Finance
In South Dakota, the 'ability to repay' (ATR) rule under Dodd-Frank requires mortgage lenders to:
AOnly make loans to borrowers with perfect credit scores
BMake a reasonable, good-faith determination that the borrower has the ability to repay the loan before making it✓ Correct
CProvide all mortgages as fixed-rate loans only
DGuarantee that borrowers will not default
Explanation
The ATR rule (implemented under TILA/Regulation Z following the Dodd-Frank Act) requires lenders to make a reasonable, good-faith determination that the borrower can repay the loan based on income, assets, employment, credit history, and monthly debt obligations. Lenders who fail to comply face legal liability.
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