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© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
DECEMBER 11, 2013
ATR/QM Product Overview/Training
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
Today’s Presenter
John Haring, Compliance Enablement Manager
Responsible for facilitating the implementation and maintenance
of residential mortgage lending compliance and industry changes
across Ellie Mae’s software applications and loan documents to
ensure compliance integrity, quality and uniformity.
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
This presentation may contain forward-looking statements under the safe harbor provisions
under The Private Securities Litigation Reform Act of 1995. These forward-looking statements
may include the company’s ability and timing to enhance the features and functionality of
Encompass software and services and of new product launches. Additional risks and uncertainties
related to the company’s business are discussed in the company’s Securities and Exchange
Commission filings, including but not limited to the company’s most recent Annual Report on Form
10-K and Quarterly Report on Form 10-Q. Unless otherwise required by applicable laws, the
company undertakes no obligation to update or revise any forward-looking statements, whether as
a result of new information, future events or otherwise.
The content provided in this slide presentation is intended for Ellie Mae® webinar attendees and
their staff only and should not be distributed outside your company. Ellie Mae does not permit any
unauthorized copying, distribution or redistribution of this presentation. Specific authorization must
be obtained in writing from Ellie Mae, Inc. Violations of copyright are subject to substantial penalties
as provided by the law plus attorney's fees incurred as a result of violation. The content is intended
for general information purposes only. It should not be construed as legal advice or opinion on any
specific facts or circumstances. You are advised to consult your own compliance staff or attorney
regarding your specific residential mortgage lending questions or situation to ensure your
compliance with applicable laws and regulations.
Safe Harbor
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
Ability-to-Repay / Qualified Mortgage Standards (ATR/QM)
Effective Date: Applications on or after January 10, 2014
©2013 Ellie Mae. All rights reserved. Confidential Material.
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
ATR/QM Standards
ATR Covered Transaction
> Consumer purpose closed-end loan secured by a 1 - 4 unit dwelling
ATR Exempt Transactions:
> HELOC (open-end credit plans)
> Time-share plans
> Reverse mortgages
> Bridge loan
> Initial construction loan
> Construction phase of construction-to-permanent loan <= 12 months
> Credit extended: under Housing Finance Agency administered program,
by certain nonprofit creditors, by creditors designated as CDFI, DASFP,
CHDO/HOME, or under EESA and HHF programs
ATR/QM Record Retention
> Three (3) years after consummation
> May maintain paper or electronic copies
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
Available NOW
Encompass ATR/QM Management tool
Appendix Q Worksheet and ATR/QM output forms
Encompass Compliance Service (ECS) tests
Encompass Product and Pricing Service (EPPS) support for
discount point calculations
eFolder contains:
Automated underwriting results
Credit report
Pay stubs
4506-T reports
Other documentation, for export to investors
Total Quality Loan program (TQL) to document QM loans with
supporting information
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
Let’s Take a Look…
View the video tutorial on the ATR/QM Management Tool.
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
Encompass Compliance Service Tests
ATR
> Exemptions based on creditor type and loan type
> Covered loans/type
> Standard
QM
> Loan term and features
> Underwriting factors
> Prepayment penalty limitations
> Agency/GSE eligibility
> Points and fees
Points and Fees
> Detailed Fee Assessments – aggregate categories, provider name,
affiliates, inclusion/exclusion
> Bona Fide Discount Points assessment
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
Encompass Compliance Service Tests
Higher-priced covered transactions
High Cost
> 2013 Federal high cost thresholds
> Prohibited practices
> Multiple state variations
New HOEPA APR calculations
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
ECS ATR/QM Results
Checks for ATR/QM type, payment underwriting and Non-standard to Standard Refis
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
ECS QM Points and Fees Test
Displays a detailed Total Loan Amount calculation and checks for rate limits
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
ECS Fee Worksheets
Fees are detailed
into categories
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
ECS Results for Payment Underwriting
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
ECS Results for Payment Underwriting cont’d.
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
Encompass Product & Pricing Service (EPPS)
• Determines bona fide
discount points and
APOR calculations
• Automatically
populates loan file with
‘Starting Adjusted Rate’
and ‘Starting Adjusted
Price’ and
undiscounted rate from
EPPS into Encompass
• These fields are used
in the Points and Fees
tests in the ATR/QM
Management tool
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
ATR/QM Training Sessions
Visit the Encompass Resource Center to Sign Up
Day Date Time Duration
Thursday Dec 19 1:00 PM (pacific) 60 minutes
Thursday Jan 2 1:00 PM (pacific) 60 minutes
Friday Jan 3 1:00 PM (pacific) 60 minutes
Monday Jan 6 1:00 PM (pacific) 60 minutes
Tuesday Jan 7 1:00 PM (pacific) 60 minutes
Wednesday Jan 8 1:00 PM (pacific) 60 minutes
Thursday Jan 9 1:00 PM (pacific) 60 minutes
Friday Jan 10 1:00 PM (pacific) 60 minutes
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
Release Notes
ATR/QM Video
ATR/QM FAQs
Encompass Compliance Center
Compliance Education Webinar Series
Encompass NewsFlash
Encompass Compliance Service Alerts
Compliance Blogs www.elliemae.com
Compliance White Paper
Additional Resources:
Encompass Resource Center
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
Questions?
