Ability to Repay and Qualified Mortgage Rule

Transcription

1 Annuncement Date: February 11, 2014 Tpic: Clarificatin t Annuncements 13-79, 13-87, Regarding Ability t Repay and Qualified Mrtgage Rule This annuncement is intended t prvide further clarity regarding prtins f Annuncements 13-79, and regarding the Ability t Repay and Qualified Mrtgage Rule. See belw fr the riginal annuncement with all new clarificatins in yellw highlight that nw supersede ld verbiage in strikethrugh: Ability t Repay and Qualified Mrtgage Rule The Cnsumer Financial Prtectin Bureau adpted a rule that implements the Ability t Repay and Qualified Mrtgage ( ATR/QM ) prvisins f the Ddd-Frank Act. The final ATR/QM rule is effective with initial applicatins taken received by the creditr n r after January 10, Brker riginated transactins where the applicatin was received by the creditr n r after January 10, 2014, must meet the ATR and QM requirements in rder t be eligible fr purchase by PennyMac. The date that the creditr received the applicatin shuld be used fr TILA early disclsure requirements as well, except where therwise prvided fr by RESPA r TILA. This annuncement is meant t prvide Crrespndents with PennyMac s lan purchase requirements, and is nt intended t be legal advice. Overview PennyMac will nly purchase lans that meet ATR/QM rule requirements. Existing prduct set will cntinue t be eligible fr delivery and purchase. Crrespndents are respnsible fr prviding evidence f cmpliance with the ATR/QM rules. PennyMac will nt accept cures n QM vilatins. Rebuttable Presumptin Jumb lans are nt eligible fr purchase. Page 1 f 8

2 Categry Eligibility General Requirements Safe Harbr QM (nn-hpml) Rebuttable Presumptin QM (HPML) Eligible fr purchase Eligible fr purchase (except Jumb) Term 30 years r less, n negative amrtizatin, n interest nly, n balln payment; and adherence t the applicable pints and fees threshlds; and APR< APOR + 1.5% (first liens); and 43% DTI underwriting requirements (based n Appendix Q guidelines); OR FNMA/FHLMC eligible r insured by VA r Rural Husing r HUD (Until prpsed rule is finalized). Term 30 years r less, n negative amrtizatin, n interest nly, n balln payment; and adherence t the applicable pints and fees threshlds; and APR >= APOR + 1.5% (first liens); and 43% DTI underwriting requirements (based n Appendix Q guidelines); OR FNMA/FHLMC eligible r insured by VA r Rural Husing r HUD (Until prpsed rule is finalized). Categry Eligibility General Requirements HUD Safe Harbr QM (FHA) (prpsed as f Nvember 1, 2013) HUD Rebuttable Presumptin QM (FHA) (prpsed as f Nvember 1, 2013) Nn-QM Eligible fr purchase Eligible fr purchase Nt eligible fr purchase Term 30 years r less, n negative amrtizatin, n interest nly, n balln payment; and adherence t the applicable pints and fees threshlds (see Pints and Fees belw); and Lan is insured by FHA; and APR< APOR % + annual MIP. *Federal HPML prepayment and escrw requirements apply if APR>=APOR+1.5% Term 30 years r less, n negative amrtizatin, n interest nly, n balln payment; and adherence t the applicable pints and fees threshlds (see Pints and Fees belw); and Lan is insured by FHA; and APR >= APOR % + annual MIP. *Federal HPML prepayment and escrw requirements apply if APR>=APOR+1.5% N/A Page 2 f 8

