Clayton Holdings Updates Compliance Software And Due Diligence Processes To Be Ready For ATR/QM
Analysis and Reports Will Assess Full-Range Of QM and Non-QM Loan Types
SHELTON, Conn., Oct. 28, 2013 /PRNewswire/ -- Clayton Holdings LLC, a leading provider of loan due diligence, surveillance and consulting services to the mortgage industry, announced today that it has added new functionality to its eCLAS compliance software in anticipation of the CFPB Ability to Repay (ATR) and Qualified Mortgage (QM) Rules that will be effective in January 2014. The company has also modified the procedures used in due diligence reviews to evaluate both QM and Non-QM loans.
These enhancements are designed to support a full range of investment options, including the purchase of various types of Non-QM loans, the company said.
The testing will first determine ATR/QM status by examining whether the loan:
- Contains any feature that would disqualify it from QM, including product type, loan type, prepayment penalty plan features, loan term restrictions, etc.
- Meets the maximum debt-to-income ratio using Appendix Q standards, or qualifies for an agency/GSE exemption.
- Does not exceed the points and fees limits.
- Has an APR that classifies the loan as a QM Safe Harbor or QM Rebuttable Presumption loan.
Clayton will be able to categorize loans into the following types: QM: Safe Harbor; QM: Rebuttable Presumption; Non-QM with lender documenting all ATR underwriting factors; Non-QM without documented ATR underwriting factors; ATR/QM Exempt; and ATR/QM Not Applicable. If the applicable guidelines require it, Clayton will also review the residual income analysis.
"The ATR/QM rules will dramatically shape the future of mortgage loan financing for years to come, and they are expected to be a critical factor in private label securitization," said Ron Castro, Managing Director of Securitization. "Beginning January 10, 2014, investors will be asking the same questions: Did the lender confirm the borrower's Ability to Repay and is this loan a Qualified Mortgage? More importantly, how safe is it to purchase this loan? The changes we are announcing today will go a long way to answering these questions for the country's largest aggregators and investors."
About Clayton Holdings LLC
Clayton Holdings, headquartered in Shelton, Connecticut, provides information and services that financial institutions, investors and government entities use to evaluate, acquire, securitize, service and monitor loans and asset-backed securities. Clayton offerings include risk-based analytics, residential and commercial loan due diligence, consulting, surveillance and staffing solutions. The company provides customized solutions including REO management, BPOs and a short sale program through its Green River Capital subsidiary A global reach in the financial services industry is provided by the company's European subsidiary, Clayton EuroRisk.
Additional information is available at Clayton.com.
SOURCE Clayton Holdings LLC
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