“The rule provides a presumption that creditors that originate Qualified Mortgages (QMs) have complied with the Ability-To-Repay (ATR) requirements. The QM standard helps protect consumers from unduly risky mortgages, and also gives you more certainty about potential liability.”
There are four types of Qualified Mortgages under the rule.
- General and Temporary QM definitions, can be originated by all creditors
- Small Creditor and Balloon-Payment QMs, can only be originated by small creditors
The QM requirements generally focus on prohibiting certain risky features and practices, such as negative amortization and interest-only periods and loan terms longer than 30 years.
QMs that are not higher-priced have a safe harbor, meaning that they are presumed to comply with the ATR requirements.
QMs that are higher-priced have a rebuttable presumption that they comply with the ATR requirements, but consumers can rebut that presumption.
If you need to ensure you have complied with the Qualified Mortgage and Ability-To-Repay Rules, you need Compliance EAGLE -- the only compliance software that offers two QM solutions.