Feature Enhancements in Version 21.2 (Broker Edition)

The Appendix Q tab has been removed from the ATR/QM input form per updates announced by the Consumer Finance Protection Bureau (CFPB) 12 CFR Part 1026, CFPB. A new stand-alone of Appendix Q has been added to the Encompass standard input forms to assist underwriters in their loan evaluations.

Administrators control access to the form by selecting a new Appendix Q checkbox that has been added to the Forms/Tools tab in the Personas setting (Encompass > Settings > Company/User Setup > Personas). This checkbox is selected by default for existing Encompass users with access to the ATR/QM Management input form prior to updating to Encompass 21.2.

The Appendix Q input form is also available in the Data Templates setting (Encompass > Settings > Loan Templates > Data Templates) where default data can be added to data templates that are applied to loans.

(Updated on 6/11/2021)

A new Price Limit row has been added to the Eligibility tab in the ATR/QM Management input form under the Points and Fees Limit row.

This row is used to populate the read-only field (field ID QM.X384) in the General Qualified Mortgage column with the Meets ATR/QM Standard, Does not meet ATR/QM, and Needs to be reviewed icons shown below based on the calculated results of the QM APR to APOR Test.

This field is populated when the Loan Application Date (field ID 745) is on or after the Use Price Based General QM Definition Date configured in the Policy category in the Encompass Admin Tools and the loan-level Use Price-Based QM checkbox (field ID QM.X383) is also selected. Otherwise, the field is blank.

The results that display in the new field also affect the icon that displays in the General Qualified Mortgage column heading. When an icon displays in the Price Limit field, the same icon displays in the heading field. When no icon displays in the Price Limit field, the heading uses the icon from the Debt to Income Ratio field (field ID QM.X40).

Note that the icons display in the Price Limit field QM.X384 for the Conventional loan type only.

(Updated on 6/4/2021)

Updates have been made to the logic used to populate the Meets ATR/QM Standard, Does not meet ATR/QM, and Needs to be reviewed icons shown below in the Agency/GSE QM Available field (field ID QM.X380) on the ATR/QM Eligibility tab on the ATR/QM Management input form.

The Agency/GSE QM Available field is located on the Agency/GSE QM Available row in the Agency/GSE Qualified Mortgage column.

The following logic is now applied when populating the field:

• When the Loan Type (field ID 1172) is USDA-RD, FHA, or VA, a blank value displays.

• When the Loan Type (field ID 1172) is HELOC or Other, a blank value displays.

• When the Loan Type (field ID 1172) is Conventional:

  • The Does not meet ATR/QM icon (red flag) displays when any of the following fields are later than the Agency QM Policy Expiration Date selected in the Encompass Admin Tools:

    • Closing Date (field ID 748)

    • Disbursement Date (field ID 2553)

    • Scheduled Closing Date (field ID 763)

    • Creation Date (field ID 2025)

  • A blank value displays when Creation Date (field ID 2025) is not later that the Agency QM Policy Expiration date, but all the following fields are blank or invalid:

    • Disbursement Date (field ID 2553)

    • Closing Date (field ID 748)

    • Scheduled Closing Date (field ID 763)

  • The Meets ATR/QM Standard icon (green flag) displays when none of the scenarios listed above are valid.

A new Use Price Based General QM Definition Date option has been added to the Policy category in the Encompass Admin Tools to set the date when loans are determined to be a General Qualified Mortgage based on the price-based rule, without relying on the Agency/QM DTI rule.

For example, if the policy setting for the Use Price Based General QM Definition Date is 10/1/2022:

• Loans created on or after 10/1/2022 would be evaluated against the priced-based rule.

• Loans created prior to 10/1/2022 would be evaluated against the existing DTI rule.

The default date for the option is set to 10/1/2022. Administrators can select an earlier date, but the date cannot be set earlier than 3/1/2021.

A new Use Price-Based General QM checkbox (field ID QM.X383) has been added to the Risk Assessment section of the Qualification tab on the ATR/QM Management input form. This checkbox is a loan-level editable field that can be used to override the Use Price Based General QM Definition Date policy setting in the Encompass Admin Tools, which determines when the old DTI-based test is disabled, and the new price-based QM APOR test is enabled. The checkbox enables Encompass users to clear the checkbox to use the old DTI-based test during the optional period after the date set in the Admin Tools, but prior to the mandatory date (10/1/2022) for the new price-based rule.

The checkbox is enabled when the loan application date (field ID 745) is on or after the date set in the Use Price Based General QM Definition Date policy setting in the Encompass Admin Tools. By default, when a loan is created, the checkbox is selected or cleared based on the policy setting in the Admin Tools. The checkbox can also be selected or cleared based on business rules. Access to the field can be controlled in Encompass Banker Edition via a Persona Access to Fields business rule.

