We have a customer who is borrowing his downpayment funds, there was supposed to be no specific repayment method, however the letter states that the custoemr won’t have any amounts do for 5 years with a fully amortized payment amount after this. do we need to include this amount in our atr/qm calcuations?
I am assuming so, but does this loan meet the definition of a simultaneous loan? If so, there are specific rules under the general repayment ability rules and the QM rules in 1026.43 explaining how you should consider a simultaneous loan in your underwriting.
In my opinion, even if it isn’t a simultaneous loan, you would still need to at least consider it. The general ATR rules 1026.43(c)(2)(vi) says that you must consider the consumer’s current debt obligations, alimony and child support.
Comment 1026.43(c)(2)(vi)-1 says: …creditors should consider whether debt obligations in forbearance or deferral at the time of underwriting are likely to affect the consumer’s ability to repay based on the payment for which the consumer will be liable upon expiration of the forbearance or deferral period and other relevant facts and circumstances, such as when the forbearance or deferral period will expire.
Under the QM rules, Appendix Q and the section on projected obligations states that if a loan is scheduled to begin to or come due within 12 months it should be included in the monthly obligations. 1026.43(e)(5)(b) – QM Rules refers to compliance with Appendix Q but also with 1026.43(c)(2)(vi). And the commentary to section says it should be considered if it will affect the consumer’s ability to repay when the deferral period ends.