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#1720717 - 07/17/12 05:23 PM AMPTA
MyScamper Offline
Gold Star
Joined: May 2006
Posts: 452
Between here and there
In their 7/12 Newsbytes, the IBA included this following reminder:

Upcoming Compliance Dates of Note
July 22 ......................... Mandatory compliance with alternative mortgage transaction regulations

This caught me off guard. Can anyone tell me whether or not balloon loans with maturity dates less than 15 years without a written commitment for renewal are still OK? On page 44230 in footnote 45 it mentions IAC title 38, sec. 1050.1272 that restricts balloon payments due and payable in less than 15 years from the origination date. However, 1050.1272 restricts balloons on high risk loans, not all loans. I'm just trying to figure out if we have to either lengthen the maturity date on our balloon loans (not meeting definition of high risk) or start issuing written commitements for renewal.

Thanks

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#1721029 - 07/18/12 02:09 PM Re: AMPTA MyScamper
MyBrainHurts Offline
Platinum Poster
Joined: Feb 2010
Posts: 960
Illinois
This is my understanding of the AMTPA:

The purpose of this rule is to put lenders in various states on an even playing field in terms of products they offer by creating preemptions of state laws that restrict those products, provided you follow the rules of the AMTPA.

The rules, such as the commitment letter rule, apply only to those lenders wishing to employ the preemption from state law. (See p 44241, center column.)

For example, if our state banned all three year balloons, AMTPA would allow them, provided you gave the commitment letters as described in 1004.4(b).

Since Illinois law only prohibits balloons less than 15 year for the high risk loans as defined in title 38, 1050, the AMTPA commitment letter provision is not something we would ordinarily have to worry about.

So, we can still make balloons, at least until the final "ability to repay" rule comes out.

This is only my reading of the rule, and my opinion is not based on any authoritative source.
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