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HUD Releases Its QM Final Rule
WASHINGTON (12/12/13)--A final rule that sets the definition of "qualified mortgage" (QM) for single-family residential mortgage loans was released by the U.S. Department of Housing and Urban Development Wednesday.

The rule was published in the Federal Register. HUD was required under the Dodd-Frank Act to issue its own qualified mortgage rule, separate from the one issued earlier this year by the Consumer Financial Protection Bureau. The QM rule will replace the CFPB's QM definition for Federal Housing Administration loans or certain other HUD insured loans.

The HUD definition is similar to the CFPB definition, with some distinct differences. For instance, HUD's rule does not have a debt-to-income ratio requirement. The HUD rule also:
  • Requires FHA streamlined refinances to comply with the rule;
  • Modifies the CFPB's rebuttable presumption standard to clarify that a presumption is rebutted if the lender does not meet the underwriting requirements applicable to the transaction;
  • Maintains the existing regulatory structure for FHA-insured single-family mortgage programs for purposes of defining qualified mortgages, but augment these programs with certain features;
  • Defines all FHA-insured single-family mortgages to be qualified mortgages, except reverse mortgages insured under HUD's Home Equity Conversion Mortgage program; and
  • Incorporates safe harbor and rebuttable presumption standards.
The rule will become effective on Jan. 10, at the same time as the CFPB's QM rule takes effect, and will apply to mortgages with a case number assignment on or after that date.
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