CFPB: QM/ATR Articles
|CFPB Annual Threshold Adjustments (CARD Act, HOEPA and ATR/QM)-Dated June 17, 2016 (Effective January 1, 2017)
Each year the CFPB increases the Points and Fees Thresholds for ATR and QM. All of the changes are slight increases based on the annual percentage change in the Consumer Price Index. This article is an update on these fees, so this is a MUST READ for any mortgage originator or manager. (CFPB-12 CFR Parts 1026-Truth in Lending (Regulation Z) Annual Threshold Adjustments (CARD Act, HOEPA and ATR/QM) – Dated June 17, 2016-Effective January 1-2017)
|CFPB Finalizes Rule to Facilitate Access to Credit in Rural and Underserved Areas (Effective 1-1-2016)
Rural and underserved areas tend to have lower access to credit and different needs in accessing any available credit. The CFPB has made provisions for these areas for lenders who are considered to be rural or underserved area lenders. This updates the original rule that came out in the first interpretation of QM-ATR. There are roughly 2,400 rural small creditors right now. The new final rule will likely increase that number by 1,700 for a total of 4,100, greatly increasing the amount of loans that can be originated. (Consumer Financial Protection Bureau Finalizes Rule to Facilitate Access to Credit in Rural and Underserved Areas – Dated September 21, 2015)
|CFPB – ATR-QM Annual Threshold Adjustment (Effective 1-1-2016)
The CFPB has announced their Annual Threshold Adjustment, which is actually a .02% decrease from the previous year, so you will want to make sure that any systems that test for ATR and QM are updated by the effective date of January 1, 2016. These limits are set each year as a determinant to whether or not a loan is a Higher Priced Mortgage Loan which sets off all kinds of compliance requirements and removes the “safe harbor” defense. (Consumer Financial Protection Bureau – ATR-QM Annual Threshold Adjustment – Dated September 21, 2015)
|CFPB – Marketing Service Agreements - Compliance Bulletin 2015-05-Dated October 8, 2015
If you or your company participates in MSAs (Marketing Services Agreements), consider this bulletin your fair warning about the CFPB’s unfavorable opinion of them. The CFPB is the authority of RESPA and, as such, is not happy that our industry has these arrangements in place as they do not believe these practices are in the best interests of the consumer. (CFPB Compliance Bulletin 2015-05-Dated October 8, 2015)
|The Message behind the "Easing" of TRID Enforcement [Download Mortgage Talking PointsTM flyer, TRID - What Every Real Estate Agent Needs to Know]
TRID What Every Real Estate Agent Needs to Know June 2015|
I\'ve been reading article after article about the easing of the TRID enforcement beyond August 1, 2015 and this is great news. However, every lender should proceed with caution and understand the intent of the release. First, I want to applaud the CFPB for understanding that turning an operation procedure off on one day and turning it on, in a new way, the next day is likely to be fraught with issues. Even the lenders who are most prepared will still have some hiccups. So Thank You! But what is the message behind the message? To figure that out, let’s read between the lines!
|Know Before You Owe - Mortgage Toolkit Disclosure (Effective 8-1-2015)
Know Before You Owe Mortgage Toolkit April 2015|
This is a really cool document. Sure it is 28 pages in length, but there definitely is some useful information in this document. It really does a great job creating talking points for you and the borrower; it has worksheets and other great information that enhance the borrower’s loan process. We have provided you with a link and we would encourage you incorporate this into your loan origination documents immediately. (CFPB Announcement and Release of the “Know Before You Owe” Mortgage Toolkit – Release Date: March 31, 2015 )
|CFPB Announces New HOEPA, Points & Fees Thresholds - Federal Register Update - August 15, 2014
The loan amount and fee changes each year are based on the requirement that the CFPB adjust these figures to account for changes in the Consumer Price Index on an annual basis. This year’s threshold represents roughly a 2% increase from this year’s loan amounts and fees, with some rounding applied.
|CFPB Ability to Repay – Consumer Acknowledgement Tips
While a client’s acknowledgement is NOT required by the CFPB, putting a “consumer acknowledgement” practice in place can be a precautionary measure to protect your company against Rebuttable Presumption claims. It seems pretty logical to me that a company would do at least something to protect their loan decision from the scrutiny of the courts.
|Consumer Finance Protection Bureau [Download Mortgage Talking PointsTM flyer, What Realtors® Need to Know About Qualified Mortgage Rules!]
