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You are correct. The 210-240 notice is intended to give the borrower notice that the rate will be changing and to give them an estimate of what that rate will change to (if you know what that rate will be at the time you make the initial/210-240 notice you will need to put it in, but most creditors won’t know the rate this far in advance so an estimate is sufficient – see the details of 1026.20(d)). This would ideally give them time to shop around for a new loan if they can’t afford the new rate.
See page 22 of the CRA Q&A, 26(b)(1)-1: https://www.ffiec.gov/cra/pdf/2010-4903.pdf.
From 1026.37(h)(2):
Bona fide and reasonable charge. A bona fide and reasonable charge is a charge for a service actually performed that bears a reasonable relationship to the servicer’s cost of providing the service, and is not otherwise prohibited by applicable law.
As you stated, there isn’t a DTI ceiling for the small creditor QM option. As long as you consider the DTI and verify the debt and income in accordance with 1026.43(e)(5)(B) then there isn’t a limit on the DTI, which means you could make an exception to your policy. Just remember that exceptions to your loan policy increases fair lending risk. Exceptions should be infrequent and well documented.
As you probably know, there has been the discussion that if a bank decides to only make QM loans that could open the door to potential fair lending concerns. The banking agencies put out a statement that making only QM would not necessarily create fair lending issues, but banks need to continue and increase fair lending monitoring during implementation of these new rules to ensure there is no disparate impact/fair lending concerns. The interagency statement is linked here: https://www.federalreserve.gov/newsevents/press/bcreg/20131022a.htm.
I believe you are in the a similar situation if you decide to utilize Appendix Q for underwriting all applicable loans. On the surface there probably isn’t an issue, but you’ll need to carefully and heavily monitor fair lending to ensure this new underwriting policy isn’t creating disparate impact. Here is also an article on fair lending concerns: https://www.mondaq.com/unitedstates/x/272916/Financial+Services/Interagency+Fair+Lending+Guidance+A+First+Step+But+In+The+Right+Direction
That is what it says in regard to HPML requirements, but keep in mind that your internal policy probably requires that you obtain appraisals on most loans and you also need to comply with the Interagency Appraisal and Evaluation Guidelines.
No, you don’t have to use the ceiling as the fully indexed rate. The fully indexed rate is going to be your index at consummation plus your margin.
Check out the commentary to 43(b)(3) – it gives various examples that might be helpful.
And yes, you need to calculate the payment for simultaneous loans (other covered loans or HELOCs secured by the same dwelling and made to the same borrower at or before consummation) in accordance with 1026.43(c)(6). And I’m not aware of any specific calculation for credit card debt under the general ATR other than under c(7).
Are you talking about an anti-steering form? If so, although a good idea, a form isn’t required by regulation, but it may be required by your policy or your secondary market investor. The prohibition on steering applies to any consumer loan secured by a dwelling.
I believe you are thinking about the High Cost Mortgage requirement under 1026.34(a)(4)(ii). It is linked here: https://www.ecfr.gov/cgi-bin/text-idx?SID=a73fc1358d918790ff49be8da05ce6f6&node=12:8.0.2.8.18.5.1.5&rgn=div8
You can use the ATR rules or any of the QM rules for which you qualify. And you can use a different option for each loan if you choose – you aren’t required to choose the same option for all of your loans.
The options that allow you to make balloon loans are the general ability to repay rules – 1-26.43(c)(2), the temporary balloon QM – 1026.43(e)(6) or the balloon QM – 1026.43(f). Remember, that under the general ability to repay rules that a higher priced covered transaction (HPCT) requires you include the highest payment in the payment schedule (the balloon payment) in the payment calculation which will likely significantly increase the debt-to-income ratio and make it difficult for you to qualify borrowers under the ATR for higher priced covered transactions (HPCT).
I would go with the CFPB’s opinion since Reg Z is now under their control. I haven’t seen anything concrete that tells us either way. But in my opinion, I believe they will consider VSI as credit insurance. This link from the CFPB, https://www.consumerfinance.gov/askcfpb/799/my-dealer-offered-me-credit-insurance-what-it.html , although addressing dealers, gives some insight to the CFPB’s definition of the different types of credit insurance.
