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The HPML appraisal rules have an exemption if the loan is a QM. We are a small creditor so we get a safe harbor for QMs as long as our loan is not more than 3.5 percentage points above the APOR. If we make a loan that is a Safe Harbor QM, we do not have to follow the requirements for HPML appraisals including if it is a flip, correct? Would it be best practice, if we have a loan that is above the actual HPML threshold to still follow the appraisal rules? I guess I am thinking that we may think it is a QM, but if it isn’t for some reason then we will have violated both the Ability to Repay and HPML appraisal rules….especially when Ability to Repay is new…
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You are correct, QM are exempt from the HPML appraisal rules, including the flip requirements. In my opinion, you could certainly abide by the HPML appraisal rules to be cautious, but if you have a safe harbor QM and have documentation in the file to back it up, you shouldn’t have any problem using the exemption to the HPML appraisal rule. However, if you have a loan that meets the QM requirements, but is a higher cost covered transaction, then you only have a presumption of compliance, which means your compliance with the ability to repay rules could be questioned. At that point, if it is determined you did not satisfy the QM requirements then you also would not have technically qualified for the HPML appraisal exemption. In cases where you only have a presumption of compliance, I think it would be prudent to follow the HPML appraisal rules if they apply.
Of course, as you stated, this is all new so we’ll have to wait to see what the examiners expect in these situations, but I think this is a safe approach.
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