Which type of loans are exempt from QM regulations?

Loans that are exempt from Qualified Mortgage (QM) regulations include temporary financing and reverse mortgages. This exemption is in place because these types of loans often operate under different conditions and purposes compared to standard residential mortgages.

Temporary financing, such as bridge loans, is designed to provide short-term funding while a borrower transitions between homes or completes a financial arrangement, making QM regulations less relevant in these scenarios. Similarly, reverse mortgages, tailored for homeowners aged 62 and older, allow them to access their home equity while living in the property. This unique structure creates specific consumer protection needs distinct from typical loans, thus justifying their exemption from QM standards.

The other loan types listed, such as standard fixed-rate mortgages and adjustable-rate mortgages, generally fall under QM regulations to ensure they meet certain consumer protection criteria. Conventional loans without lender guidelines are also subject to QM scrutiny since they may lack essential borrower safeguards. Therefore, it is the nature of temporary financing and reverse mortgages that sets them apart as exempt from QM regulations.