General Mortgage Knowledge · 20% of the SAFE examhard
Correct answer: The borrower may succeed, because a first-lien QM with a 1.8% APR spread above APOR only has rebuttable presumption protection, which the borrower can attempt to overcome with evidence of insufficient residual income
A first-lien QM loan with an APR spread exceeding 1.5 percentage points above APOR is classified as a higher-priced covered transaction, which receives only rebuttable presumption protection (not safe harbor). A 1.8% spread exceeds the 1.5% threshold, so this loan has rebuttable presumption status. The borrower CAN attempt to rebut the presumption by demonstrating that at origination, they did not have sufficient residual income or assets after paying mortgage-related obligations to meet living expenses — a standard the CFPB has outlined. A 46% DTI combined with inadequate residual income could form the basis for rebuttal. "The borrower may succeed, because a first-lien QM wi..." is incorrect because safe harbor requires the spread to be 1.5% or less on first liens. "The claim will fail because rebuttable presumption c..." is incorrect because a 46% DTI alone does not void QM status under the 2021 General QM rule (which replaced DTI caps with a pricing-based test). "The borrower is likely to succeed because a 46% DTI..." understates the borrower's rights — residual income analysis is specifically mentioned in CFPB guidance as a rebuttal basis.
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