Opinion

NELSON v. ACRE MORTGAGE & FINANCIAL, INC.

Court: District Court, M.D. Pennsylvania
Filed: Sep 25, 2020
Cited by: 0 cases
Authority: More cited than 29.1%

noting that it is not proper, on summary judgment, to consider evidence that is not admissible at trial

How later courts described this case

noting that it is not proper, on summary judgment, to consider evidence that is not admissible at trial
“[T]he unverified representations of counsel in a brief are not a proper part of the record for consideration on a motion for summary judgment.”

Written by the judges who cited it.

The opinion

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF PENNSYLVANIA

BRIGITTE NELSON,

Plaintiff, CIVIL ACTION NO. 3:17-cv-01050

v. (SAPORITO, M.J.)

ACRE MORTGAGE & FINANCIAL,

INC., et al.,

Defendants.

MEMORANDUM

This federal civil action commenced on November 9, 2016, when the

plaintiff, appearing through counsel, filed her original complaint in the

United States District Court for the Eastern District of Pennsylvania.

(Doc. 1.) The original one-count complaint asserted a federal claim for

violation of the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq.,

and Regulation Z, 12 C.F.R. part 1026,1 the latter of which implemented

TILA. The original complaint named five defendants, including Acre

1 The original and amended complaints cite to Regulation Z, 12

C.F.R. part 226, promulgated by the Board of Governors of the Federal

Reserve System (the “Board”). But general rulemaking authority with

respect to TILA was transferred from the Board to the Consumer Finance

Protection Bureau (“CFPB”) in 2011. The CFPB then issued its own

Regulation Z, 12 C.F.R. part 1026, which was substantially identical to

the Board’s Regulation Z.

Mortgage & Financial, Inc. (“Acre Mortgage”) and Classic Quality Homes

(“Classic”).

On January 30, 2017, the plaintiff filed her counseled amended

complaint. (Doc. 2.) The seven-count amended complaint omitted three of

the original defendants, effectively dismissing them from the action. Only

Acre Mortgage and Classic remained as defendants. Count One of the

amended complaint asserts federal claims for violation of TILA,

Regulation Z, the Real Estate Settlement Procedures Act (“RESPA”), 12

U.S.C. § 2601 et seq., and Regulation X, 24 C.F.R. part 1024,2 the last of

which implemented RESPA. These federal claims in Count One are

brought against Acre Mortgage only. The remaining six counts of the

amended complaint assert related state-law claims against Acre

Mortgage and Classic.

Defendant Classic moved to dismiss or transfer the case for

improper venue, arguing that the property at issue was located, and all

2 The amended complaint cites to Regulation X, 24 C.F.R. part 3500,

promulgated by the Department of Housing and Urban Development

(“HUD”). But all rulemaking authority with respect to RESPA was

transferred from HUD to the CFPB in 2011. The CFPB then issued its

own Regulation X, 12 C.F.R. part 1024, which was substantially identical

to HUD’s Regulation X.

relevant events or omissions occurred, in Monroe County, Pennsylvania,

which is located within this judicial district, the Middle District of

Pennsylvania. (Doc. 11.) On May 2, 2017, the motion was granted, and

the case was transferred to this Court. (Doc. 15.)

On March 13, 2019, after discovery was completed but before the

dispositive motion deadline, we granted a motion to withdraw filed by

plaintiff’s counsel. (Doc. 60; see also Doc. 52.) On August 16, 2019, after

allowing the plaintiff several months to secure new legal representation,

we granted the plaintiff’s motion to proceed pro se in this matter. (Doc.

66; see also Doc. 65.)

Acre Mortgage has moved for summary judgment on all claims

against it, pursuant to Rule 56 of the Federal Rules of Civil Procedure.

(Doc. 70.) The motion is fully briefed and ripe for decision. (Doc. 71; Doc.

71; Doc. 72; Doc. 76; Doc. 77; Doc. 78; Doc. 79.) Classic has not joined the

motion, nor has it filed a dispositive motion of its own.

