While we here at CrunchedCredit recognize that many of our readers spend their days deep in commercial lending land, we also like to provide updates for our residential lending friends from time to time (and for our commercial lending friends who like to be able to impress their resi-friends at cocktail parties).

You may have seen our many previous OnPoints (see here, here and here) and blogs (see here and here) about the CFPB’s recently adopted Ability-to-Repay (ATR) and Qualified Mortgage (QM) rules. These rules represent two of the biggest changes to the residential mortgage securitization market to be born from the financial crisis and they will continue to shape the RMBS landscape for years to come.

In addition to our OnPoints and blogs on the ATR/QM rules, Dechert was engaged by the American Bankers Association to analyze the ATR and QM rules and prepare A Strategic Guide to the ATR/QM Rules, which was recently published by the ABA.  This guide will assist bank members in understanding the new risks in mortgage lending and implementing the ATR/QM rules.


Dechert also recently published its own methodology to identify and evaluate, among other things, new repayment risks and defenses, fair lending issues related to QM product choices, and the requirements and valuation haircuts that secondary market participants will impose on lenders as a result of the ATR rules. This methodology is called the ATR/QM Legal Stress Test, and is available here.

These publications, as well as a number of other suitable cocktail party topics Dechert guides to recent regulatory reforms related to mortgage finance reform and other related areas can be found on our website.

By: Ralph Mazzeo and Linda Ann Bartosch