A small creditor originates 450 first-lien mortgages in the current calendar year and 380 in the previous year. Their assets total $2.8 billion. Can they originate balloon payment QMs in the current year?
Correct Answer
C) No, they exceed the asset size threshold
Under 12 CFR 1026.43(f), small creditors must have assets of $2.069 billion or less (as of 2024) and originate 500 or fewer first-lien mortgages in the preceding calendar year. While the loan volume qualifies, the $2.8 billion in assets exceeds the threshold, disqualifying them from balloon payment QM eligibility.
Why This Is the Correct Answer
Under 12 CFR 1026.43(f), small creditors must have assets of $2.069 billion or less (as of 2024) and originate 500 or fewer first-lien mortgages in the preceding calendar year. While the loan volume qualifies, the $2.8 billion in assets exceeds the threshold, disqualifying them from balloon payment QM eligibility.
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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