We have the small creditor temporary exemption. We do 62 month balloons. To clarify: if it is a HPCT we must factor the final balloon payment and the loan is a non-QM. If it is a NON HPCT we do not need to factor the final balloon and it is considered a Small Creditor QM. Am I getting this right?

I think that currently if a balloon is higher priced, yes you qualify at the balloon payment but it is still a qualified mortgage.

We are also a small creditor doing qualified balloon mortgages. We are not eligible to do qualified balloon mortgages after April 2016 as we do not meet the rural and underserved area definition. We are considering doing unqualified balloon mortgages. My understanding is that in order to be able to qualify the borrower at the monthly payment we need to make sure the balloon term is 62 months and that the loan is not a high priced loan.

Are there others that are considering continuing doing balloon mortgages as unqualified mortgages and is this how you plan on qualifying the borrowers?

Thank you for your input.

We too are considering continuing making balloon loans after April date. We do not know how we will qualify a borrower at this time. Here is another question...I have read where if we were to continue with these types of loans, that we must "manage the risk element". Any thoughts as to just how to address this?