Ability to Repay

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    I was reading over the small entity compliance guide for ability to repay and on page 14 at the top it says “Copies of Tax-return transcripts or payroll statements can be obtained directly from the consumer or from a service provider, and need not be obtained directly from a government agency or employer, as long as the records are reasonably reliable and specific to the individual consumer” I thought these records had to come directly from a third party? We will be attempting to make the Small Creditor Portfolio QM, so does this mean we can continue to get copies from our customers as long as they are reasonably reliable?


    Official Staff Interpretations to 12 CFR 1026.43(c)(4): 3. Tax-return transcript. Under § 1026.43(c)(4), a creditor may verify a consumer’s income using an Internal Revenue Service (IRS) tax-return transcript, which summarizes the information in a consumer’s filed tax return, another record that provides reasonably reliable evidence of the consumer’s income, or both. A creditor may obtain a copy of a tax-return transcript or a filed tax return directly from the consumer or from a service provider. A creditor need not obtain the copy directly from the IRS or other taxing authority. See comment 43(c)(3)-
    IMO, in order for a tax return provided by the consumer to be deemed reasonably reliable you would need evidence that the tax return provided was filed.

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