With the comment period on HUD’s proposed rule to define “Qualified Mortgage” coming to a close on October 30th, the industry is reacting to the rule and the Consumer Financial Protect Bureau’s (CFPB) counterpart finalized earlier this year. The rules are a response to requirements in the Dodd-Frank Wall Street Reform and Consumer Project Act that the definition of qualified mortgage be revised to meet Ability-to-Pay criteria in the Truth-in-Lending Act. Both rules are scheduled to go into effect in January, despite requests by some industry members to delay implementation. There is uncertainty about the impact of the CFPB rule on low income borrowers who may end up paying more for unqualified loans if their debt-to-income ratio exceeds 43% or results in fees that exceed the 3% cap for qualified loans. The HUD proposed rule also contains the 3% limit on upfront points and fees but does not include the CFPB debt-to-income requirement. Instead, HUD will rely on existing underwriting standards which require lenders to assess a borrower’s ability to pay.