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Ellie Mae Announces A New ATR/QM Solution For Encompass360

Ellie Mae ® (NYSE: ELLI), a leading provider of enterprise-level, on-demand automated solutions for the residential mortgage industry, today announced the Fall Release to its Encompass360® mortgage management solution will include new Ability-to-Repay (ATR) / Qualified Mortgage (QM) solutions that will enable lenders to automatically assess QM eligibility and effectively document QM compliance to investors and regulators.

Ellie Mae’s ATR/QM Solution will provide:

  • Tools to test for key ATR and QM calculations, such as total debt-to-income (DTI) and points and fees calculations, including a bona fide discount point assessment.
  • Functionality for underwriters to demonstrate they have considered, verified and documented a consumer’s employment, income, assets and obligations in order to determine the consumer’s ability-to-repay.
  • The ability to test the loan’s APR for safe harbor status.
  • The ability to determine whether “risky” loan terms or features are present.
  • Multiple reports and worksheets that can be delivered along with the loan to investors to document QM compliance.
  • Alerts that identify conflicts between loan data and ATR/QM standards.

Ellie Mae’s new ATR/QM solutions provide dynamic eligibility recommendations and feedback for multiple types of QM loans: General QM; Agency/GSE QM; Small Creditor Balloon Payment QM, and Small Creditor QM.

Encompass360 users will see the assessments real-time via an online ATR/QM checklist that will change and provide alerts as elements in the loan file change. The checklist will red-flag changes that could affect QM eligibility status and safe harbor treatment and show underwriters what needs to be reviewed. The functionality also allows lenders to write their own business rules and set parameters to focus on specific types of QM originations.

Ellie Mae offers the ability to provide a number of different outputs documents that identify loan eligibility:

  • An ATR/QM eligibility worksheet, complete with supporting data.
  • A new Appendix Q worksheet that documents how the income was underwritten to arrive at the overall DTI calculations.
  • Encompass Compliance Service™ (Mavent) reports detailing rate thresholds, fee assessments and discount points that count towards the 3% QM ceiling. (The Encompass Product and Pricing Service also provides support for discount point calculations and automatically populates loan files.)
  • The Encompass eFolder which contains automated underwriting results, credit report, pay stubs, 4506T, etc. that can be exported to investors.

Correspondent loans sold to investors via Ellie Mae’s Total Quality Loan™ (TQL) program will receive an additional QM eligibility review and those results are expected to accelerate the purchase review process.

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