Clayton Holdings Enhances Software For Upcoming ATR/QM

Shelton, Conn.-based Clayton Holdings LLC, a provider of loan due diligence, surveillance and consulting services, has added new functionality to its eCLAS compliance software.

According to the company, the enhancement comes in anticipation of the Consumer Financial Protection Bureau's (CFPB) ability-to-repay (ATR) and qualified mortgage (QM) rules that will become effective in January.

Clayton says it has also modified the procedures used in due diligence reviews to evaluate both QM and non-QM loans.

The enhancements are designed to support a full range of investment options, including the purchase of various types of non-QM loans, the company says. The testing will first determine ATR/QM status by examining whether the loan does the following:

áContains any feature that would disqualify it from QM, including product type, loan type, prepayment penalty plan features and loan term restrictions;
áMeets the maximum debt-to-income ratio using Appendix Q standards, or qualifies for an agency/government-sponsored enterprise exemption;
áDoes not exceed the points and fees limits; and
áHas an annual percentage rate that classifies the loan as a QM safe harbor or QM rebuttable presumption loan.

Clayton says it 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 company adds.


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