CFPB Continues To Finalize Elements Of "Points And Fees" Test As Implementation Date Draws Closer

The CFPB's final ability-to-repay rule (Rule), issued January 10, 2013, implements Dodd-Frank mortgage reforms requiring creditors to make good faith determination that a consumer has reasonable ability to repay his or her home loan before the loan is extended. The CFPB provided certain protections from liability under this requirement for loans that meet the criteria to be a "qualified mortgage." A key requirement of a qualified mortgage is that the transaction's "points and fees" generally cannot exceed 3% of the total loan amount. Concurrent with its final Rule, the CFPB issued a proposed amendment regarding loan originator compensation, as the CFPB was still grappling with how to address that element in the final rule.