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Student Loan Debt Based on Borrower's Income

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How must we consider student loan debt that is based on the borrower's income and therefore deferred when it comes to the borrower's Ability to Repay?

Appendix Q: V. Consumer Liabilities: Projected Obligations and Obligations Not Considered Debt

1. Projected Obligations.

a. Debt payments, such as a student loan or balloon-payment note scheduled to begin or come due within 12 months of the mortgage loan closing, must be included by the creditor as anticipated monthly obligations during the underwriting analysis.

b. Debt payments do not have to be classified as projected obligations if the consumer provides written evidence that the debt will be deferred to a period outside the 12-month timeframe.

First published on 04/08/2018

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