CFPB Addresses Non-QMs Under Ability-To-Repay Rule

The Consumer Financial Protection Bureau ("CFPB"), in its most recent set of Supervisory Highlights, provides a bit of insight into how it interprets its Ability to Repay Rule for loans that are not Qualified Mortgages ("QMs").  However, it fails to reconcile the Rule's contradiction that while a lender making a non-QM is not required to consider or verify the borrower's income if it reasonably finds the borrower's assets to be sufficient, it is nonetheless required to consider and verify a borrower's income!  Make sense?

By way of background, the Dodd-Frank Act and CFPB's regulations generally require lenders making a closed-end residential mortgage loan to reasonably determine that the consumer will be able to repay the loan according to its terms.  If the lender wants to take advantage of a safe harbor of compliance with that requirement, it may choose to make a QM in accordance with the Rule's strict criteria for those loans.  However, a lender may decide to