Our bank is considering offering only General QMs starting in January 2014 because of litigation risks. Currently the loans offered by this bank are both General and Temporary QMs under the new rules. Does anyone see additional Fair Lending Risks by droping Temporary QMs. These (Temporary QMs)will now be denied, and it seems to me that disparate treatment/impact could occur.

The regulators released a joint statement on this Oct. 23, 2013:

Interagency Statement on Fair Lending Compliance
and the Ability-to-Repay and Qualified Mortgage Standards Rule

It will help clarify that what you are concerned about, most likely, is not a fair lending issue.

This joint statement was from five regulators and did not include HUD which is interesting. Therefore there may be more guidance to come.

Also, the joint statement on Oct. 23rd addressed QMs which includes both "General QMs" and "Temporary QMs". My question above is addressing General QMs vs Temporary QMs.

I believe it stated a bank has the right to offer certain products or not. Therefore, if you are only offering General QMs, either they qualify or they don't. At a recent seminar I attended, I was surprised how many never used nor intended to use a GSE underwriting system so that option doesn't exist for them.
I thought I heard HUD has released something, but I'm so busy right now with our senior manager of lending suddenly departing for another job.

That's the part that scares me. How long until some lender comes along and makes an "exception" to policy and all of a sudden WHOOPS! It's no longer a QM. I think we may have to have ATR in place as a backup.

There is risk to only offering QMs. What about redlining risk?
What if loan volume is cut in half in minority neighborhoods? How about CRA risk? Better increase minority advertising, without being deceptive...

There is risk no matter what you do. If you do offer non-QMs, you have litigation risk; difficult to quantify, but it's there. You also might receive criticism from your regulator on a safety and soundness basis for such loans.

So we're still caught in the constant conundrum: fall more on the CRA compliance side, or more on the safety and soundness side? Either way, we'll likely be criticized.

Banks are looking at, or have already decided, to always underwrite to ATR regardless of whether they are using a QM category. If the QM falls apart when a question arises, such as if a mistake was made and the loan does not qualify, the bank can have ATR as a back up to defend its credit decision.

Exactly. Think in terms of ATR being your normal, stated credit underwriting process, and QM being the validation of that process.