42%.
When doing our ATR (the 8 factors) and using the payment at the 61st month and the DTI goes over 42% would we still have a qualified mortgage and just track the loan as a policy exception? Since the regulation does not have a specific threshold for DTI we are thinking that because we are over our underwriting standards that the loan would not be a qualified mortgage. Are we thinking correctly?
You must consider the consumer’s debt-to-income ratio (DTI) or residual income,
although the rule sets no specific threshold for DTI or residual income.
You must consider the DTI but there is no threshold for a small creditor QM, that if exceeded, disqualifies it from QM status, as long as all other criteria are met. Be aware of the fair lending risk associated with policy exceptions and mindful of ways to minimize those risks.
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