June 2016 ICBA Summary of the Ability -to Repay (ATR) / Qualified Mortgage (QM) Rule 3 o The monthly payment on the covered transaction. Payments on adjustable rate mortgages (ARM) must reflect use of the “fully indexed rate” or any introductory rate, whichever is greater. Must use the fully indexed rate or the intro rate whichever is greater. Special rules for balloon, interest-only and neg-am loans: Balloon loans that are HPML, creditor must consider the ability to repay based on terms including the required balloon payment. On May 11, 2011, the Federal Reserve Board (FRB) issued a proposed rule (Rule) to implement ability-to-repay requirements for closed-end residential loans.1 The Rule implements Section 1411, Section 1412, and part of Section 1414 of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act of 2010 (Dodd-Frank).2 Comments on the Rule are to be received by no later than July 22 when assessing the consumer’s ability-to-repay); 3. The consumer’s monthly mortgage payment for this loan; you calculate this using the introductory or fully-indexed rate, whichever is higher, and monthly, fully-amortizing payments that are substantially equal; 4. For purposes of § 1026.43(c)(2)(iii), the creditor must determine the consumer's ability to repay the loan based on a payment of $1,398, which is the substantially equal, monthly, fully amortizing payment that would repay $200,000 over 30 years using the fully indexed rate of 7.5 percent.
Section 46.2(g) requires licensees to perform an ability to repay analysis when at the fully indexed rate, assuming a fully amortized repayment schedule.
General Comparison of Ability- to-Repay Requirements with Qualified Mortgages1 ATR Standard General QM Definition . Greater of fully indexed or introductory rate . Max rate in first 5 years As applicable, per GSE or agency requirements : of the fully-indexed rate or the initial rate, and • Monthly, fully amortizing, substantially equal payments § General and small creditor QM ARM or step- rate mortgage: • Use the maximum interest rate that could apply during the 5 years after the first payment due date, and • Fully amortizing payments (either full term or after re- set to max rate) § Standard Ability-to-Repay (ATR) § 1026.43(c) Fixed Rate Mortgage § 1026.43(c)(5)(i) Fixed interest rate specified in loan contract Fixed interest rate at closing Amortization period as specified in loan agreement Loan agreement face amount at closing Monthly, fully amortizing, substantially equal payments at the payment calculation rate 2) Current employment status (if you rely on employment income when assessing the consumer’s ability to repay). 3) Projected monthly mortgage payment for this loan. You calculate this using the introductory or fully-indexed rate, whichever is higher, and monthly, fully-amortizing payments that are substantially equal. Deceptive ‘teaser rates’ are prohibited: The mortgage rate shown to a borrower cannot mask the true cost of the loan. Additionally, mortgage lenders cannot measure the borrower’s ability to repay the loan based on a teaser rate. (A teaser rate is an introductory interest rate that is lower than the long-term rate. For example, if the fully indexed interest rate on a personal loan is tied to the six-month LIBOR index with a margin of 3% then the rate would be 10% if the six-month LIBOR index were at 7%. If the six-month LIBOR index were to increase to 8% then the new fully indexed interest rate would be 11%. June 2016 ICBA Summary of the Ability -to Repay (ATR) / Qualified Mortgage (QM) Rule 5. 2017 Points and Fee Limits. Effective January 1, 2017, loans greater than or equal to $102,894 have a cap on points and fees. is 3% of the total loan amount.
Jan 8, 2014 consumer's ability to repay). Monthly mortgage payment for this loan. You calculate this using the introductory. 3. or fully-indexed rate,
Mar 31, 2008 ability to repay the loan,5 although most lenders, prior to the recent increase in the borrower's ability to repay at the fully-indexed rate). 3. Nov 12, 2010 adjustable rate borrowers to show that they can repay their loans even when the rates ability to make payments at the fully indexed rate. Mar 6, 2008 lower than the fully indexed rate; (3) the borrowers have a debt-to-income “ reasonably believes” that the consumer will be able to repay the The definition of "fully indexed rate" under the ATR rule is the interest rate calculated using the index or formula that will apply after recast, as determined at the time of consummation, and the maximum margin that can apply at any time during the loan term. We use 11th DCOF as our index and 2.75% as our margin. General Comparison of Ability- to-Repay Requirements with Qualified Mortgages1 ATR Standard General QM Definition . Greater of fully indexed or introductory rate . Max rate in first 5 years As applicable, per GSE or agency requirements :
For purposes of determining the fully indexed rate where the initial interest rate to determine the consumer's repayment ability for a negative amortization loan.
A determination under this subsection of a consumer's ability to repay a For purposes of this subsection, the term “fully indexed rate” means the index rate The rule requires you to assess a member's ability to repay for virtually all mortgage loan (calculated using the introductory or fully indexed interest rate, Jan 10, 2013 The “ability to repay” rule, which goes into effect in January 2014, requires While many lenders already use the fully-indexed rate to approve
For loans in which the interest rate may vary, the reasonable ability to pay shall be determined based on a fully indexed rate and a repayment schedule which
Jan 16, 2014 In return for making sure you can repay your loans, the lenders will be protected to determine whether borrowers have the ability to repay their loan. the “fully indexed” rate, or what the rate would be adding the margin and During the adjustable period, the rate is based on the index and the margin. Jun 5, 2012 mortgage (QM) rule that would establish “ability to repay” standards for mortgage lending. mortgage payment using the fully indexed rate. Jan 18, 2013 Adjustable-rate mortgage (“ARM”) payments must be calculated using the higher of the introductory rate or fully indexed rate. There are specific
monthly payment must be calculated using the fully indexed rate or an introductory rate, The concurrent proposal seeks comment on whether the general ability-to-repay and qualified mortgage rule should be modified to address potential adverse consequences on certain programs from the ability-to-repay requirements because they are