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ATR with Debt Forgiveness

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I am working on a consumer real estate loan and on a special consideration for the Ability To Repay (ATR). I have a customer that has given me a letter regarding forgiveness on student loans.How can I factor this into the ATR computation?

It will, of course, depend on what the letter says. If the letter informs your applicant that all or part of their student loan debt has been forgiven or will be forgiven as of a specific date, and you are able to verify that the letter is genuine, and can get reliable information on what your applicant's student loan debt payments will be after the forgiveness is effective, you can adjust your calculations of debt service requirements accordingly as part of your ATR determination.

First published on 10/09/2022

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