Ability-to-Repay/Qualified Mortgages - Review and Update

Recorded on February 23, 2015   |   With Jack Holzknecht

Ability-to-Repay/Qualified Mortgages - Review and Update

With Jack Holzknecht
  • 1 Video
  • 3 PDFs
  • 2.0 hrs
Course description

The Dodd-Frank Act provisions implementing the ability-to-repay (ATR) and qualified mortgage (QM) provisions were effective on January 10, 2014. Most banks implemented the provisions without major difficulties. Now after a year of regulatory scrutiny most creditors are evaluating the decisions they made during initial implementation, and some are making changes. Most compliance examination reports reflect compliance with ATR requirements, but some note failures to achieve QM status.

Are you still satisfied with your initial decisions? This program reviews the ability-to-repay and qualified mortgage rules, including the requirements for each of the seven options . The discussion explains the conditions for use of the option and advantages and disadvantages of each option.

This two-hour webinar explores:

  • What transactions are covered by the ATR and QM rules;
  • The ability-to-repay rules by the numbers:
  • The 7 ATR options are reviewed. Each option has a list of requirements to be met in order to assure compliance or QM status;
  • The 5 QM options are the best of the seven options. QMs have higher standards but result in lower liability and higher liquidity;
  • The 3 balloon payment options are available for those who offer, or would like to offer, a balloon loan product. Each option has a list of requirements to be met in order to offer a balloon option;
  • The 1 option no one seems to use is the option to refinance a non-standard mortgage into a standard mortgage. Congress had a good idea with this option, but included too many conditions for the option to be viable for most lenders ; and
  • The most important number in lending compliance - the total of points and fees. Which fees and charges are included in the calculation and which items may be excluded from the calculation? Why is the number so important?
  • Is your institution using Appendix Q to verify income, assets and debts? If not why not? The arguments for and against using Appendix Q are explored.
  • Is your loan a QM if you haven't documented QM status? The program reviews:
  • How to document ATR and QM status;
  • What information must be kept; and
  • How long should records be retained.
  • What are examiners looking for and what are they finding? The program explores the insight that can be gained from a review of the Interagency Examination Procedures.
  • What liability can result from a failure to comply or a failure to achieve QM status? How long does the liability last?
  • Safe Harbor provisions; and
  • Rebuttable presumption of compliance provisions.

So why is this program important at this time? It has been one year since the ATR/QM were effective. The one-year mark is always a good time for evaluating compliance efforts. At the present time:

  • Potential liability from violations is high;
  • Regulatory scrutiny is intense; and
  • The rules are complex.

It is time to find out how your current compliance efforts stack up. If you have weaknesses, develop a plan to eliminate the weaknesses. If you find your efforts are sufficient, then walk away at the end of the program with the satisfaction of a job well done.

Who Should Attend:
This webinar contains benefits for anyone with responsibilities related to ATR/QM rules, including mortgage loan department management, compliance officers, auditors, loan officers, loan originators, loan processors, and others.

Course Curriculum

Ability-to-Repay/Qualified Mortgages - Review and Update
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Jack Holzknecht
Jack Holzknecht

Jack Holzknecht is the CEO of Compliance Resource, LLC. He has been delivering the word on lending compliance for 39 years. In Jack's 34 years as a trainer over 125,000 bankers (and many examiners) have participated in his live seminars and webinars. Jack's career began in 1976 as a federal bank examiner. He later headed the product and education divisions of a regional consulting company. There he developed loan and deposit form systems and software. He also developed and presented training programs to bankers in 43 states. Jack has been an instructor at compliance schools presented by several state bankers associations. He developed and delivered compliance training for the FDIC and OTS for ten years. He is a Certified Regulatory Compliance Manager and a member of the National Speakers Association. He is also a "BOL Guru."