Ability to Repay and Qualified Mortgage Rule

Transcription

1 Ability to Repay and Qualified Mortgage Rule The Consumer Financial Protection Bureau adopted a rule that implements the Ability to Repay and Qualified Mortgage ( ATR/QM ) provisions of the Dodd-Frank Act. The final ATR/QM rule is effective with initial applications taken on or after January 10, (For FHA it is Case Numbers assigned on or after January 10, 2014) Overview Maverick will only accept loans that meet ATR/QM rule requirements. QM compliance cannot be cured after closing. Category Eligibility General Requirements Safe Harbor QM (non- HPML) Rebuttable Presumption QM (HPML) amortization, no interest only, no balloon thresholds; and APR< APOR + 1.5% (first liens); and 43% DTI underwriting requirements (based on Appendix Q guidelines); OR FNMA/FHLMC eligible or insured by VA, Rural Housing or HUD (until proposed rule is finalized). amortization, no interest only, no balloon thresholds; and APR >= APOR + 1.5% (first liens); and 43% DTI underwriting requirements (based on Appendix Q guidelines); OR FNMA/FHLMC eligible or insured by VA, Rural Housing or HUD (until proposed rule is finalized). HUD Safe Harbor QM amortization, not interest only, no balloon thresholds (see Points and Fees below); and

2 HUD Rebuttable Presumption QM Loan is insured by FHA. APR< APOR % + annual MIP *Federal HPML prepayment and escrow requirements apply if APR>=APOR+1.5% amortization, not interest only, no balloon thresholds (see Points and Fees below); and Loan is insured by FHA. APR >= APOR % + annual MIP Non-QM Not eligible N/A *Federal HPML prepayment and escrow requirements apply if APR>=APOR+1.5% Products under ATR/QM Only qualified mortgage loans will be accepted by Maverick and must comply with the requirements outlined in the ATR/QM rule. Points and Fees Thresholds Note Amount Points and Fees Threshold based on Total Loan Amount $100,000+ 3% $60,000-$99,999 $3,000 $20,000-$59,999 5% $12,500-$19,999 $1,000 <=$12,499 8% Evidencing Compliance with QM Points and Fees Clear itemization of fees and application of all credits that indicate paid by/to will be required on all loans; Acceptable forms of evidence include, but are not limited to: Rate Sheet Screen print from LOS and/or Pricing Engine Lock agreement with the borrower; Lock confirmation Final HUD-1 and Addendum(s)

3 Final TIL and Itemization of Amount Financed Invoices Private Mortgage Insurance certificate Purchase contract Maverick will utilize a compliance certification system to verify compliance with the following: ATR/QM, TILA, Federal High Cost (f.k.a. HOEPA), State High Cost, Local High Cost, HPML and Fannie/Freddie Points & Fees. Fees Always Included: Transaction Fees Loan Origination Fees Consumer Points Credit Guarantee Insurance Premium (FHA, VA Funding Fee, USDA) Charges imposed on the creditor for purchasing the loan which is passed onto the consumer. Discount Points for inducing payment by means other than credit Mortgage broker fees Fees for preparing TILA disclosures, real estate construction loan inspection fees, fees for postconsummation tax or flood service policy, required credit life insurance charges. Maybe Included: Credit Life or Debt Cancellation: Excluded IF the insurance is not required, disclosures are made and the consumer authorizes it. Otherwise it is included. Premiums for property or liability insurance Excluded IF the consumer selects the insurance company and disclosures are made. Otherwise it is Included. Premiums for vendor s single interest (VSI) insurance. Security Interest charges (filing fees), insurance in lieu of filing fees and certain notary fees Excluded IF the fee is for lien purposes prescribed by law, payable to a third public official and is itemized and disclosed. Charges imposed by third parties are Excluded IF the use of the third party is not required to obtain loan and creditor does not retain the charge. Charges imposed by third-party closing agents Excluded IF creditor does not require and does not retain the fee for the particular service. Appraisal and credit report fees Excluded IF application fees, if charged to all applicants, and are not finance charges. Application fees may include appraisal or credit report fees Bona Fide Discount Points Bona fide discount points may be excluded from the points and fees calculation as permitted by the ATR/QM rule. To verify the exclusion of bona fide discount points Maverick will use the following: Evidence of the Starting Adjusted Rate (a.k.a. Base Rate) and points, and corresponding LLPAadjusted rate stack or rate sheet with non-llpa adjusted rate stack and LLPA grids ; and Evidence of the delivery price to the consumer (i.e. rate/lock confirmation).

4 Private Mortgage Insurance Private Mortgage Insurance must be Included in points and fees all borrower paid up-front PMI where it is: Notes: non-refundable or refundable and in excess of FHA limits. To exercise the exclusion of PMI from the points and fees calculation, the up-front premium must be refundable over the life of the policy. Lender paid PMI is not included in points and fees. Borrower paid monthly PMI is not included in points and fees. Seller Credits Where there is clear evidence of the party responsible for payment, Seller credits can be applied to the following to reduce points and fees: Discount points Finance charges Note: seller credits cannot be applied to broker fees. Lender Credits and Credit for Rate Chosen The credit for rate chosen (line 802 on the HUD-1) may be applied to reduce points and fees, excluding broker fees and fees paid to an affiliate of the broker. Broker Compensation Broker compensation and fees paid to an affiliate of the broker must be included in the points and fees calculation; they cannot be reduced by credits. Effective January 10, 2014, Maverick Funding will no longer charge any lender fees. Lender paid broker compensation will be capped at a maximum of 2.75% and no flat fee will be allowed. Note: If broker has affiliates it is recommended a lower compensation plan be selected. A Lender Paid Compensation Form will be available on our Wholesale website. Temporary QM The underwriting requirement under ATR/QM is satisfied if the file receives an Approve/, or equivalent result, or is eligible for insuring by VA, Rural Housing or HUD. General QM Loans that do not meet the underwriting requirement under Temporary QM must have a DTI <=43% to meet the General QM underwriting requirement.

5 The determination of DTI must be in accordance with Appendix Q as outlined in the ATR/QM rule.