Loan Officer Practice Exam

What is the retention period for information used in the ability to repay analysis for a general qualified mortgage?

1. 2 years

2. 3 years

3. 4 years

4. 5 years

The correct answer is: 2 years

The retention period for information used in the ability to repay analysis for a general qualified mortgage is 3 years. This retention timeline aligns with regulatory requirements stipulated by the Consumer Financial Protection Bureau (CFPB). Maintaining documentation for this duration ensures that lenders have sufficient records to demonstrate compliance with the ability to repay rule. Typically, lenders must retain records that reflect the financial circumstances of borrowers to substantiate their lending practices. This documentation includes income verification, employment records, and any other relevant financial information. Holding onto these records for 3 years allows lenders to respond to any potential inquiries or audits regarding their lending decisions. Understanding the specific retention periods is crucial for compliance and best practices in lending. Furthermore, adherence to these guidelines protects the lender from potential liabilities that could arise from disputes regarding the borrower's ability to repay their mortgage.