To remind our readers, the Ability-to-Repay regulations require loan originators to "make a reasonable, good-faith determination before or when [they] consummate a mortgage loan that the consumer has a reasonable ability to repay the loan, considering such factors as the consumer’s income or assets and employment status (if relied on) against:
- The mortgage loan payment
- Ongoing expenses related to the mortgage loan or the property that secures it, such as property taxes and insurance you require the consumer to buy
- Payments on simultaneous loans that are secured by the same property
- Other debt obligations, alimony, and child-support payments"
As stated within the Guide: "The purpose of this guide is to provide an easy-to-use summary of the ATR/QM rule."
Remember, ATR stands for Ability-to-Repay and QM stands for Qualified Mortgages.
So, real estate professionals, you should know that lenders will have to independently verify a borrower's Ability-to-Repay starting in January of next year and you should start now to become familiar with these new rules to effectively represent your clients. This Guide is a great starting place.
