What is the QM test?

A Qualified Mortgage (QM) is a defined class of mortgages that meet certain borrower and lender standards outlined in the Dodd-Frank regulation. The Ability-to-Repay rule outlines eight criteria the lender must use to determine if you can or cannot make mortgage payments.

What are the QM requirements?

General QM Definition. A loan qualifies as a General QM as defined in the ATR/QM Rule if: it does not have negative amortization, interest-only or balloon payment features, a term that exceeds 30 years, or total points and fees that generally exceed 3 percent of the loan amount (General QM Product Requirements)

What fees are included in the QM test?

For a QM you must pass the 3% test, the APOR to Interest rate test and the APR to APOR test….Passing the Points & Fees Test for QM!

Fee	Points & Fees?	Finance Charge?
Interest & Time Price Differential	NO	YES
MIP-Federal, State, Guarantee Fees, VA, FHA, USDA	NO	YES
PMI-Upfront	Maybe-Conditional	YES

What is the difference between APR and APOR?

The Average Prime Offer Rate (APOR) is an annual percentage rate that is based on average interest rates, fees, and other terms on mortgages offered to highly qualified borrowers. In general, a first-lien mortgage is “higher-priced” if the APR is 1.5 percentage points or more higher than the APOR.

What does QM stand for in mortgage?

Qualified Mortgages
All Qualified Mortgages (QM) are presumed to comply with this requirement. As described below, a loan that meets the product feature requirements can be a QM under any of three main categories: (1) the general definition; (2) the “GSE-eligible” provision; or (3) the small creditor provision.

What is the purpose of a QM?

A Qualified Mortgage is a category of loans that have certain, more stable features that help make it more likely that you’ll be able to afford your loan. A lender must make a good-faith effort to determine that you have the ability to repay your mortgage before you take it out.

What are the new QM rules?

The CFPB recently issued a final rule delaying the mandatory compliance date for the new general qualified mortgage (QM) rule based on an annual percentage rate (APR) limit from July 1, 2021 to October 1, 2022. The final rule is effective on June 30, 2021. The CFPB also issued an executive summary of the final rule.

Which is prohibited by the QM rule?

Certain risky loan features are not permitted, such as: An “interest-only” period, when you pay only the interest without paying down the principal, which is the amount of money you borrowed. “Negative amortization,” which can allow your loan principal to increase over time, even though you’re making payments.

What is APOR rate?

Average Prime Offer Rate (APOR) is a survey-based estimate of Annual Percentage Rates (APRs) currently offered on prime mortgage loans. APOR is used to calculate Rate Spread for HMDA reporting purposes and to determine whether the loan is a higher priced mortgage loan (HPML) under Regulation Z.

Is mortgage insurance included in QM points and fees?

In general, the following items are excluded from the points and fees calculation for a QM loan: Interest fees or the time-price differential; FHA Upfront Mortgages Insurance Premiums (UFMIP) and annual Mortgage Insurance Premiums (MIPs); Monthly private mortgage insurance (PMI).

Who qualified for APOR?

Duly authorized humanitarian assistance actors, especially those transporting medical supplies and laboratory specimens related to COVID-19, and other relief and humanitarian assistance. Persons going to and from the airport, including overseas Filipino workers carrying Overseas Employment Certificates.

What does QM mean?