We will be making balloon loans that are not QM loans. We are not a small creditor.
If we make a higher-priced covered transaction we will need to include the balloon in the monthly payment to calculate ATR.
Assume we make a 7 year balloon amortized over 20 years. To calculate the monthly payment for ATR do we just figure what the monthly payment would be if there was no balloon and the entire loan amount was amortized over 7 years?
I do not think you can have a balloon on an HPML either QM or non QM. The only way you can do balloons (excluding small creditor) is make it an non Qualified Mortgage loan. YOu will need to keep the APR below 1.5% above the APOR.
Zitch70, this is one of the subtle confusing points I've been trying to sort out. There is a difference between a Higher-Priced Covered Transaction 1026.43(b)(4)and a Higher-priced mortgage loan (HPML) and the High-cost (HOEPA)loan. I think the balloon is only forbidden on the HOEPA loan.
We do fall under the Balloon Payment QM exemption. Do I understand it correct that as long as the loan is not HPML, we do not need to use the balloon payment in our repayment ability as long as the maturity is 61 months or greater?