![]() the calculated monthly payment on the mortgage or dwelling secured loan, assuming that the loan will be repaid in substantially equal monthly payments during its term.current or reasonably anticipated income and assets.A lender will, in effect, be responsible for making loans that borrowers can repay.Īt a minimum, the following factors must be evaluated by the lender when determining a borrower’s ability to repay: Instead, it describes eight factors that lenders must consider and verify in order to make an ability-to-repay determination. The Final Rule does not dictate any particular loan underwriting standards that lenders or creditors must follow when making a mortgage or loan secured by a dwelling. ![]() The Final Rule will go into effect on January 10, 2014. ![]() Under the rule, lenders are required to make a good faith determination that the borrower has the ability to repay the loan prior to making a mortgage or dwelling secured loan.Īs mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd Frank), the rule also provides that if a lender makes a “qualified mortgage” (as defined in the rule), the lender will receive special protection from liability if the borrower contests the lender’s compliance with the ability-to-repay determination requirements. On Thursday, January 10, 2013, the Consumer Financial Protection Bureau (CFPB) released its Final Rule setting forth new “ability-to-repay” determination requirements that will appy to traditional residential mortgages and any other consumer credit transaction secured by a dwelling. ![]()
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