HUD Proposes New Definition of Qualified Mortgage

HUD proposed a new definition of “qualified mortgage” (QM) in a statement released Monday. To meet the new QM requirements, a mortgage will have to require periodic payments, have terms not exceeding 30 years, limit upfront points and fees to no more than three percent with adjustments to facilitate smaller loans, and be insured or guaranteed by FHA or HUD.

The Dodd–Frank Act required HUD to propose a QM definition that is aligned with the ability-to-repay criteria set out in the Truth-in-Lending Act (TILA) as well as the department’s historic mission to promote affordable mortgage financing options for qualified lower income borrowers.

“The new limit on upfront points and fees for all Title II FHA-insured single family mortgages is consistent with the private sector and conventional mortgages guaranteed by Fannie Mae and Freddie Mac to attain qualified mortgage status under CFPB’s final rule.” HUD said in a statement. “Currently, HUD does not insure, guarantee or

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