During a training quiz scenario, the MLO encounters a QM Points and Fees Test issue. Which response should explain the required action to the team?

Correct Answer

B) Separate discount points from ordinary fees when the rule requires it

Why this is correct: The Qualified Mortgage (QM) Points and Fees Test under Regulation Z imposes a cap on total points and fees as a percentage of the loan amount. A critical step in this calculation is correctly categorizing charges. Discount points (points paid to buy down the interest rate) are generally included in the QM points and fees calculation. However, some bona fide discount points may be excluded under certain conditions. The rule requires separating and evaluating these items specifically, not lumping all fees together. Why the other choices are wrong: "Apply a different loan-program rule without checking the file facts" is wrong because the QM Points and Fees Test has its own precise rules; applying a different rule would lead to an incorrect calculation. "Apply the high-cost loan timing rule even though the file is testing QM Points and Fees Test" is wrong because HOEPA (high-cost loan) rules are a separate regulatory regime with different triggers and calculations; applying its timing rule here is irrelevant. "Use the same treatment for all mortgage products without comparing program requirements" is wrong because the treatment of discount points can vary between QM, non-QM, and government loans; a one-size-fits-all approach is non-compliant. Exam tip: For the QM Points and Fees Test, meticulously separate discount points from other fees like appraisal or title charges. Know which items are included and which can be excluded.