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Special rate spread for small creditors?

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Question: 
My bank makes QM Balloon loans and one of my new loan officers is insisting he does not have to stay under the QM 43% Debt to Income cap. He does, doesn’t he?
Answer: 

Not according to Reg Z. The 43% DTI requirement is imposed on general QMs, but the provisions for Balloon QMs at 1026.43(f) do not require it. The regulation and comment at 1026.43(f)(1)(iii) say how the DTI must be calculated (mostly per ATR requirements) but do not mandate a limit. However, your own bank policy might impose such a restriction, in which case the new loan officer must follow the banks internal regulation (aka policy). Tune into the upcoming webinar “Hey HPML! What’s the Matter with QMATR, eh?” on August 5, 2020 to learn more about Balloon QMs and how to make them in a compliant manner.

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Learn more about Rebekah Leonard’s webinar Hey HPML! What’s the Matter with QMATR, eh?

First published on 07/12/2020

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