The Consumer Financial Protection Bureau (CFPB) published the final rule regarding Ability to Repay (ATR) and Qualified Mortgage (QM) Standards under the Truth in Lending Act (Regulation Z). Lenders are now required to make a “reasonable” and “good faith” determination of a borrower’s ability to repay a residential mortgage loan.

The reality for most lenders is that the free market has already addressed the issues related to borrower’s Ability to Repay. However, for those remaining, the rule has opened the door for liability and litigation – especially considering any future foreclosure action.