Finance
Under the Dodd-Frank Act, a 'qualified mortgage' (QM) is designed to protect borrowers by ensuring lenders have verified the borrower's:
AEmployment history going back 10 years
BAbility to repay the loan at the time of origination✓ Correct
CNet worth exceeds the loan amount
DOwnership of at least one prior property
Explanation
The Ability to Repay (ATR) rule under Dodd-Frank requires lenders to make a reasonable, good-faith determination that borrowers can repay their mortgage. Loans that meet QM standards are presumed to comply with ATR. QM loans have caps on points and fees, no negative amortization, and are limited to 30-year terms.
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