I. BACKGROUND

The plaintiff, Brigitte Nelson, is a retired, disabled military

veteran. On November 9, 2015, she purchased a home from the non-

moving defendant, Classic. In the process of securing financing for the

home purchase, she grew dissatisfied with another lender and applied for

a mortgage with the moving defendant, Acre Mortgage, to which she was

referred by Classic. On or before the closing date, Acre Mortgage provided

her with: (1) a Truth-in-Lending Disclosure Statement (Doc. 72-10),

dated September 24, 2015; (2) an initial Good Faith Estimate (Doc. 72-

11), also dated September 24, 2015; (3) a revised Good Faith Estimate

(Doc. 72-12), dated October 28, 2015; (4) a Servicing Disclosure

Statement (Doc. 72-13, at 2), dated September 24, 2015; (5) a Notice of

Servicing Transfer (Doc. 72-13, at 3), dated November 9, 2015; and (6) a

Settlement Statement (HUD-1) (Doc. 72-14), dated November 9, 2015.

One year after closing, she filed the instant lawsuit, claiming that

Acre Mortgage violated the provisions of TILA and its implementing

regulations because: (a) the lender provided disclosures on the wrong

forms; (b) the lender failed to disclose local property taxes for which she

would be liable; (c) the lender failed to correctly disclose the estimated

monthly payments for which she would be responsible; and (d) the lender

failed to make a reasonable and good faith determination of her ability to

repay the loan. In addition, she claims that Acre Mortgage violated the

provisions of RESPA and its implementing regulations because the

lender failed to provide notice of the transfer of its servicing rights to a

non-party entity, The Money Source. For relief, Nelson seeks damages

and rescission of her mortgage.

Nelson also asserts state-law claims against Acre Mortgage and

Classic, seeking damages and rescission of the home sale agreement.

II. LEGAL STANDARD

Under Rule 56 of the Federal Rules of Civil Procedure, summary

judgment should be granted only if “there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a). A fact is “material” only if it might affect the

outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986). A dispute of material fact is “genuine” only if the evidence “is such

that a reasonable jury could return a verdict for the non-moving party.”

Anderson, 477 U.S. at 248. In deciding a summary judgment motion, all

inferences “should be drawn in the light most favorable to the non-

moving party, and where the non-moving party’s evidence contradicts the

movant’s, then the non-movant’s must be taken as true.” Pastore v. Bell

Tel. Co. of Pa., 24 F.3d 508, 512 (3d Cir. 1994).

The party seeking summary judgment “bears the initial

responsibility of informing the district court of the basis for its motion,”

and demonstrating the absence of a genuine dispute of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the movant makes

such a showing, the non-movant must set forth specific facts, supported

by the record, demonstrating that “the evidence presents a sufficient

disagreement to require submission to the jury.” Anderson, 477 U.S. at

251–52. Thus, in evaluating a motion for summary judgment, the Court

must first determine if the moving party has made a prima facie showing

that it is entitled to summary judgment. See Fed. R. Civ. P. 56(a); Celotex,

477 U.S. at 331. Only once that prima facie showing has been made does

the burden shift to the nonmoving party to demonstrate the existence of

a genuine dispute of material fact. See Fed. R. Civ. P. 56(a); Celotex, 477

U.S. at 331.

Both parties may cite to “particular parts of materials in the record,

including depositions, documents, electronically stored information,

affidavits or declarations, stipulations (including those made for the

purposes of the motion only), admissions, interrogatory answers or other

materials.” Fed. R. Civ. P. 56(c)(1)(A). “An affidavit or declaration used

to support or oppose a motion must be made on personal knowledge, set

out facts that would be admissible in evidence, and show that the affiant

or declarant is competent to testify on the matters stated.” Fed. R. Civ.

