On July 10, 2013, the Consumer Financial Protection Bureau (CFPB) issued a final rule1 amending its earlier regulations defining and implementing the ability-to-repay requirements of the Dodd-Frank Act. The July 10 release clarified and amended final regulations that had been issued on Jan. 10, 2013.2 The effective date of the regulations is Jan. 10, 2014.
The CFPB ability-to-repay regulations create a safe harbor for mortgages that meet certain, specified underwriting requirements (so-called "qualified mortgages"). Much has been written describing the underwriting requirements that must be met for a loan to be a "qualified mortgage." Little has been written on the potential liability faced by originators and assignees that make loans that are not qualified mortgages. Such potential liability is the issue explored in this article.
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