Click Ability to Repay/QM to view the Ability to Repay (ATR)/Qualified Mortgage (QM) compliance test results. The Ability to Repay/QM tab includes compliance testing and results for the following:
· ATR/QM - Product Feature
· ATR/QM - Points and Fees Test
· ATR/QM - Qualifying Payment
· ATR/QM - Higher Priced Covered Transaction (HPCT) APR Test
Tip: The Ability to Repay/QM compliance test cannot be performed until a GFE has been saved. The Points and Fees Test will use data from the most recently saved GFE until the HUD is saved. Once the HUD is saved, the Points and Fees Test will only use data from the HUD.
A summary of the results of the test appears at the top of the Ability to Repay/QM tab. The summary provides the user with a quick glance at each of the tests performed and displays a statement about the results of the compliance testing.
Badges appear next to each compliance test in the summary and throughout the tab to indicate if the loan has passed or failed. A green badge with a checkmark will appear if the loan is currently passing that compliance test. A red triangle badge with an exclamation mark will appear if the loan is currently not passing that compliance test. A yellow circle badge will appear if there is not currently enough information to perform that compliance test.
ATR/QM - Product Feature test confirms that the loan details meet all the requirements necessary to be considered a QM loan. Features tested include loan terms less than or equal to 30 years, small creditor balloon features, interest-only payments, balloon mortgage terms greater than or equal to 60 months, and balloon features on fixed transactions only. If the loan is exempt from testing due to product features, the reason(s) for exemption will be listed here.
ATR/QM - Points and Fees Test is performed to determine if the loan meets the requirements of a QM loan. In the initial view, summary results display the Allowable Points and Fees and the Transaction Points and Fees. To view details of the test, click the Show Details hyperlink to expand the view to display the Amount Financed, Applicable Financed Fees, Total Loan Amount, Applicable Finance Charges, Affiliate Fees, Subject Lien Prepayment Penalty, Prepayment Penalty on Satisfied Liens, and Lender Credit information.
· Allowable Points and Fees – calculation may be based on a flat dollar amount or a percentage of the total loan amount based on regulations and the loan amount. A statement indicating how the calculation was determined is listed below the Total Loan Amount on the left-side of the ATR/QM – Points and Fees Test section.
· Applicable Finance Charges – all fees properly identified as finance charges, except those excluded by the regulation, such as interest, FHA MIP, and the Federal VA funding fee, are included in the ATR/QM – Points and Fees Test. If discount points are charged, the user will be required to list the undiscounted rate and points on the GFE/HUD so that the amount of bona fide discount points can be calculated and the appropriate amount of the bona fide discount excluded from the Points and Fees Test. Undiscounted points are the points that are “base rate points” and must be paid to obtain the undiscounted rate.
· Affiliate Fees – fees paid to affiliates must also be included in the points and fees testing. In order to identify fees as paid to affiliates, a field has been added to the appropriate vendor types configured in Admin to identify affiliate providers. If an affiliate vendor is entered on the Vendor Info screen and the correlating Paid To type is selected on the GFE/HUD, then fee will be included in the points and fees testing automatically and listed in the Affiliate Fees section. Users can also manually identify a fee as Affiliate when the Paid To type is Other by marking the Affiliate check box. Affiliate fees that are marked as Financed by the creditor and also a finance charge will be subtracted from the Amount Financed as part of the Total Loan Amount calculation.
· Subject Lien Prepayment Penalty– if the product associated with the loan is configured to have a prepayment penalty, the appropriate amount of the penalty must be considered for the Points and Fees test.
· Prepayment Penalty on Satisfied Liens– refinance loans off a mortgage with a prepayment penalty that must be included in the Points and Fees Test and identified as such on the Forms & Docs > 1003 > Liabilities tab and the appropriate indicator for the Prepayment Penalty Same Creditor must be made for the liability being paid.
· Lender Credit– if a lump-sum lender credit is used as a credit towards the Points and Fees Test, that amount will be listed here. This is based on the setup in the Administrative site.
Tip: If a single MI premium will be paid by the borrower for a transaction, the appropriate deduction of the current 1.75% FHA MIP premium will be made if the premium is identified as refundable. If you do not wish to have this deduction made, the MI premium should not be identified as refundable on the MI calculator accessible from the GFE and 1003.
ATR/QM - Qualifying Payment calculates the qualifying payment as required by QM. In the initial view, the QM Maximum DTI and the Transaction QM DTI are displayed. To view details of the test, click the Show Details hyperlink to expand the view to display the Total Monthly Income, Total Monthly Debt, QM Qualifying P&I Payment, and QM Qualifying Rate information.
ATR/QM - Higher Priced Covered Transaction (HPCT) APR Test will determine if the loan is a higher priced transaction and will display the results. In the initial view, the HPCT APR Threshold and Transaction APR are displayed along with a statement indicating if the transaction is or is not a QM Higher Priced Coverage Transaction. To view details of the test, click the Show Details hyperlink to expand the view to display the Rate Lock Date, APR, and 1st Lien Adjustment information.
The Rate Lock Date will be required for the Higher Priced Covered Transaction (HPCT) APR Test. The system will determine the appropriate APOR rate to make the necessary regulatory comparisons based on the product features, the loan term, and the rate lock date. The regulation requires that the date that the rate was set with the borrower is the appropriate date. The system will use the date the rate lock action was performed in the LOS rather than the date of the application rate sheet. If the rate has not yet been locked, the most recent APOR values will be used for testing to assist in identifying issues prior to the time of lock.
Tip: The LOS will automatically calculate the Regulatory Rate Lock Date if enabled in the Administrative site.
Tip: Compliance testing in the LOS is dynamic and updates automatically as information is added or changed on the loan application. Users should periodically review the Compliance Alerts for any updates that could affect the loan application.
Click Print to print the Compliance Alerts which will print each of the compliance testing tabs on a separate page.