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How Does QM Affect Mortgage Insurance Products?

QM requires that any MI paid by the borrower at the time of loan closing that is not refundable on a pro-rata basis must be applied towards the 3% points and fees cap. Additionally, any refundable borrower-paid insurance premiums paid at closing in excess of 175bps must be included in a lender’s QM 3% points and fees calculation.

Points and fees paid at or prior to closing cannot exceed 3% of the loan amount, however, higher thresholds are provided for loan amounts below $100,000.

The 3% points and fees calculation is illustrated below:

  • Includes any non-refundable MI premiums that are paid at or prior to closing.

  • Excludes any MI premiums paid after closing (i.e., borrower-paid monthly and lender-paid products).

  • Excludes any pro-rated refundable MI premiums paid at or prior to closing, provided that:

    • Refunds are paid automatically at loan satisfaction and pro-rated per CFPB requirements.

    • The portion of any refundable premium that exceeds 1.75% (paid at or prior to closing) counts towards the 3% point and fees cap.

How Does QM Affect Mortgage Insurance Products?

Our deferred borrower-paid monthlies, lender paid monthlies and lender-paid singles, are the best value options, as they do not count against the points and fees cap.

In addition, we offer other refundable and non-refundable products, which can still be viable options for lenders with room under the cap. It is Radian’s position that our refundable premiums, in their entirety, should be counted towards the 3% points and fees cap.

Radian is here to support your efforts when originating QM loans. If you have any questions, please contact your Radian representative.

Radian's QM Reference Chart

The information provided here is for informational purposes only and is not offered as and does not constitute legal advice or legal opinions. Radian's refundable borrower paid single premiums and refundable SplitEdge premiums will be effective on April 14, 2014, subject to regulatory approval.









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