Ohio Administrative Code › Title 109:4 - Consumer Protection › Chapter 109:4-3 - Deceptive Acts or Trade Practices in Connection with Consumer Transactions › Section 109:4-3-19 - Determining a consumer's ability to repay a residential mortgage loan

Current through all regulations passed and filed through July 1, 2024
(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.
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)(2)
Prior Effective Dates:
				1/7/07