Qualified Residential Mortgage — A Resource Center
By Brandon Cornett | © 2012, All rights reserved
Welcome to QualifiedResidentialMortgage.org. This website is an educational resource for home buyers, journalists, and others interested in the residential real estate market. This website serves as a central source of information on the Qualified Residential Mortgage. Over the coming weeks, we will be adding a wealth of news and information relating to the qualified residential mortgage (QRM).
This website also provides a standardized definition of the QRM. This is intended to reduce some of the confusion that surrounds this topic. Many websites have attempted to define the QRM. Some have done this accurately, while others have only added to the confusion through misinterpretation. Our standard definition is meant to eliminate this confusion, to the fullest extent possible.
What is a Qualified Residential Mortgage?
A qualified residential mortgage is a home loan with a statistically lower risk of default, based on the underwriting guidelines and product features built into the loan. The Consumer Financial Protection Bureau (CFPB), along with other federal agencies, is currently developing these guidelines. QRM loans are also exempt from the risk-retention rules created with the passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the "Dodd-Frank Act" for short.
QRM underwriting criteria are meant to reduce the likelihood of default and delinquency, which occurs when a homeowner can no longer make his or her mortgage payments. Thus, the QRM is intended to provide stability within the housing market in general, and the residential mortgage market in particular.
The concept for this requirement was born from the Dodd-Frank Act. Title XIV of this act calls on federal banking agencies, the SEC, the Department of Housing and Urban Development, and the Federal Housing Finance Agency (FHFA) to jointly define the criteria of the qualified residential mortgage.
Title XIV, Section 1401 of the Dodd-Frank Act explains that these agencies must "take into consideration underwriting and product features that historical loan performance data indicate result in a lower risk of default."
Current Status of the QRM
As of May 2013, the exact definition of a qualified residential mortgage has yet to be finalized. We expect the Consumer Financial Protection Bureau (CFPB) to finalize it within the next few months. When those criteria are announced, they will no doubt make big waves in the lending world. The QRM will affect mortgage lenders and home buyers alike, altering the manner in which home loans are made.
The criteria established by these federal agencies will trickle down to the primary mortgage market where home loans are made. Lenders will want to adhere to these guidelines in order to circumvent the aforementioned risk-retention rules. So the QRM will essentially 'set the bar' of residential lending standards in the United States.
Our Purpose and Mission
This website is owned and operated by the creators of the Home Buying Institute. We felt the need to create a standardized source of information on this subject, because up until now it has been a source of confusion for many people.
There are many different definitions and explanations of the qualified residential mortgage online today. Some of these explanations are accurate, while others are not. This presents a problem to home buyers, journalists, and anyone else who is researching the QRM. We hope to alleviate these problems by disseminating standardized definitions and explanations.