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Qualified Mortgages
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Terms in this set (34)
Qualified Mortgage
A mortgage that meets certain requirements specified under the Dodd-Frank Act and clarified by the Bureau
Qualified Mortgage
Has regular substantially equal periodic payments. Can't have negative amortization, interest only payments, or balloon payments. If the loan does not require monthly payments, the payments are to be calculated as if paid monthly.
Qualified Mortgage
Has a term of 30 years or less.
Qualified Mortgage
A loan where points and fees do NOT exceed 3% of the loan amount. The loan amount is the amount stated in the promissory note.
The 3% cap is adjusted as the loan balance falls below $102,894
Qualified Mortgage
Has monthly payments "calculated" based on the highest expected payment in the first 5 years. The lender must underwrite the loan based on a fully amortized payment schedule taking into account the highest adjustment of any loan payment, and all other mortgage- related payments, including taxes and insurance, whether or not impounded by the lender.
Qualified Mortgage
A loan in which the lender considers and verifies the borrower's current and reasonably expected income and expenses. This includes debt obligations, alimony, and child support. This eliminates low- document and no-document loans
Qualified Mortgage
A loan in which the borrower's debt-to-income ratio does not exceed 43%. The debt includes all mortgage-related expenses, and simultaneous mortgage-related expenses that the lender knows or has reason to know.
Qualified Mortgage
Has a specific DTI ratio, 30-year term limit, and a cap on the points and fees assessed also it excludes, negative amortization loans, interest-only loans, and non-rural balloon-payment loans
Alternative Qualified Mortgage
These mortgages must satisfy the first three requirements of a qualified mortgage and also be eligible to be purchased by Fannie Mae or Freddie Mac, insured by FHA or the Rural Housing Service, or guaranteed by the Department of Veterans Affairs.
This temporary definition will phase out as each agency issues its own qualified mortgage rules, or the GSE conservatorship ends, or on January 10, 2021.
The Points and Fees for a loan ≥ 102,894
These are no greater than 3% of the total loan amount
The Points and Fees for a loan ≥ 61,737 but less than 102,894
These are no greater than 3,087 dollars
The Points and Fees for a loan ≥ 20,579 but less than 61,737
These are no greater than 5% of the total loan amount
The Points and Fees for a loan ≥ 12,862 but less than 20,579
These are no greater than 1,029 dollars
The Points and Fees for a loan for a loan amount of < 12,862
These are no greater than 8% of the total loan amount
QM Points and Fees
All finance charges "Paid by Borrower at Close" (i.e., Commitment Fee, Application Fees, etc.)
QM Points and Fees
Total Affiliate Fees
Fees paid to an affiliate of the creditor which are excluded from the finance charge (i.e., appraisal fees, title fees, etc.)
QM Points and Fees
Borrower Paid Discount Points
Total loan discounts paid by the borrower to buy down the interest rate of the Loan
QM Points and Fees
Bona Fide Discount Points Excluded -
Up to two (2) bona fide discount points may be excluded from points and fees if the undiscounted rate
does not exceed the APOR by more than 1%; or up to one (1) bona fide discount point may be excluded
from points and fees if the undiscounted rate does not exceed the APOR by more than 2%. The interest
rate reduction must be "consistent with established industry practice".
NOTE: If excluding points, a Discount Verification form (Exhibit 44) or similar form must be submitted.
QM Points and Fees
Fees that are charged to borrower at close or paid outside of closing (POC) that are not considered lender or affiliate
(e.g., mortgage insurance premiums, credit life insurance)
QM Points and Fees
Loan Originator Compensation -
Compensation paid to the mortgage broker by the loan originator (Correspondent) that is attributed to the transaction at the time the interest rate is set
QM Points and Fees
HOEPA APR
For a transaction in which the APR will not vary during the term of the loan or credit plan, the APR is based on the interest rate in effect as of the date the interest rate for the transaction is set.
For a transaction in which the interest rate may vary during the term of the loan or credit plan in
accordance with an index, the APR is based on the interest rate that results from adding the maximum
margin permitted at any time during the term of the loan or credit plan to the value of the index rate in effect as of the date the interest rate for the transaction is set,
or
the introductory interest rate, whichever
is greater
Qualified Mortgage
Has periodic payments, term is under 30 years, is insured or guaranteed by HUD, has no
points and fees greater than 3% of the
original unpaid principal balance (UPB) for most loans
Higher Priced QM
It is a first lien mortgage and:
Is a jumbo loan with an APR that exceeds the
Average Prime Offer Rate (APOR) by 2.5% or
more
Is a non-jumbo, non-FHA loan with an APR that
exceeds the APOR by 1.5% or more
Is an FHA loan with an APR that exceeds the
APOR plus ongoing MIP Rate (for example 1.35%
is the current MIP rate on a 30
year loan) by 1.15% or more.
Is a subordinate mortgage with an APR that
exceeds the APOR by 3.5% or more.
QM in Safe Harbor
Mortgage does not exceed limits on upfront points and fees; has an APR for a first lien mortgage that is equal to or less
than the average prime offer rate (APOR)
plus 115 basis points plus ongoing annual MIP.
QM With Rebuttable Presumption
These loan does not exceed limits on upfront points and fees; has an (APR) that exceeds the APOR as of the date the interest rate is set plus 115 basis points plus the annual ongoing (MIP) for a first lien mortgage.
Qualified Mortgage Exceptions
Home Equity Conversion Mortgages (HECM
reverse mortgages),
Construction to permanent loans for 12 months
or less for the construction phase,
Extension of credit by a Housing Finance
Agency
QM Primary Residence Residual Income of 2500 or more
Lenders must simply comply with the minimum reserve
requirements for the loan program.
Requirement for a Primary Residence QM with a Residual Income of greater than 800 but less than 2500
This is the greater of:
Three (3) months liquid* PITI reserves are
required,
OR
Minimum reserve requirements for the base Loan
program.
Note: Lenders should consider requiring additional reserves for
loans with higher layered risks
Categories of QMs
These are
- Standard QM
- Alternative QM
- Higher Priced QM
Higher Priced QM
In general, this is a loan with an annual percentage rate, or (APR), higher than a benchmark rate called the Average Prime Offer Rate
First Lien QM
Is "higher-priced" if the annual percentage rate (APR) is 1.5 percentage points or more higher than the APOR.
These are first to get paid if lender goes into foreclosure.
Higher Priced Jumbo Loan (Qualified)
Is considered if the annual percentage rate (APR) is 2.5 percentage points or more higher than the APOR.
Subordinate Loan QM
Generally "higher-priced" if the APR of this mortgage is 3.5 percentage points or more higher than the APOR.
The lender of this mortgage will be paid only after your first-lien mortgage is paid off.
QM Points and Fees
Charges paid to the lender, originator, or affiliate, even if the same fees would not be included if charged by an independent third party
Include loan originator compensation paid by the borrower or lender, as known at the time the interest rate is set, if attributable to the transaction, whether paid to the individual loan officer or a broker
(UFMIP) is NOT included in the points and fees.
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