Help me out please, I’m a little confused.
The CFPB has just come out and added a 4th type of QM which is the Small Creditor Portfolio QM.
Within this we can have the “presumption of compliance” if the APR doesn’t exceed the APOR by more than 3.5 for both first and subordinate liens. (Assuming all other conditions of a regular QM are met and the creditor is an actual small creditor).
Does this mean that if their rate spread is below 3.49 they’re still considered an HPML within the already stated escrow requirements? And are able to get the presumption of compliance (assuming all other requirements of a QM are met.)??
Or are they going to consider these small creditor loans to be HPML’s if the rate spread exceeds 3.5?
What I really need to know is, when is escrow necessary to be established for a small creditor loan? After the rate spread exceeds 1.5 or 3.5?