ATR/QM Product Overview/Training - Ellie Maehelp.elliemae.com/DocumentationLibrary/360/ATR-QM... ·...

© 2013 Ellie Mae, Inc.

This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.

DECEMBER 11, 2013

ATR/QM Product Overview/Training



Today’s Presenter

John Haring, Compliance Enablement Manager

Responsible for facilitating the implementation and maintenance

of residential mortgage lending compliance and industry changes

across Ellie Mae’s software applications and loan documents to

ensure compliance integrity, quality and uniformity.



This presentation may contain forward-looking statements under the safe harbor provisions

under The Private Securities Litigation Reform Act of 1995. These forward-looking statements

may include the company’s ability and timing to enhance the features and functionality of

Encompass software and services and of new product launches. Additional risks and uncertainties

related to the company’s business are discussed in the company’s Securities and Exchange

Commission filings, including but not limited to the company’s most recent Annual Report on Form

10-K and Quarterly Report on Form 10-Q. Unless otherwise required by applicable laws, the

company undertakes no obligation to update or revise any forward-looking statements, whether as

a result of new information, future events or otherwise.

The content provided in this slide presentation is intended for Ellie Mae® webinar attendees and

their staff only and should not be distributed outside your company. Ellie Mae does not permit any

unauthorized copying, distribution or redistribution of this presentation. Specific authorization must

be obtained in writing from Ellie Mae, Inc. Violations of copyright are subject to substantial penalties

as provided by the law plus attorney's fees incurred as a result of violation. The content is intended

for general information purposes only. It should not be construed as legal advice or opinion on any

specific facts or circumstances. You are advised to consult your own compliance staff or attorney

regarding your specific residential mortgage lending questions or situation to ensure your

compliance with applicable laws and regulations.

Safe Harbor



Ability-to-Repay / Qualified Mortgage Standards (ATR/QM)

Effective Date: Applications on or after January 10, 2014

©2013 Ellie Mae. All rights reserved. Confidential Material.



ATR/QM Standards

ATR Covered Transaction

> Consumer purpose closed-end loan secured by a 1 - 4 unit dwelling

ATR Exempt Transactions:

> HELOC (open-end credit plans)

> Time-share plans

> Reverse mortgages

> Bridge loan

> Initial construction loan

> Construction phase of construction-to-permanent loan <= 12 months

> Credit extended: under Housing Finance Agency administered program,

by certain nonprofit creditors, by creditors designated as CDFI, DASFP,

CHDO/HOME, or under EESA and HHF programs

ATR/QM Record Retention

> Three (3) years after consummation

> May maintain paper or electronic copies



Available NOW

Encompass ATR/QM Management tool

Appendix Q Worksheet and ATR/QM output forms

Encompass Compliance Service (ECS) tests

Encompass Product and Pricing Service (EPPS) support for

discount point calculations

eFolder contains:

Automated underwriting results

Credit report

Pay stubs

4506-T reports

Other documentation, for export to investors

Total Quality Loan program (TQL) to document QM loans with

supporting information



Let’s Take a Look…

View the video tutorial on the ATR/QM Management Tool.

http://help.elliemae.com/encompass/tutorials/360/ATR-QM.htm



Encompass Compliance Service Tests

ATR

> Exemptions based on creditor type and loan type

> Covered loans/type

> Standard

QM

> Loan term and features

> Underwriting factors

> Prepayment penalty limitations

> Agency/GSE eligibility

> Points and fees

Points and Fees

> Detailed Fee Assessments – aggregate categories, provider name,

affiliates, inclusion/exclusion

> Bona Fide Discount Points assessment



Encompass Compliance Service Tests

Higher-priced covered transactions

High Cost

> 2013 Federal high cost thresholds

> Prohibited practices

> Multiple state variations

New HOEPA APR calculations



ECS ATR/QM Results

Checks for ATR/QM type, payment underwriting and Non-standard to Standard Refis



ECS QM Points and Fees Test

Displays a detailed Total Loan Amount calculation and checks for rate limits



ECS Fee Worksheets

Fees are detailed

into categories



ECS Results for Payment Underwriting



ECS Results for Payment Underwriting cont’d.



