Ability-to-Repay & Qualified Mortgages
Ability-to-Repay & Qualified Mortgages
VI. What Charges Count Toward the QM Points and Fees Cap?
29
QM: Points and Fees Caps for 2016
Loan Amount Range*
Allowable Points and Fees*
$101,749 and up
3%
$61,050 - $101,748.99
$3,052
$20,350 - $61,049.99
5%
$12,719 - $20,349.99
$1,017
$0 - $12,718.99
8%
* Adjusted annually
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FEDERAL DEPOSIT INSURANCE CORPORATION
Prepaid Finance Charges (PPFC) Categorical Exclusions
Always excluded:
? Daily interest, or other interest
? Government guaranty fees
? Ex: FHA upfront and annual premiums, VA funding fee, USDA
guarantee fee
? All monthly PMI charges and premiums payable after consummation
? However, upfront PMI charges must meet certain conditions to be
excluded
31
FEDERAL DEPOSIT INSURANCE CORPORATION
PPFC Conditional Exclusions ? Third Party Charges
? PPFC paid to bona fide third parties may be excluded from points and fees
? But - any part of the charge retained by the creditor, loan
originator, or affiliate is counted
? However, if required elsewhere that the fee be included, then
that trumps this exclusion and the fee must be counted o Example: upfront PMI
32
FEDERAL DEPOSIT INSURANCE CORPORATION
PPFC Conditional Exclusions ? Discount Points
The number of discount points that can be excluded depends on the loan's rate:
? If the pre-discount rate does not exceed APOR + 1%: you can exclude up to 2 bona fide discount points
? If the pre-discount rate does not exceed APOR + 2%: you can exclude up to 1 bona fide discount point
33
FEDERAL DEPOSIT INSURANCE CORPORATION
PPFC Conditional Exclusions ? Discount Points
? Discount points can be excluded only if they are "bona fide"
? To be bona fide, the points must:
? Buy a rate reduction for the borrower ? Reduce the loan rate by an amount consistent with
"industry norms"
34
FEDERAL DEPOSIT INSURANCE CORPORATION
Third Party Loan Origination Compensation
? Compensation paid to third party originators is included in points and fees ? Including compensation paid through the interest rate
? However - compensation to your own employee loan originators is not included
35
FEDERAL DEPOSIT INSURANCE CORPORATION
Real Estate Settlement Fees: Conditional Exclusions
? Real estate settlement costs
? Costs described in the Truth in Lending finance charge rule
1026.4(c)(7)
o Title-related charges, appraisal fees, credit report fees, and document preparation fees, etc
? To be excluded, the fees must meet 3 conditions:
1. Reasonable 2. Without direct or indirect compensation to the creditor, and 3. Not paid to an affiliate of the creditor
36
FEDERAL DEPOSIT INSURANCE CORPORATION
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