What type of loans does the ATR rule generally not cover?

The Ability to Repay (ATR) rule under the Dodd-Frank Act is designed to ensure that lenders evaluate a borrower's ability to repay a mortgage loan before extending credit. However, certain types of loans fall outside the scope of this rule, which is why selecting "All of the above" as the correct answer is appropriate.

Home equity lines of credit (HELOCs) do not typically fall under the ATR rule because they are considered open-end lines of credit. Borrowers often use them for variable amounts over time, which does not align with the ATR's requirements for closed-end mortgage loans.

Reverse mortgages are also exempt from the ATR rule. These loans are specifically designed for elderly homeowners to convert a portion of their equity into cash, allowing them to access funds without monthly mortgage payments. The consumer protections and regulations surrounding reverse mortgages differ from conventional loans.

Bridge loans, which are short-term loans used to "bridge" the gap between the purchase of a new property and the sale of an existing one, are another type not covered by the ATR rule. Since these are temporary in nature and usually for a shorter loan term, they do not fit the ATR's parameters.

By understanding that the ATR rule does not cover home equity lines of credit,