Frequent question: Which would be considered a toxic loan feature under the qualified mortgage QM rule based on Dodd Frank definitions?

Which of the following loan features would exclude a loan from being considered a qualified mortgage?

Qualified mortgages can’t have the following: Risky loan features, or those that offer artificially low monthly loan repayments in the early years of the loan term, including interest-only, balloon or negative amortization loans, sometimes referred to as subprime mortgages.

Which of the following is not a required characteristic of a qualified mortgage QM )?

Which of the following is NOT a required characteristic of a qualified mortgage (QM)? The answer is the borrower must make a down payment.

What is the QM rule?

The General QM final rule is part of the CFPB’s work to protect homeowners from debt traps and unaffordable, irresponsible mortgage lending. Under the statute, QM loans are presumed to be made based on the lender’s reasonable determination of the homeowner’s ability to repay the loan.

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What is an acceptable feature of a qualified mortgage?

All qualified mortgages should generally meet the following mandatory requirements: 1. The loan cannot have negative amortization, interest-only payments, or balloon payments. 2. Total points and fees cannot exceed 3 percent of the loan amount.

What is a safe harbor loan?

To qualify for the safe harbor, which is a conclusive presumption of compliance with the ability to repay rule, the APR could not exceed the APOR for a comparable transaction by (1) 1.5 percentage points or more for a first lien transaction or (2) 3.5 percentage points or more for a junior lien transaction.

What feature must not present for a loan to fall under the definition of a qualified mortgage?

Certain risky loan features are not permitted, such as: An “interest-only” period, when you pay only the interest without paying down the principal, which is the amount of money you borrowed. “Negative amortization,” which can allow your loan principal to increase over time, even though you’re making payments.

What is a non-qualified loan?

A non-qualified mortgage (non-QM) is a home loan designed to help homebuyers who can’t meet the strict criteria of a qualifying mortgage. For example, if you are self-employed or don’t have all the necessary documentation to qualify for a traditional mortgage, you might need to look at non-qualified mortgages.

Which of the following features would be permitted for a non-qualified mortgage but not for a qualified mortgage?

Terms in this set (32) Which of the following features would be permitted for a non-qualified mortgage, but not for a qualified mortgage? The answer is an interest-only option. An interest-only option is permitted for a non-qualified mortgage, but not for a qualified mortgage.

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Which of the following is not a requirement for FHA loan?

Which of the following is NOT a requirement for someone applying for an FHA loan? You chose not to answer this question. Correct Answer: No history of bankruptcy or foreclosure. The FHA requires borrowers to have no foreclosures in the past three years, and no bankruptcies in the past two years.

What is a qualified mortgage under Dodd Frank?

A qualified mortgage is a mortgage that meets certain requirements for lender protection and secondary market trading under the Dodd-Frank Wall Street Reform and Consumer Protection Act, a significant piece of financial reform legislation passed in 2010.

What is the purpose of a qualified mortgage QM )?

The Consumer Financial Protection Bureau’s QM rule was designed to protect borrowers to ensure they don’t pay excessive points and fees on their mortgage, and that ultimately, they have the ability to repay their mortgage.

What are the new QM rules?

The CFPB recently issued a final rule delaying the mandatory compliance date for the new general qualified mortgage (QM) rule based on an annual percentage rate (APR) limit from July 1, 2021 to October 1, 2022. The final rule is effective on June 30, 2021. The CFPB also issued an executive summary of the final rule.