Reply To: Small Creditor – Higher Priced Covered Transactions


HPML has its own triggers and HPML escrow has some exemptions. The HPCT threshold does not affect the HPML triggers. If your loan is 1.5% or more above the APOR on a first lien transaction subject to the HPML rules then you are required to escrow unless you meet one of the HPML escrow exemptions. The HPCT status indicates whether or not you will attain a safe harbor or rebuttable presumption of compliance for your QM. If your loan is NOT a HPCT and you meet the QM requirements you have a safe harbor; if it is a HPCT and you meet the QM requirements then you have a rebuttable presumption of compliance. As a small creditor under (e)(5), (e)(6), or (f) of 1026.43 you are given more room for a safe harbor – the definition of the HPCT gives small creditors up to 3.5% or more above the APOR before it becomes a HPCT. Again, HPCT won’t affect your escrow requirements under the HPML rules.