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ATR Ability To Repay

ATR Ability To Repay in Final Rule DFA

The final Ability-To-Repay rule describes certain minimum requirements for creditors making ability-to-repay determinations, but does not dictate that they follow particular underwriting models.

At a minimum, creditors generally must consider eight (8) underwriting factors:

  1. Current or reasonable expected income or assets;
  2. Current employment status;
  3. The monthly payment on the covered transaction
  4. The monthly payment on any simultaneous loan;
  5. The monthly payment for mortgage-related obligations;
  6. Current debt obligations, alimony and child support;
  7. The monthly debt-to-income ratio or residual income;
  8. Credit history;

To properly evaluate these 8 factors, the lender must use reasonable 3rd-party verified information. This simply means, for example, that current employment status as stated by the Borrower on a loan application must be verified by the Borrowers’ Employer as to the veracity and accurateness of the statement made on the loan application.

It should be noted that the Dodd-Frank Act creates special rights and defenses for borrowers whose lenders have failed to verify ability to repay. These rights include the ability to bring a private cause of action for damages (including for all finance charges and fees paid by borrower) within three (3) years from origination of the mortgage, and as a defense to foreclosure at any time during the life of the loan.

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Pat Billheimer, NMLS #1172852
LO #092673
AZ License #MB-0903024
3850 E Baseline Rd #115
Mesa, AZ 85206

Phone: 866-229-1418
Cell: 480-878-3633
Efax: 480-800-6547
Email: pat@RER-online.com

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