Recently we polled our Compliance Master Group members on the Ability-to-Repay/Qualified Mortgages rules. There were no huge surprises, but we got a lot of confirmation of what we expected to see:
- Most creditors use a mix of ATR/QM options;
- The Small Creditor QM is the most popular ATR/QM option;
- Adopting the ATR/QM rules was a challenge, but did not reduce loan volume for most creditors; and
- Most creditors have not yet adopted Appendix Q, but plan to do so in the future.
Do you meet the Ability to Repay rules by complying with:
- The 8 factors 38%
- The 8 factors and the QM options 52%
- Only the QM options 5%
- We no longer originate mortgage loans 5%
Is the safe harbor and/or rebuttable presumption of compliance important for your financial institution to attain?
- Yes, we only make non-HPCT QM loans in order to attain the safe harbor 11%
- Yes, we ensure we meet the requirements for the safe harbor or the rebuttable presumption of compliance 17%
- We prefer to attain safe harbor or rebuttable presumption of compliance status, but it isn’t a deal breaker if we don’t 50%
- No, we don’t expect all loans that we originate to qualify for the safe harbor or rebuttable presumption of compliance 22%
Has your institution used the Refinancing of a Non-Standard Mortgage exemption?
- Yes 5%
- No 95%
Which QM option do you use most frequently?
- General QM 17%
- Temporary GSE QM 11%
- Small Creditor QM 55%
- Balloon Payment QM 17%
What level of change did you experience as a result of the ATR/QM rules?
- We had to make significant changes in our underwriting process. 33%
- We had to make moderate changes in our underwriting process. 48%
- We were able to comply with our current process and have only had to make minor adjustments. 19%
Describe your financial institution’s transition to Appendix Q:
- It has been extremely difficult 0%
- It has been somewhat difficult 35%
- It has been easy since Appendix Q is similar to our existing standards. 20%
- We do not use the General QM option so we don’t use Appendix Q. 45%
Does your financial institution plan to use Appendix Q in the future?
- Yes 58%
- No 42%
Has complying with these rules had a negative impact on the number of loans you are able to originate?
- Yes 33%
- No 67%
Have you been through an audit or exam on the ATR/QM rules?
- Yes 20%
- No 80%