We have a borrower who has a single pay note due in 2 months. They have enough money in savings to cover the repayment. Do we have to use the single pay note in our DTI if we can verify enough assets?

Would we convert to monthly payments for DTI?

Why don't you secure the loan with the funds in the savings account instead of the dwelling?

I'm going to toss in a guess on that: Borrower wants to be able to claim his loan interest on his taxes.

The single pay note is unsecured. We weren't sure how to use the single pay in our DTI calculation as a current obligation.

I'm fairly certain ATR applies only to mortgage secured transactions.

From a safety and soundness standpoint, I would just go ahead and secure the funds in a 2 month cd and be done with it. Repayment could come from the matured CD or any other funds that he may or may not have coming to him/her.

ahk, are you trying to describe that an applicant for a mortgage has an existing obligation (which is this single pay note) and you're trying to document how this obligation facotrs into the ATR for the new mortgage?

Yes kw! Sorry for all the confusion!

I believe the debt you described (a "balloon payment" debt due within 12 months of the mortgage loan closing) should be factored in as an anticipated monthly obligation - but I am not entirely sure, so hopefully someone will chime in to contradict or support!

There's a handy tool here: http://www.bankersonline.com/tools/compliance/dti_z_fr.html

That is what I thought as well kw.