ATR - DTI

Posted By: Ninky

ATR - DTI - 10/05/16 06:39 PM

We are decisioning a 2nd lien closed-end Home equity loan. When including other obligations and other mortgage related expenses for ATR, if the 1st mortgage is an ARM, do we have to include the fully indexed payment when we calculate our DTI?
Posted By: Carolina Blue

Re: ATR - DTI - 10/07/16 06:15 PM

How would you know the fully indexed rate of the other mortgage? I think it would be prudent from an underwriting standpoint to consider an increased payment, but there's no ATR requirement of which I'm aware. 43(c)(2)(vi) only states "current debt obligations". I know this following commentary is for the mortgage-related obligations but I think it is reasonable to apply to your situation. (Bold is my emphasis)

43(c)(2)(v)5. Estimates. Estimates of mortgage-related obligations should be based upon information that is known to the creditor at the time the creditor underwrites the mortgage obligation. Information is known if it is reasonably available to the creditor at the time of underwriting the loan. Creditors may rely on guidance provided under comment 17(c)(2)(i)-1 in determining if information is reasonably available. For purposes of this section, the creditor need not project potential changes, such as by estimating possible increases in taxes and insurance. See comment 43(c)(2)(v)-4 for additional examples discussing the projection of potential changes. The following examples further illustrate the requirements of ยง 1026.43(c)(2)(v):