QM Redefines U.S. Mortgage Finance, FedFin Finds

In this report, FedFin assesses the qualified-mortgage (QM) standards adopted today by the CFPB. An in-depth analysis of these vital rules will follow shortly, but we here assess the key terms of the rules and their market and political impact. Much in the rule tracks the very detailed QM criteria demanded by Congress in the Dodd-Frank Act (see FSM Report MORTGAGE94). For example, the rule, as required, bans balloon mortgages (except in certain rural and under-served areas) along with payment-option, no-doc and similar loans from QM eligibility. However, the CFPB was still forced to make hard decisions on matters such as legal protection within the QM criteria.

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