When calculating an ATR/QM for a second mortgage and we have the first mortgage which is an ARM, what amount do we use for the first mortgage payment, what it currently is or what it could potentially be (or somewhere in between)? Is there guidance on this? Thank you.
The DTI calculation for the ATR requirement in c(7) states you must consider current debt and in my opinion that means the current payment. However, if the loan is still in the introductory rate phase, I would take a more conservative approach and base the calculation on the rules for determining the payment calculation for the loan in question, which would be the greater of the fully indexed rate or the introductory rate.
I would apply the same methodology for loans made under the QM rule, basically treating it as a simultaneous loan.