In practice, conclusive presumption of compliance means: which loans are presumed to comply with QM without further testing?

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Multiple Choice

In practice, conclusive presumption of compliance means: which loans are presumed to comply with QM without further testing?

Conclusive presumption of compliance applies to prime loans that meet the general QM standards. When a loan fits those criteria, it’s treated as automatically compliant with the QM/ATR requirements, so the lender doesn’t have to run full ability-to-repay testing beyond verifying that the loan has the QM features. In practice, this means fully amortizing loans with a term of 30 years or less, no negative amortization or risky features, and points and fees within the QM limit are presumed to comply. Other conventional loans that don’t meet these QM standards or prime loans that fail to meet them are not covered by this presumption.

Conclusive presumption of compliance applies to prime loans that meet the general QM standards. When a loan fits those criteria, it’s treated as automatically compliant with the QM/ATR requirements, so the lender doesn’t have to run full ability-to-repay testing beyond verifying that the loan has the QM features. In practice, this means fully amortizing loans with a term of 30 years or less, no negative amortization or risky features, and points and fees within the QM limit are presumed to comply. Other conventional loans that don’t meet these QM standards or prime loans that fail to meet them are not covered by this presumption.

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