Which feature is NOT characteristic of a qualified mortgage?

A qualified mortgage (QM) is designed to ensure that borrowers can repay their loans and to protect them from risky lending practices. The features commonly associated with qualified mortgages include a fixed interest rate, an amortized payment structure, and limits on certain fees to ensure transparency and borrower protection.

The characteristic that is not associated with a qualified mortgage is the option adjustable-rate mortgage (Option ARM). This type of loan allows borrowers to choose how much they want to pay each month, which can lead to negative amortization, where the balance of the loan increases rather than decreases. Such flexibility can pose a substantial risk to borrowers, as their payments may not cover the interest accruing on their loan, leading to increased debt.

In contrast, features like a fixed interest rate and an amortized structure ensure predictability and gradual repayment of the principal balance. Furthermore, limits on fees help keep the cost of borrowing reasonable and prevent excessive charges that could adversely affect borrowers. Therefore, the incorrect inclusion of an Option ARM in the context of qualified mortgages makes it a standout choice that does not align with the established criteria for QMs.