Which of the following statements best describes a qualified mortgage's primary protective feature?

• A. presumption of compliance with ability to repay standards
• B. zero down payment required
• C. no required disclosures
• D. no appraisal needed

Answer: (A)

The key idea is that a qualified mortgage provides a safe harbor by creating a presumption that the lender complied with ability-to-repay requirements. Under the ATR rules, lenders must determine whether the borrower has the ability to repay the loan. A loan that fits the qualified mortgage criteria is treated as presumed to meet those ATR standards, giving the lender protection from potential ATR lawsuits and enforcement risk.

This is why the statement describing the primary protective feature as a presumption of compliance with ability-to-repay standards is the best answer. The other choices aren’t defining protections of a QM: down payment requirements aren’t mandated by QM, mandatory disclosures still exist under mortgage disclosure rules, and appraisals are generally still needed for many loans.