Ability-to-Repay and Qualified Mortgage Standards under the Truth in Lending Act (Reg. Z); Final Rule (CFPB - Pre-Fed. Reg. Version)

The CFPB 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.

Effective Date: January 10, 2014.

Click here to view rule release in full (links externally to CFPB website).

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