I think this has been thrown a bit already. But I am wondering what everyone is reporting for their CLTV on FHA loans.
For approval/credit decision purposes we calculate the CLTV off the base loan amount and property value.
For HMDA reporting, we report the total loan amount as base loan amount plus upfront MIP. This is the loan amount that is being used in our HMDA software to test for the CLTV and it gives us the Q617 error.
I tried researching this a bit and while the reg and CFPB guides say:
(24) Except for purchased covered loans, the ratio of the total amount of debt secured by the property to the value of the property relied on in making the credit decision.
I took this to mean we could document that the Quality error was fine as it was the CLTV used in the credit decision.
However, I did find some information from QuestSoft that stated otherwise:
The Q617 edit has been generating a lot questions as there is still quite a bit of industry confusion surrounding the logic behind it. Most frequently it is seen in FHA loans. Based on feedback from the CFPB and various LOS partners, here is what we know:
•FHA standards are established for qualification purposes – CLTV is calculated using the “base loan amount” for LTV/CLTV limits.
•HMDA requires the CLTV to be calculated using the “total amount securing the debt”.
•The Q617 Quality Edit is intended to identify a potential error. If the error is systemic in nature, the reporting entity must make the appropriate correction prior to submission.
•If your LOS allows you to establish business rules for populating specific data fields on your HMDA screens, we encourage you to consider creating such rules to manage CLTV.
I don't use QuestSoft but we used to....and I take that to mean that the CLTV should be recalculated prior to submission.
Can anyone tell me what they are reporting for the CLTV?