Now that the CFPB has defined the QRM (see CFPB & the Qualified Residential Mortgage (QRM)), HUD will define theirs and would like your comments…really?
The Dodd–Frank Wall Street Reform and Consumer Protection Act requires HUD to propose a QM definition that is aligned with the Ability-to-Repay criteria set out in the Truth-in-Lending Act (TILA) as well as the Department’s historic mission to promote affordable mortgage financing options for qualified lower income borrowers. HUD’s proposed definition also builds off of the existing QM rule finalized by the Consumer Financial Protection Bureau (CFPB) earlier this year (…and perhaps to be similar to the CFPB definition of a QRM so borrowers can evaluate Conventional v. Government mortgage loans???).
In order to meet HUD’s QM definition, mortgage loans must:
- Require periodic payments;
- Have terms not to exceed 30 years;
- Limit upfront points and fees to no more than three percent with adjustments to facilitate smaller loans (except for Title I, Section 184 and Section 184A loans); and
- Be insured or guaranteed by FHA or HUD.
The rule with the omitted language in context can be found here.
Source from HUD: HUD Press Release HUD No. 13-151