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Thursday, May 30, 2013

CFPB Amends Ability-to-Repay Rule

The CFPB has amended its final ability-to-repay rule, adding an ABA-advocated exception that allows the compensation paid by lenders or brokers to loan originators not to count toward the rule’s points and fees threshold.

The bureau also changed its original rule to provide a two-year transition period during which small creditors -- including those that do not operate predominantly in rural or underserved areas -- can offer balloon payment qualified mortgages if they hold the loans in portfolio. Small creditors are those with less than $2 billion in assets that make up to 500 first-lien mortgages a year.

The CFPB will use the two-year transition period to study whether the definitions of “rural” or “underserved” should be adjusted, and to work with small creditors to transition to other types of products, such as adjustable rate mortgages, that satisfy other qualified mortgage definitions.

Read more.

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