Which type of mortgage is described as safe harbor under QM in general terms?

• A. VA insured loans
• B. FHA insured loans
• C. Conventional loans
• D. Safe harbor qualified mortgages

Answer: (D)

Under the Qualified Mortgage rules, there is a special category that gives lenders strong protection from ATR-related lawsuits when the loan meets certain standards. This category is called a safe harbor qualified mortgage. The idea is that if a loan fits the safe harbor criteria—such as prudent underwriting, limits on fees and certain features like negative amortization or large balloon payments—the lender is shielded from certain liability claims about the borrower’s ability to repay.

So, the concept you’re being tested on is that safe harbor under QM refers to loans specifically labeled and treated as safe harbor qualified mortgages, not just any insured or conventional loan. Government-insured products (like VA or FHA) are insured by their agencies, and conventional loans can be QM without the safe harbor designation, but the explicit “safe harbor” label aligns with the safe harbor qualified mortgage.