A construction-to-permanent loan has an 18-month construction phase with interest-only payments, followed by a 30-year permanent phase with principal and interest payments. How does this loan relate to QM requirements?
Correct Answer
C) The loan can be QM if the permanent phase meets all requirements
Under 12 CFR 1026.43(e)(2)(v), the prohibition on interest-only payments applies to the loan term, but construction-to-permanent loans are evaluated based on the permanent financing phase. If the permanent phase has no interest-only payments and meets other QM requirements, the loan can qualify as QM.
Why This Is the Correct Answer
Under 12 CFR 1026.43(e)(2)(v), the prohibition on interest-only payments applies to the loan term, but construction-to-permanent loans are evaluated based on the permanent financing phase. If the permanent phase has no interest-only payments and meets other QM requirements, the loan can qualify as QM.
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