Under the Reg. Z changes effective October 1, the lender is required to verify the borrower's repayment ability considering their current obligations, including mortgage-related expenses, which specifically includes insurance, taxes, condo fees and homeowners' association fees. My question is this: I don't see any basis in the regulation for limiting these mortgage-related expenses to just the property securing the loan. Should I interpret this requirement to mean that we must include all mortgage-related expenses and obligations that the borrower may have, even on second homes or vacation homes? And if the collateral is a rental property, shouldn't we include the mortgage-related expenses relative to their primary dwelling in the repayment ability calculation? I can't find any basis for limiting consideration of these expenses to just the property securing the loan or their primary dwelling. Thoughts?

Normally for underwriting mortgage loans, the total debt to income is calculated, primary, secondary residences, etc.

E.g., a customer may have excessive capacity for a vacation home, but would be strugling if you included the payments for their primary residence. The purpose is to ensure that people can afford what they're buying.

Thanks for the reply. I believe I read somewhere in all the materials I have that the lender should use the FNMA/FHLMC guidelines for determining payment ability, and those underwriting guidelines do appear to require consideration of all mortgage-related expenses for all properties owned by the borrower, regardless of whether they are securing the loan in question or not, so this appears to support your thought as well. Thanks again.