HUD proposes QM definition

Julie C. Nichols General

HousingWire – Christina Mlynski

The Department of Housing and Urban Development rolled out a proposal to define a qualified mortgage for home loans that will be insured, guaranteed or administered by the housing agency. The proposed QM rule will be designed for single-family mortgages insured by the Federal Housing Administration, according to HUD.

"The proposed rule aims to ensure the continuity of access to mortgage financing to creditworthy, yet underserved borrowers while further strengthening protections for FHA borrowers and taxpayers, alike," HUD stated. The proposed QM definition must align with the ability-to-repay rule set out in the Dodd-Frank Act and builds off the existing QM rule finalized by the Consumer Financial Protection Bureau earlier this year.

To meet HUD’s QM definition, loans must require periodic payments, have terms not exceeding 30 years, limit upfront points and fees to more than 3% with adjustments to facilitate smaller loans and be insured or guaranteed by FHA or HUD.

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