Ability to Repay Rule

Question 1

What main two things does the Ability to Repay Rule do?

Answer 1

• The Rule made it illegal to approve a consumer for a loan based solely on his or her ability to make the initial payments calculated at the introductory rate.
• The Rule also provides that a creditor’s “reasonable and good faith determination” must be based on verified and documented information

Question 2

Based on the Ability to Repay Rule, how must creditors qualify borrowers?

Answer 2

they must qualify based on their ability to make payments when the interest rate on their loan resets.