Federal Mortgage LawsQuestion 63 of 400
Which loan feature is generally NOT permitted in a Qualified Mortgage?
a.A fully amortizing 30-year term
b.Negative amortization that increases the principal balance
c.A fixed interest rate
d.Verified income documentation
Explanation
A QM cannot have negative-amortization, interest-only, or balloon-payment features (with narrow exceptions for certain small-creditor loans), and its term cannot exceed 30 years. Negative amortization, which increases the principal over time, is expressly prohibited. Fully amortizing fixed-rate loans with verified income are hallmarks of a QM.
Law Reference: Ability-to-Repay/Qualified Mortgage Rule (Reg Z 1026.43)Practice all 400 questions free — no signup required.
Related questions on this topic
- The anti-steering safe harbor under Reg Z is satisfied when the loan originator presents the consumer with loan options that include the loan with the lowest interest rate, the loan with the lowest total dollar amount for origination points/fees, and:
- The Ability-to-Repay rule requires a creditor to make a reasonable, good-faith determination of the consumer's ability to repay. Which of the following is NOT one of the underwriting factors the rule requires the creditor to consider and verify?
- For a Qualified Mortgage of $100,000 or more, the total points and fees generally may not exceed what percentage of the total loan amount?
- When underwriting an adjustable-rate Qualified Mortgage, the monthly payment used to evaluate the consumer's ability to repay must generally be calculated using:
- A loan originator calls an appraiser before the report is finished and says the deal needs the home to appraise at least at the contract price to close. Under the appraisal independence requirements, this communication is:
- The Home Valuation Code of Conduct (HVCC) was largely superseded by which framework establishing appraisal independence?
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against NMLS SAFE Mortgage Loan Originator National Test · How we review