A lender is considering a mortgage application where the borrower's debt-to-income ratio is 45%, but all other QM requirements are met. The loan amount is within conforming limits. If the lender can demonstrate the borrower has substantial compensating factors, what type of loan could this be?
Correct Answer
C) Non-QM loan that meets ATR
Since the DTI exceeds 43%, this cannot be a General QM loan under 12 CFR 1026.43(e)(2)(vi). However, the lender can still originate the loan as a non-QM loan if they can demonstrate compliance with the ATR rule through compensating factors under 12 CFR 1026.43(c)(7), such as residual income or assets.
Why This Is the Correct Answer
Since the DTI exceeds 43%, this cannot be a General QM loan under 12 CFR 1026.43(e)(2)(vi). However, the lender can still originate the loan as a non-QM loan if they can demonstrate compliance with the ATR rule through compensating factors under 12 CFR 1026.43(c)(7), such as residual income or assets.
More Federal Laws Questions
A mortgage broker's website states 'Qualified borrowers can get loans with down payments as low as 3%.' Which statement about TILA advertising requirements is correct?
A loan's APR increases from 4.25% on the Loan Estimate to 4.35% on the Closing Disclosure due to a rate lock expiration. What action is required?
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