The CFPB's Ability to Repay / Qualified Mortgage Rule (ATR/QM) rule reshaped the mortgage market and created new legal risks for lenders to understand.
Overview: The ATR/QM rule comes out of the Dodd-Frank and was finalized in 2014. It includes standards that a lender must meet to document that a borrower has the ability to repay the loan that is being made. A lender has a safe harbor for liability for ATR if a loan meets the designated criteria of a Qualified Mortgage (QM). The QM criteria has become the de facto underwriting standards for much of the industry, and the CFPB must ensure that some form of the "GSE patch" continues and revisit other decisions made 6 years ago regarding points and fees caps. Such steps will enable access to credit for as many borrowers as possible under a broad and sustainable QM construct.