FAQs On ATR & QM For Small Entities – Part Three

FAQs PicIntroduction. The FAQs below come directly from the most recent CFPB guidelines for January 2014.  Parts One and Two can be found here and here. As I go through the rules I will supplement the FAQs.  This information does not apply to the Big Banks, e.g. B of A, Morgan Stanley, JPMorgan, etc.  Rather, it applies to “small creditors” such as community banks. Unfortunately, the regulators have sought to apply the ATR/QM rules even to Mom and Pop who may sell an occasional rental unit or two.[1] The CFPB gives “small creditors” or “small entities” certain underwriting latitude in the application of the ATR/QM rules. Generally, these are persons or entities with no more than $2 billion in assets that make no more than 500 mortgage loans per year. Originally, the small entity exceptions were intended to apply only to “rural or underserved counties,” but until January 10, 2016, the exceptions will apply to all small creditors, regardless of location. Caveat: This material below is informational only and does not constitute “legal advice.”  Moreover, it is summary only; for more information, the actual regulations should be reviewed.  [For full article, go to link here.]

[1] I maintain vehemently that on the state and federal levels, the CFPB rules should not apply to the occasional sale of residential property owned by persons who are not in the business of making such loans, when they “carry back the paper,” e.g. on a contract or note and trust deed. The fact that Oregon’s DFCS insists otherwise is a sad and disturbing commentary on the uber-regulatory mindset of governmental bureaucrats who would rather regulate than cogitate.  Any sentient human being who has a passing familiarity with the housing and credit crisis would know that the occasional sale of residential property by Mom and Pop who carry back the paper was never meant to be subject to the ATR/QM and mortgage loan originator laws.