Announcement 20-0007: North Carolina Bona Fide Discount Points Assessment

February 4, 2020

Overview

In the state of North Carolina, borrowers may be charged bona fide discount points for the purpose of reducing their interest rate. For Owner Occupied Loans with a balance of $300,000 or less, up to 2.25% (Agency products) or 0.25% (Non-agency products) may be charged as Discount Points under the North Carolina Max Fee Rule if the bona fide assessment is met.

Determining Maximum Discount Points

North Carolina does not use the Average Prime Offer Rate (APOR) like the QM Test does. They use the Fannie Mae Average Rate.

The Fannie Mae Average Rate can be accessed on the following website:

https://www.fanniemae.com/singlefamily/historical-daily-required-net-yields

In this example the Fannie Mae Rate is used for bona fide discount point assessment.

3.34 + 1 = 4.34

If the Starting Adjusted Rate does not exceed 4.34, you can exclude 2.00 points, and have a maximum of 2.25% in Discount Points charged.

3.34 + 2 = 5.34

If the Starting Adjusted Rate does not exceed 5.34, you can exclude 1.00 point, and have a maximum of 1.25% in Discount Points charged.

If the Starting Adjusted Rate is greater than the comparable rate +2.00, no points are eligible for exclusion, and the maximum Discount Points are 0.25%.

Starting Adjusted Rate is the Rate closest to PAR.

Compliance Fails

Locks with non-bona fide Discount Points will encounter Compliance Fails, and the interest rate will need to be raised in order to reduce the Discount Points to proceed.

Contacts

Please contact CorrespondentRM@carringtonms.com with any questions.

Carrington thanks you for your business.

Government Agency Approvals

FHA Non-Supervised Mortgagee Approval #:
24751-0000-5
VA Automatic Lender Approval #:
902324-00-00

Mortgagee/Loss Payee Clause

Carrington Mortgage Services LLC
ISAOA/ATIMA
P.O. Box 692408
San Antonio, TX 78269-2408

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This information is provided for your convenience and Carrington Mortgage Services, LLC makes no warranties concerning the accuracy or completeness of any of the information. This is not financial or legal advice and should not be taken as such. This information is for mortgage professionals only and is not intended for distribution to consumers.
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Government Agency Approval | FHA Non-Supervised Mortgage Approval #: 24751-0000-5 | VA Automatic Lender Approval #: 902324-00-00

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