Atr/Qm And Fair Lending

For approximately two years now we have devoted much time and discussion to the subject of the Ability To Repay Rule and the Qualified Mortgage Rule which go into effect January 10, 2014. We have analyzed closely the risks involved in complying and the various alternatives available, particularly alternatives for originating Qualified Mortgages.

Often the subject of Fair Lending has come up. Many of you have questioned whether a policy that says your bank will only originate Qualified Mortgages could later be criticized by examiners on a Fair Lending basis if certain customers are turned down for credit because they cannot meet the underwriting requirements for a Qualified Mortgage. The question is whether your "only Qualified Mortgages" policy results in what the regulators and the Equal Credit Opportunity Act refer to as "disparate impact." You will remember that disparate impact occurs where you have a facially neutral policy ("Qualified Mortgages Only") that has