Balloon loans that are not higher-priced transaction, the creditor must use the maximum payment scheduled during the first 5 years.Balloon loans that are HPML, creditor must consider the ability to repay based on terms including the required balloon payment.Special rules for balloon, interest-only and neg-am loans:.Must use the fully indexed rate or the intro rate whichever is greater.BorrowerвЂ™s monthly payment on the covered transaction Creditor may verify orally (VVOE) as long as the creditor prepares a record of the information obtained.ДЈ).

as long as the creditor considers these factors when determining the repayment ability

Employment may be full-time, part-time, irregular, etc.

BorrowerвЂ™s current employment status if the borrowerвЂ™s income from employment is used to determine repayment ability.

Creditors must use third-party records that provide reasonable reliable evidence of the borrowerвЂ™s income/assets (W2вЂ™s, paychecks, tax-returns, bank statements, etcвЂ¦)Дў).

Creditors must only consider the income/assets necessary to support the determination the borrower can repay the loan.

BorrowerвЂ™s current or reasonable expected income or assets, except for value of the dwelling that secures the loan. The ATR rule applies to all consumer credit transactions secured by a dwelling EXCEPT: home equity lines of credit (HELOC), reverse mortgages, temporary or вЂњbridgeвЂќ loans less than 12 months, loans secured by an interest in a timeshare plan, and construction phase of 12 months or less on a construction-to-perm loan.ДЁ general underwriting factors creditors must consider and verify:ДЎ). The Rule: Creditors must make a reasonable and good faith effort at or before consummation, that the borrower will have a reasonable ability to repay the loan according to its terms. LetвЂ™s look at what loans are subject to the new rule and the 8 underwriting factors that make up the regulation. The current effective date for the ATR rule (as set forth under the Dodd-Frank Act) is January 14, 2014, this means you have less than 9 months to get your systems, marketing, training, etc. The views expressed herein are the views of the blogger and not those of Stinson Leonard Street or any client.The ATR (Ability to Repay) rule is set to be fully implemented soon and if you are not ready for it then fasten your seatbelts, itвЂ™s going to be a bumpy ride. As one of the 75 largest firms in the U.S., Stinson Leonard Street has more than 520 attorneys and offices in 14 cities, including Minneapolis, Mankato and St.

Stinson Leonard Street LLP provides sophisticated transactional and litigation legal services to clients ranging from individuals and privately held enterprises to national and international public companies. By вЂњmore difficultвЂќ we mean references in the survey that the approval rate is вЂњsomewhat lowerвЂќ to вЂњmuch lower.вЂќДЄbout 57% of loan officers responded that approval was more difficult for prime residential mortgages with principal balances greater than the conforming loan limits announced by the FHFA. The вЂњmore difficultвЂќ response rate rises to about 49% for loan officers from smaller banks for borrowers that have FICO scores of less than 680. Around 34% of all loan officers responding to a Fed survey indicated the CFPBвЂ™s Ability-to-Repay and Qualified Mortgage Standards under the Truth in Lending Act (the ATR/QM rule) makes it more difficult to get conforming mortgage loans approved.

Atr qm rule