If points and fees exceed the 3% cap, what is the loan's status with respect to QM?

Prepare for the Qualified and Non-Qualified Mortgage Test with comprehensive flashcards and multiple-choice questions. Ensure you understand every concept with detailed hints and explanations.

Multiple Choice

If points and fees exceed the 3% cap, what is the loan's status with respect to QM?

When a loan’s points and fees exceed the 3% cap, it does not meet the criteria for a Qualified Mortgage. That means it loses the QM safe harbor protections for the lender. The loan can still be originated under ATR (ability-to-repay) requirements, but it won’t have QM status and its pricing and features won’t enjoy the QM safety net. This does not make it a conventional conforming loan, nor does it exempt the loan from TRID disclosures. So, the essential idea is that exceeding the cap means the loan is not considered a Qualified Mortgage.

When a loan’s points and fees exceed the 3% cap, it does not meet the criteria for a Qualified Mortgage. That means it loses the QM safe harbor protections for the lender. The loan can still be originated under ATR (ability-to-repay) requirements, but it won’t have QM status and its pricing and features won’t enjoy the QM safety net. This does not make it a conventional conforming loan, nor does it exempt the loan from TRID disclosures. So, the essential idea is that exceeding the cap means the loan is not considered a Qualified Mortgage.

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