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CFPB Seeks Comments on Proposed Ability to Repay Rules

The ""Consumer Financial Protection Bureau"":http://www.consumerfinance.gov/(CFPB) is reopening a comment period regarding new data and information it has received related to the proposed ""ability-to-repay"" rule.

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The bureau reopened the comment period until July 9, 2012 to receive feedback on new data and information it received. The original comment period to the proposed rule closed on July 22, 2011.

""Through our ability-to-repay rule, we want to ensure that consumers are not set up to fail with mortgages they cannot afford and we want to protect access to affordable credit,"" said CFPB Director Richard Cordray. ""We are committed to gathering solid data to inform this important rule. This notice gives the public an opportunity to comment on the information we have received so far, as well as an opportunity to submit additional data.""

The proposed rule also seeks for a definition of a ""qualified mortgage.""

Depending on what language is included in the definition of a qualified mortgage, a borrower's debt-to-income ratio might be used to determine if a borrower can qualify, and lenders might be required to take extra steps to verify income.

In the years leading up to the housing market crises, lenders approved of loans borrowers could not afford to pay back. In response, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) requires lenders to make a ""reasonable"" and ""good-faith assessment"" of a borrowers' financial capacity to afford a mortgage.

The CFPB stated it expects to issue the final rule before the end of the year. The ""notice"":http://files.consumerfinance.gov/f/201205_cfpb_Ability_to_Repay.pdf with details to submit a comment is available online. Under the Dodd-Frank Act, the rule is required by January 2013.

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