Ability to Repay

The Federal Reserve has published its draft guidelines implementing Dodd-Frank’s new ability to repay requirements. Under the new rule, lenders would get a safe-harbor if they offer certain safe mortgages including no negative amortization, interest-only payments, or a balloon payment, or a loan term exceeding 30 years and the points and fees do not top 3% of the loan. Those of you in affiliated arrangements should pay close attention to the rule because, as with HOEPA, title fees are rolled into the 3% calculation if they are paid to the lender or their affiliate. Bona fide third party title fees are not included in the points and fees calculation. If lenders do not offer loans within this safe harbor, they will have to follow strict ability to repay underwriting standards or risk giving borrowers an extra defense in foreclosure. The new rules are open for comment until July 22, 2011.

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Sikora Law has operations in Michigan and Ohio. With a network of attorney relationships in multiple states, we combine the friendly familiarity of a small firm with the institutional knowledge and capabilities generally only found at a large firm. Sikora Law has the resources to deal with your situation with the right lawyer – or the right team of lawyers – and provide reliable, comprehensive, and responsive legal representation . We combine experience, creativity, and technology to efficiently and effectively protect our clients' interests and meet their goals.
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