What legal protections do qualified mortgage loans offer?

Question

Accepted Answer

The CFPB offered lenders issuing QM mortgages protection from legal challenges in foreclosure proceedings and other litigation. With a QM mortgage, lenders have shown they made sure borrowers had the ability to repay their loan. This gives lenders legal protection from lawsuits claiming the lender didn’t verify a borrower’s ability to repay. However, if a borrower doesn’t believe a lender ensured they had the ability to repay, the borrower can still challenge the lender in court.

Additionally, only QMs can be insured, guaranteed or backed by the FHA, the VA, Fannie Mae or Freddie Mac, so these loans are safer for investors who buy mortgage-backed investments.