On January 10, the Consumer Financial Protection Bureau (CFPB)
issued a final rule, as mandated by provisions of the Dodd-Frank
Wall Street Reform and Consumer Protection Act (DFA), which
requires mortgage lenders to consider a consumer's ability to
repay residential mortgages before extending credit (the Rule). The
Rule also establishes the standards for a loan to be considered a
"Qualified Mortgage." The Rule will take effect on
January 10, 2014, giving lenders a year to establish compliance
procedures.
Ability to Repay. In making ability-to-repay
determinations, the Rule requires that lenders meet certain minimum
requirements including consideration of various underwriting
factors as well as the use of reasonably reliable third-party
records to verify the information used to evaluate such factors.
The Rule does not require lenders to use any particular
underwriting model, but lenders must at a minimum consider
underwriting factors such as a consumer's current or
