The recent uproar over regulators' "qualified residential mortgage" (QRM) proposal has obscured the importance of another underwriting standard in the Dodd-Frank Act, the similarly titled "qualified mortgage" (QM).

While the QRM rule will determine which loans are exempt from risk retention if MBS are issued, the QM rule determines which mortgages lenders can originate without facing potential legal liability of up to $100,000 per loan. Regulators can fine a lender $5,000 per day for “unintentional” violations.

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