What Realtors need to Know about Qualified Mortgage Rules December 2013|
For the last several months, you\'ve been asking for a Mortgage Talking Points™ on Qualified Mortgage rules to share with your real estate agents (and builders). Here’s a simplified version of the rule explaining points and fee structures, loan categories, and what it means to agents and their clients.
|Consumer Finance Protection Bureau [Download Mortgage Talking PointsTM flyer, What Realtors® Need to Know About Ability-to-Repay Mortgage Rules! ]
Ability to Repay December 2013|
For the last several months, you\'ve been asking for a Mortgage Talking Points™ on Ability to Repay to share with your real estate agents. Here’s a simplified version of the rule outlining the 8 underwriting requirements for each loan and how it impacts them.
|CFPB – Small Creditors, and do I work for one? [Link to Chart Outlining Requirements for Small Creditors]
You will have to ask yourself three questions to determine if you are a small creditor, and thus be eligible for certain loan types including the ability to originate a small creditor QM that does not have a specific DTI cap (although ATR still needs to be determined). Link to chart outlining requirements for small creditors.
|QM Confusion - Basic Principles & Interpretations
Many loan officers and company are trying to figure out the best solutions from multiple angles to be compliant with QM. Read the 4 basic principles and scenarios and what they mean in your everyday mortgage business.
|CFPB Release - Federal Regulators Provide Guidance on Qualified Mortgage Fair Lending Risks (dated 10/22/13)
The CFPB is addressing industry concerns on potential violations to ECOA due to the possibility it could be interpreted as a disparate impact (and of course an unintended consequence of the new regulations). Something tells me that if lenders are hesitant to originate loans that are only QM loans, the result could be that a majority of the minority class is not being served by lenders, and that could be a big problem.
|CFPB – Press Release – CFPB Updates April Clarifications to Ability to Repay – Dated 7-10-2013
I am confident, as I have previously stated in other articles, that we are probably not seeing the last of these changes – to this rule or others. Now this is not to discourage you from taking notice and understanding the evolution of these changes. Closely monitor these announcements that Mortgage Currentcy writes about so that you can stay connected on the most recent “final” rules.
|CFPB – Passing the Points & Fees Test for QM – View Comparison Chart & Examples
Points and fees calculation are those fees known at or before loan consummation. Second, unless specified, closing costs that a creditor pays and recoups from the consumer over time and THROUGH the interest rate are NOT counted in points and fees. This means that creditors can bake that into the rate too. Yet that doesn\'t mean that you will pass the APOR and PAR test if you do that (more on that in your business line analysis). Tammy Butler shares a couple of charts and math formulas she has confirmed with CFPB.
|CFPB Qualified Mortgage Rules – Safe Harbor and Rebuttal Presumption – Mini-Series Part 6
With Safe Harbor, you would think you are truly safe - not really so. With Rebuttable Presumption, you are more likely to be exposed to litigious efforts by attorneys and borrowers alike if they default on their mortgage in the first 36 months after the consummated loan was originated. It is imperative that you understand that if the loan falls into category (4) and exceeds a 43% DTI, then the loan carries neither the safe harbor nor the benefits from rebuttable presumption.
|CFPB Finalizes Rules – Ability to Repay for Small Lenders and LO Comp Changes
If you are a small community lender or credit union and meet the standards defined as having less than $2 billion in assets, and each year make 500 or fewer first-lien mortgages, then you will also be granted special consideration regarding Qualified Mortgages and Ability to Repay Rules. However, still lots of confusion when it comes to LO compensation. I’ll bet this “final rule” is NOT the final one, so stay tuned.
