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BankersOnline.com Forums Dodd-Frank Final Rules Discussions Ability to Repay/Qualified Mortgage Rule HELOC repayment terms
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#1893578 - 02/04/14 08:38 PM HELOC repayment terms
Bec Offline
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Bec
Joined: Jul 2010
Posts: 1,115
The Great White North
The more I read the more confused I get. In determining DTI where there is an existing HELOC that is not a simultaneous loan, how do we figure out the payments. If it is an interest only HELOC with a draw phase only and there is a margin tied to an index?
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Ability to Repay/Qualified Mortgage Rule
#1893779 - 02/05/14 04:16 PM Re: HELOC repayment terms Bec
Mike Baker Offline
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Mike Baker
Joined: Dec 2002
Posts: 193
Tennessee
I happened to see the following question in the "Anonymous" section and thought it might be a good one to copy to this thread...perhaps Bec's question and the following one could be answered together?

Originally Posted By: Anonymous
Our bank has used 1.5% of the fully funded HELOC for the monthly payment used to qualify. The actual required payment during the draw period is interest only.

Questions: Under ATR, is this an issue? Also, if we use the preceding described approach for calculating a payment on our HELOC's but take the credit report payment amount [which is usually interest only] on other bank's HELOC's when underwriting other requests, is that permissible...or could it be deemed discriminatory?

Thank you for your input.
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#1893866 - 02/05/14 06:18 PM Re: HELOC repayment terms Bec
hgliii Offline
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HELOCs are exempt from ATR. You should not have a problem, as you cannot determine how another bank calculate its repayment. IMO.
Last edited by hgliii; 02/05/14 06:18 PM. Reason: grammar correction
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#1893871 - 02/05/14 06:24 PM Re: HELOC repayment terms Bec
Mike Baker Offline
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Mike Baker
Joined: Dec 2002
Posts: 193
Tennessee
Just wondering...while I understand that HELOC's are exempt from ATR, what if you are dealing with a closed end mortgage request and the customer has a HELOC that will still be in place after the closing? For purposes of DTI calculation, what payment amount should be used? Thank you.
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#1893886 - 02/05/14 06:44 PM Re: HELOC repayment terms Bec
hgliii Offline
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Posts: 574
We would use the payment from credit report. Again, you cannot control how another lender calculates their payments. As far as discriminating if you use the same criteria on every loan, you should be ok.

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#1893961 - 02/05/14 07:46 PM Re: HELOC repayment terms Bec
Bec Offline
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Bec
Joined: Jul 2010
Posts: 1,115
The Great White North
Thank you for your input. I really appreciate it!
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#1893964 - 02/05/14 07:49 PM Re: HELOC repayment terms Bec
Mike Baker Offline
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Mike Baker
Joined: Dec 2002
Posts: 193
Tennessee
Same here. Have a great day!
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