A mortgage file is paused during a policy refresh meeting because of ATR QM Rules. Which answer should apply the requirement without relying on borrower preference?

Correct Answer

A) Recalculate ratios when debts or value change

Why this is correct: The governing concept under ATR/QM rules is that the lender must make a reasonable, good-faith determination of the borrower's ability to repay, which relies on accurate calculations of key ratios like Debt-to-Income (DTI) and Loan-to-Value (LTV). If underlying facts such as debts or property value change, the ratios must be recalculated to ensure the ATR determination remains valid. The correct action, "Recalculate ratios when debts or value change," is a fundamental step to maintain compliance with ATR requirements. Why the other choices are wrong: "Apply a different loan-program rule without checking the file facts" is wrong because ATR/QM are overarching federal rules that apply based on the loan's facts; applying irrelevant program rules is non-compliant. "Ignore product, occupancy, LTV, or eligibility limits because the borrower prefers the loan" is wrong because ATR and QM standards are legal requirements, not subject to borrower preference. "Apply the correct general concept to the wrong changed-circumstance stage rather than the ATR QM Rules rule" is wrong because misapplying a concept (like a disclosure timing rule) to the ATR calculation does not fulfill the specific duty to verify repayment ability. Exam tip: ATR is dynamic. Any change in financial facts (debts, income, value) necessitates a re-evaluation of DTI and LTV.