We have a borrower refinancing a mortgage loan - she is 100% owner of the SFR and it is her primary residence. Since her income flows from a corporation that she owns 100%, the corporation will be a co-borrower. (Corporation has no ownership in the SFR.) The MLO claims that the individual rents out "51% of her home to a tenant" (still an SFR), therefore the MLO says it is a commercial loan (not a consumer loan) as he considers the SFR to be "investment property". (He thinks having the corporation as a co-borrower further strengthens the "commercial" status.) This feels like it could only be a consumer loan - I don't think the facts support a commercial deal nor would I consider this investment property. Am I off?

No - you are not wrong. It is owner occupied rental property if you believe all of that. The corporate co-borrower is meaningless if the corporation is 100% owned by the borrower as she already controls all corporate income and has nothing to do with the loan purpose.

If she needs a co-borrower, how is she meeting the ATR requirements. Any corporate income is already hers.

Sounds like some game playing.

Thank you!!