It's not an exemption, but it is a defacto QM Safe Harbor. You won't find it in Regulation Z, however, because it was statutory relief provided in 2018. Look at revisions to the Truth in Lending Act made in Section 101 of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (Public Law 115-174). Under those statutory provisions, if your bank meets certain criteria (primarily asset size) and the loan meets certain criteria (including held in portfolio, no interest only, no negative am, no prepayment penalty), and your underwriting "considers and documents debt, income, and financial resources of the consumer", the loan will be considered a Safe Harbor QM loan. The statute also is clear that the consideration and documentation of income does not need to be done under any specific standards including Appendix Q or any successor regulation and stipulates that it can be done in a variety of methods.
Jim Bedsole, CRCM, CBA, CFSA, CAFP
My posts - my opinions