Qualified Mortgages (QM) FAQ

Yes, based on guidance from the Federal Housing Finance Agency (FHFA), Freddie Mac and Fannie Mae (the GSEs) generally are aligned in their approach and implementation, although some implementation differences may be necessary based on existing GSE-specific requirements. For example, due to differing guide requirements for ARMs with initial fixed periods within a range of dates, the GSEs have addressed this issue differently.

No. The Seller must determine whether the mortgage is classified as TILA Exempt or ATR Exempt. Freddie Mac cannot provide regulatory interpretations or advice. Please consult with regulatory counsel regarding the TILA requirements and related staff commentary.

Note: Sellers are required under Section 5801.1 of the Single-Family Seller/Servicer Guide (Guide) to provide a variety of data points in the Uniform Closing Dataset (UCD) file, including whether a loan is ATR Exempt or not. Please see the UCD technical specifications for field code 3.027 and 3.028.

Yes, Freddie Mac continues to purchase HPCTs. Refer to Guide Section 4202.5 for additional information about HPCTs.

Sellers should refer to the ATR provisions of Regulation Z to determine if a loan meets the HFA exemption, including for loans that are not originated directly by a Housing Finance Agency. Those loans that do meet the exemption requirements fall under the definition of an exempt Loan, defined in Bulletin 2021-19. The requirements related to maximum points and fees and APR-APOR spread for exempt loans are described in Bulletin 2021-19.

Question: [07.07.21] The Revised General QM Rule for the “verify” provision includes commentary (1026.43 (e)(2)(v)(B)-3.i) that cites Guide Chapters 5102 through 5500, published June 10, 2020. This citation states that using these chapters in the Guide meets the standards for verifying current or reasonably expected income or assets using third-party records and provides a creditor with reasonably reliable evidence of the consumer’s income or assets. Where may I find this version of the Guide?

Answer: Guide Chapters 5102 through 5500, dated June 10, 2020, may be accessed under “Historical Guide Snapshot PDFs” using the following link: https://guide.freddiemac.com/app/guide/archive

Question: [07.07.21] The Revised General QM Rule for the “verify” provision includes commentary (1026.43(e)(2)(v)(B)-3.iv) that states if revisions are made to Guide Chapters 5102 through 5500, the creditor still complies with the “verify” provision if the revisions are “substantially similar” to the version published June 10, 2020. As a Seller, may I presume revisions Freddie Mac publishes after June 10, 2020 meet the CFPB’s “substantially similar” conditions and that I have met the associated portion of the Revised QM Rule requirements?

Answer: No. Freddie Mac will not interpret the regulatory meaning of “substantially similar” for Sellers. Sellers may, at their discretion, reach out to the CFPB for any questions or concerns related to the “substantially similar” text within the regulatory commentary or any other questions related to the text within the Revised QM Rule and associated preamble. Note, however, that loans sold to Freddie Mac must meet the current Guide requirements.

Reminder: Freddie Mac will not make the determination of whether a mortgage, including a mortgage assessed through LPA or AIM, or delivered through Loan Selling Advisor^®, complies with or is exempt from the ATR/QM Rule, including the Revised General QM Rule, or whether a Seller’s designation of the status of a mortgage under the Revised General QM Rule is correct. These determinations of compliance with the Revised General QM Rule and other applicable laws are the Seller’s responsibility.

No. The Guide requirements must always be met. For all ARMs, the qualifying rate must, at a minimum, equal the maximum interest rate that may apply during the first five years after the date on which the first regular periodic payment will be due, based on the full loan amount over the loan term. If the Guide requirements are more restrictive than the Revised General QM Rule, then the Guide requirements must be met.

No. LPA does not determine QM status. Freddie Mac will not make the determination of whether a mortgage, including a mortgage assessed through LPA or LPA AIM, or delivered through Loan Selling Advisor^®, complies with or is exempt from the ATR/QM Rule, including the Revised General QM Rule, or whether a Seller’s designation of the status of a mortgage under the Revised General QM Rule is correct. These determinations of compliance with the Revised General QM Rule and other applicable laws are the Seller’s responsibility.

Our systems test loans against our purchase requirements. We do not use our systems to enforce compliance with industry regulations and applicable law. Instead, we rely on our clients’ representations and warranties with regard to compliance with applicable law as outlined in Guide Section 1301.2. Clients should check with their legal counsel on how to comply with the Revised General QM Rule.

We have updated our systems to perform an automated check of the APR-APOR thresholds and points and fees defined in the Bulletin 2021-19. We will utilize the UCD and ULDD datasets (aligned with Fannie Mae) as provided to perform the automated checks at time of delivery/purchase to prevent delivery/purchase of a mortgage that violates the APR/APOR and points and fees limitations.

The average prime offer rate (APOR) is a survey-based estimate of annual percentage rates (APRs) currently offered on prime mortgage loans. It is used to calculate “rate spread” for Home Mortgage Disclosure Act (HMDA) reporting purposes and to determine whether the loan is a higher priced mortgage loan under Regulation Z. APOR is calculated and published weekly by the Federal Financial Institutions Examination Council (FFIEC).

Under UCD requirements, clients must submit the APR and the APOR in the UCD xml file as well as the Ability to Repay (ATR) Method Type (General or Exempt). These UCD data points can help clients determine compliance with the revised definition of QM. For more information, see our UCD webpage. The UCD requirements are available at Appendix I – Uniform Closing Dataset.

Effective May 1, 2023 Sellers are required to provide the unique QM APR Short-Term Reset ARM data point in the UCD xml file for short-term ARMs (3/6 & 5/6 SOFR ARMs) when such mortgages are subject to the Revised General QM Rule. For more information about QM APR Short-Term Reset ARM data point, read the May 1, 2023 joint GSE UCD announcement located in our UCD webpage.