3 Investment Prperties PennyMac will cntinue t purchase lans n investment prperties. Investment prperties which are fr business purpses (brrwer des nt intend t ccupy fr greater than 14 days in the year) are exempt frm ATR/QM; hwever, such lans must meet agency eligibility requirements and are subject t the applicable pints and fees threshld. Further requirements regarding investment prperties (including the applicable pints and fees threshld) can be fund in the applicable GSE guide. Fr clarificatin, PennyMac will rely n the crrespndent s designatin at delivery t qualify a lan fr QM exempt status. Eligible Prducts under ATR/QM Only qualified mrtgage lans are eligible fr purchase. All prducts eligible fr purchase by PennyMac that are subject t ATR/QM must cmply with the requirements utlined in the ATR/QM rule. Lan types currently eligible fr purchase will remain eligible as QM requirements d nt affect PennyMac s prduct fferings s lng as the individual lan satisfies the ATR/QM requirements. See Prduct Prfiles fr a cmplete list f prducts. Pints and Fees Threshlds Nte Amunt Pints and Fees Threshld based n Ttal Lan Amunt $100,000+ 3% $60,000-$99,999 $3,000 $20,000-$59,999 5% $12,500-$19,999 $1,000 <=$12,499 8% Page 3 f 8

4 Evidencing Cmpliance with QM Pints and Fees Clear itemizatin f fees and applicatin f all credits that indicate paid by/t will be required n all lans; hwever, PennyMac will nt require a specific frm related t QM pints and fees. PennyMac will accept a brad number f dcuments as evidence f cmpliance. Acceptable frms f evidence include, but are nt limited t: Rate Sheet Screen print frm LOS and/r Pricing Engine Lck agreement with the brrwer; Lck cnfirmatin Final HUD-1 and Addendum(s) Final TIL and Itemizatin f Amunt Financed Invices Private Mrtgage Insurance certificate Purchase cntract In additin t dcuments required t itemize fees and credits PennyMac will cntinue t require a cmpliance certificatin, generated by an apprved cmpliance vendr. The certificatin shuld evidence cmpliance with the fllwing: ATR/QM, TILA, Federal High Cst (f.k.a. HOEPA), State High Cst, Lcal High Cst, HPML and Fannie/Freddie Pints & Fees. Certificatins frm the fllwing vendrs are acceptable: Cmpliance Ease Cmpliance Eagle Data Trac Dc Magic Interthinx Mavent PCI Wiz Sentinel (including CmplianceOne) QuestSft CnfrmX Digital Dcs Dcu Prep-Lan Analysis IDS Calyx (Digital Dcs) Opus Brks System Gregg & Valby Page 4 f 8

5 PennyMac des nt represent that utilizing the abve vendrs will ensure cmpliance with any regulatry requirements. Crrespndents must cnsult with their external and internal legal cunsel and cmpliance departments t determine what steps are necessary t ensure cmpliance with all applicable legal and regulatry requirements. Bna Fide Discunt Pints Bna fide discunt pints may be excluded frm the pints and fees calculatin as permitted by the ATR/QM rule. T verify the exclusin f bna fide discunt pints, PennyMac will require: Evidence f the Starting Adjusted Rate (a.k.a. Base Rate) and pints, and crrespnding LLPAadjusted rate stack r rate sheet with nn-llpa adjusted rate stack and LLPA grids ; and Evidence f the delivery price t the cnsumer (i.e. rate/lck cnfirmatin). Hazard Insurance Impunds Amunts cllected fr Hazard Insurance and retained by an affiliate f the creditr r affiliate f the brker shuld be included in pints and fees if the amunt is placed int an escrw accunt. If the fee is nt escrwed, r is nt retained by the creditr affiliate, it shuld nt cunt twards pints and fees. Settlement Charges The grss charge paid t the creditr, an affiliate f the creditr r an affiliate f the brker must be included in pints and fees. Fees Paid t the Creditr Fees paid t the Creditr must be included in pints and fees and can be reduced by a Lender credit r credit fr rate chsen (line 802 n the HUD-1). Fees Paid t an Affiliate f the Creditr Fees paid t The amunt paid t and retained by an affiliate f the creditr must be included in pints and fees (the Net Amunt ) and can be reduced by a Lender credit r credit fr rate chsen (line 802 n the HUD-1). Please nte: The Net Amunt will be included in PennyMac s verificatin f Pints & Fees when evidence is available t dcument the Net Amunt (i.e. breakdwn n the HUD-1 settlement statement, invices, etc). If evidence dcumenting the Net Amunt is Page 5 f 8

