U.S. Consumer Financial Protection Bureau Issues Rules on Qualified Mortgages and Ability to Repay

Congress in the Dodd-Frank Act responded to concerns about the quality of mortgage loans by establishing incentives for lenders to seek to ensure that borrowers had the ability to repay mortgage loans made to them. In response to a directive from Congress, the Consumer Financial Protection Bureau (the“Bureau”) has issued its much anticipated Ability-to-Repay (“ATR”) Rule and Qualified Mortgage (“QM”) Rule (the “Rules”), which will go into effect on January 14, 2014. The following is a brief overview of the new Rules.

The Ability-to-Repay Rule -

The key to the Rules is the ATR requirement, which will require a lender to make a reasonable and good faith determination that a consumer has a reasonable ability to repay a loan in accordance with its terms. Any lender that fails to satisfy the ATR rule will be at risk for the following penalties and liabilities:

1. general Truth in Lending Act damages,

2. special ATR statutory damages, and

3. in a foreclosure action, a defense by recoupment or setoff.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Dechert LLP | Attorney Advertising

Written by:


Dechert LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.