HPML and Safe Harbor
Conventional & VA
|Safe Harbor Test*||APR < APOR + 1.50%||APR < APOR + 1.50% + 1.15
for FHA UFMIP, + Annual MI
|HPML Test*||APR < APOR + 1.50%||APR < APOR + 1.50%|
*HPML & Safe Harbor Tests compare the APR to the APOR index as of Rate Set Date (RSD.) An HPML loan has an APR that exceeds the Average Prime Offer Rate + 1.5% (based on the RSD) for first lien.
What is a Rate Set Date?
The RSD is the specific date within the loan origination process when the interest rate is locked with the lender.
Why is the RSD Important?
In addition to HPML/Safe Harbor tests, the CFPB and Qualified Mortgage (QM) mandates that when a rate is locked, the compensation is also locked for the purposes of QM. From that point forward, whatever the comp was at the time the rate was locked is what QM will use to calculate the points and fees. The only way to change that compensation for QM purposes is to change the rate, term, or product of the loan. A Partner could zero out their origination but if they do not make one of the changes above, QM will still use the compensation from when the loan was locked, or previously extended, to calculate QM.
HPML & Safe Harbor
When will we run HPML Test?
- This test will be run at every status starting at Registration.
- If the loan is not passing HPML, your Rocket Launcher, Folder Receive Analyst, CCS/SPS or Solutions Underwriter will email you to advise test failed.
- A loan will not be able to move to the next status if it is failing HPML.
Not many options are available to solve a Safe Harbor and/or HPML Fail:
- If loan is floating, rate can be lowered to move loan forward
- If loan is locked:
- Term can be raised (if less than 23 years),
- Rate can be lowered
- APR fees can be lowered
How can you fix it?
- Your Rocket Launcher, Folder Receive Analyst, CCS/SPS or Solutions Underwriter will send you our QM Findings worksheet for review. We will also reach out to our QM Team for guidance.
- You will need to submit a Change in Circumstance (CIC) form on the QLMS Portal to make any changes to fix the loan after Folder Receive.
Home Ownership Counseling Required
QM Points & Fees
|≥ $101,953||3% of the total loan amount|
|$61,172 to $101,953||$3,059|
|$20,391 to $61,172||5% of the total loan amount|
|$12,744 to $20,391||$1,020|
|< $12,744||8% of the total loan amount|