Mortgage Origination Consumer Protections

Question 1

What types of loans are covered under the ATR-QM rule?

Why is a QM significant?

Answer 1

Closed-end mortgage loans

Provides safe harbor

Question 2

What is a reasonable source to verify a consumer’s ability to repay?

Answer 2

third party records to verify information

Question 3

What factors must the CU consider under the ATR rule when underwriting mortgage loans?

Answer 3

income/assets/employment/monthly payments/current debts/credit history/debt obligations/residual income

Question 4

What are the types of qualified mortgages?

What features make each QM different?

Answer 4

General Definition QMs-
priced based limitation (APOR);
loan term of 30 years or less; points and fees 3% or less;
UW;
income and debt consideration;
DTI

No Neg Am
No IO
No Balloon payments

Government Agency Definition QMs -previous carve out for Fannie/Freddie

Small Creditor QMs
port loan

Balloon Payment QMs

Seasons QMs

Question 5

What are the record retention requirements for the ATR-QM rule, meaning how long do records demonstrating compliance need to be kept?

Answer 5

3 years

Question 6

What loan terms can disqualify a mortgage from being a general definition QM?

Answer 6

Terms over 30 years

Question 7

What kinds of mortgages does the loan originator compensation rule apply to?

Answer 7

closed end consumer transactions secured by a dwelling

Question 8

In what ways does Reg Z limit a loan originator’s compensation?

What is permitted and what is prohibited?

Answer 8

prohibits the LOs compensation from being based on the transaction
Prohibits being compensated by the consumer and another person such as the CU

Question 9

What disclosures are required under the loan originator rule and on what documents?

Answer 9

NMLSR ID
application, note and security instrument