Finance
What is the purpose of the Qualified Mortgage (QM) rule under Dodd-Frank?
ATo set maximum interest rates
BTo ensure borrowers have the ability to repay the loan✓ Correct
CTo require mortgage insurance
DTo limit loan origination fees
Explanation
The Ability-to-Repay/Qualified Mortgage rule requires lenders to make a good-faith determination that borrowers can repay the loan, protecting consumers from predatory lending practices.
People Also Study
Related Ohio Questions
- Which federal law requires lenders to provide borrowers with a Loan Estimate (LE) within three business days of receiving a mortgage application?Finance
- Under the Dodd-Frank Act, a Qualified Mortgage (QM) generally prohibits:Finance
- In Ohio, which type of mortgage clause requires the entire loan balance to become due upon sale of the property?Finance
- Under the Dodd-Frank Act, an Ohio lender making a 'qualified mortgage' (QM) must ensure the borrower has:Finance
Key Terms to Know
Private Mortgage Insurance (PMI)
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Math Concepts
Study This Topic
Practice More Ohio Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Ohio Quiz →