|CFPB– Qualified Mortgage Rules [Part 5] – Record Retention Requirements
Regarding this record-keeping obligation, most likely it will be the lenders/aggregators that acquires your loans that will be responsible for maintaining these records for 3 years after loan consummation. This does not absolve you from this rule. Check with your state requirements regarding their record-keeping rules. It is good practice to make sure you also have the means to reproduce the file or any specific document that was used in approving the loan for this period of time.
|Consumer Finance Protection Bureau - Qualified Mortgage Rules [Part 4] - Maximum DTI Parameters and Introducing a Secondary Category for Loans Eligible for Sale to FNMA/FHLMC/VA/FHA & RD
Your burden is to establish the risk factors associated with any given loan, and you may be the bearer of bad news on loans even if the AU system suggested an approve rating. It is imperative you do everything in your power to document your reason behind approving loans above this 43% benchmark and retain that info in your loan file.
|Consumer Finance Protection Bureau – Qualified Mortgage and Ability to Repay Rules for Small-Entity Compliance
This is the first of many different Small Entity Compliance Guides that the Bureau has released for the upcoming rules that go into effect in 2014. This one discusses the ATR and QM requirements that are effective 1/10/14.
|Consumer Finance Protection Bureau – Qualified Mortgage Rules [Part 3] Loan Qualification Highest Payment Rules
New Govt Rules for Adjustable Rate Mortgages April 2013|
How is this going to impact you directly? If you are actively originating adjustable rate loans or loans with buydown features, you may be in a ‘world of hurt’. Your higher-end borrowers and real estate investors who want to manage their cash flow by taking advantage of an adjustable rate feature may no longer qualify. The illustrations that the CFPB provide below give a very clear indication that obtaining a loan with an adjustable rate feature will become very difficult in January, 2014. (CFPB Issues Final Rule on Qualified Mortgages – Final Rules Introduced 1/10/13)
|Consumer Finance Protection Bureau – Qualified Mortgage Rules – Part Two - Points and Fees Maximums – 5 Tiers of Loan Amount Thresholds
These five (5) tiers provide you the roadmap that is necessary to understand what amounts or percentages are allowed based on your loan amounts. How is this going to impact you directly? The impact will vary, based on the loan amount tiers. All in all, this seems like the simplest and fairest way to determine excessive points and fees when originating a loan.
|Consumer Finance Protection Bureau - Qualified Mortgage Rules – Part One: General Requirements for Qualified Mortgage
A qualified mortgage is loosely defined as not carrying any of the risky features that were actively used in the industry prior to the housing collapse, which included ‘no-doc’ loans, balloon payments, interest-only features, negative amortization features, terms greater than 30 years, etc. Since the rule goes into effect a year from now, we are breaking it down and writing about one topic at a time as not to overwhelm you.
|CFPB Introduces Rules for Ability to Repay and Qualified Mortgages
CFPB Introduces Rules for Ability to Repay and Qualified Mortgages January 2013|
The CFPB adopted their new rule that is designed to protect borrowers from irresponsible mortgage lending. I wonder how long it will take chronic alcoholics that have fallen to the temptations of alcohol to begin to blame their dilemma and demise on the beer industry and sue local taverns or bars for their choice in how much they drink! (CFPB ISSUES RULE TO PROTECT CONSUMERS FROM IRRESPONSIBLE MORTGAGE LENDING )
|Consumer Finance Protection Bureau Proposed a No Point, No Fee loan Option! What It Might Mean for Loan Originators! Comparison Example Included!
Let me just say… we don’t get this. The very first proposal on this news release indicates it is proposing that lenders offer a No Point, No Fee loan because of the amount of confusion that accompanies all the different variations and combinations of points, fees and interest rates. Then it immediately tells us, in print, that you would be required to do this “unless the consumers are unlikely to qualify for such a loan”….. My question is: who is going to make that determination, and at what point in the origination process? It sure seems like a possible violation of ECOA and Fair Housing requirements if you decide on your own not to offer the No Point, No Fee option. View Comparison Example! (CFPB News Release: CFPB proposes rules to bring a greater accountability to mortgage market – 8/17/2012)