BROWSE

Ability To Repay

What is 'Ability To Repay'

An individual's financial capacity to make good on a debt. Specifically, the phrase "ability to repay" was used in the

Explaining 'Ability To Repay'

The purpose of this legislation and the "ability to repay" standard was to prevent lenders from employing the same loose lending criteria used during the housing bubble of the mid-2000s, in which many people were allowed to take out mortgages they couldn't really afford, then lost their homes to foreclosure a few years later. Under the new laws, individuals who are not properly subjected to the ability to repay standard during the origination process may have a defense against foreclosure.


Further Reading


The Consumer Financial Protection Bureau's Ability-to-Repay/Qualified Mortgage Rule
www.jstor.org [PDF]
… for ability-to- repay violations.91 Accordingly, where the creditor does not properly assess a borrower's ability to repay the loan, the borrower could receive a "free" loan after repaying the principal amount … Mortgage lenders must assess borrowers' ability to repay loans based …

Why the Ability-to-Repay Rule Is Vital to Financial StabilityWhy the Ability-to-Repay Rule Is Vital to Financial Stability
heinonline.org [PDF]
… for ability-to- repay violations.91 Accordingly, where the creditor does not properly assess a borrower's ability to repay the loan, the borrower could receive a "free" loan after repaying the principal amount … Mortgage lenders must assess borrowers' ability to repay loans based …

How Sensitive is the Farm Sector's Ability to Repay Debt to Rising Interest Rates?How Sensitive is the Farm Sector's Ability to Repay Debt to Rising Interest Rates?
www.jstor.org [PDF]
… for ability-to- repay violations.91 Accordingly, where the creditor does not properly assess a borrower's ability to repay the loan, the borrower could receive a "free" loan after repaying the principal amount … Mortgage lenders must assess borrowers' ability to repay loans based …

Financing vs. forgiving a debt overhangFinancing vs. forgiving a debt overhang
www.nber.org [PDF]
… for ability-to- repay violations.91 Accordingly, where the creditor does not properly assess a borrower's ability to repay the loan, the borrower could receive a "free" loan after repaying the principal amount … Mortgage lenders must assess borrowers' ability to repay loans based …

Financial Vergangenheitsbewältigung: the 1953 London debt agreementFinancial Vergangenheitsbewältigung: the 1953 London debt agreement
papers.ssrn.com [PDF]
… for ability-to- repay violations.91 Accordingly, where the creditor does not properly assess a borrower's ability to repay the loan, the borrower could receive a "free" loan after repaying the principal amount … Mortgage lenders must assess borrowers' ability to repay loans based …

The financial instability hypothesisThe financial instability hypothesis
papers.ssrn.com [PDF]
… for ability-to- repay violations.91 Accordingly, where the creditor does not properly assess a borrower's ability to repay the loan, the borrower could receive a "free" loan after repaying the principal amount … Mortgage lenders must assess borrowers' ability to repay loans based …

Paying for a law degree: Trends in student borrowing and the ability to repay debtPaying for a law degree: Trends in student borrowing and the ability to repay debt
heinonline.org [PDF]
… for ability-to- repay violations.91 Accordingly, where the creditor does not properly assess a borrower's ability to repay the loan, the borrower could receive a "free" loan after repaying the principal amount … Mortgage lenders must assess borrowers' ability to repay loans based …

Minsky's theory of financial crises in a global contextMinsky's theory of financial crises in a global context
www.tandfonline.com [PDF]
… for ability-to- repay violations.91 Accordingly, where the creditor does not properly assess a borrower's ability to repay the loan, the borrower could receive a "free" loan after repaying the principal amount … Mortgage lenders must assess borrowers' ability to repay loans based …



Q&A About Ability To Repay


How do you determine if someone has been improperly subjected to the ability-to-repay standard during the origination process?

You must look at whether they were given false information or did not receive enough information about their loan terms and conditions.

What is the purpose of the Ability to Repay standard?

The purpose of the Ability to Repay standard was to prevent lenders from employing loose lending criteria.

Who can use this defense against foreclosure?

Individuals who were not properly subjected to the ability-to-repay standard during the origination process may have a defense against foreclosure.

What does "ability to repay" mean?

It means that an individual's financial capacity should be able to make good on a debt.

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