6 nt available, PennyMac will include the entire amunt, frm the HUD-1 settlement statement, paid t the affiliate f the creditr. A quarterly certificatin will be required t identify all affiliates f creditrs. Fees Paid t an Affiliate f the Brker Originatin fees paid t an affiliate f the brker must be included in pints and fees and cannt be reduced by any credits. Nn-riginatin related fees paid t the brker r an affiliate f the brker shuld nt be included in Pints and Fees. Examples f nn-riginatin related fees include, but are nt limited t, administrative tasks unrelated t taking a mrtgage lan applicatin r negtiating credit terms and real estate brker activity. Private Mrtgage Insurance Include in pints and fees all brrwer paid up-frnt PMI where it is: nn-refundable r refundable and in excess f FHA limits. Ntes: T exercise the exclusin f PMI frm the pints and fees calculatin, the up-frnt premium must be refundable ver the life f the plicy. Lender paid PMI is nt included in pints and fees. Brrwer paid mnthly PMI is nt included in pints and fees. Seller Credits Where there is clear evidence f the party respnsible fr payment, Seller credits can be applied t the fllwing t reduce pints and fees: Discunt pints Finance charges Nte: seller credits cannt be applied t brker fees. Page 6 f 8

7 Lender Credits and Credit fr Rate Chsen The credit fr rate chsen (line 802 n the HUD-1) may be applied t reduce pints and fees, excluding brker fees and fees paid t an affiliate f the brker fr riginatin activities. The credit fr rate chsen can be applied t reduce fees paid t an affiliate f the creditr. Clear evidence utlining the applicatin f the credit is required. Credits fr RESPA/TILA Cures Credits fr RESPA/TILA cures cannt be applied t reduce pints and fees. Brker Cmpensatin Brker cmpensatin and fees paid t an affiliate f the brker fr riginatin activities must be included in the pints and fees calculatin; they cannt be reduced by credits. QM Underwriting Requirement Evidencing Cmpliance with the QM Underwriting Requirement PennyMac will require evidence f cmpliance with the ATR/QM rule. Incme and debt shuld be reviewed and cnsidered in the cntext f ability t repay; hwever, PennyMac will nt require a specific wrksheet related t DTI r residual incme. Temprary QM (Cnventinal, VA, Rural Husing) The underwriting requirement under ATR/QM is satisfied if the file cntains an Apprve/Eligible, r equivalent result, r is eligible fr insuring by VA r Rural Husing r HUD (nce prpsed ruled is finalized, FHA lans will fall under HUD QM). Lans that meet the Temprary QM underwriting requirement, as stated abve, by evidencing agency eligibility r insurability and have a DTI in excess f 43% are eligible fr purchase. Page 7 f 8

8 General QM (Jumb) Lans that d nt meet the underwriting requirement under Temprary QM must have a DTI <=43% t meet the General QM underwriting requirement. The determinatin f DTI must be in accrdance with Appendix Q as utlined in the ATR/QM rule. HUD QM (FHA) (prpsed, as f Nvember 1, 2013) The lan must be insured by HUD t meet the HUD QM underwriting requirement. PennyMac will purchase lans pending insurance by HUD prvided that all ther requirements under the ATR/QM rule have been met. If, subsequent t purchase, the lan is nt insured within the required time frame utlined in the Guide r is determined uninsurable the lan will be subject t repurchase. General Reminder The purpse f this annuncement is t help Crrespndents understand PennyMac's requirements related t the ATR/QM rule. This annuncement is nt legal advice and PennyMac des nt represent that fllwing this guidance will ensure cmpliance with any regulatry requirements. This dcument is nt intended t prvide a cmprehensive accunt r descriptin f regulatry requirements; Crrespndents must cnsult with their external and internal legal cunsel and cmpliance departments t determine what steps are necessary t ensure cmpliance with all applicable legal and regulatry requirements. Nthing in this dcument shuld be cnstrued as a mdificatin r waiver f the terms f the Lan Purchase Agreement, including any representatins and warranties made therein. Updates t PennyMac Sellers Guide and Prduct Prfiles will fllw in the cming days. PennyMac will publish additinal annuncements as requirements and regulatins are refined. Page 8 f 8