September 10, 2013
Qualified Mortgages: Safe harbor From What?
By Vincent Di Lorenzo
New York Law Journal
September 9, 2013
On July 10, 2013, the Consumer Financial Protection Bureau (CFPB)
issued a final rule1 amending its earlier regulations defining and
implementing the ability-to-repay requirements of the Dodd-Frank
Act. The July 10 release clarified and amended final regulations
that had been issued on Jan. 10, 2013.2 The effective date of the
regulations is Jan. 10, 2014.
The CFPB ability-to-repay regulations create a safe harbor for
mortgages that meet certain, specified underwriting requirements
(so-called "qualified mortgages"). Much has been written describing
the underwriting requirements that must be met for a loan to be a
"qualified mortgage." Little has been written on the potential
liability faced by originators and assignees that make loans that
are not qualified mortgages. Such potential liability is the issue
explored in this article.