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Thursday, December 12, 2013

HUD Finalizes QM Guidelines for FHA Mortgages

The HUD finalized a definition for Qualified Mortgages that are insured by the FHA. The final rule includes two categories for federally insured QMs: a safe harbor QM and a rebuttable presumption QM, which it intended to align largely -- but not entirely -- with the QM guidelines established by the CFPB. HUD also designates all Title I home improvement loans, Title II manufactured housing loans and Section 184/184A loans as safe harbor QMs.

HUD did not eliminate interest rate distinctions from its QM categories or provide safe harbor treatment to all loans that meet its QM definition. The safe harbor and rebuttable presumption QMs are distinguished by whether the APR exceeds the average prime offer rate by more than the mortgage insurance premium and 1.15 percentage points.

HUD realigned its rebuttable presumption standard, points-and-fees trigger and APR calculations with the CFPB’s.

The final rule takes effect Jan. 10, 2014, alongside the CFPB’s QM standard, giving bankers less than one month as an implementation period.

Read the final rule.
Read ABA’s comment letter.

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