BROUGHT TO YOU BY THE LETTER “Q”:The Qualfied Mortgage and Qualfied Residential Mortgage Joseph Pigg, Vice President and Sr. Counsel aba.com |1-800-BANKERS

TWO STANDARDS: ONE GOAL QM AND QRM both intended to improve underwriting QM sets outer boundaries of what is an acceptable loan (red light/green light) QRM provides exemption from risk retention

aba.com |1-800-BANKERS QRM IS A SUBSET OF QM – as proposed a much smaller subset qrm QRM QM

aba.com |1-800-BANKERS GSE’s are exempt from QRM (while in conservatorship GSE exemption necessary to avoid disruption of mortgage market Justified due to full backing of federal government Makes it much harder to ever resolve GSE status

aba.com |1-800-BANKERS QM/QRM and GSE standards should be more closely aligned. a a Revised QRM (and GSE standard) QM

aba.com |1-800-BANKERS Aligning QM/QRM and GSE standards makes sense QM still sets boundaries of acceptable loans – must be safe, with traditional features and with a proven ability to be repaid QRM is a subset – safe, traditional, repayable and with additional borrower qualifications –i.e.down payment GSE standards should be same as QRM – loans safe enough to gain full backing of taxpayers should also be safe enough to be sold to investors without additional risk retention