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#1893787 - 02/05/14 04:22 PM Small Creditor exempt from new appraisal rules?
1995Banker Offline
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We are a small creditor, so if we comply with ATR we automatically have a QM. We make a substantial number of HPMLs. The new appraisal requirements in 1026.35(c)(6) state QMs are exempt. Am I interpreting that correctly? Thanks!
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Ability to Repay/Qualified Mortgage Rule
#1893812 - 02/05/14 04:52 PM Re: Small Creditor exempt from new appraisal rules? 1995Banker
RR Joker Offline
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yes
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#1893823 - 02/05/14 05:02 PM Re: Small Creditor exempt from new appraisal rules? 1995Banker
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#1893891 - 02/05/14 06:48 PM Re: Small Creditor exempt from new appraisal rules? 1995Banker
Skittles Online
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Unfortunately we don't. We're also a small creditor and are originating HPML's; however ours are balloons which negates the QM status. We only have the ATR.
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#1893894 - 02/05/14 06:51 PM Re: Small Creditor exempt from new appraisal rules? 1995Banker
Norman Paperman Offline
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Skittles, if you are doing an ATR that is also an hpml (and is conceivably a hpct [APOR + 1.5]), are you also underwriting the balloon payment in the repayment analysis?

A light bulb just went off in my head.
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#1893996 - 02/05/14 08:07 PM Re: Small Creditor exempt from new appraisal rules? 1995Banker
Skittles Online
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No - ours are for 62 months so that's not required. We only have this exemption (as of right now) until January 2016.
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#1894026 - 02/05/14 08:49 PM Re: Small Creditor exempt from new appraisal rules? 1995Banker
Norman Paperman Offline
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Gotcha. I thought you had to underwrite the balloon payment on any ATR balloon that also met the hpct test.
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#1894063 - 02/05/14 09:25 PM Re: Small Creditor exempt from new appraisal rules? Skittles
John Burnett Offline
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Originally Posted By: Skittles
No - ours are for 62 months so that's not required. We only have this exemption (as of right now) until January 2016.


Skittles, you first said your loans are not QMs. But you say you are using a temporary QM qualification that expires in 2016. That would mean that you ARE writing balloon payment QMs under .43(e)(6). You wouldn't need to include the balloon payment in your DTI analysis regardless of the term of the note, as long as it's written for 5 years or more. No need to go to 62 months.
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#1894072 - 02/05/14 09:32 PM Re: Small Creditor exempt from new appraisal rules? 1995Banker
Norman Paperman Offline
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John, to clarify, if Skittles is not writing QMs, but rather a general ATR balloon that qualifies as a hpct (I make this assumption based on the simply APOR + 1.5) wouldn't they need to underwrite the balloon in the repayment ability, regardless of the term?

I ask because we are writing general ATR balloons (variable rate) that are due in 8 years. If we were to trip the hpct trigger, we would be required to underwrite the balloon payment by showing repayment ability other than the sale of the property.
Last edited by Norman Paperman; 02/05/14 09:33 PM.
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#1894088 - 02/05/14 09:45 PM Re: Small Creditor exempt from new appraisal rules? 1995Banker
John Burnett Offline
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Yes, that is correct.
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#1894570 - 02/06/14 09:12 PM Re: Small Creditor exempt from new appraisal rules? 1995Banker
Help!!! Offline
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We are a small creditor and we are making QM balloon loans, which are all HPML. If the loan amt is less than $25,000.00, is that transaction exempt from the appraisal requirement?

Are the any other exemptions from the appraisal requirement on a HPML?

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#1894574 - 02/06/14 09:18 PM Re: Small Creditor exempt from new appraisal rules? 1995Banker
6231956 Offline
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Am I correct in saying that when you mail the appraisal that you give it 3 days to reach the customer and then have to wait 3 more days for the customer to review. So really the earliest a closing can be scheduled is 6 days after mailing the appraisal to the customer. Getting more confused each day..

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#1894603 - 02/06/14 09:46 PM Re: Small Creditor exempt from new appraisal rules? Help!!!
John Burnett Offline
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Originally Posted By: Help!!!
We are a small creditor and we are making QM balloon loans, which are all HPML. If the loan amt is less than $25,000.00, is that transaction exempt from the appraisal requirement?

Are the any other exemptions from the appraisal requirement on a HPML?


The exemptions from the HPML appraisal requirements are found at 1026.35(c)(2). If your loans are QMs, they are exempt, regardless of their size, from the appraisal requirements (1026.35(c)(2)(i). If they are under $25,000, they are exempt under 1026.35(c)(2)(ii), even if they aren't QMs.
Last edited by John Burnett; 02/06/14 09:46 PM.
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#1894605 - 02/06/14 09:50 PM Re: Small Creditor exempt from new appraisal rules? 6231956
John Burnett Offline
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Originally Posted By: 6231956
Am I correct in saying that when you mail the appraisal that you give it 3 days to reach the customer and then have to wait 3 more days for the customer to review. So really the earliest a closing can be scheduled is 6 days after mailing the appraisal to the customer. Getting more confused each day..


That's correct, regardless of whether you're dealing with a Reg B appraisal copy or a Reg Z HPML appraisal copy, or both.
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