What is the time period for a consumer to bring a case against a lender for failing to meet the ATR requirement?

The time frame for a consumer to bring a case against a lender for failing to comply with the Ability to Repay (ATR) requirement is three years. This time limit aligns with various consumer protection laws designed to ensure that borrowers are protected when lenders do not properly assess their ability to repay a loan.

The ATR rule, part of the Dodd-Frank Act, was established to promote responsible lending practices. Under this rule, lenders must verify a borrower's income, assets, employment, credit history, and other financial obligations before extending a mortgage. If a lender fails to meet these requirements, consumers have a limited period of three years to assert their rights and seek remedies.

Choosing a time frame shorter than three years would not provide sufficient time for consumers to gather evidence and file a claim, potentially leading to an erosion of borrower protections. Likewise, a longer time frame could complicate the lending process and increase uncertainty for lenders, which could ultimately hinder them from providing loans. Therefore, the three-year period strikes a balance that serves both the interests of consumers and lenders effectively.