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Monday, April 15, 2013

CFPB's Plain Language Explanation of Qualified Mortgage Rule

The CFPB has released a Small Entity Compliance Guide for the Ability-to-Repay and Qualified Mortgage Rule. In addition, the CFPB released a Chart that "compares the general ATR requirements with the requirements for originating QM loans."

The QM rules impact the distribution of insurance products to bank customers by affiliated entities. The three main impacts on banks that sell insurance will be in the distribution of title insurance, homeowners and lender-paced insurance (LPI).  For title and homeowners insurance, the points and fees charged for these insurance products by a company affiliated with a lender must be included in the calculation, for which the total points and fees cannot exceed 3 percent of the loan amount in order to qualify as a QM loan. For LPI, the QM rule includes changes to the requirement for notifications to a borrower and advancement of funds to an escrow account.

Learn more about these regulations from the CFPB.