A General QM loan can also be a higher priced loan.....

A Seasoned QM cannot be a higher priced loan.....

Is this correct....

I'm mixing up my terms.....

Both can be higher priced loans...

Both cannot be high cost....

is this correct.....

Correct.

Thanks, Randy....

I'm missing something somewhere..... I see that there are different APR/APOR thresholds based on amounts of the loan....
___________

First-Lien Covered Transaction $110,260 or Greater 2.25 percentage points
First-Lien Covered Transaction $66,156 to $110,260 3.5 percentage points
First-Lien Covered Transaction Less than $66,156 6.5 percentage points
Covered Transaction Secured by a Manufactured Home1 Less than $110,260 6.5 percentage points
Covered Transaction Secured by a Manufactured Home1 $110,260 or Greater 2.25 percentage points

Subordinate-Lien Covered Transaction $66,156 or Greater 3.5 percentage points
Subordinate-Lien Covered Transaction Less than $66,156 6.5 percentage points

_____________

But I only see that you are presumed in compliance if the loan is NOT HPML...

You have a rebuttable presumption if it is HPML....

So what level of liability do the above thresholds provide....what is the point if you are only presumed in compliance if the loan is not HPML...

I'm missing something.

No - but that is no change from the current General QM rules that do not have a rate spread test. An HPML provides for rebuttable presumption which means that the customer actually has to prove that your assessment of affordability was flawed.

Thanks, Randy....I'm new to this (obviously)....

So is there a point to those thresholds I've listed?

The HPML test in Section 35 is totally separate and not based on any loan dollar amounts.

(i) By 1.5 or more percentage points for loans secured by a first lien with a principal obligation at consummation that does not exceed the limit in effect as of the date the transaction's interest rate is set for the maximum principal obligation eligible for purchase by Freddie Mac;

(ii) By 2.5 or more percentage points for loans secured by a first lien with a principal obligation at consummation that exceeds the limit in effect as of the date the transaction's interest rate is set for the maximum principal obligation eligible for purchase by Freddie Mac; or

(iii) By 3.5 or more percentage points for loans secured by a subordinate lien.

Also, the APR for the QM test may be different than the APR for HPML testing and the final CD, if the loan's interest rate adjusts in 5 years or less.

So....if they meet the HPML test they are definitely QMs.

If they meet those thresholds above they are definitely QMs....

Sorry if I'm beating a dead horse....

Thankfully we don't do any loans that adjust in 5 years or less so that doesn't apply.....

Also, I know to sell these loans we have to meet the requirements by 7/1/21...

I know the CFPB did extend the date...so for portfolio loans do we have until 2022 or is it 7/1 because of the GSE rules?

Yes - any loan that is not a HPML would qualify under the new General QM rules, if you meet all the other requirements. If you meet all the other requirements and the rate spread requirements under the new General QM rules, it will be considered a QM, whether or not it is a HPML.

For secondary market loans, for application dated on or after July 1, 2021, the loan must meet the new General QM requirements.

For portfolio loans, you can either use the old or new QM requirements for any loan, if the application is received before October 1, 2021. For applications received on or after October 1, 2021, you would have to use the new QM definitions.

So we have until 10/1/21 for portfolio loans....not 10/1/22....

Oh-oh - that was a typo on my part - you are correct, that should be 2022 for portfolio loans.

Thanks....I'll just focus on our sold loan policies and procedures and not stress too much yet over the portfolio loans....

Has there been any change to Fannie's DU to address the revised General QM?

What type of policy changes are you looking at making to your secondary market to address the revised QM? I understand the revised QM
is based on the APR spread but what are some of the other requirements that we should consider that might also be impacted by Fannie's DU to address the revised QM. Thanks.

Has anyone received anything like this for Freddie Mac? Everything I have found simply states:

REMINDER: Determination of regulatory compliance

"Freddie Mac will not make the determination of whether a mortgage, including a mortgage assessed through Loan Product Advisor®, complies with or is exempt from the Revised QM Rule or whether a Seller’s designation of the status of a mortgage under the Revised QM Rule is correct. These determinations of compliance with the Revised QM Rule and other applicable laws are the Seller’s responsibility."

I am not sure that anything in LP or DU is going to measure rate spreads. That and other prohibited product features have nothing to do with underwriting.

The system we use now actually does and they did confirm they are up to date with the new requirements, I was just hoping Freddie would post something similar to what Fannie did, would give me a little more comfort.

Thanks, rl. You're da man!

Thank you, I did see this, maybe I am just asking too much I was just really impressed with what Fannie put out there.