Implications of the ability-to-repay rule and the qualified mortgage definition
In January 2013, the U.S. Consumer Financial Protection Bureau (CFPB) issued the ability-to-repay (ATR) and the qualified mortgage (QM) rule – one of its “most important rules” yet.
This rule is “designed to assure the reliability of mortgages – making sure that lenders offer mortgages that consumers can actually afford to pay back.” The industry has until 10 January 10 2014, when the rule becomes effective, to prepare itself for a new qualified mortgage world.
The impact of the ATR rule and the QM definition is not limited to origination activities alone. In fact, they have broad implications across the entire mortgage lifecycle, from origination to default management.