124 STAT. 2146 PUBLIC LAW 111–203—JULY 21, 2010 ‘‘(i) for which the regular periodic payments for the loan may not— ‘‘(I) result in an increase of the principal bal- ance; or ‘‘(II) except as provided in subparagraph (E), allow the consumer to defer repayment of prin- cipal; ‘‘(ii) except as provided in subparagraph (E), the terms of which do not result in a balloon payment, where a ‘balloon payment’ is a scheduled payment that is more than twice as large as the average of earlier scheduled payments; ‘‘(iii) for which the income and financial resources relied upon to qualify the obligors on the loan are verified and documented; ‘‘(iv) in the case of a fixed rate loan, for which the underwriting process is based on a payment schedule that fully amortizes the loan over the loan term and takes into account all applicable taxes, insur- ance, and assessments; ‘‘(v) in the case of an adjustable rate loan, for which the underwriting is based on the maximum rate permitted under the loan during the first 5 years, and a payment schedule that fully amortizes the loan over the loan term and takes into account all applicable taxes, insurance, and assessments; ‘‘(vi) that complies with any guidelines or regula- tions established by the Board relating to ratios of total monthly debt to monthly income or alternative measures of ability to pay regular expenses after pay- ment of total monthly debt, taking into account the income levels of the borrower and such other factors as the Board may determine relevant and consistent with the purposes described in paragraph (3)(B)(i); ‘‘(vii) for which the total points and fees (as defined in subparagraph (C)) payable in connection with the loan do not exceed 3 percent of the total loan amount; ‘‘(viii) for which the term of the loan does not exceed 30 years, except as such term may be extended under paragraph (3), such as in high-cost areas; and ‘‘(ix) in the case of a reverse mortgage (except for the purposes of subsection (a) of section 129C, to the extent that such mortgages are exempt altogether from those requirements), a reverse mort- gage which meets the standards for a qualified mort- gage, as set by the Board in rules that are consistent with the purposes of this subsection. ‘‘(B) AVERAGE PRIME OFFER RATE.—The term ‘average prime offer rate’ means the average prime offer rate for a comparable transaction as of the date on which the interest rate for the transaction is set, as published by the Board.. ‘‘(C) POINTS AND FEES.— ‘‘(i) IN GENERAL.—For purposes of subparagraph (A), the term ‘points and fees’ means points and fees as defined by section 103(aa)(4) (other than bona fide
