We do a lot of balloon loans now and don't qualify for any exemption that would allow us to do balloon-QM's. We are planning on shifting to ARMs in order to have QM eligible loans.

Are there any banks out there in a similar position to us that are just going to keep on doing balloon loans and accept the risk that they aren't QMs?

We do balloon loans now and do qualify as a 'small creditor'. We will be forming a committee after the Board Meeting next week to see what our risk appetite will be.

So far the word I have heard is that our bank will continue to make balloon mortgages but we do not qualify as a small creditor. I believe our management team is going to make a full presentation to the board to make sure they fully understand.

Balloons only and no ARMs at all? (I assume you have fixed rate secondary market loans as well)

I am toying around with this idea just to make it easier on staff (assuming the rest of management and the Board agrees); however, I am currently hung up on having to include the balloon payment in DTI calculations for HPML balloons (this isn't required for non-HPML balloons). We have a fair amount of balloons now that are HPMLs and including the amount of the balloon payment for these would skyrocket the DTI.

Yes, we do offer secondary market loans in addition to our in house balloon mortgages.

Just wanted to throw this out again to see if anyone has decided against making QM's and just doing the ATR for their in-house loans.

Seems to be much easier not to have to worry about appendix Q and the 43% DTI requirement if you are ok with your underwriting.

bump