Pepper attorneys John V. Levonick, Scott D. Samlin and Avinoam D. Erdfarb were quoted in the April 22, 2019 Debtwire article, "Lender Beats First Qualified Mortgage-Ability to Repay Rule Legal Challenge." The article references their April 15, 2019 Client Alert, "Federal Court Clarifies Banks' Obligations Under Appendix Q."
An Ohio bank facing a first-of-its-kind challenge to its diligence in meeting the Ability-to-Repay Rule has won the case, providing clarity to mortgage lenders wondering how courts would interpret the regulatory guidance, according to a court filing and a Pepper Hamilton lawyer.
The decision was a "landmark" for lenders who have been uncertain as to what standards they must meet under the QM Appendix Q, which describes standards for determining borrower debt and income, according to a client note by lawyers at Pepper Hamilton last week. It was the first time a federal court ruled on the veracity of the standards for the purposes of relying on specific documentation, the lawyers wrote.
"The decision is promising for all lenders in other jurisdictions," said the lawyers, led by special counsel John Levonick.
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