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MBA CMB: Residential Mortgage Banking (Residential CMB)

MBA CMB · Work through your exam, one topic at a time.

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Residential Mortgage Banking (Residential CMB)

Residential Mortgage Banking (Residential CMB) tests the origination-to-servicing chain: how a loan is qualified, disclosed, underwritten, funded, sold, and serviced, and where compliance risk arises.

Core rules and concepts

  • Origination: take a complete application; issue the Loan Estimate within three business days; verify income, assets, debts, and credit.
  • Ability-to-Repay/Qualified Mortgage: ATR requires verified and documented income, assets, and debts; General QM uses a price-based APR spread over APOR plus points-and-fees limits, not a standalone 43% DTI test.
  • RESPA/TILA: RESPA Section 8 prohibits kickbacks and unearned fees; TRID requires LE and Closing Disclosure timing, with fee tolerances on certain charges.
  • Fair lending: ECOA and the Fair Housing Act prohibit discrimination; disparate-impact analysis remains a supervisory focus.
  • Secondary marketing: price and hedge the pipeline, decide servicing retained versus released, and manage warehouse-line capacity.

Worked example

Borrower gross monthly income is $7,500; total monthly debts including proposed PITI of $1,800 are $2,625. DTI = 2,625 / 7,500 = 35%. The loan is a $240,000 conventional first lien with 20% down, APR 6.50%, APOR 5.00%, so the APR spread is 1.50 percentage points; points and fees are 2.0% of the loan amount. Under General QM price-based rules, a first-lien spread under 2.25 points and points/fees under 3% support QM status; verified income and debts support ATR. If the spread were 2.30 points, the loan would fall outside General QM and need another QM category or non-QM treatment. The lender must also confirm LE delivery within three business days and CD delivery at least three business days before consummation.

Traps

  • Applying the old 43% DTI QM test.
  • Treating a low DTI as proof of ATR without verification.
  • Missing RESPA Section 8 issues in marketing or service arrangements.
  • Ignoring fee tolerances on the Closing Disclosure.
  • Hedging only at aggregate level while leaving the pipeline unhedged.