The terms Ability to Repay and Qualified Mortgage were defined in regulations implemented by which agency?

The terms Ability to Repay and Qualified Mortgage were defined in regulations implemented by the Consumer Financial Protection Bureau (CFPB). The CFPB was established after the financial crisis to enhance consumer protections in the financial marketplace, particularly in relation to mortgage lending.

The Ability to Repay rule ensures that lenders assess a borrower's capacity to repay a loan before extending credit, requiring them to evaluate various financial factors such as income, employment status, and credit history. This was a crucial development aimed at preventing the type of irresponsible lending that contributed to the housing market crash.

The Qualified Mortgage designation provides a safe harbor for lenders, ensuring that loans meeting specific criteria are presumed to comply with the Ability to Repay requirement. This helps mitigate the risk of litigation for lenders while also promoting responsible lending practices that protect consumers.

In contrast, the Office of Housing and Urban Development (HUD), the Federal Housing Administration (FHA), and the Department of Housing and Urban Development (DHUD) focus on various aspects of housing policy, but it was the CFPB that specifically addressed these regulations in the context of consumer finance and mortgage lending reform.