Question
I have an applicant who pays $200 more
a month than the child support order directs, which he has been doing for a few
years. Do I include the additional $200
in the debt to income ratio?
Answer
Although this voluntary, regular, monthly payment
is not required to be included in the in the monthly obligations, you may do so
and still comply with Agency Underwriting guidelines. This is a perfect example
of a compensating factor, meaning the applicant qualifies and meets the debt to
income ratio guidelines while also including a regular and voluntary monthly
payment that is not described as a legal obligation.
When an applicant is required to pay
alimony, child support, or maintenance payments under a divorce decree,
separation agreement, or any other written legal agreement (and those payments
must continue to be made for more than ten months), the payments must be
considered as part of the borrower’s recurring monthly debt obligations.
FHA, VA, FNMA and FHLMC do not require
voluntary payments to be taken into consideration.
Document the file with the appropriate
legal documents to support the legal obligation. When that obligation will be
met, or expires, is crucial. A letter of explanation from the borrower may be
requested by an underwriter as a best practice, so the next person touching the
file can see this issue was addressed and explained.
Brandy George
Director/Underwriting Operations
Compliance
Lenders Compliance Group
