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#2200288 - 12/10/18 11:58 PM Balloon Loan Small Creditor
Nicole Offline
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Joined: Nov 2018
Posts: 144
Please forgive me if this has gone around a couple times. I have been out of the compliance world for a few years and now got back into it and my head is spinning.... In order to do balloon home loans a small creditor must meet the asset size, amount of mortgage loans your originate and must have originated at least one loan in a rural or undeserved area. Correct?

if we don't meet the "rural or underserved" can we originate balloon loans with the ATR requirements? If so you must do a balloon term of 61 months or more and you don't have to consider the balloon payment in the DTI?

thank you all so much!

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Ability to Repay/Qualified Mortgage Rule
#2200828 - 12/14/18 09:38 PM Re: Balloon Loan Small Creditor Nicole
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,684
Cape Cod
That's correct. They won't be QMs, but you can do ATR-qualifying balloon loans unless your state doesn't permit them,
John S. Burnett
Fighting for Compliance since 1976
Bankers' Threads User #8

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#2201310 - 12/21/18 02:48 PM Re: Balloon Loan Small Creditor Nicole
MD Offline
New Poster
Joined: Sep 2018
Posts: 7
Can you direct me to where in the regulation it talks about the balloon term of 61 months or more? I am trying to explain this to a lender this morning who tells me they are not in violation of Reg Z. They are doing a balloon loan for 6 months to avoid the customer having to pay intangible taxes. They are supposedly planning to have this sold in 6 months. The lender wants them to pay regular payments though, not interest only. I know (I think) it is in 1026.43 but what section please???

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#2201313 - 12/21/18 02:53 PM Re: Balloon Loan Small Creditor Nicole
raitchjay Offline
Power Poster
Joined: Oct 2009
Posts: 8,759

If you'll check that section out, it basically says that you have to include the largest payment in the first 5 years.
I'm fixin' to fix that.

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