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Course description

The world is changing for balloon lenders. Many financial institutions have used balloon loan products to meet the mortgage lending needs of their communities for decades. Effective April 1, 2016 one of the three balloon-payment options permissible under the Ability-to-Repay rules, the Temporary Balloon Qualified Mortgage option, is expiring. Revisions to Regulation Z published by the Consumer Financial Protection Bureau on September 21, 2015 revised the Ability to Repay/Qualified Mortgage (ATR/QM) options available to all financial institutions.

Alternatives - While one balloon option is expiring, the other two balloon options - the Regular Balloon Qualified Mortgage and making balloon loans that satisfy the Eight Factors test, remain as viable alternatives for making balloon loans, assuming certain conditions are met. Plus, small creditors may newly qualify to make balloon loan QMs under a March 22 interim rule that makes a huge modification to the "rural or underserved" test. A detailed review of the conditions for making balloon loans under each of these options is provided, along with an analysis of the March 2 guidance for submitting requests for designation as a rural area.

If neither of the remaining balloon options work for your institution, then long-term fixed-rate loans or Adjustable Rate Mortgages (ARMs) are viable alternatives.

Revised Conditions - There are a number of conditions that must be met in order to originate balloon loans that meet the ATR/QM requirements Some of those conditions were recently revised. The revisions expand opportunities for some institutions and contract opportunities for others. The program provides detailed explanations of the revised definitions of "small assets", "small volume" and "rural areas".

ARM Disclosure Requirements - If an institution selects ARMs as an alternative to balloon loans expanded knowledge of the existing and recently revised disclosure rules, including TRID rules is needed. The program includes a primer on providing the full-range of ARM disclosures.

The ATR/QM balloon rules have been in use for two years, but in the wake of important recent revisions, you need to evaluate what options are now available.

This two-hour webinar reviews the six remaining ATR options, including the two remaining balloon-payment options. The new small creditor and rural and underserved areas rules are reviewed in detail with a discussion of the positive and negative impact these changes may have on your institution. In addition to reviewing the remaining balloon-payment alternatives available to your institution the program also outlines the steps necessary to take advantage of the positive changes and lessen the impact of negative changes.

Upon completion of the program participants understand:

  • The remaining Ability to Repay Options and Qualified Mortgage Options;
  • When and why the Temporary Balloon Qualified Mortgage option expires;
  • Which remaining ATR/QM options allow for balloon-payment loans;
  • What alternatives are available to replace balloon-payment loans;
  • What institutions qualify as "small creditors" under the revised rules;
  • How the "Rural/Underserved" test has been modified;
  • The expanded definition of "rural area;"
  • How does the change impact your ATR/QM options;
  • What tools are available from the Census Bureau and the CFPB to determine which areas are rural areas and how to use those tools;
  • The impact, positive or negative, these changes may have on your institution; and
  • How to manage the changes and retain the integrity of your compliance management system.

This informative session will benefit auditors, mortgage department management, compliance officers, loan officers, loan processors and other personnel with mortgage lending responsibilities.


Compliance Gurus

Jack Holzknecht and Kelly Owsley

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."Kelly M. Owsley, CRCM is Director of Training Services for Compliance Resource, LLC. Kelly's career in banking began in 2000. Since then she has worked for financial institutions ranging in asset size from $250 million to $3 billion. Kelly has worked in numerous areas of the financial services industry including retail branch management, lending, product development and training. In addition, Kelly spent three years in a training and development role with CUNA Mutual Group servicing the largest credit union in the United States. Most recently, she served as the Vice President of Compliance, BSA Officer, and CRA Officer for a community bank in Kentucky where she was responsible for implementing and training all compliance related topics. Kelly holds a Bachelor of Science degree in Accounting from the University of Kentucky and is a Certified Regulatory Compliance Manager.

Course curriculum

  • 1


    • Popped Balloons - Alternate Strategies

  • 2


    • Materials

    • Slides

    • Questions and Answers