QM Background and Policy

Optimal Blue allows lenders to define and customize QM Policies that can be applied to business channel entities, product groups, and investors. These policies are displayed in the search results enabling the LO to determine if a loan meets QM in real time while calculating loan level price adjustments (LLPAs), fees, discount points, APR, APOR, and toxic features.

Background

To address the recent qualified mortgage (QM) rules issued by the Consumer Financial Protection Bureau (CFPB), Optimal Blue offers a QM feature that lenders can apply to their daily pricing methods. 

New rules from the CFPB define a category of mortgages called QM and ability-to-repay (ATR) requirements. These rules require that lenders make a good faith determination of an applicant’s ability to repay before originating a mortgage loan. The CFPB also provide certain legal protections from liability when a loan meets QM. For lenders, loans that meet QM requirements are eligible for investor purchase on the secondary market.

These rules are effective for applications dated on or after January 10, 2014. For a loan to qualify as QM, applications must meet the following requirements:

  • Applications cannot contain certain risky loan terms or features as defined by the CFPB.

  • The lender must evaluate and document the applicant’s ATR using QM requirements.

  • Points and fees must fall within QM thresholds.

Optimal Blue displays QM icons and data to help the user make the best pricing decisions and remain in compliance with QM Policy. 

  • When pricing a loan, identify the Pass and Fail icons that indicate which products and prices meet QM. Optionally, the HPML icon indicates that the selection falls into rebuttable presumption as a Higher-Priced Mortgage Loan (HPML).

  • When evaluating rates, points, and fees, identify the QM Trace icon to display an analysis on how the current loan data measures against QM Policy limits. This information identifies specific parameters that may make a loan ineligible for QM status.

QM Policy

Optimal Blue allows lenders to define and customize QM Policies that can be applied to business channel entities, product groups, and investors. These policies are displayed in the search results enabling the LO to determine if a loan meets QM in real time while calculating loan level price adjustments (LLPAs), fees, discount points, APR, APOR, and toxic features. The LO and Secondary can view a QM trace which identifies lender defined limitations in the associated QM policies and if values for the loan scenario pass or fail. The user can define the QM policies for the product types and determine if the investor requires specific modifications unique to that investor.

Optimal Blue Global Default Policy

The QM Optimal Blue Global Default Policy does the following:

  • Defines a conservative interpretation of the CFPB requirements

  • Applies to all entities and products, unless defined otherwise

  • Identifies products and pricing that meet specified QM rules

  • Displays lender limits and pass/fail values in the QM Trace

  • Allows the user to create and define custom QM policies that include:

    • QM and non-QM origination defaults

    • LLPAs and Service Release Premium (SRP) display preferences

    • APOR date default

    • Points and fees preferences

    • Debt-to-income ratio (DTI), APR/APOR, and point and fee limits by dollar and percentage

Custom QM Policies

Optimal Blue gives users the flexibility to create custom policies to manage fees, points, LO compensation, and other variables in QM calculations. Users can define policies that are

  • Specific to entity, product, or investor

  • Based on wholesale, retail, and correspondent channels that are more restrictive than the CFPB Policy, offering a cushion for loan changes

  • Less restrictive than the CFPB Policy, allowing for certain Government-Sponsored Enterprise (GSE) exceptions

Qualified Mortgage – Configuration & Secondary Admin User Guide

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