THE NEW ABILITY-TO-REPAY AND QUALIFIED MORTGAGE RULES UNDER DODD-FRANK AND REGULATION Z: AN OVERVIEW
Robert K. Olsen and Jessica Nguyen
Robert K. Olsen Robert K. Olsen is a principal of Aldrich Bonnefin & Moore, PLC in Irvine, California and head of the firm’s Consumer Practice Group. He specializes in consumer regulatory compliance, financial privacy, fair lending and other financial regulatory matters.
Jessica Nguyen Jessica Nguyen is a law clerk with aldrich Bgnnefin & Moore, PLC in Irvine, California, awaiting Bar results. She graduated from Chapman University Dale E. Fowler School of Law in May 2013.
On January 30, 2013, the Consumer Financial Protection Bureau ("CFPB") issued the first of five final rules concerning new "Ability to Repay" requirements under Regulation Z ("ATR Rule").1 The ATR Rule was enacted in response to the 2008 financial crisis, following a period when credit standards in residential mortgage lending deteriorated and loans allegedly were made to consumers without adequately considering their ability to repay the loans.2 Even though creditors already seemed to have reduced their appetites for risk,3 Congress believed stricter, legally-mandated lending standards were necessary to ensure that creditors remained vigilant in their lending practices and to avoid another recession as severe as the one that hit in 2008.4