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Compliance Compass: confused about "ability-to-repay"?


Paul Guttormsson

Confused about ability-to-repay and qualified mortgages?


Under one of the many new mortgage lending rules taking effect in January 2014, credit unions will have to calculate a borrower’s ability to repay before making any closed-end loan secured by a dwelling.


The credit union will be presumed to comply with the complicated requirements if the loan meets the standards to be considered a "qualified mortgage." Staff can be understandably confused by what this all means. Here are some resources that can help:


  • The League recently updated its ii Release No. B074 to explain the regulation. The release now includes charts and a section that lays out the "pros and cons" credit unions face in deciding whether to make qualified mortgages or to rely only on their ability-to-repay analyses.




Our Compliance Officer School in Wisconsin Dells November 20-21 will, among many other hot topics, address these mortgage-related compliance issues. Mark your calendar!


Questions? Contact me at (262) 408-6009.

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