Reply To: Small Creditor Presumption of Compliance


The final rule will extend the QM safe harbor to small creditors with first lien qualified mortgages under 1026.43(e)(5) even if the APR is between 1.5 – 3.5 percentage points higher than the APOR. It is raising this threshold to ensure small creditors still make loans that consumers need – since smaller creditors have a higher cost of funds their rates may be higher and therefore they should be given greater tolerance. The CFPB feared that if small creditors can’t make these loans within the safe harbor parameters then they may not be made at all which would leave a segment of consumers underserved.

Unfortunately, The escrow trigger is not changing, so if you make an HPML under 12 CFR 1026.35 you’ll still have to comply with the escrow requirements unless you meet one of the exemptions in 1026.35(b)(2).