The Department of Housing and Urban Development (HUD) issued a proposed rule to define a Qualified Mortgage (QM) for single family residential mortgages and loans that HUD insures, guarantees, or administers, including FHA loans. The HUD QM definition largely aligns with the QM guidelines established by the Consumer Financial Protection Bureau (CFPB), with a few key differences.
Similar to the CFPB rule, HUD proposed a safe harbor QM and rebuttable presumption QM, creating two distinct categories, and adopts the same points and fees thresholds. However, the annual percentage rate calculation used to determine whether a loan qualifies for the safe harbor or a rebuttable presumption and the rebuttable presumption definition issued by HUD differ from the CFPB’s final rules.
HUD also proposed to designate Title I (home improvement loans), Section 184 (Indian housing loans), and Section 184A (Native Hawaiian housing loans) insured and guaranteed loans as safe harbor QMs. Comments on the proposal are due by October 30.