The Consumer Financial Protection Bureau (CFPB) has published regulations implementing various provisions of the Dodd-Frank Act (XIV). This includes the Ability to Repay (ATR) and Qualified Mortgage (QM) rules.
QM and ATR Effective Date
• Conventional, VA, and USDA Loans: QM and ATR rules apply to loan applications dated on or after January 10, 2014.
− Application date is defined as the earlier of:
− The broker original 1003 interview date, or
− The date the borrower signed the 1003.
• Broker application is dated November 20, 2013 and the file is submitted to HomeBridge on January 14, 2014 – QM/ATR rules do not apply.
• Broker application is dated January 10, 2014 and the file is submitted to HomeBridge on February 20, 2014 – QM/ATR rules do apply.
• FHA Loans: QM and ATR rules apply to case numbers assigned on or after January 10, 2014. If a case number is re-issued, the date of the most recently issued case number will apply.
• Broker application is dated November 20, 2013 with a case number issued December 1, 2013 and file is submitted to HomeBridge on January 10, 2014 -QM/ATR rules do not apply.
• Broker application is dated January 1, 2014 with a case number issued January 10, 2014 and file is submitted to HomeBridge on January 11, 2014 – QM/ATR rules do apply.
Transactions Covered by QM and ATR Rules
QM and ATR rules apply to the following:
• Purchase and refinance transactions secured by owner-occupied and second homes.
QM and ATR rules do not apply to the following:
• Investment property*
NOTE: Investment properties that are for business purposes are exempt from QM rules.
If the borrower occupies any investment property for > 14 days in any given year the investment property is no longer considered for business purposes only and would be subject to QM and ATR rules.
Additionally, there can be no evidence that the borrower purchased/refinanced the investment property for personal rather than business reasons (e.g. property purchased for a family member).
• Construction loans (during the construction phase)
*HomeBridge will provide additional information regarding a form the borrower will be required to sign to certify the loan is for a “business purpose