P. 56(c)(4). “Although evidence may be considered in a form which is

inadmissible at trial, the content of the evidence must be capable of

admission at trial.” Bender v. Norfolk S. Corp., 994 F. Supp. 2d 593, 599

(M.D. Pa. 2014); see also Pamintuan v. Nanticoke Mem’l Hosp., 192 F.3d

378, 387 n.13 (3d Cir. 1999) (noting that it is not proper, on summary

judgment, to consider evidence that is not admissible at trial).

III. UNDISPUTED MATERIAL FACTS3

The plaintiff, Brigitte Nelson, is a veteran of the United States

3 Because we ultimately decline to retain jurisdiction over the

plaintiff’s state-law claims, we limit our recitation of the undisputed

material facts to those concerning the plaintiff’s federal claims only.

In her response to Acre Mortgage’s statement of undisputed

material facts, Nelson qualifies many—if not most—of the defendant’s

fact statements without specifically admitting or denying them. For the

most part, these qualifications do not directly dispute the facts as stated

by the defendant, but simply restate them to her own satisfaction. In the

few instances where Nelson has contradicted material facts as stated by

Acre Mortgage, we have looked to the evidence cited by each party in

support of their respective statements. See generally the previous section

of this memorandum opinion (citing Fed. R. Civ. P. 56(a), (c), and

Anderson, 477 U.S. at 251–52). We note that, in addition to particular

documentary exhibits, Nelson has often cited to sections of her brief in

opposition to summary judgment to support her counter-statements of

fact, but “assertions in briefs are not competent evidence unless agreed

to by the adverse parties.” Dabone v. Thornburgh, 734 F. Supp. 195, 199

Army who retired in 2013 after 32 years of honorable military service.

Upon retirement, she was classified as a 100-percent disabled veteran.

Under a state program, a veteran who is classified as 100-percent

disabled may be exempted from paying local property taxes, so long as

his or her income falls below a statutory maximum. Applications for this

exemption are handled by a county veteran affairs office, but whether the

individual veteran satisfies the income-eligibility criteria is determined

by officials with the state veterans commission.

In July 2015, Nelson contacted Classic after seeing an

advertisement on television for homes to purchase in Monroe County,

Pennsylvania. On July 3, 2015, Nelson entered into a contract with

Classic to purchase a newly constructed home. After initially contracting

to purchase that newly constructed home, she subsequently contracted

(E.D. Pa. 1990); see also Braden v. Univ. of Pittsburgh, 477 F.2d 1, 6 (3d

Cir. 1973) (“We have repeatedly stated that statements in briefs unless

specifically admitted by the adversary side cannot be treated as record

evidence.”); Prince v. Sun Shipbuilding & Dry Dock Corp., 86 F.R.D. 106,

107 (E.D. Pa. 1980) (“[T]he unverified representations of counsel in a

brief are not a proper part of the record for consideration on a motion for

summary judgment.”). To defeat a motion for summary judgment, the

nonmoving party must raise more than “some metaphysical doubt as to

the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,

475 U.S. 574, 586 (1986).

to instead purchase an existing home located at 124 Milestone Drive. The

124 Milestone Drive property had been purchased by Classic out of

foreclosure and had been, or was to be, renovated.

After she had initially contracted to purchase the newly constructed

home from Classic, Nelson had begun the mortgage loan application

process with Navy Federal Credit Union. In the course of this process,

Nelson became dissatisfied with Navy Federal Credit Union and applied

for a mortgage loan from Acre Mortgage instead, to which she had been

referred by Classic. On September 24, 2015, she initiated her application

with Acre Mortgage when she submitted her financial information to an

Acre Mortgage loan officer, Angie Maxwell, over the phone.4 Nelson

4 In her counter-statement and in her deposition testimony, Nelson

appears to take the position that her application for a mortgage loan

commenced later, when she first received and signed a written loan

application form during an in-person meeting at the offices of Acre

Mortgage in October. Based on this, she suggests that her application

was improperly backdated to September 24, 2015. But for the purposes

of Regulation Z (and TILA), “an application consists of the submission of

the consumer’s name, the consumer’s income, the consumer’s social

security number to obtain a credit a report, the property address, an

estimate of the value of the property, and the mortgage loan amount

sought.” 12 C.F.R. § 1026.2(a)(3)(ii). “[O]nce a creditor has received [this]

information, it has an application for purposes of Regulation Z. A

submission may be in written or electronic format and includes a written

record of an oral application.” 12 C.F.R. pt. 1026, supp. I, pt. 1, cmt.

