How QM, QRM and HOEPA Relate to Each Other

Ken Markison, the Mortgage Bankers Association’s regulatory counsel sees the relationship between the qualified mortgage, the qualified residential mortgage and the Home Ownership and Equity Protection Act as three concentric circles, he told the Northeast Conference of Mortgage Brokers in Atlantic City, N.J.

The QM definition makes up the middle of those circles, while QRM is a smaller circle but one Markison believes should be nearly as wide. The outer circle is HOEPA.

The MBA believes a broad definition of QM would bring safer, more sustainable mortgage products to more borrowers. But if the QM definition is “blurry,” and does not have a bright-line standard for what is permissible, there would be less lending within QM, he said.

Markison believes a rule could be out by Thanksgiving, and the industry could expect clear, bright-line standards.

As for HOEPA, it is a “moving target in the rule makings we are facing today,” he said. The new boundary will be “a de facto usury ceiling,” and that small-balance loans will be impacted more by the change.