CFPB to Assess Effectiveness of Ability to Repay/Qualified Mortgage Rule

The Consumer Financial Protection Bureau ("CFPB") will evaluate the Ability to Repay / Qualified Mortgage ("ATR/QM") Rule, which is part of the "Truth in Lending Act" (Regulation Z). The ATR/QM rule requires a mortgage lender to assess a borrower's ability to repay ("ATR") a mortgage loan. The Dodd-Frank Act also provided for a new class of "qualified mortgage" ("QM") loans that do not contain "risky" features and so are presumed to comply with the ATR requirement. The presumption of compliance can be either conclusive (i.e., a safe harbor) for QM loans that are not "higher-priced," or rebuttable for QM loans that are "higher-priced."

The ATR/QM rules (i) set standards for classifying QM loans and (ii) establish criteria and requirements for lenders to evaluate the ability of consumers to repay loans under the ATR requirement.

The CFPB plans to release a report on the assessment in January 2019, and requested public comment on ways to improve the study. Comments are due 60 days after publication of the request in the Federal Register.