Tag: ability to repay

3 articles tagged “ability to repay”

Underwriting DSCR Investor Loans with AI: The Business-Purpose Determination That Keeps the Loan Out of Ability-to-Repay

A DSCR loan lives or dies on one classification the underwriter makes before touching the ratio: is this credit primarily for a business purpose, and therefore outside Regulation Z's ability-to-repay rule, or not. Get it wrong and a loan you priced as exempt is now a consumer mortgage with no ATR determination behind it. How we build an agent that computes the coverage ratio and, more important, documents the business-purpose call under 12 CFR 1026.3(a) so an investor and an examiner can both follow it.

Oct 20, 20266 min read

Underwriting the Bank-Statement Loan With AI: Deposit Analysis That Is Auditable, and the Ability-to-Repay Rule Non-QM Never Escapes

Bank-statement loans qualify a self-employed borrower on deposits instead of tax returns, which makes the income calculation the whole underwrite and the easiest number to get wrong. These are non-QM loans, and non-QM does not mean no ability-to-repay: Reg Z 1026.43(c) still requires a reasonable, good-faith determination on all eight factors. Here is how an AI agent classifies twelve to twenty-four months of deposits, the transfer that double-counted income until we caught it in shadow mode, and the reasonableness call the underwriter still signs.

Sep 23, 20264 min read

Ability-to-Repay Under Reg Z 1026.43 in AI-Assisted Underwriting: The Eight Factors, the Revised General QM Price Test, and the Documentation Boundary the Agent Cannot Cross Alone

The ATR/QM rule at Reg Z 1026.43 has been through three rounds of major revision since 2013, and the current General QM definition anchors on an APR-to-APOR price threshold rather than the old 43-percent DTI cap. AI underwriting participates in ATR analysis by producing the eight-factor computation, but the documentation of the third-party verification the rule requires and the qualification decision the rule allocates to the creditor are places the agent's autonomy stops. Where AI actually sits in the ATR workflow and what the audit file has to contain.

Jul 3, 202614 min read

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