- Non-Qualified Mortgages (non-QM’s)
- Flexible Valuation Options
- Business Partner and consumer friendly
- Compliant
Non-Qualified Mortgages
CUFBL, in support of the industry and our members, has chosen to continue to offer non-QM loans. If you recall, Qualified Mortgages (QM’s) are more restrictive in the debt ratio allowed, in the amount of points and fees allowed to be charged, may have more stringent length of employment and income verification guidelines, and documentation requirements for the consumer. We feel this approach to continue to offer non-QM loans will better serve a greater portion of our business partners and our consumers as a whole with minimal impact on the transaction or the consumer’s experience. This type of loan will not be exempt from the new rule.
Flexible Valuation Options
To ensure the best transactional experience for the business partner and the consumer, CUFBL will determine the appropriate compliant approach for each home loan based on several factors. These factors may include but are not limited to:
- Availability, timeliness and quality of valuation service and its product
- Market conditions
- Cost
- Compliant with the regulation
In addition, CUFBL may choose from several compliant, independent vendors and utilize their respective valuation methods. These may include but are not limited to:
- Datacomp
- NADA
- Market Comparable Appraisals (where available)
It should be noted that CUFBL WILL NOT provide the consumer with the manufacturer’s invoice as an available option unless authorized to do so by the appropriate business partner.
CUFBL feels this approach will allow us to best serve our business partners and the consumer as well.
Business Partner and Consumer Friendly Approach
Regardless of the valuation provided to the consumer, CUFBL will continue to base our lending criteria off of our current advance guidelines. If a Market Comparable Appraisal is provided as the solution to the valuation, standard LTV calculations will be used to determine the maximum loan amount. In essence, there is NO CHANGE to the guidelines to which we determine the maximum loan amount.
CUFBL will also be sending out a letter to the consumer educating them as to why they are receiving the valuation. We are hopeful that this process will reduce any additional conversations the consumer may have with a business partner. CUFBL can also provide guidance and assist our business partners in explaining how the new HPML Appraisal Rule may impact the home loan process. It should be also noted that CUFBL took a similar approach to the Regulation B Rule in sending out a letter of explanation to the consumer along with the advance calculations with little to no negative impact to the consumer or the business partner. We anticipate a similar experience in this situation.
Compliant
CUFBL understands that compliant lenders are required for the long-term sustainability of our industry. As such, all approaches chosen and any processes available to our organization were vetted with our compliance team and found to meet the standards established by the Consumer Financial Protection Bureau (CFPB). Our goal as a creditor was to develop flexible options that reconciled any compliance issues related to the HPML Appraisal Rule and minimize any impact to the service we provide our business partners and our consumers, respectively.
Best Practices
CUFBL would like to share some best practices that came out of its discussions during the review of the new rule:
- Provide CUFBL with a copy of the home invoice or home purchase order and income verification to review and sign off as soon as possible as that triggers the ordering of the cost valuation (there is no change to the market comparable appraisal ordering process). While this info may not be readily available at time of loan submission or may change during the course of the transaction, a loan approval may still be able to be given based on the information provided at that time. However, the valuation to be provided to the consumer must be for the home they are actually purchasing. Remember the consumer must have this at least 3 days PRIOR to closing.
- Use any waiting period time required by regulations to perform other items related to the transaction. If you are a licensed MLO, for example, that could include making sure all conditions are met, other loan items are completed, etc. If you are a retailer, that could include ensuring other items related to the sale of the home are completed or are in process.
CUFBL remains committed to providing both its business partners and its customers (or “members” as we like to say in the credit union world) with the service and education necessary to operate in today’s regulatory environment.
Thank you for taking the time to read this communication and, as always, your business. Should you need further assistance on this topic or any CUFBL program, please feel free to contact your assigned CUFBL Business Development Executive.
Regards,
John Walters
John Walters
Sales and Marketing Manager
Phone: 866-595-7228 x6252
E-mail: Jwalters@sacu.com
CUFBL is an Equal Housing Lending · Federally Insured by NCUA
