Question

Why are banks incentivized to offer Qualifying Residential Mortgages (QRMs)? a.Banks are usually in the business of initiating but not keeping mortgages, so offering QRMs allows them to sell them all to a CMO. b.The government forces bank to offer them if they want to offer any kind of mortgage. c.Banks are usually in the business of initiating but not keeping mortgages, but QRMs are high enough quality that banks would want to keep them.

Answer 1

Answer:

To benefit”safe” loans, like 15 and 30 yr fixed mortgages with20%-30% down payments, certain types of mortgageswould be designated as Qualified Residential Mortgages. These QRMs areclassified as loans that are much less likely to default, so the lenders will be allowed to originate the loans without holding that 5%.

Explanation:

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