Small Creditor QM - DTI and RI

Posted By: Likes to Comply

Small Creditor QM - DTI and RI - 01/02/20 05:41 PM

We have a policy DTI of 50% but will approve loans with a DTI greater than 50% (as allowed by policy) when the borrower has the ability to repay and has sufficient residual income. We document the file and track it as a policy exception.

So when we make a policy exception in this instance and have considered the customers ability to repay the debt, will it still qualify as a Small Creditor QM (assuming all other requirements are met also) even if the DTI is higher than the amount that is indicated in policy?
Posted By: rlcarey

Re: Small Creditor QM - DTI and RI - 01/04/20 12:28 PM

If you "approve loans with a DTI greater than 50% (as allowed by policy) when the borrower has the ability to repay and has sufficient residual income", why is it a policy exception?
Posted By: RR Joker

Re: Small Creditor QM - DTI and RI - 01/06/20 01:48 PM

We have a stated policy DTI limit as well, but if it exceeds that by some small amount and they have good residuals and other credit factors are acceptable, we will take it to loan committee to request approval over limits.

It's not a habit, so ours would still be an exception to the norm, and I would still consider these QMs.
Posted By: rlcarey

Re: Small Creditor QM - DTI and RI - 01/06/20 02:00 PM

Just make sure that everyone goes through the exact same process. And if they all go through the exact same process, is that not a policy?
Posted By: Likes to Comply

Re: Small Creditor QM - DTI and RI - 01/08/20 04:19 PM

We consider it a policy exception mainly so that it is tracked on a log and documented properly on the credit write up in the loan file. It is more of a CYA purpose than anything else.

Thanks for the help!!!