2(a)(3)–1 (official interpretation of 12 C.F.R. § 1026.2(a)(3)). The evidence

disclosed—and subsequently provided proof of—her income in connection

with her mortgage application. She disclosed a monthly income of

$7,086.83, including $1,510 in social security disability benefits,

$2,906.83 in non-educational veterans benefits, and $2,670 in military

pension benefits. She did not disclose any other income.5 Later, at closing,

Nelson signed the loan application form below a statement

acknowledging that this income information was true and correct.

Before closing, Nelson received and signed a Truth-in-Lending

Disclosure Statement, dated September 24, 2015.6 (Doc. 72-10.) The

disclosure statement disclosed the estimated annual percentage rate of

her prospective mortgage loan, the estimated total amount of her

of record indicates that, notwithstanding any written forms, Nelson’s

loan application with Acre Mortgage was initiated on September 24,

2015, when she provided Maxwell with the requisite financial

information over the phone. (Doc. 72-1, at 11; see also Doc. 72-9, at 7.)

Nelson fails to cite any evidence in the record to dispute this date.

5 In her counter-statement, Nelson avers that she disclosed her

educational veterans benefits as well. But she cites no competent record

evidence in support. She cites only to a subsequent July 2016 email from

a federal official with the U.S. Department of Veterans Affairs to an Acre

Mortgage official, which does not address any disclosures made by

Nelson.

6 In her counter-statement, Nelson avers that she received and

signed the Truth-in-Lending Disclosure Statement during an in-person

meeting at the offices of Acre Mortgage in October. She does not dispute

that it was received before the closing.

payments, the estimated amount financed, the estimated finance charge,

and her total estimated monthly payment, which included principal,

interest, and estimated taxes and insurance. The amount for estimated

taxes and insurance was $75, which covered insurance only. It did not

include any property taxes due to Nelson’s anticipated exemption as a

disabled veteran.

Before closing, Nelson received an initial Good Faith Estimate,

dated September 24, 2015. (Doc. 72-11.) The initial Good Faith Estimate

included a line-item for an initial deposit of $225 into an escrow account

to pay future recurring charges, including all property taxes and all

insurance. (Id.) The form explicitly advised that the escrow account “may

or may not cover all of these charges.” (Id.) Nelson also received a revised

Good Faith Estimate, dated October 28, 2015. (Doc. 72-12) The revised

Good Faith Estimate included a line-item for an initial deposit of $225

into an escrow account to pay future recurring charges, including all

property taxes and all insurance. (Id.) The form explicitly advised that

the escrow account “may or may not cover all of these charges.” (Id.) The

escrow account deposits reflected on these forms did not include any

property taxes due to Nelson’s anticipated exemption as a disabled

veteran.

In conducting its due diligence prior to closing, Acre Mortgage

consulted Monroe County officials to confirm that property taxes could

be excluded. Based on the income information provided by Nelson to Acre

Mortgage, county officials informed Acre Mortgage that Nelson should be

eligible for the property tax exemption. Nelson had previously spoken

with county officials about the tax exemption as well.7

Officials at Acre Mortgage remained uncertain about the exclusion

of property taxes, and they held a meeting one or two days before the

closing. Following the meeting, Acre Mortgage once again contacted

county officials to confirm Nelson’s eligibility for the tax exemption. The

county informed Acre Mortgage that, based on the income information

submitted to the lender, she was eligible, but the exemption could not be

granted formally until Nelson had title to the property. Based on these

multiple consultations with county officials and its own investigation in

to the requirements for the property tax exemption, Acre Mortgage

concluded that Nelson was eligible and property taxes could be excluded

7 Nelson disputes these fact statements by the defendant, but she

fails to cite any competent evidence. See supra note 3.

