Explain whether this loan would be considered a Qualified Mortgage based on points and fees. Determine the difference in APR between the initial LE and the CD. Explain whether the... Explain whether this loan would be considered a Qualified Mortgage based on points and fees. Determine the difference in APR between the initial LE and the CD. Explain whether the difference is more or less than the APR accuracy tolerance limit under TRID.
Understand the Problem
The questions involve analyzing whether a specific loan qualifies as a Qualified Mortgage based on varying points and fees, and calculating the difference in APR between the Loan Estimate (LE) and the Closing Disclosure (CD) to assess compliance with APR accuracy tolerance limits under the TILA-RESPA Integrated Disclosure (TRID) rule.
Answer
The loan may be a Qualified Mortgage if points and fees are under 3%. APR change should be within 0.125% tolerance.
The loan could be considered a Qualified Mortgage if the points and fees do not exceed 3% of the loan amount. The difference in APR between the initial Loan Estimate (LE) and the Closing Disclosure (CD) should be within the tolerance limit; typically 0.125% for fixed-rate loans.
Answer for screen readers
The loan could be considered a Qualified Mortgage if the points and fees do not exceed 3% of the loan amount. The difference in APR between the initial Loan Estimate (LE) and the Closing Disclosure (CD) should be within the tolerance limit; typically 0.125% for fixed-rate loans.
More Information
Qualified Mortgages limit points and fees to 3% of the loan amount for loans equal to or above $100,000 to protect consumers from high-cost loans. For APR differences, within 0.125% is typically acceptable for fixed-rate mortgages.
Tips
A common mistake is not considering all fees in the points and fees calculation. Ensure that all applicable fees are included.
Sources
- OCC Bulletin 2015-27: Consumer Compliance: Revised Interagency - occ.gov
- TILA-RESPA Integrated Disclosure FAQs - consumerfinance.gov
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