Build the ability-to-repay file for a dwelling-secured consumer loan
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- List the income, employment, debts, mortgage-related obligations and third-party records on the file against the repayment factors. Do not mark the loan a qualified mortgage.
- What the lawyer must review
- For a covered transaction, 12 C.F.R. § 1026.43(c)(1) says the creditor must make a reasonable and good-faith determination, at or before consummation, that the consumer will have a reasonable ability to repay the loan according to its terms. Paragraph (c)(2) requires consideration of current or reasonably expected income or assets other than the value of the dwelling, employment status if employment income is used, the monthly payment on the loan, simultaneous loans the creditor knows or has reason to know about, mortgage-related obligations, current debts, alimony and child support, monthly debt-to-income ratio or residual income, and credit history. Verification uses reasonably reliable third-party records. The general payment rule uses the fully indexed rate or any introductory rate, whichever is greater, and monthly, fully amortising payments that are substantially equal. Under § 1026.43(e)(1)(i), there is a safe harbour if the loan is a qualified mortgage defined in (e)(2), (e)(4), (e)(5), (e)(6), or (f) and is not a higher-priced covered transaction, or if it is a qualified mortgage defined in (e)(7) whether or not it is higher-priced. Under (e)(1)(ii), a qualified mortgage defined in (e)(2), (e)(4), (e)(5), (e)(6), or (f) that is a higher-priced covered transaction is presumed to comply, and that presumption can be rebutted. You decide which paragraph applies. The tool does not.
- Written for / version
- United States versionUS
Who does what
| Role | What they do |
|---|---|
| Assistance | Consider narrowly defined preparation support after confirming the tool’s capability and permitted scope. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Trace every relied-on figure to its source, confirm dates and assumptions, and independently recalculate totals or derived amounts.
- Verify the applicable jurisdiction and the version of each relevant law, rule or instrument in force at the material time.
- Confirm the output against the client’s instructions and the complete relevant source material, including omissions or contradictions.
- Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use.