What is a Qualified Mortgage (QM)?

If you look up the definition of a Qualified Mortgage (QM) in Section 1026.43(e)(2) of Regulation Z, you will see that there are a lot of criteria that must be met to have a QM. For instance, there are limitations on the loan term, the points and fees, and the APR, among other things. Additionally, there are several different types of QMs (General, Seasoned, Small Creditor, etc.) and each have their own specific set of criteria. Since financial institutions are not required to originate QMs, why would they want to go through all that work just to have one? The answer is, for the safe harbor, which gives a financial institution “protection” should the loan ever end up in court. Regulation Z provides two types of safe harbor for QMs, conclusive and rebuttable.

Kevin explains more in the video.

 

You can access the “Repayment Ability and Risk Requirements (Qualified Mortgage Rule) Matrix 6.2” that Kevin references in the video in our Free Lending Downloads.

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Published
2024/04/08

 
Kevin Edwards

Kevin Edwards

Kevin brings years of experience and a unique perspective on regulatory matters to our clients. A self-proclaimed geek and accredited CRCM, Kevin is also a recovering attorney with experience as in-house counsel for a large regional bank and one of the leading national title insurance providers. For reasons unknown, Kevin decided to leave the safety and serenity of his desk job to seek fortune and glory as a wandering adventurer. Like a bank compliance version of Kwai Chang Caine, The Man with No Name or Don Quixote, he now travels the land seeking to help those in need and righting compliance wrongs, wherever he may find them. Kevin lives in Sioux Falls with his two children, who are surprisingly normal after having endured their father’s vivid imagination for their entire lives. He won’t admit to having any hobbies, because apparently “Regulations never sleep.” (While he does say this in his Batman voice, we’re pretty sure he’s joking.) From the looks of his Facebook page, he likes the outdoors and spending time with his large extended family (who seem like relatively normal people).

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