Ability to Repay - Additional Analysis


In our Tuesday (4/19/11) newsletter we notified you of the FRB's proposed amendments to Regulation Z (12 CFR 226) that would set out how residential mortgage lenders would be required to determine a consumer’s ability to repay a mortgage.

The Proposal would define what are termed "qualified mortgages" and also set minimum underwriting standards for many mortgages. The proposed amendments, which are required by the Dodd-Frank Act, also would implement limits on prepayment penalties and attempt to prevent lenders from evading the rules.

In today's newsletter, we will provide further elaboration of the Proposal.

Comment Period: Until July 22, 2011.

Because the Consumer Financial Protection Bureau (CFPB) will take over Regulation Z rulemaking authority on July 21, 2011, the FRB has said that it will not be taking final action on the proposal and that the comments it receives will be transferred to the CFPB.

Topics Covered:

-Loan Products

-Ability to Repay

-8 Criteria

-Special Features

-Refinancing: "Nonstandard" into a "Standard" Mortgage

-Qualified Balloon Loan - Rural or Underserved Area

-Prepayment Penalties

-Safe Harbor or Rebuttable Presumption

-Lender Liability

Article provides links to relevant resources.

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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.

© Jonathan Foxx, Lenders Compliance Group | Attorney Advertising

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