A self-employed borrower provides bank statements instead of tax returns for income verification. Under what circumstances would this alternative documentation be considered acceptable for QM compliance?
Correct Answer
C) When used as part of a comprehensive analysis meeting ATR requirements
Under the ATR/QM rule (12 CFR 1026.43), while there are specific documentation requirements for General QM loans, alternative documentation can be used if the creditor makes a reasonable, good faith determination of the consumer's ability to repay based on verified and documented information, including comprehensive analysis of the borrower's financial situation.
Why This Is the Correct Answer
Under the ATR/QM rule (12 CFR 1026.43), while there are specific documentation requirements for General QM loans, alternative documentation can be used if the creditor makes a reasonable, good faith determination of the consumer's ability to repay based on verified and documented information, including comprehensive analysis of the borrower's financial situation.
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A borrower provides bank statements showing a large deposit of $15,000 two weeks before loan application. What is the MLO's primary concern regarding this deposit?
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A borrower is presented with three loans: Loan A at 6.0% with $3,000 points, Loan B at 6.5% with $1,000 points, and Loan C at 7.0% with no points. Which loan represents the 'lowest points and fees' category?