from the loan disclosures and closing documents.8

On or before the closing date, Nelson received a Settlement

Statement, commonly known as a “HUD-1” statement. (Doc. 72-14.) The

HUD-1 indicated that $14,539 in school district property taxes for 2015–

2016 had been “paid outside closing” by the seller, and thus it did not

include an adjustment to charge a prorated portion of this property tax

payment to the buyer. (Id.) The HUD-1 indicated that Nelson’s loan

terms included a monthly payment of $1,377.43 in principal and interest,

plus a monthly escrow payment of $103.25 to cover homeowner’s

insurance, bringing her total monthly payment to $1,480.68. (Id.) An

unchecked box on the HUD-1 indicated that the escrow payment did not

include property taxes. (Id.)9

Before the closing date, Nelson received a Servicing Disclosure

Statement from Acre Mortgage advising her that the lender did not

service mortgage loans of the type for which she applied, and that the

lender intended to assign, sell, or transfer the servicing of her mortgage

loan before the first payment was due. (Doc. 72-13, at 2.) Nelson signed

8 See supra notes 3, 5, 7.

9 See supra notes 3, 7.

the document to acknowledge its receipt. (Id.) Her signature was dated

September 24, 2015.10 (Id.) At the closing, Nelson received a Notice of

Servicing Transfer informing her that, instead of Acre Mortgage, her loan

would be serviced by The Money Source for all payments beginning

January 1, 2016. (Doc. 72-13, at 3.) This notice included the effective date

of the transfer of servicing, the name, address and phone number of both

Acre Mortgage and The Money Source, the date when Acre Mortgage

would cease to accept payments and The Money Source would begin to

accept them, and a statement that the transfer of servicing did not affect

any term or condition of the mortgage loan other than who would be

collecting the loan payments. (Id.)11

In December 2015, after the closing, Nelson applied for the disabled

veteran property tax exemption. In February 2016, she was notified by

the state veterans commission that she was not eligible for the property

tax exemption for 2015 or 2016 because she received educational benefits

that substantially increased her income for the purposes of this program,

10 At her deposition, Nelson acknowledged that the signature was

hers, but testified that the date was written in by someone else. She did

not recall having read the document, but she does not dispute having

received it on or before the closing date.

11 See supra notes 3, 7.

exceeding the statutory maximum income for eligibility.12 Nelson

requested reconsideration of this decision, and her application was

denied on reconsideration by the state veterans commission in March

2016.

Nelson completed a graduate degree program in May 2016 and no

longer received educational veterans benefits thereafter. Without the

educational veterans benefits, her income fell below the statutory

maximum. She reapplied in 2017 and was granted tax-exempt status as

a 100-percent disabled veteran effective beginning in 2018.

IV. DISCUSSION

The plaintiff claims that Acre Mortgage violated the provisions of

TILA, RESPA, and their respective implementing regulations. She

claims that Acre Mortgage violated TILA and Regulation Z when it

provided disclosures on the wrong forms, failed to disclose local property

taxes for which she ultimately would be liable and consequently failed to

correctly disclose the estimated monthly payments for which she would

be responsible, and failed to make a reasonable and good faith

12 The value of these educational veterans benefits appears to have

been reported directly to the state veterans commission by the U.S.

Department of Veterans Affairs.

determination of her ability to repay the loan. She claims that Acre

Mortgage violated RESPA and Regulation X by failing to provide proper

notice of the transfer of its servicing rights to The Money Store.

