I apologize if this was addressed in one of our weekly sessions. I have not heard a few recently. What payment amount do we consider on a HELOC that the borrower does not plan on drawing on before or at closing? I know 1026.43 (c)(6)(ii) says you are to use “the periodic payment required under the terms of the plan and the amount of credit to be drawn at or before consummation of the covered transaction.” I am seeing information that indicates that we should use the full line amount at the highest rate it can get in 5 years? If this is true, then someone who plans to advance $5,000 of a $50,000 line would benefit from a lower DTI then someone who elected to not advance any.
Jack did discuss this in one of our earlier session this year. There isn’t clear guidance on what to do in this situation. Without having an amount drawn at or before consummation, it seems you have to assume the full amount may be drawn and base your calculation on that. If you do base the payment on the amount drawn at or before consummation you need to consider if you are comfortable with that calculation – how would this affect your underwriting if the borrower accessed the full line?