Under the new Ability-to-Repay (ATR) Rule, mortgage lenders must look at customers’ income, assets, savings, and debt, and weigh those against the monthly payments over the long term. In order to satisfy the requirements for a Qualified Mortgage under Appendix Q (Reg. Z), the consumer's DTI ratio may not exceed 43%, and a creditor must use the standards in Appendix Q to verify and document a consumer's income and debt and calculate the DTI ratio. Please note that any requirements not specified or not addressed under Appendix Q must revert to the Fannie Mae Selling Guide.
Effective January 10, 2014, all LD Advantage products are required to comply with Appendix Q rules established by the Consumer Financial Protection Bureau (CFPB). Appendix Q requires mortgage lenders to consider the consumers’ Ability-to-Repay (ATR) a debt before extending credit. Lender must make a reasonable, good-faith determination at or before closing a mortgage transaction secured by a dwelling, that a consumer will have a reasonable ability to repay the loan according to its terms.
Appendix Q Summary
Complete CFPB Appendix Q