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Ability to Repay - Reg Z

Reg Booster has taken the Ability to Repay (ATR) requirements from Reg Z and made them easier to digest by reformatting them. If you'd like to read them in the actual 214 page Federal Register, 3-column document, start on page 183 and have your reading glasses ready. If you'd rather read them in a more managable format there is a 19 page PDF document linked below. There is a Word version if you need to customize this for your institution.

What's this all about? The basic thrust of the ATR rule is to address the problems that occurred in the years leading up to the mortgage crisis when mortgages were made to consumers without some lenders doing an adequate job of determining whether the consumer would be able to repay the loans under as agreed. The ATR rule amends Regulation Z to expand upon the requirement to assess consumer's ability to repay the loans. Changes include:

  • New section: 12 CFR 1026.43 Minimum standards for transactions secured by a dwelling
  • New Appendix Q to Regulation Z
  • were also made to 12 CFR 1026.32 Requirements for high-cost mortgages

This document is much easier to read and use as a training document and for reference than the Federal Register. It includes the sections on income - effective income, employment history, income sources, family owned business income and documentation requirements, analysis of self-employment income, reviewing tax returns, corporate and partnership income verification and more.

First published on 02/15/2013

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