Ohio Admin. Code 109:4-3-19 - Determining a consumer's ability to repay a residential mortgage loan
(A) Division (B)(2)
of section 1345.031 of the Revised Code
prohibits a supplier from engaging in a pattern or practice of providing
residential mortgage loan transactions to consumers based predominantly on the
supplier's realization of the foreclosure or liquidation value of the
consumer's collateral without regard to the consumer's ability to repay the
loan in accordance with its terms, provided that the supplier may use any
reasonable method to determine a borrower's ability to repay the loan. Such
methods may include, but shall not be limited to, verification of the
borrower's current and expected income, current and expected cash flow, net
worth and other financial resources, current financial obligations, property
taxes and insurance, assessments on the property, employment status, credit
history, and other relevant factors such as debt-to-income ratio, credit score,
tax returns, pension statements, employment payment records, and statements or
information submitted by the consumer in their mortgage loan application,
provided that no supplier shall disregard facts and circumstances that indicate
that the financial or other information submitted by the consumer is inaccurate
or incomplete.
(B) "Pattern or
practice" is not established by isolated, random, or accidental acts, although
it can be established without the use of a statistical process. In addition, a
supplier may be acting pursuant to a written or unwritten policy and that
action alone could establish a pattern or practice of making mortgage loans in
violation of this rule.
(C) "The
supplier's realization of the foreclosure value of the consumer's collateral"
means the amount of money the supplier would reasonably be expected to recoup
from the proceeds of a court-ordered sale of the collateral through a
foreclosure action.
(D) "The
supplier's realization of the liquidation value of the consumer's collateral"
means the amount of money the supplier would reasonably be expected to recoup
from the proceeds of a sale of the collateral by the consumer.
(E) In addition to the factors listed in
paragraph (A) of this rule, and without limiting the applicability of division
(B)(2) of section 1345.031 of the Revised Code and
this rule to all residential mortgage loan products, for nontraditional
mortgage loan products and mortgage loan products with a discounted
introductory rate, great weight and due consideration shall be given to the
federal Interagency Guidance on Nontraditional Mortgage Product Risks, 71 Fed.
Reg. 58,609 (2006), as amended, in deciding whether or not the supplier used a
reasonable method of determining a borrower's ability to repay the loan.
(F) Neither division (B)(2) of
section 1345.031 of the Revised Code nor
this rule shall apply to reverse mortgages.
(G) All records, worksheets, or supporting
documentation used by the supplier in conducting an analysis of the consumer's
ability to repay the loan in accordance with its terms shall be maintained by
that supplier in the consumer's loan file for each residential mortgage loan
transaction for a period of at least two years from the date of closing, or as
required by other applicable state or federal law, whichever time period is
greater. The records required to be maintained by this rule may be retained in
an electronic format.
(H)
For purposes of paragraph (A) of this rule, a consumer
shall be considered to have an ability to repay if the lender is offering a
fully-amortizing fixed-rate refinance loan that has the same or lesser interest
rate as the consumer's current loan, the same or lesser principal amount as the
consumer's current loan, and does not extend the payoff date of the consumer's
current loan. If the consumer currently has an adjustable rate mortgage, the
interest rate of the consumer's current loan is the interest rate the consumer
is paying as of the date of the refinance.
Notes
Promulgated Under: 119.03
Statutory Authority: 1345.05
Rule Amplifies: 1345.031(B)(2)
Prior Effective Dates: 01/07/2007, 03/30/2012
Promulgated Under: 119.03
Statutory Authority: 1345.05
Rule Amplifies: 1345.031(B)(2)
Prior Effective Dates: 1/7/07
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