In order to receive safe harbor QM designation, an IRRRL must satisfy several specific seasoning and recoupment tests. IRRRLs that do not pass will qualify for a QM’s rebuttable presumption of ability to repay. IRRRLs will also be exempt from several income verification requirements under certain circumstances. The department noted that a loan’s QM status does not affect its eligibility for a VA guarantee provided that VA underwriting standards are met.
The department noted that its definitions of QMs may differ in some regards from the CFPB’s, and that where they differ — in providing more flexibility on negative amortization, FICO score documentation or debt-to-income ratios, for example — VA intends for its definition to preempt the CFPB’s for loans guaranteed or issued by VA. The agency said:
Congress has authorized VA to deliver veterans’ benefits in a way that helps as many veterans as possible. In so doing, VA’s statutory framework expressly includes authority for … taking into consideration the unique circumstances that affect veterans.
Read the interim final rule.