A decade ago, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act, ushering in the Ability-to-Repay/Qualified Mortgage era of mortgage lending. The ATR rule, as defined by the Consumer Financial Protection Bureau, requires a reasonable and good faith determination by mortgage lenders that a borrower is able to pay back the loan.
But what began as a way to ensure the financial crisis never happens again has instead created a new set of challenges for would-be homebuyers, especially when it comes to homeownership opportunities for minorities.
Dodd-Frank was born out of the 2008 financial crisis and was a landmark piece of legislation to try and prevent the kind of anything-goes lending that characterized that time period. Dodd-Frank also created the CFPB, which is charged with protecting borrowers from financial institutions.
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