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#1878759 - 12/15/13 08:31 PM Can a HCM (HOEPA) be a QM?
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In the mountains
We qualify under the Small Creditor Temporary Balloon-Payment Qualified Mortgage Rules. Thereby, exempting us from the balloon payment prohibition in section 32 for HCM. However, since a HCM has a higher points and fees threshold than the Temporary Balloon Payment QM rules, does this mean that we can make the HCM as long as it meets the otherwise required ATR standards, but would not be considered a QM and therefore would not have even the rebuttable presumption of compliance?

In other words, can a HCM (HOEPA) loan ever be a QM?
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Ability to Repay/Qualified Mortgage Rule
#1878760 - 12/15/13 09:44 PM Re: Can a HCM (HOEPA) be a QM? Likes to Comply
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Never mind...

The Bureauís Ability-to-Repay/Qualified Mortgage Rule allows for a loan that meets the criteria for a qualified mortgage but that is a high-cost mortgage because of its APR to be considered a qualified mortgage. Thus, it is possible for a loan with a rate that exceeds the HOEPA rate threshold to be a qualified mortgage if the loan otherwise meets the qualified mortgage criteria.

A qualified mortgage that is also a high-cost mortgage would be eligible for a presumption of compliance with the Ability-to-Repay/Qualified Mortgage Rule. Closed-end high-cost mortgages that do not meet the criteria for a qualified mortgage will receive no presumption of compliance with the ability-to-repay requirements.

(See 2013 Home Ownership and Equity Protection Act (HOEPA) Rule Small Entity Compliance Guide pg. 28 and 29)
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#2022857 - 06/24/15 09:01 PM Re: Can a HCM (HOEPA) be a QM? Likes to Comply
complygirl Offline
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Joined: Oct 2004
Posts: 822
midwest
So we have a HCM (HOEPA) loan based on the points and fees test, so this cannot be a small creditor QM loan, even if all other criteria is met? Am I understanding this rule correctly? Thanks.

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#2022884 - 06/24/15 09:26 PM Re: Can a HCM (HOEPA) be a QM? Likes to Comply
raitchjay Online
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OK
I think you have your answer in your first post: the HOEPA points and fees threshold is higher than the QM threshold, which means that if a loan is a HOEPA loan because it exceeds the HOEPA thresholds, it is automatically going to also exceed the QM points and fees threshold, meaning the loan can't be a QM. On the flip side, if a loan is HOEPA because of the APR, it may still pass the QM points and fees test and be eligible for QM status.
Last edited by raitchjay; 06/24/15 09:27 PM.
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