A. TILA Claims

“Congress enacted the Truth in Lending Act . . . to ‘assure a

meaningful disclosure of credit terms so that the consumer will be able

to compare more readily the various credit terms available to him and

avoid the uninformed use of credit.’” Krieger v. Bank of America, N.A.,

890 F.3d 429, 432 (3d Cir. 2018). “Historically, Regulation Z of the Board

of Governors of the Federal Reserve System (Board), 12 CFR part 226,

has implemented TILA.” Truth in Lending (Regulation Z), 76 Fed. Reg.

79,768, 79,768 (Dec. 22, 2011). “[T]he Dodd-Frank Act transferred

rulemaking authority for TILA to the [Consumer Finance Protection

Board (CFPB)], effective July 21, 2011.” Id. The CFPB subsequently

promulgated implementing regulations, also known as Regulation Z,

codified at 12 C.F.R. part 1026. The CFPB has also issued official

interpretations of these regulations to facilitate the implementation of

TILA. See 12 C.F.R. pt. 1026, supp. I; Curtis v. Propel Prop. Tax Funding,

LLC, 915 F.3d 234, 242 (4th Cir. 2019).

The Dodd-Frank Act also directed the CFPB “to integrate the

mortgage loan disclosures under TILA and RESPA.” Integrated

Mortgage Disclosures Under the Real Estate Settlement Procedures Act

(Regulation X) and the Truth In Lending Act (Regulation Z), 78 Fed. Reg.

79,730, 79,730 (Dec. 31, 2013). Previously, mortgage lenders were

required to provide multiple disclosure forms developed by two different

agencies charged with implementing TILA and RESPA. Id. Consumers

often found the forms confusing, and lenders and settlement agencies

found them burdensome to provide and explain. Id. In discharging this

statutory mandate, the CFPB promulgated revisions to Regulation Z,

mandating a new set of integrated disclosure forms for mortgage loans

for which the lender or mortgage broker receives an application on or

after October 3, 2015—the effective date of these revisions. 12 C.F.R. pt.

1026, supp. I, pt. 1, cmt. 1(d)(5)–1 (official interpretation of 12 C.F.R.

§ 1026.1(d)(5)).

Nelson first claims that Acre Mortgage violated TILA and

Regulation Z because it provided her with the old disclosure forms, rather

than the new integrated forms. But, as noted above, the moving

defendant has adduced evidence that her application was received by

Acre Mortgage on September 24, 2015, and Nelson has failed to cite any

competent evidence to the contrary. On the record before us, we find no

genuine dispute of material fact with respect to the application date, and

thus Acre Mortgage did not use the wrong disclosure forms.

Nelson next claims that Acre Mortgage failed to disclose local

property taxes for which she ultimately would be liable, and it

consequently failed to correctly disclose the estimated monthly payments

for which she would be responsible. Prior to October 3, 2015, Regulation

Z required a mortgage lender to “make good faith estimates of the

disclosures required by § 1026.18” following receipt of a consumer’s

written application. 12 C.F.R. § 1026.19(a)(1)(i) (2011) (amended eff. Oct.

3, 2015). These disclosures included “an estimate of the amount of taxes

and insurance, including any mortgage insurance, payable with each

periodic payment.” 12 C.F.R. § 1026.18(s)(3)(i)(C) (2011) (amended eff.

Oct. 3, 2015). Regulation Z further provided that, “[i]f any information

necessary for an accurate disclosure is unknown to the creditor, the

creditor shall make the disclosure based on the best information

reasonably available at the time the disclosure is provided to the

consumer, and shall state clearly that the disclosure is an estimate.” 12

C.F.R. § 1026.17(c)(2)(i).13 The CFPB’s official interpretation at the time

provided that:

Disclosures may be estimated when the exact

information is unknown at the time disclosures are

made. Information is unknown if it is not reasonably

available to the creditor at the time the disclosures are

made. The “reasonably available” standard requires

that the creditor, acting in good faith, exercise due

diligence in obtaining information. . . . The creditor

normally may rely on the representations of other

parties in obtaining information.

