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The Unconventional Lending Path

Independent Banker

Potential risks and compliance considerations in making ‘non-qualified’ mortgages under the CFPB’s ability-to-repay rule

When the Consumer Financial Protection Bureau issued its final “ability to repay” rule under Regulation Z in January, the bureau formally set a new regulatory standard requiring all mortgage lenders to make a “reasonable and good faith determination” that a mortgage borrower has a “reasonable ability to repay” a mortgage loan according to its terms. The rule also defines two new categories of “qualified mortgages” (dubbed QMs) that, when made in accordance with specified criteria, provide lenders with protection against borrower lawsuits alleging rule violations.

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