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#1825194 - 06/19/13 06:42 PM Small Creditor New 4th Category
Arizona Offline
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Joined: Nov 2009
Posts: 106
Now that the new 4th category of 1026.43(e) has been finalized as of May 30th. Are small creditors exempt from escrowing if they meet the criteria for Small Creditor Portfolio QM (1st mortgage HPML Rate Spread < 3.5% "conclusive safe harbor")?

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Ability to Repay/Qualified Mortgage Rule
#1826484 - 06/24/13 01:39 PM Re: Small Creditor New 4th Category Arizona
Arizona Offline
100 Club
Joined: Nov 2009
Posts: 106
bump

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#1826729 - 06/24/13 06:57 PM Re: Small Creditor New 4th Category Arizona
Dani York, CRCM Offline
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Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
No. The new definition of higher-priced mortgage loan in 1026.43 only applies to that section (1026.43). The definition in 1026.35 is still the same (ie there is no distinction for small creditors with a separate threshold).

The only thing the new threshold in 1026.43 did was to give small creditors the safe harbor on QMs orginated under that type, instead of just a rebuttable presumption of compliance, for loans priced up to 3.5 over APOR. It does not affect the escrow requirements. So if you originate a first lien small creditor QM that is priced 2.0 over APOR, you get the same protections as a non-HPML QM (safe harbor), BUT you would still have to escrow.
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#1826762 - 06/24/13 07:35 PM Re: Small Creditor New 4th Category Arizona
Arizona Offline
100 Club
Joined: Nov 2009
Posts: 106
If a Lender qualifies under the small servicer exemption would they still be required to escrow if APOR is over 1.5% but less than 3.5% APOR?

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#1826810 - 06/24/13 08:03 PM Re: Small Creditor New 4th Category Arizona
raitchjay Offline
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Joined: Oct 2009
Posts: 8,701
OK
Yes. The new 4th category didn't change the definition of an HPML under Sec. 35.
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