Click HOEPA/High Cost Loan to view the HOEPA/High Cost Loan compliance test results. The HOEPA/High Cost Loan tab includes compliance testing and results for the following:
· HOEPA - APR Coverage Test
· HOEPA - Points and Fees Coverage Test
· HOEPA - Prepayment Penalty Coverage Test
· HOEPA - High Cost Counseling (if applicable)
Tip: The HOEPA/High Cost Loan 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 HOEPA/High Cost Loan 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.
HOEPA - APR Coverage Test will compare the applicable APR rate to determine if the loan passes or fails the APR Coverage Test. For Adjustable Rate (ARM) loans, the HOEPA APR is calculated using the fully indexed rate, or in some cases the maximum rate that will be paid during the term of the loan. In the initial view, the HOEPA APR Threshold and Transaction HOEPA APR are displayed. 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 Conforming Adjustment information. If the rate has not yet been locked, the most recent APR values will be used for testing to assist in identifying issues prior to the time of lock.
HOEPA - Points and Fees Coverage Test is performed to determine if the loan meets the requirements of HOEPA. 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 HOEPA - Points and Fees Coverage 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 HOEPA - Points and Fees Coverage 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.
HOEPA - Prepayment Penalty Coverage Test is performed on loans that have a prepayment penalty to confirm that the penalty meets the applicable HOEPA requirements. This test is not performed on loans that do not have a prepayment penalty.
HOEPA - High Cost Counseling will display if the loan is identified as High Cost. This section will identify if Homeownership Counseling has been verified and a statement displays in the summary section indicating that Homeownership Counseling must be completed. Users can enter a date for when Homeownership Counseling was completed in the Forms & Docs > Processing > Homeownership Counseling Date field or the Forms & Docs > U/W Conditions/Decision > Homeownership Counseling Date field to satisfy this compliance alert.
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.
Click Close to close the Compliance Alerts window.