12 C.F.R. pt. 1026, supp. I, pt. 2, cmt. 17(c)(2)(i)–1 (2014) (amended eff.

Oct. 3, 2015) (official interpretation of 12 C.F.R. § 1026.17(c)(2)(i) (2014)

(amended eff. Oct. 3, 2015)).

As noted above, the moving defendant has adduced evidence that

Nelson failed to disclose her educational veterans benefits as income

when she applied for a mortgage loan with Acre Mortgage, and Nelson

has failed to cite any competent evidence to the contrary. The evidence

adduced by the moving defendant further indicates that Acre Mortgage

relied on the representations of both Nelson and county officials with

respect to her eligibility for the disabled veterans property tax exemption,

13 We note that, although § 1026.17 has been amended, the text of

this subparagraph, § 1026.17(c), was not.

and that Acre Mortgage acted in good faith and exercised due diligence

in seeking to determine whether property taxes could be excluded from

her estimated monthly payment and other mortgage loan disclosures.

The moving defendant has adduced evidence that its TILA disclosures

were based on the best information reasonably available at the time the

disclosures were provided to Nelson, and the disclosures clearly stated

that they were estimates. On the record before us, we find that no

reasonable jury could return a verdict in favor of the plaintiff with respect

to whether Acre Mortgage adequately disclosed Nelson’s local property

tax obligations or her estimated monthly payments under the mortgage

loan.

Finally, Nelson claims that Acre Mortgage failed to make a

reasonable and good faith determination of her ability to repay the

mortgage loan. Regulation Z provides that “[a] creditor shall not make a

loan that is a covered transaction unless the creditor makes a reasonable

and good faith determination at or before consummation that the

consumer will have a reasonable ability to repay the loan according to its

terms.” 12 C.F.R. § 1026.43(c)(1). But, as the official interpretation notes,

the rule and commentary do not specify how much

income is needed to support a particular level of debt or

how credit history should be weighed against other

factors. So long as creditors consider the factors set forth

in § 1026.43(c)(2) according to the requirements of

§ 1026.43(c), creditors are permitted to develop their

own underwriting standards and make changes to those

standards over time in response to empirical

information and changing economic and other

conditions. Whether a particular ability-to-repay

determination is reasonable and in good faith will

depend not only on the underwriting standards adopted

by the creditor, but on the facts and circumstances of an

individual extension of credit and how a creditor’s

underwriting standards were applied to those facts and

circumstances.

12 C.F.R. pt. 1026, supp. I, pt. 3, cmt. 43(c)(1)–1 (official interpretation of

12 C.F.R. § 1026.43(c)(1)). Moreover, “[a] change in the consumer’s

circumstances after consummation . . . that cannot be reasonably

anticipated from the consumer’s application or the records used to

determine repayment ability is not relevant to determining a creditor’s

compliance with the rule.” Id. cmt. 43(c)(1)–2 (emphasis added).

In performing this ability-to-repay evaluation, the lender is

required to consider “[t]he consumer’s current or reasonably expected

income or assets,” id. § 1026.43(c)(2)(i), and to “verify the amounts of

income or assets that the creditor relies on . . . using third-party records

that provide reasonably reliable evidence of the consumer’s income or

assets,” id. § 1026.43(c)(4). The lender is also required to consider “[t]he

consumer’s monthly payment for mortgage-related obligations,” 12

C.F.R. § 1043(c)(2)(v), which includes expected property taxes, 12 C.F.R.

pt. 1026, supp. I, pt. 3, cmt. 43(c)(2)(v)–1 (official interpretation of 12

C.F.R. § 1026.43(c)(2)(v)).

Estimates of mortgage-related obligations should be

based upon information that is known to the creditor at

the time the creditor underwrites the mortgage

obligation. Information is known if it is reasonably

available to the creditor at the time of underwriting the

loan. Creditors may rely on guidance provided under

comment 17(c)(2)(i)–1 in determining if information is

reasonably available.

Id. cmt. 43(c)(2)(v)–5.