The CFPB on July 8 issued an interpretive rule to clarify that, when a borrower dies, the name of the borrower’s heir generally may be added to the mortgage without triggering the requirements of the CFPB’s Ability-to-Repay rule. Because an heir has already acquired the title to the home, the creditor is not required to determine the heir’s ability to repay the mortgage before formally recognizing the heir as the borrower, according to the interpretive rule.

     Nutter Notes: The CFPB said that the interpretive rule can also apply to effectively exempt other transfers from Ability-to-Repay rule requirements, including transfers to living trusts, transfers during life from parents to children, transfers resulting from divorce or legal separation, and other family-related transfers.