Which statement best contrasts qualified mortgages with non-qualified mortgages?

• A. Qualified mortgages have no underwriting; non-qualified require underwriting
• B. Qualified mortgages rely on collateral only; non-qualified rely on income
• C. Qualified mortgages have fixed rates; non-qualified have adjustable rates
• D. Qualified mortgages preserve a presumption of ability to repay; non-qualified do not

Answer: (D)

Qualified mortgages come with a built-in presumption that the borrower has the ability to repay. Under the regulation, lenders must perform a reasonable underwriting to evaluate income, assets, employment, and monthly debts to ensure the borrower can make the payments. When a loan meets QM criteria, it provides a safe harbor: the lender is presumed to have complied with the ability-to-repay rule if the borrower later defaults. Non-qualified mortgages do not carry this presumption, so lenders face more potential liability and must prove they properly assessed repayment ability. The other statements don’t fit because QM underwriting is still required, QMs can have fixed or adjustable rates as long as they meet ATR and other criteria, and QM status is not determined by collateral alone.