What does the term "Qualified Mortgage" refer to?

The term "Qualified Mortgage" refers to a category of loans that meet specific consumer protection standards set forth by regulatory bodies, particularly the Consumer Financial Protection Bureau (CFPB). These standards are designed to ensure that borrowers are offered loans that are more likely to be sustainable and affordable over the long term.

Qualified Mortgages are typically characterized by certain features, such as limits on points and fees, no negative amortization, and a prohibition on loans with terms exceeding 30 years. This classification helps protect consumers from risky lending practices and promotes more responsible lending in the mortgage market.

While options like no-interest loans, government-backed mortgage programs, or refinancing options for troubled borrowers might serve specific purposes, they do not encompass the comprehensive consumer protection focus that defines Qualified Mortgages. Therefore, the correct understanding of Qualified Mortgages encompasses their role in promoting loan stability and safeguarding borrower interests.