Ability-to-Repay: The Basics and a Chart

September 22, 2011

Jonathan Foxx

Visit our Website

Re: Ability-to-Repay - The Basics and a Chart

Greetings!,

As you may know, I have written extensively on the referenced regulatory matter, most recently in a two-part series.

I have just published the following article:

Ability-to-Repay: The Basics and a Chart

This article provides an outline of Ability-to-Repay and also provides a useful chart that highlights the compliance components.

The article is published in the September 2011 edition of the highly regarded National Mortgage Professional Magazine.

It is my pleasure to make the original article available to you, compliments of the magazine. (A one year free subscription to the magazine is being offered exclusively to our newsletter subscribers.) I am including the accompanying chart as a separate document, for ease-of-use.

Please contact me for the article's White Paper.

Regards,

Jonathan

How Soon for Ability-to-Repay?

How soon will Ability-to-Repay be a required regulatory compliance implementation?

Special Advisor to the Treasury Secretary for the CFPB, Raj Date, speaking at the American Banker's Regulatory Symposium on September 20, 2011 in Washington, D.C., stated that the CFPB intends to issue a final rule early next year addressing a lenders' duty to determine that consumers have a reasonable ability to repay mortgages.

Excerpt

As a revision to Regulation Z (the implementing regulation of the Truth in Lending Act), the Rule requires creditors to determine a consumer's ability to repay a mortgage before making the loan and would also establish minimum mortgage underwriting standards.

The Rule applies to any consumer credit transaction secured by a dwelling, except an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan or ''bridge'' loan with a term of 12 months or less.

It appears that the Rule applies to purchase money and refinances, but not modifications of existing mortgages. There is a prohibition on prepayment penalties unless the mortgage is a prime, fixed rate, qualified mortgage - and unless the amount of the prepayment penalty is limited.

LENDERS COMPLIANCE GROUP is the first full-service, mortgage risk management firm in the country, specializing exclusively in mortgage compliance and offering a full suite of services in mortgage banking. We are pioneers in outsourcing solutions for residential mortgage compliance. We offer our clients real-world, practical solutions to mortgage compliance issues, with an emphasis focused on operational assessment and improvement, benchmarking methodologies, Best Practices, regulatory compliance, and mortgage risk management. We are pioneers in outsourcing solutions for mortgage compliance.

This communication is sent to our valued clients and colleagues, who regularly receive our Mortgage Compliance Updates, Compliance ALERTS, and Commentaries. These publications are free to subscribers.

Information contained in this email is not intended to be and is not a source of legal advice. The views expressed are those of the contributing author, as well as news services and websites linked hereto, and do not necessarily reflect the views or policies of Lenders Compliance Group (LCG), any governmental agency, business entity, organization, or institution. LCG makes no representation concerning and does not guarantee the source, originality, accuracy, completeness, or reliability of any statement, information, data, finding, interpretation, advice, opinion, or view presented herein.

T: (516) 442-3456

F: (516) 706-7070

Lenders Compliance Group, Inc. | 167 West Hudson Street - Suite 200 | Long Beach | New York | 11561