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
ATR/QM Common Questions
What is Ability-to-Repay (ATR) / Qualified Mortgage (QM)
Standards?
> Lenders making a special type of loan, known as a Qualified
Mortgage, is entitled to presume that the loan complies with ATR
requirements (safe harbor).
> Establishes different types of QMs that are generally identified as
loans with restrictions on loan features, limits on fees being
charged, and underwriting requirements.
> Requires lenders to demonstrate they have made a reasonable and
good faith determination, based on verified and documented
information, that the consumer has a reasonable ability to repay the
loan.
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
When does ATR/QM Standards go into effect?
> ATR/QM will apply to loan applications taken
on or after January 10, 2014.
ATR/QM Common Questions
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
How will ATR be evaluated?
To determine a borrower’s Ability-to-Repay, creditors must consider
eight (8) underwriting factors:
1. Current or reasonably expected income or assets
2. Current employment status
3. Monthly payment on the covered transaction
4. Monthly payment on any simultaneous loan
5. Monthly payment for mortgage-related obligations
6. Current debt obligations, alimony, and child support
7. Monthly debt-to-income ratio or residual income
8. Credit history
ATR/QM Common Questions
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
What loans are covered under ATR/QM?
Consumer purpose closed-end loans secured by a 1 - 4 unit dwelling.
How are FHA, VA, USDA loans impacted by ATR/QM?
> Loan Term cannot exceed 30 years
> Cannot contain an Interest-Only Term
> Cannot contain Negative Amortization
> Higher-Priced Covered Transaction Threshold
• Safe Harbor vs. Rebuttable Presumption of Compliance
> 3% Points & Fees Limit
ATR/QM Common Questions
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
What transactions are EXEMPT from ATR/QM?
> HELOC (open-end credit plans)
> Time-share plans
> Reverse mortgages
> Bridge loan
> Initial construction loan
> Construction phase of construction-to-permanent loan <=12 months
> Credit extended: under Housing Finance Agency administered
program, by certain nonprofit creditors, by creditors designated as
CDFI, DASFP, CHDO/HOME, or under EESA and HHF programs
ATR/QM Common Questions
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
What’s required for ATR/QM Record Retention?
> Three (3) years after consummation
> May maintain paper or electronic copies
ATR/QM Common Questions
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
Is this same functionality provided in both Encompass Broker
and Encompass Banker editions?
> No – Broker Edition does not include the Underwriter
Summary since brokers do not underwrite loans.
Is there an additional cost for this new functionality?
> No – It was provided with the Encompass Fall (9.0) Release
in November 2013 at no additional charge.
ATR/QM Common Questions
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
What items are INCLUDED in points and fees?
> Finance Charge Fees* (not otherwise excluded)
> Loan Origination Fee
> Commitment/Rate Lock Fee
> All Compensation paid to Mortgage Broker
> Credit Insurance Premiums and Impounds
> Maximum Prepayment Penalty
> Prepayment Penalty Payoff (Refinance)
> HELOC Transaction Fee [High Cost only]
Assume one draw of maximum credit limit
> HELOC Participation Fee [High Cost only]
ATR/QM Common Questions
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
What items are NEVER INCLUDED in points and fees?
> Prepaid Interest
> FHA Mortgage Insurance
> VA Funding Fee
> USDA/RHS Guarantee Fee
> Charges Payable in a Comparable Cash Transaction
> Creditor Paid Fees not paid to Mortgage Broker
> Sellers Points falling under 1026.32(b)(1)(i):
Prepaid Interest
Premium or guaranty protecting creditor against the
consumer’s default or other credit loss
Third party charges paid to third party provider, creditor, or
affiliate (of creditor or mortgage broker)
Points
ATR/QM Common Questions
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
QM – Points and Fees Limits
If Note Amount is:
$100,000 or more
$60,000 or more but less than
$100,000
$20,000 or more but less than
$60,000
$12,500 or more but less than
$20,000
Less than $12,500
Threshold is:
3% of the Total Loan Amount*
$3,000
5% of the Total Loan Amount*
$1,000
8% of the Total Loan Amount*
© 2013 Ellie Mae, Inc.
This presentation and its content are intended for general information purposes only and should not be construed as legal advice or opinion on any specific facts or circumstances.
Thank You for Attending! Recording available on the Encompass Resource Center