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Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank

Directors' Resource Center
Technical Assistance Video Program

Ability-to-Repay & Qualified Mortgages

  1. Introduction
  2. The Core Requirement: A Reasonable Determination of an Ability-to-Repay
  3. How to Demonstrate Compliance for Non-QMs: The Eight Factors
  4. The Qualified Mortgage Presumptions
  5. Establishing QM Status
  6. What Charges Count Toward the QM Points and Fees Cap?
  7. Understanding Supervisory Expectations Regarding Non-QM and QM Lending
  8. Building an Effective Compliance Management System for ATR/QM
  9. Synthesis, Review and Resources
I. Introduction

This segment is the first of the three-part video series covering compliance with the mortgage-related rulemakings issued by the Consumer Financial Protection Bureau (CFPB).  This video series is designed for community bank compliance officers, to help facilitate understanding of how to comply with these rules. The series begins with the Ability-to-Repay & Qualified Mortgages rule (ATR/QM rule) with a special focus on aspects of the ATR/QM rule of particular interest to community bankers.

Approximate run time: 4:11

 

Link to YouTube Video

Presentation Materials - PDF


II. The Core Requirement: A Reasonable Determination of an Ability-to-Repay

Segment two of the ATR/QM video reviews the most basic requirement of the ATR/QM rule: the determination of a consumer's ability to repay a loan that is a covered transaction. It identifies what types of transactions are covered by the ATR/QM rule, and the exemptions most relevant to community bankers.

Approximate run time: 3:15

Link to YouTube Video

Presentation Materials - PDF


III. How to Demonstrate Compliance for Non-QMs: The Eight Factors

Emphasizing the commonsense underwriting intended by the rule, this segment of the ATR/QM video details how creditors make a reasonable ability to repay a loan that is not a Qualified Mortgage (QM). The segment reviews the eight factors that must be considered and verified in making a credit decision, and briefly highlights the types of documentation that can be used to verify the information.

Approximate run time: 7:39

Link to YouTube Video

Presentation Materials - PDF


IV. The Qualified Mortgage Presumptions

Segment four reviews the characteristics and effects of the two kinds of presumptions associated with QMs. In addition, it highlights the expanded eligibility of the "safe harbor" QM for "small creditors."

Approximate run time: 6:10

Link to YouTube Video

Presentation Materials - PDF


V. Establishing QM Status

This segment reviews the requirements for underwriting QMs. The different kinds of QMs are identified, and restrictions on loan features and underwriting requirements for each type are discussed.

Approximate run time: 14:33

Link to YouTube Video

Presentation Materials - PDF


VI. What Charges Count Toward the QM Points and Fees Cap?

Segment six reviews the components of the points and fees cap with respect to QMs. This segment discusses aspects of points and fees categories that will be most relevant to community banks, including prepaid finance charges, third-party originator compensation and real estate settlement charges. Important exclusions to these categories are reviewed as well.

Approximate run time: 11:08

Link to YouTube Video

Presentation Materials - PDF


VII. Understanding Supervisory Expectations Regarding Non-QM and QM Lending

This segment discusses supervisory expectations regarding compliance with the ATR/QM rule. The segment emphasizes that the ATR/QM rule does not dictate institutions' business decisions about how to comply with the rule, and that the QM or non-QM status of originated loans does not subject institutions to heightened supervisory risks.

Approximate run time: 2:55

Link to YouTube Video

Presentation Materials - PDF


VIII. Building an Effective Compliance Management System for ATR/QM

This segment focuses on how institutions can build and maintain an effective compliance management system with respect to the ATR/QM rule. The segment highlights aspects of a CMS to consider in order to enhance compliance efforts and offers practical tips that bank personnel may find helpful.

Approximate run time: 13:57

Link to YouTube Video

Presentation Materials - PDF


IX. Synthesis, Review and Resources

This segment closes out the ATR/QM video by synthesizing the rules concerning balloon mortgages, as well as the assumptions to be used in calculating payments to be considered in underwriting ARM loans.  It then reviews briefly the earlier contents of the video. Finally, this segment lists resources to consult for additional information about the ATR/QM rule.

Approximate run time: 7:07

Link to YouTube Video

Presentation Materials - PDF


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