I wanted to get a sense for what others are doing, if they have a policy for not doing non-QM loans, when they have a Points and Fees test failure and existing seller concessions that are not designated towards specific fees. Do you allow application of undesignated seller concessions to QM finance charge items in order to change the loan from non-QM status to QM status? Any regulations or commentary/guidance you know of that says whether this is acceptable or forbidden?

Thank you for your time and assistance.

I’m not quite sure that I agree that a lump sum seller credit can be allocated by the creditor as they wish to off-set prepaid finance charges to lower the finance charge and APR or for the QM test.

Paragraph 38(j)(2)(v).

1. General seller credits. When the consumer receives a generalized credit from the seller for closing costs or where the seller (typically a builder) is making an allowance to the consumer for items to purchase separately, the amount of the credit must be disclosed. However, if the seller credit is attributable to a specific loan cost or other cost listed in the Closing Cost Details tables, pursuant to § 1026.38(f) or (g), that amount should be reflected in the seller-paid column in the Closing Cost Details tables under § 1026.38(f) or (g).

Without an agreement by the seller to pay for specific costs, I believe they have to leave this as a general credit.

Yeah, I don't really like the feel of it. It's just one of those things in TRID that wasn't necessarily clearly defined. I sent a question in to the CFPB on it today. I'll see if they ever get back to me. I asked a question about disclosing a single close/single disclose CP and they never got back to me, lol.

Thanks for taking a stab at it.