Federal Register Publishes Final ATR and QM Standards under TILA
by: Anna DeSimone
June 12, 2013 the Federal Register published the Final Rule by the Consumer Financial Protection Bureau, Ability-to-Repay and Qualified Mortgage Standards Under the Truth in Lending Act (Regulation Z)
The Bureau of Consumer Financial Protection (Bureau) is amending Regulation Z, which implements the Truth in Lending Act (TILA). Regulation Z generally prohibits a creditor from making a mortgage loan unless the creditor determines that the consumer will have the ability to repay the loan.
The final rule provides an exemption to these requirements for creditors with certain designations, loans pursuant to certain programs, certain nonprofit creditors, and mortgage loans made in connection with certain Federal emergency economic stabilization programs.
The final rule also provides an additional definition of a qualified mortgage for certain loans made and held in portfolio by small creditors and a temporary definition of a qualified mortgage for balloon loans. Finally, the final rule modifies the requirements regarding the inclusion of loan originator compensation in the points and fees calculation.
The Bureau is issuing this final rule to adopt certain exemptions, modifications, and clarifications to TILA’s ability-to-repay requirements. TILA section 129C, as added by sections 1411, 1412, and 1414 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), generally requires creditors to make a reasonable, good faith determination of a consumer’s ability to repay a mortgage loan and creates a presumption of compliance with these ability-to-repay requirements for certain loans designated as “qualified mortgages.” On January 10, 2013, the Bureau issued a final rule (the 2013 ATR Final Rule) to implement these ability-to-repay requirements and qualified mortgage provisions. The effective date of the final rule is January 2014.
Please refer to my article dated May 29, 2013 which summarizes the Loan Originator Compensation and the Points and Fees Calculation and Exemptions for Certain Creditors and Lending Programs.
http://cdn.s3.webcontentor.com/OFFICE/BANKER01/files/misc_files/130531073555_5.29.13.CFPB.Anna.pdf
About the Author:
Anna DeSimone is President and Founder of Bankers Advisory, Inc.
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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