Q: What happens if a consumer has trouble repaying a loan I originate under the general ATR rule? What happens if my organization violates the regulation?
A: Whether or not you complied with the ATR requirements is based on the information available during origination.
For example, you are not in violation of the ATR requirements if consumers cannot repay their mortgage loans solely because they experienced a sudden and unexpected job loss after you originated the loan. The ATR determination applies to information known at or before consummation.
However, if consumers have trouble repaying a loan you originate, they could claim that you failed to make a reasonable, good-faith determination of their ATR before you made the loan. If the consumers prove this claim in court, you could be liable for, among other things, up to three years of finance charges and fees the consumers paid as well as the consumers’ legal fees.
There is a three-year statute of limitations on ATR claims brought as affirmative cases. After three years, consumers can bring ATR claims only as setoff/recoupment claims in a defense to foreclosure.