124 STAT. 2143 PUBLIC LAW 111–203—JULY 21, 2010 by the same dwelling will be made to the same consumer, the creditor shall make a reasonable and good faith determina- tion, based on verified and documented information, that the consumer has a reasonable ability to repay the combined pay- ments of all loans on the same dwelling according to the terms of those loans and all applicable taxes, insurance (including mortgage guarantee insurance), and assessments. ‘‘(3) BASIS FOR DETERMINATION.—A determination under this subsection of a consumer’s ability to repay a residential mortgage loan shall include consideration of the consumer’s credit history, current income, expected income the consumer is reasonably assured of receiving, current obligations, debt- to-income ratio or the residual income the consumer will have after paying non-mortgage debt and mortgage-related obliga- tions, employment status, and other financial resources other than the consumer’s equity in the dwelling or real property that secures repayment of the loan. A creditor shall determine the ability of the consumer to repay using a payment schedule that fully amortizes the loan over the term of the loan. ‘‘(4) INCOME VERIFICATION.—A creditor making a residential mortgage loan shall verify amounts of income or assets that such creditor relies on to determine repayment ability, including expected income or assets, by reviewing the consumer’s Internal Revenue Service Form W–2, tax returns, payroll receipts, finan- cial institution records, or other third-party documents that provide reasonably reliable evidence of the consumer’s income or assets. In order to safeguard against fraudulent reporting, any consideration of a consumer’s income history in making a determination under this subsection shall include the verification of such income by the use of— ‘‘(A) Internal Revenue Service transcripts of tax returns; or ‘‘(B) a method that quickly and effectively verifies income documentation by a third party subject to rules prescribed by the Board. ‘‘(5) EXEMPTION.—With respect to loans made, guaranteed, or insured by Federal departments or agencies identified in subsection (b)(3)(B)(ii), such departments or agencies may exempt refinancings under a streamlined refinancing from this income verification requirement as long as the following condi- tions are met: ‘‘(A) The consumer is not 30 days or more past due on the prior existing residential mortgage loan. ‘‘(B) The refinancing does not increase the principal balance outstanding on the prior existing residential mort- gage loan, except to the extent of fees and charges allowed by the department or agency making, guaranteeing, or insuring the refinancing. ‘‘(C) Total points and fees (as defined in section 103(aa)(4), other than bona fide third party charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or mortgage originator) payable in connec- tion with the refinancing do not exceed 3 percent of the total new loan amount. ‘‘(D) The interest rate on the refinanced loan is lower than the interest rate of the original loan, unless the bor- rower is refinancing from an adjustable rate to a fixed-
