Which statement about ATR underwriting is true?

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Multiple Choice

Which statement about ATR underwriting is true?

ATR underwriting focuses on whether the lender can reasonably determine a borrower’s ability to repay the loan by analyzing income, assets, employment, and the proposed payment in light of existing debts. This ability-to-repay assessment is what gates Qualified Mortgage status, so the statement that meeting ATR requirements is the central criterion for QM status is correct. Income must be verified for all borrowers, including self-employed individuals, with appropriate documentation, so saying verification isn’t required is incorrect. ATR applies to a broad range of closed-end mortgage loans, not just purchase-money loans, so that option is false. High‑LTV loans aren’t exempt from ATR requirements; they still must satisfy ATR underwriting to be QM.

ATR underwriting focuses on whether the lender can reasonably determine a borrower’s ability to repay the loan by analyzing income, assets, employment, and the proposed payment in light of existing debts. This ability-to-repay assessment is what gates Qualified Mortgage status, so the statement that meeting ATR requirements is the central criterion for QM status is correct. Income must be verified for all borrowers, including self-employed individuals, with appropriate documentation, so saying verification isn’t required is incorrect. ATR applies to a broad range of closed-end mortgage loans, not just purchase-money loans, so that option is false. High‑LTV loans aren’t exempt from ATR requirements; they still must satisfy ATR underwriting to be QM.

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