Bureau Releases Modifications and Clarifications to Ability to Repay Rule

The CFPB issued a Final Rule amending the Ability to Repay/Qualified Mortgage Standards. 

The Rule finalizes an additional category of Qualified Mortgages for certain portfolio loans made by Small Creditors; raises the rate spread threshold for certain loans made by Small Creditors to be eligible for the ATR Safe Harbor; and provides a transition period to allow certain creditors to originate balloon-payment qualified mortgages, even if they do not lend primarily in rural or underserved areas.

The Final Rule also makes some revisions to the types of loan originator compensation, which must be included in the points and fees calculation, addressing such compensation paid to an employee.  Certain community development creditors, down payment assistance providers, and nonprofit organizations have also been designated as exempt from the Ability to Repay requirements.  In addition, credit extended through Housing Finance Agency and Emergency Economic Stabilization Act programs are exempt from the Ability to Repay requirements.

We will provide in-depth details in an upcoming newsletter article.

Diane Dean

Diane Dean

Diane joined Banker’s Compliance Consulting with over 10 years of compliance experience and over 15 years of experience within the financial industry. Diane is a Certified Regulatory Compliance Manager (CRCM) and has a Bachelor’s Degree in Sociology with a concentration in Criminal Justice. She is a graduate of the Schools of Banking Compliance School and has participated in various other training opportunities throughout her career. Diane understands firsthand the struggles banks face in building and maintaining successful compliance programs. Her experience and common sense approach to consumer compliance is a great asset to our clients. Diane and her husband have two kids who keep them busy. She enjoys running and other sports and is a big Bugs Bunny fan! She’s a bit crazy in that she does enjoy reading some of these regulations and she’s a “crazy cat lady!” Her cat tales are hilarious!

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