St Casimirs Mortgage Minute

CFPB Clarifies Questions on Mortgage Successors


The Consumer Financial Protection Bureau yesterday issued an interpretive rule clarifying that a borrower’s heir may be added to a mortgage without triggering the Ability-to-Repay rule. The clarification came in response to industry concerns that creditors may be obligated to determine the ability to repay of a successor-in-interest assuming a deceased borrower’s mortgage.

“There can be significant consequences for a successor that is not able to become an obligor on a mortgage,” the bureau said, noting that the interpretation will allow successors to seek a loan modification if necessary to keep the home. In addition to inheritances, the rule also applies to other situations, including transfers to living trusts, transfers of title from parents to children and transfers resulting from divorces.

---ABA Daily Newsbytes