Sec 1-Page 71

1. Question

A lender originates a closed-end consumer mortgage loan secured by a condominium unit occupied by the borrower as a primary residence.

Which statement correctly describes the scope of the ATR/QM Rule?

A) The rule applies only to FHA-insured loans
B) The rule applies to closed-end consumer credit transactions secured by one-to-four family dwellings, including condominiums and co-ops
C) The rule applies only to adjustable-rate mortgages
D) The rule applies only to owner-financed transactions

2. Question

A lender originates a Qualified Mortgage that is not considered higher-priced under federal regulations.

Which status applies to Qualified Mortgages that are not higher-priced?

A) Rebuttable Presumption status
B) Safe Harbor status
C) Exempt Transaction status
D) Temporary QM status only

3. Question

A lender structures a mortgage loan with an interest-only payment feature and later attempts to classify the loan as a Qualified Mortgage under the ATR/QM Rule.

Why could this loan fail to qualify as a QM?

A) Qualified Mortgages prohibit negative amortization and interest-only payment features
B) Interest-only features are permitted only for FHA loans
C) Qualified Mortgages require all loans to have balloon payments
D) Interest-only loans automatically receive Rebuttable Presumption status

4. Question

A creditor originates a Qualified Mortgage with a 35-year repayment term.

Why could the loan fail QM eligibility requirements?

A) Balloon payments are prohibited on all mortgage loans
B) Qualified Mortgages prohibit loan terms exceeding 30 years
C) QM loans may only be written for 15-year terms
D) Loan terms longer than 20 years require government insurance

5. Question

A lender charges points and fees equal to 5 percent of the loan balance on a standard mortgage loan exceeding $100,000.

Why could the loan fail QM standards?

A) Qualified Mortgages prohibit all points and fees
B) The points and fees threshold is limited to 3 percent of the loan balance
C) Fees above 1 percent automatically violate ATR rules
D) Points and fees restrictions apply only to refinance loans

6. Question

A lender originates a Home Equity Line of Credit (HELOC) secured by the borrower’s primary residence.

Which statement is correct?

A) The ATR/QM Rule applies to all HELOCs
B) The ATR/QM Rule does not apply to open-end credit plans such as HELOCs
C) HELOCs receive automatic Safe Harbor status
D) HELOCs are treated as Qualified Mortgages by default

7. Question

A lender originates a reverse mortgage secured by a borrower’s principal residence.

Which statement is correct?

A) Reverse mortgages are exempt from the ATR/QM Rule
B) Reverse mortgages are subject only to the points-and-fees limitations
C) Reverse mortgages automatically qualify as Safe Harbor QMs
D) Reverse mortgages are covered only if the borrower is under age 62

8. Question

A lender originates a temporary bridge loan with a maturity term of nine months.

How are temporary bridge loans treated under the rule?

A) They are always treated as Qualified Mortgages
B) They are exempt only if secured by investment property
C) Temporary or bridge loans with terms of 12 months or less are exempt
D) They are exempt only if the lender waives prepayment penalties

9. Question

A lender originates a consumer loan secured solely by vacant land.

Which statement is correct?

A) Consumer loans secured by vacant land are exempt from the ATR/QM Rule
B) Vacant land loans automatically receive Rebuttable Presumption status
C) Vacant land loans are covered only if the borrower intends future construction
D) Vacant land loans are subject only to APR disclosure requirements

10. Question

A compliance officer asks how long a lender must retain evidence demonstrating compliance with the ATR/QM Rule.

What is the required retention period?

A) One year after consummation
B) Two years after consummation
C) Three years after consummation
D) Five years after consummation

11. Question

A lender reviews a borrower’s mortgage application and verifies the borrower’s current income documentation and employment status before approving the loan.

Why must the lender review and verify these items under the ATR/QM Rule?

A) Income and employment verification are optional if the borrower has excellent credit
B) The lender must consider and verify income or assets and current employment status as part of the ATR/QM underwriting requirements
C) Employment verification applies only to FHA-insured loans
D) Income documentation is required only for adjustable-rate mortgages

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