Encompass Product & Pricing Service (EPPS)

• Determines bona fide

discount points and

APOR calculations

• Automatically

populates loan file with

‘Starting Adjusted Rate’

and ‘Starting Adjusted

Price’ and

undiscounted rate from

EPPS into Encompass

• These fields are used

in the Points and Fees

tests in the ATR/QM

Management tool



ATR/QM Training Sessions

Visit the Encompass Resource Center to Sign Up

Day Date Time Duration

Thursday Dec 19 1:00 PM (pacific) 60 minutes

Thursday Jan 2 1:00 PM (pacific) 60 minutes

Friday Jan 3 1:00 PM (pacific) 60 minutes

Monday Jan 6 1:00 PM (pacific) 60 minutes

Tuesday Jan 7 1:00 PM (pacific) 60 minutes

Wednesday Jan 8 1:00 PM (pacific) 60 minutes

Thursday Jan 9 1:00 PM (pacific) 60 minutes

Friday Jan 10 1:00 PM (pacific) 60 minutes



Release Notes

ATR/QM Video

ATR/QM FAQs

Encompass Compliance Center

Compliance Education Webinar Series

Encompass NewsFlash

Encompass Compliance Service Alerts

Compliance Blogs www.elliemae.com

Compliance White Paper

Additional Resources:

Encompass Resource Center

http://www.elliemae.com/



Questions?



ATR/QM Common Questions

What is Ability-to-Repay (ATR) / Qualified Mortgage (QM)

Standards?

> Lenders making a special type of loan, known as a Qualified

Mortgage, is entitled to presume that the loan complies with ATR

requirements (safe harbor).

> Establishes different types of QMs that are generally identified as

loans with restrictions on loan features, limits on fees being

charged, and underwriting requirements.

> Requires lenders to demonstrate they have made a reasonable and

good faith determination, based on verified and documented

information, that the consumer has a reasonable ability to repay the

loan.



When does ATR/QM Standards go into effect?

> ATR/QM will apply to loan applications taken

on or after January 10, 2014.




How will ATR be evaluated?

To determine a borrower’s Ability-to-Repay, creditors must consider

eight (8) underwriting factors:

1. Current or reasonably expected income or assets

2. Current employment status

3. Monthly payment on the covered transaction

4. Monthly payment on any simultaneous loan

5. Monthly payment for mortgage-related obligations

6. Current debt obligations, alimony, and child support

7. Monthly debt-to-income ratio or residual income

8. Credit history




What loans are covered under ATR/QM?

Consumer purpose closed-end loans secured by a 1 - 4 unit dwelling.

How are FHA, VA, USDA loans impacted by ATR/QM?

> Loan Term cannot exceed 30 years

> Cannot contain an Interest-Only Term

> Cannot contain Negative Amortization

> Higher-Priced Covered Transaction Threshold

• Safe Harbor vs. Rebuttable Presumption of Compliance

> 3% Points & Fees Limit




What transactions are EXEMPT from ATR/QM?

> HELOC (open-end credit plans)

> Time-share plans

> Reverse mortgages

> Bridge loan

> Initial construction loan

> Construction phase of construction-to-permanent loan <=12 months

> Credit extended: under Housing Finance Agency administered

program, by certain nonprofit creditors, by creditors designated as

CDFI, DASFP, CHDO/HOME, or under EESA and HHF programs




What’s required for ATR/QM Record Retention?

> Three (3) years after consummation

> May maintain paper or electronic copies




Is this same functionality provided in both Encompass Broker

and Encompass Banker editions?

> No – Broker Edition does not include the Underwriter

Summary since brokers do not underwrite loans.

Is there an additional cost for this new functionality?

> No – It was provided with the Encompass Fall (9.0) Release

in November 2013 at no additional charge.




What items are INCLUDED in points and fees?

> Finance Charge Fees* (not otherwise excluded)

> Loan Origination Fee

> Commitment/Rate Lock Fee

> All Compensation paid to Mortgage Broker

> Credit Insurance Premiums and Impounds

> Maximum Prepayment Penalty

> Prepayment Penalty Payoff (Refinance)

> HELOC Transaction Fee [High Cost only]

Assume one draw of maximum credit limit

> HELOC Participation Fee [High Cost only]




What items are NEVER INCLUDED in points and fees?

> Prepaid Interest

> FHA Mortgage Insurance

> VA Funding Fee

> USDA/RHS Guarantee Fee

> Charges Payable in a Comparable Cash Transaction

> Creditor Paid Fees not paid to Mortgage Broker

> Sellers Points falling under 1026.32(b)(1)(i):

Prepaid Interest

Premium or guaranty protecting creditor against the

consumer’s default or other credit loss

Third party charges paid to third party provider, creditor, or

affiliate (of creditor or mortgage broker)

Points




QM – Points and Fees Limits

If Note Amount is:

$100,000 or more

$60,000 or more but less than

$100,000


$60,000


$20,000

Less than $12,500

Threshold is:

3% of the Total Loan Amount*

$3,000


$1,000




Thank You for Attending! Recording available on the Encompass Resource Center

ATR/QM Product Overview/Training - Ellie Maehelp.elliemae.com/DocumentationLibrary/360/ATR-QM... ·...

Documents

Transcript of ATR/QM Product Overview/Training - Ellie Maehelp.elliemae.com/DocumentationLibrary/360/ATR-QM... ·...