Is there any guidance on how we should treat deferred payments under the small creditor QM? I know there is guidance in Appendix Q, but I can’t find anything outside of that….right now, we amortize them out over 15 years at 5% and use that payment, looks like the Appendix Q guidelines are less strict….
This is in reference to other debt obligations for underwriting…like student loans
The small creditor QM refers to c(7) under the general ATR rules. There are special rules there for balloon, interest only and neg. am loan but it doesn’t mention deferred payments in general or student loans. Appendix Q does address deferred/student loans, but Appendix Q doesn’t technically apply to the small creditor QM.
Nothing in the guidance for small creditor portfolio loans addresses deferred payments. Appendix Q addresses when the deferred payments are included in debt. It assumes that the deferred debt has scheduled payments once the payments begin. I am curious how you arrived at 15 years and 5%. Are those the numbers used in the contract for the deferred debt?