![]() ![]() an escrow account will have to be put into place on the loan, etc. The effect of not meeting the HPML test is that other requirements come into place e.g. ![]() HPML = APR ≥ APOR + 2.5% 1st Lien Is Jumbo as Defined by FHLMC (Freddie Mac).HPML = APR ≥ APOR + 1.5% 1st Lien Non-Jumbo as Defined by FHLMC (Freddie Mac).The Higher Priced Mortgage Loan Test (§ 1026.35(a)(1)): The biggest issue may be that an investor is not willing to purchase a rebuttable presumption loan or may offer less for it. The effect of not meeting the Safe Harbor test above is that a loan becomes a rebuttable presumption, which gives the buyer the ability to refute that the creditor fully checked the buyer's ability-to-repay should the loan ever be disputed in court. Non-FHA QM Rebuttable Presumption = APR ≥ APOR + 3.5% 1st Lien Small Creditor Variance. ![]() Non-FHA QM Rebuttable Presumption = APR ≥ APOR + 3.5% 2nd Lien.Non-FHA QM Rebuttable Presumption = APR ≥ APOR + 1.5% 1st Lien.FHA QM Rebuttable Presumption = APR ≥ (APOR + (Annual MIP + 1.15%)) 1st Lien.The QM Safe Harbor/Rebuttable Presumption Test (formally known as Higher-Priced Covered Transaction) Some confusion comes into play in the mortgage industry because of the proximity in how the two tests are calculated however, to be clear, they are two different tests which can vary and have separate effects in the loan process. The IDS Compliance team would like to review the differences between the QM Safe Harbor Determination test and the HPML test. ![]()
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