21. If an Applicant does not consider a borrower’s ability to pay back a loan for any of its covered mortgage, consumer, or small business loan products, what information should it include in any explanation of how this practice serves a community develop

For Question PM14, an Applicant that does not include an assessment of a borrower’s ability to pay back a loan as part of its underwriting standards for each of its covered mortgage, consumer, and/or small business loan products may offer an explanation of how this practice serves a community development purpose. In addition to the community development purpose of the relevant loan product, examples of the types of information the Applicant could provide to support such an explanation include, but are not limited to:

• The rates, terms, and conditions of the relevant loan product(s).
• Any protections that mitigate potential harm to consumers of the loan product (e.g., those that support borrower affordability and successful repayment of principal, interest, and fees in a reasonable time frame rather than reborrowing, rollovers, or immediate collectability – including the absence of recourse – in the event of default).
• Any evidence that consumers are not harmed (e.g., the rate of successful repayments under the original rates, terms, and conditions of the product).
• Whether the credit risk of the loan product is retained by the Applicant or transferred (e.g., through sale of the loan product).

See also the Interagency Lending Principles for Offering Responsible Small-Dollar Loans, for additional information.