Qualified mortgages are designed to ensure compliance with ability to repay standards. Which of the following is a defining feature of qualified mortgages?

• A. They eliminate all underwriting requirements
• B. They guarantee loan approval
• C. They include a presumption of compliance with ability to repay standards
• D. They require no documentation

Answer: (C)

The key idea is that a qualified mortgage carries a safe harbor by presuming the lender has complied with the ability-to-repay standard. In other words, if a loan meets the qualified mortgage criteria, it’s treated as complying with the borrower’s ability to repay, which provides legal protection for the lender if questions about ATR arise later. This presumption doesn't mean the loan is automatically approved or that underwriting is skipped; lenders still assess income, debts, and other factors and must document their analysis. It also doesn’t imply there’s no documentation or that approval is guaranteed. The other options contradict how qualified mortgages function: underwriting isn’t eliminated, approval isn’t guaranteed, and documentation is still required.