CFPB Tweaks Ability to Repay Rule for Small Portfolio Creditors, Housing Assistance Programs, and Nonprofits
By: Kristie D. Kully , Andrew L. Caplan
On May 29, 2013, the CFPB finalized certain amendments to its January 2013 Ability to Repay/Qualified Mortgage Rule. In addition to clarifying how loan originator compensation will be factored into the QM’s three percent limit on points and fees (as discussed in a recent K&L Gates Consumer Financial Services Watch blog post), the May 2013 amendments (which will become effective at the same time as the QM Rule, in January 2014) will exempt new categories of creditors and transactions from the Rule’s ability to repay requirements; expand the definition of QM to include a new set of loans made by small portfolio lenders; and create a two-year window in which certain balloon payment loans will enjoy QM status, without requiring that such loans be made to borrowers in rural or underserved areas. Read More