The name of the ATR/QM POLICY EXPIRATION DATE option in the Policies category in the Encompass Admin tools has been changed to QM GSE Patch Expiration Date.

(Updated on 6/4/2021) 

A new button and two new fields have been added to the APR/APOR section of the Qualification tab on the ATR/QM management input form:

• QM Annual Percentage Rate field (field ID QM.X381).

• Two new checkboxes (field ID QM.X382) to indicate whether a loan is or is not a QM higher-priced covered transaction.

• QM Payment Stream button.

Both new fields are available in the Encompass Reporting Database and can be added to custom forms and Encompass reports.

QM Annual Percentage Rate

Encompass calculates and populates a value to this field when a loan meets the criteria for a QM Loan. Otherwise, Encompass populates the value from the APR field (field ID 799). By default, the field is disabled for editing, but a user can click the Lock icon to manually edit the value.

QM Higher-Priced Covered Transaction

Encompass will select one of these checkboxes (field ID QM.X382) to indicate whether a loan is a QM higher-priced covered transaction based on the criteria described in 12 CFR 1026.43(b)(4).

QM Payment Stream Pop-Up Window

Encompass users can click the new QM Payment Stream button to view the payment schedule used to calculate the value in the new QM Annual Percentage Rate field (field ID QM.X381). After clicking the button, the payment schedule opens in a new pop-up window. The payment schedule assumes a fixed interest rate at the maximum rate over the first 5 years of the loan (first 61 payments). The payment schedule is provided for testing purposes for Encompass users. If the loan doesn't have an APR change, the following message will display when a user clicks the button:

In order for this QM Payment Stream button logic to apply as described above, the 1st Change value (field ID 696) must be 60 months or less AND the Annual Percentage Rate (field ID 799) and QM Annual Percentage Rate (field ID QM.X381) must be the same value in both fields.

The following logic is used to populate the appropriate This loan is/is not a QM higher-priced covered transaction checkbox (field ID QM.X382) for first lien and subordinate lien loans.

When the First Lien checkbox is selected for the Mortgage Lien Type (field ID 420):

• The Is checkbox is selected when the QM APR (field ID QM.X381) is equal to or greater than the APOR (field ID 3134) plus 1.5%.

• The Is Not checkbox is selected when the QM APR (field ID QM.X381) is less than the APOR (field ID 3134) plus 1.5%.

When the Subordinate Lien checkbox is selected for the Mortgage Lien Type (field ID 420)

• The Is checkbox is selected when the QM APR (field ID QM.X381) is equal to or greater than the APOR (field ID 3134) plus 3.5%.

• The Is Not checkbox is selected when the QM APR (field ID QM.X381) is less than the APOR (field ID 3134) plus 3.5%.

The logic applies to loan that meet the following criteria:

• The Number of Units (field 16) is 4 or less.

• The Mortgage Lien Type (field ID 420) is not blank.

• The Average Prime Offer Rate (field ID 3134) is not blank and is not zero.

• The QM Annual Percentage Rate (field ID QM.X381) is not blank and is not zero.

An update has been made to the existing General QM APR calculation, so Encompass can determine the appropriate DTI-based APR for various ARM loan types, compare the APR to the APOR (for price-based limits), and determine General QM eligibility. The DTI-based APR is calculated using the maximum rate over the first five-years to calculate the APR. The new QM APR calculation is triggered in the same manner as the APR calculation in prior versions of Encompass:

• When a user opens certain input forms, for example the RegZ-LE or RegZ-CD.

• When a user saves the loan.

• When the calculations are needed by an API call.

For loans using the new URLA forms, the label for the PMI, MP Financed field (field ID 1045) in section 4a on the 1003 URLA Part 4 input form has been changed to MIP, PMI Financed to be consistent with the terminology used on the MIP, PMI, Guarantee Fee Calculation pop-up window.

The following new fields have been added to the Encompass Reporting Database to capture data for a total of five authorized agents for the VA 26-1820 Loan Disbursement form. Data for these fields is imported from loan files submitted via Encompass LO Connect. These fields do not display on any input forms in Encompass, but they print on the VA-26-1820 Loan Disbursement output form. They are also available in the Encompass Reporting Database and can be added to custom forms and reports. The new fields are listed in the table below.

* HUD Duly Auth Agent Function 2 (field ID 1798) is an existing Encompass field that displays on the VA 26-1820 Loan Disbursement input form and is now associated with the function for agent #2 for loans imported from Encompass LO Connect.

In Encompass Broker Edition, a new Pipeline Tasks section has been added to the Company/User Setup > Personas > Access tab settings screen where administrators can control persona access to the following loan tasks:

• Export ULAD
• Export iLAD
• Export Fannie Mae Formatted File (3.2)

When these options are selected here, users assigned with this persona will have access to the options from the Pipeline menu and when they right-click a loan in their Pipeline and navigate to the GSE Services option in the menu.