Sunday, April 3, 2016

Student Loans underwriting guidelines for Kentucky FHA, VA, USDA, and Fannie Mae in 2016

STUDENT LOAN CLARIFICATION FOR ALL KENTUCKY LOAN PROGRAMS


 
PROGRAM
GUIDELINE
FANNIE MAE
For all student loans, whether deferred, in forbearance, or in repayment (not deferred), the lender must use the greater of the following to determine the monthly payment to be used as the borrower's recurring monthly debt obligation:
  • 1% of the outstanding balance; or
  • The actual documented payment (documented in the credit report, in documentation obtained from the student loan lender, or in documentation supplied by the borrower).
 
If the payment currently being made cannot be documented or verified, 1% of the outstanding balance must be used.
Exception: If the actual documented payment is less than 1% of the outstanding balance and it will fully amortize the loan with no payment adjustments, the lender may use the lower, fully-amortizing monthly payment to qualify the borrower.
FREDDIE MAC
Use the following:
  • The payment on the credit report
  • 1% of the outstanding balance or
  • The actual documented fully amortizing payment.
FHA LOANS
If the actual monthly payment is 0 or is not available use 2% of the outstanding balance to establish the monthly payment.
 
VA LOANS
May be excluded from the borrower's total monthly obligations with evidence of a minimum of 12 months deferment from date of closing.
 
If there is no monthly payment reflected on the credit report, a copy of the borrower's payment letter or promissory note should be used to determine what payment amount to use.
USDA LOANS
Fixed payment loans:  A fixed payment may be used in the debt ratio when the lender retains documentation to verify the payment is fixed, the interest rate is fixed, and the repayment term is fixed.  There must be no future adjustments to the terms of the student loan payments. 
 
Non-Fixed payment loans:  Payments for deferred loans, Income Based Repayment (IBR), Graduated, Adjustable, and other types of repayment agreements which are not fixed cannot be used in the total debt ratio calculation.  One percent of the loan balance reflected on the credit report must be used as the monthly payment.  No additional documentation is required.
     




-- 

Joel Lobb
Senior  Loan Officer
(NMLS#57916)

 phone: (502) 905-3708
 Fax:     (502) 327-9119



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