CFPB Issues Guide on Truth in Lending

The "plain language" report details the agency’s Ability-to-Repay (ATR) and Qualified Mortgage (QM) rule.

June 1, 2013

The Consumer Financial Protection Bureau (CFPB) in April released a “plain language” guide on the agency’s Ability-to-Repay (ATR) and Qualified Mortgage (QM) rule under Regulation Z (Truth in Lending).

The CFPB amended Reg Z in January to implement Sections 1411 and 1412 of the Dodd-Frank Act, which generally require creditors to make a reasonable, good faith determination of a consumer’s ability to repay any consumer credit transaction secured by a dwelling (excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan) and establishes certain protections from liability under this requirement for “qualified” mortgages.

The guide aims to explain how creditors can determine whether their loans meet the rule’s QM requirements and, if so, whether they will receive either a safe harbor or rebuttable presumption of compliance with the ATR requirements.

The CFPB also released small entity compliance guides on the TILA escrow rule, the 2013 Home Ownership and Equity Protection Act (HOEPA) rule, the Equal Credit Opportunity Act (ECOA) appraisal and valuations rule, and the TILA higher-priced mortgage loans (HPML) appraisal rule.