CFPB Announces Upcoming Assessment of Ability-to-Repay Rule

The Consumer Financial Protection Bureau (CFPB) yesterday published a notice in the Federal Register announcing that CFPB will be conducting an assessment of its Ability-to-Repay rule (ATR rule). The Notice seeks public input on CFPB’s plans for the assessment and recommendations for improving it.

The ATR rule, which took effect in January 2014, outlines the steps mortgage originators are required to take to obtain and verify information to determine whether a consumer can afford to repay a mortgage. It also establishes a set of criteria that a mortgage loan must meet to be considered a "qualified mortgage" (QM). If a mortgage loan meets the QM criteria, the originator is presumed to have complied with the requirements of the ATR rule. NCSHA previously summarized the ATR-QM rule in more detail on its blog after CFPB first published the final rule.

HFA program loans are currently exempt from the requirements of the ATR rule, an exemption NCSHA advocated for. This exemption applies to both loans originated directly by HFAs and loans originated by HFAs’ lender partners pursuant to HFA programs.

In conducting the assessment, CFPB is complying with a provision of the Dodd-Frank Wall Street Reform Act that requires CFPB to conduct an assessment of each significant federal financial consumer protection rule it issues within five years of the rule’s implementation. Since the ATR rule took effect January 2014, CFPB must conclude its assessment by January 2019.

CFPB expects that its assessment will mostly be focused on the impact the ATR rule has had on the availability of mortgage credit. This will include an analysis on how the rule has affected credit availability for certain sub-populations of borrowers, including low- and moderate-income borrowers, rural borrowers, self-employed borrowers, and those with high debt-to-income ratios. While CFPB does not expect to include in the assessment report any specific proposals for amending the ATR rule, its findings will help the agency determine whether to pursue additional changes to the rule moving forward.

CFPB is seeking public input on the assessment until July 31. NCSHA intends to submit comments on behalf of all HFAs. If you have any thoughts you would like NCSHA to consider as it develops its comments, please send them to Greg Zagorski by Friday, July 21.

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