A creditor originates a 40-year mortgage with a 42% DTI ratio calculated using appendix Q standards. The loan has no risky features and meets all other QM requirements. What is this loan's QM status?
Correct Answer
C) Not a QM due to the 40-year term
Under 12 CFR 1026.43(e)(2)(ii), a qualified mortgage cannot have a loan term exceeding 30 years. Despite meeting the DTI requirement and having no other risky features, the 40-year term automatically disqualifies the loan from QM status.
Why This Is the Correct Answer
Under 12 CFR 1026.43(e)(2)(ii), a qualified mortgage cannot have a loan term exceeding 30 years. Despite meeting the DTI requirement and having no other risky features, the 40-year term automatically disqualifies the loan from QM status.
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