When consumers apply for a mortgage, they often struggle to understand how much of a monthly payment they can afford to take on. They may assume that lenders and mortgage brokers will not make loans that people cannot afford. But in the years leading up to the financial crisis, lenders too often made mortgages that could not be paid back. Today the Consumer Financial Protection Bureau (CFPB) is finalizing the Ability-to-Repay rule that requires lenders to obtain and verify information to determine whether a consumer can afford to repay the mortgage. This is one of the signature new rules the CFPB is issuing to meet its goal to help restore trust in the mortgage market.

The Dodd-Frank Wall Street Reform and Consumer Protection Act recognized the need to mandate that lenders ensure consumers have the ability to pay back their mortgages. Under the law, responsibility for drafting the Ability-to-Repay rule initially fell to the Board of Governors of the Federal Reserve System.