Ohio Administrative Code › Title 109:4 - Consumer Protection › Chapter 109:4-3 - Deceptive Acts or Trade Practices in Connection with Consumer Transactions › Section 109:4-3-27 - No reasonable probability of payment

Current through all regulations passed and filed through July 1, 2024
(A) Pursuant to division (B)(14) of section
			  1345.031  of the Revised Code, no
			 supplier shall enter into a consumer transaction knowing there was no
			 reasonable probability of payment of the obligation by the consumer.
(B) The supplier's analysis of the reasonable
			 probability of payment of the obligation by the consumer 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 (other
			 than the consumer's equity in the dwelling that secures repayment of the loan),
			 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.
(C) In addition to the factors listed in
			 paragraph (B) of this rule, and without limiting the applicability of division
			 (B)(14) 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 whether there was a reasonable probability of
			 payment of the obligation by the consumer.
(D) Neither division (B)(14) of section
			  1345.031  of the Revised Code nor
			 this rule shall apply to reverse mortgages.
(E) All records, worksheets, or supporting
			 documentation used by the supplier in conducting an analysis of the reasonable
			 probability of payment of the obligation by the consumer 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.
(F)
								 For purposes of paragraph (A) of this rule, a consumer
			 shall be considered to have a reasonable probability of payment if the lender
			 is offering a fully-amortizing fixed-rate refinance loan that has the same or
			 lesser interest rate as the rate of 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.
Five Year Review (FYR) Dates:
				03/18/2016 and
				03/18/2021
Promulgated
				Under:  119.03
Statutory
				Authority:  1345.05
Rule
				Amplifies:  1345.031(B)(14)
Prior Effective Dates:
				1/7/07