New Qualified Mortgage and Escrow Analysis Modules in the SCE
Over the past few
months we have added two new calculation modules to the Sherman Calculation
Engine (SCE): a Qualified Mortgage (QM) analysis
module and an
Escrow Analysis
module. Both
are available through the JSON and XML interfaces of the SCE, and therefore
through the SCE API Server and the
SCEX.
Qualified Mortgage (QM) Analysis
Qualified Mortgages are defined in 12 CFR 1026.43(e). The new QM module allows a partner to determine whether a given loan qualifies as a Qualified Mortgage by evaluating the loan against the QM requirements:
- APR test - compares the loan’s APR to the Average Prime Offer Rate (APOR) using the QM spread caps, which vary by lien type, loan amount tier, and whether the property is a manufactured home.
- Product feature test - flags loans with prohibited features such as a balloon payment (for general QM), deferred principal, negative amortization, or a term longer than 30 years.
- Points and fees test - compares total points and fees to the QM cap, which is based on loan amount tiers.
- Small creditor balloon provisions - supports the small creditor balloon QM, including its own term and amortization term limits and rate-increase test.
The module accepts loan data, lien information, loan features, and the HCM
results (APOR, total loan amount, and total points and fees) for the loan, and
returns an IsQm result along with the individual trigger results and the
values used in each test. This makes it straightforward to automate QM
determinations within an origination or compliance workflow. The module
supports both the General QM and Small Creditor QM types.
Please see the chapter covering this new functionality in the SCE XML reference manual and the SCE JSON reference manual for request and response details.
Escrow Analysis
The new Escrow Analysis module performs escrow analysis calculations. Given a list of escrow items (each with a name, annual disbursement date and cost, and cushion selection) and an escrow payment stream (start date and payments per year), the module computes:
- The periodic escrow payment amount.
- The cushion requirement.
- The initial escrow deposit (closing balance) required.
- The escrow adjustment amount.
- A schedule of payment and disbursement events with running balances, for both an aggregate schedule and a separate schedule for each category of escrow item.
This allows partners to set up and disclose escrow accounts consistently with their servicing and origination processes. Please see the chapter covering this new module in the SCE XML reference manual and the SCE JSON reference manual for request and response details.
Availability
Both modules are available in our current release of the SCE, through the JSON and XML interfaces, and can be exercised through the SCE API Server and the SCEX. If you have questions about integrating either module, or would like a copy of the relevant manual chapters, please contact us.