Ability To Repay

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Dictionary Says

Definition of 'Ability To Repay'

An individual's financial capacity to make good on a debt. Specifically, the phrase "ability to repay" was used in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act in Title XIV, the Mortgage Reform and Anti-Predatory Lending Act, to describe the requirement that mortgage originators substantiate that potential borrowers can afford the mortgage they are applying for. Originators are required to look at a borrower's total current income and existing debt, for example, to make sure that the existing debt plus the potential mortgage debt, property taxes and required insurance do not exceed a stated percentage of the borrower's income.
Investopedia Says

Investopedia explains 'Ability To Repay'

The purpose of this legislation and the "ability to repay" standard was to prevent lenders from employing the same loose lending criteria used during the housing bubble of the mid-2000s, in which many people were allowed to take out mortgages they couldn't really afford, then lost their homes to foreclosure a few years later. Under the new laws, individuals who are not properly subjected to the ability to repay standard during the origination process may have a defense against foreclosure.

Search results for

'Ability To Repay'

  • Reinvesting Capital Gains In Leveraged Portfolios

    http://www.investopedia.com/articles/stocks/07/reinvest_capital_gains.asp
    ... 1: Maintaining Constant Leverage Clearly in the previous example, the investor
    didn't manage his or her ability to repay interest or the potential losses. ...

  • Why Bad Bonds Get Good Ratings

    http://www.investopedia.com/articles/bonds/09/bonds-credit-ratings.asp
    ... Bonds. Credit ratings were developed to provide a way to assess a company's financial
    strength, and its likely ability to repay investors in a timely manner. ...

  • 6 Biggest Bond Risks

    http://www.investopedia.com/articles/bonds/08/bond-risks.asp
    ... that corporate bonds aren't guaranteed by the full faith and credit of the US
    government but are dependent on the corporation's ability to repay that debt. ...

  • An Introduction To Emerging Market Bonds

    http://www.investopedia.com/articles/bonds/09/emerging-market-bonds.asp
    ... point rise in a nation's credit default swaps are considered red flags with regard
    to a particular emerging market and its ability to repay debt to investors. ...

  • Should Parents Pay For College?

    http://www.investopedia.com/articles/pf/09/parents-pay-for-college.asp
    ... 2. Reduce Your Risk Even if you've realistically evaluated your child's borrowing
    needs, make sure you evaluate their ability to repay the money they borrow. ...

  • 5 Basic Things To Know About Bonds

    http://www.investopedia.com/articles/bonds/08/bond-market-basics.asp
    ... Standard & Poor's, Moody's and Fitch. These agencies rate a company's ability
    to repay its obligations. Ratings range from 'AAA' to 'Aaa ...

  • Sometimes It Pays To Borrow From Your 401(k)

    http://www.investopedia.com/articles/retirement/08/borrow-from-401k-loan.asp
    ... The more serious problem is to take 401(k) loans while working without
    having the intent or ability to repay them on schedule. In ...

  • 5 Reasons The US May See Another Debt Downgrade - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/1111/5-Reasons-The-U.S.-May-See-Another-Debt-Downgrade.aspx
    ... reason this time around, but it is clear that the ratings agencies see a direct
    link between a negative political climate and the nation's ability to repay debt ...

  • Bad Credit Puts The Brakes On Broker Career

    http://www.investopedia.com/articles/financialcareers/07/broker_credit.asp
    ... Also, look for any judgments that may have been satisfied or erroneous information
    about your ability to repay debts on a timely basis. ...

  • Higher Education - Bubble, Closed Society Or Free Market? ...

    http://financialedge.investopedia.com/financial-edge/0811/Higher-Education---Bubble-Closed-Society-Or-Free-Market.aspx
    ... Access to debt is ultimately predicated on the ability to repay it (even if banks
    and nations forget this periodically) and the recent rate of job and wage ...

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