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#2225741 - 11/15/19 09:38 PM 3 Year Balloon??
NoJustNo Offline
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Can anyone explain how a bank could be making 3 year fixed rate balloon loans? How is this possible with ATR? Examiners just missing it?

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#2225742 - 11/15/19 09:45 PM Re: 3 Year Balloon?? NoJustNo
rlcarey Online
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Your guess is as good as ours.
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#2225893 - 11/19/19 08:01 PM Re: 3 Year Balloon?? NoJustNo
RR Joker Offline
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Perhaps they are hanging their hat on this... 1) does not specify that you must consider a balloon payment.

They would not have safe harbor, however.

(A) A loan with a balloon payment, as defined in ยง 1026.18(s)(5)(i), using:

(1) The maximum payment scheduled during the first five years after the date on which the first regular periodic payment will be due for a loan that is not a higher-priced covered transaction; or

(2) The maximum payment in the payment schedule, including any balloon payment, for a higher-priced covered transaction;
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#2225895 - 11/19/19 08:05 PM Re: 3 Year Balloon?? NoJustNo
rlcarey Online
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The highest payment in the first five years would be the balloon payment.
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#2225896 - 11/19/19 08:07 PM Re: 3 Year Balloon?? NoJustNo
raitchjay Offline
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OK
My first thought when i saw this thread was that perhaps they were referencing business purpose loans, not subject to ATR. We still make some 3 year balloons in those scenarios. But since the post was in the ATR thread, i assumed that wasn't the case, so i didn't originally mention it.
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#2225930 - 11/20/19 01:30 PM Re: 3 Year Balloon?? rlcarey
RR Joker Offline
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Originally Posted by rlcarey
The highest payment in the first five years would be the balloon payment.


I don't disagree with that...but I can also see it being potentially misinterpreted since #2 specifically mentions *including any balloon".

Just my theory.
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#2228538 - 01/08/20 05:37 PM Re: 3 Year Balloon?? NoJustNo
NoJustNo Offline
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Nope... not business purpose. Thanks for confirming my thinking!

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