For example, Fannie Mae defines a four-unit property where the borrower occupies one of the units as a “principal residence.” If under TILA such a loan is considered to be for commercial or business purposes, it will be exempt from TILA and therefore considered an ATR Exempt Loan by Fannie Mae.įannie Mae purchases or securitizes ATR Exempt Loans as long as such loans meet the other eligibility and underwriting requirements described in this Guide. Note: The classification of certain transactions for TILA purposes and for eligibility and underwriting purposes by Fannie Mae do not always align. For purposes of determining whether a loan is an ATR Exempt Loan, lenders must follow the TILA and Regulation Z definitions. An ATR Exempt Loan is, with certain exceptions, a loan that either is not subject to TILA or is exempt from the ability to repay requirements in Regulation Z (12 CFR § 1026.43(a) or (d)). Refer to the regulation for the applicable requirements.ĪTR Exempt Loans. These requirements do not apply to certain assumptions or modifications of existing Fannie Mae loans regardless of the dates on which the loans being assumed or modified were originally closed. The ATR Covered Loan requirements apply to acquisitions of newly originated loans (including government mortgage loans). Have an APR-APOR spread as described below under APR-APOR Spread Limitations. Have total points and fees as described below under Points and Fees Limitations and The loan must have regular periodic payments that are substantially equal that do not result in an increase in the principal balance or allow the borrower to defer repayment of principal Have a loan term not exceeding 30 years (see Acceptable Loan Terms below) īe a fully amortizing loan, as defined in Regulation Z: An ATR Covered Loan must meet the following requirements in addition to the other underwriting and eligibility requirements in the Selling Guide:
An ATR Covered Loan is a loan subject to the TILA’s ability to repay requirements under Regulation Z and is otherwise not an ATR Exempt Loan (defined below). Note: As to any loan for which the original application was made before January 10, 2014, but which was assumed on or after January 10, 2014, and subsequently purchased or securitized by Fannie Mae, then, for eligibility purposes, the application date is considered to be the date on which Truth in Lending Act disclosure requirements were triggered with respect to such assumption.ĪTR Covered Loans.
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