![]() Such features are prohibited by the qualified mortgage rule, as defined by CFPB: In this context, a ‘toxic’ loan feature can refer to any high-risk feature that may have contributed to the mortgage and housing collapse of 2008. For details on these and other exceptions, refer to the “Official Documents” section below. Certain exceptions have been made for ‘bona fide discount points’ on prime loans. Generally speaking, the points and fees paid by the borrower must not exceed 3% of the total amount borrowed, if the loan is to be considered a qualified mortgage. The QM rule puts a limit on these additional charges, including those used to compensate mortgage brokers and loan officers. In this context, ‘points and fees’ are additional costs charged by the lender during mortgage application, processing and closing. Here are the key features of a qualified mortgage in 2015: The CFPB was then given the task of finalizing that definition, which they did in January 2013. The Dodd-Frank Act provided a general definition (essentially an outline) of the QM loan. The term ‘qualified mortgage’ was first used within the text of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which became federal law on July 21, 2010. Full Definition of a Qualified Mortgage: Updated for 2015 Lenders that make QM loans will receive some degree of legal protection against borrower lawsuits, either in the form of a safe harbor or rebuttable presumption. You will find a list of those prohibited features below. The qualified mortgage rule, as defined by CFPB, is designed to create safer loans by prohibiting or limiting certain high-risk products and features. Lenders that generate such loans will be presumed to have also met the Ability-to-Repay rule mandated by the Dodd-Frank Act. The QM Rule at a GlanceĪ qualified mortgage is a home loan that meets certain standards set forth by the federal government. It has had little impact on the lending industry since then, according to a recent analysis. The rule took effect on January 10, 2014. This definition was first issued by the Consumer Financial Protection Bureau (CFPB) on January 10, 2013. On this page, you’ll find the final definition of the Qualified Mortgage (QM) rule, as of January 2015. There are no down-payment requirements in either of the now-aligned rules. This change was entered into the Federal Register in December 2014 and takes effect one year from the entry, in December 2015. The agencies have simply aligned QRM with the definition of QM. The Federal Deposit Insurance Corporation (FDIC) and five other agencies finally completed their definition of the related Qualified Residential Mortgage (QRM) rule, which relates to risk-retention requirements. Update: 2015 was a notable year for the Qualified Mortgage rule.
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