Question 28
Domain 2: Mortgage Loan Origination ActivitiesUnder the Ability-to-Repay rule, which of the following is a lender required to verify?
Correct answer: C
Explanation
Under the Ability-to-Repay rule, a lender must make a reasonable, good-faith determination that the consumer can repay the loan. The rule requires verification of the borrower’s "current or reasonably expected income or assets," along with other factors such as employment status and debt obligations.
Why each option is right or wrong
A. The borrower's marital status
B. The borrower's religious affiliation
C. The borrower's current income or assets
Regulation Z’s Ability-to-Repay requirement, 12 C.F.R. § 1026.43(c)(2), requires the creditor to verify the consumer’s income or assets using reasonably reliable third-party records, not mere stated figures. The rule specifically looks to the borrower’s current or reasonably expected income or assets as part of the repayment analysis, so the lender must verify present income or assets before making the loan.
D. The borrower's family medical history