Reg Z QM – Are there different types of Qualified Mortgages (QMs)?

Compliance > Regulation Z - TILA > Ability to Repay / Qualified Mortgages
Q:  Are there different types of Qualified Mortgages (QMs)?
 
A:  There are four types of QMs.
  • Two types of QMs, the General and Temporary QMs, can be originated by any creditor, regardless of the creditor’s size.
  • Two additional types of QMs, Small Creditor and Balloon-Payment QMs, can be originated only by small creditors. 
 
For all four types, QMs that are higher-priced receive a rebuttable presumption and QMs that are not higher-priced receive safe harbor status. However, the definition of “higher-priced” is different for Small Creditor and Balloon-Payment QMs.
 
Some requirements are common across all four types of QM. These requirements include:
 
  • A prohibition on negative amortization or interest-only payments
  • A prohibition on loan terms in excess of 30 years
  • Limitations on points and fees: The threshold is generally 3 percent of the loan balance but larger amounts are allowed for loans under $100,000
     
     
     
ADDITIONAL INFORMATION – CFPB ATR/QM Compliance Guide - http://files.consumerfinance.gov/f/201603_cfpb_atr-qm_small-entity-compliance-guide.pdf
 

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