Federal Reserve Proposes Changes to Regulation Z to Implement New “Ability-to-Repay” Requirement for Residential Mortgage Loans
On April 20, the Federal Reserve released a proposed rule that would prohibit a creditor from making a residential mortgage loan without regard to a borrower’s ability to repay. The proposed rule would amend Regulation Z, which implements the Truth in Lending Act, to carry out certain reforms mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Following a comment period that runs through July 22, the proposed rule will be finalized by the new Bureau of Consumer Financial Protection.