Updated HB-1-3555, Chapter 11, Ratio Analysis
The Single Family Housing Guaranteed Loan Program (SFHGLP) is pleased to announce revisions to technical HB-1-3555, Chapter 11, Ratio Analysis. An advance copy of the proposed changes was made available on July 20, 2021. These changes became effective upon the recent issuance of a Procedure Notice (PN). Below are the highlighted revisions:
Chapter 11- Ratio Analysis
11.2 B. The Total Debt Ratio:
- Student Loans: Removed the phrase “the greater of” from Non-Fixed payment loans and added guidance regarding “when the payment is above zero” and “when the payment is zero”.
- Revolving accounts: “with no outstanding balance” are not required to be closed.
- Mortgages: Rental Property – Eliminated language regarding omission of mortgage debt. Guidance for entry of rental income in GUS is provided in the GUS Lender User Guide under Section 18.104.22.168.1, Retained Investment Properties.
- Added: Debt management plans:
- Include the monthly payment amount due from the counseling plan.
- Refer to Chapter 10 for guidance on credit exception and documentation requirements.
11.3 DEBT RATIO WAIVERS AND COMPENSATING FACTORS
A. Purchase Transactions: Debt Ratio Waivers
- GUS Refer, Refer with Caution, and manually underwritten loans without GUS assistance:
- Added: “The lender must document eligible compensating factors to support a debt ratio waiver.”
- Added: “all” of the following conditions are met to the first paragraph.
- Debt Ratio Waiver Request and Agency Approval:
- Added: “The issuance of the Conditional Commitment for a Loan Note Guarantee represents Agency approval of the ratio waiver.”
B. Refinance Transactions: Debt Ratio Waivers
- Added a bullet: GUS files that receive a GUS recommendation of Refer, Refer with Caution, or are not supported by GUS, require debt ratio waivers, and supporting documentation must be submitted to the Agency.
- Added: “The issuance of the Conditional Commitment for a Loan Note Guarantee represents Agency approval of the ratio waiver”.
11.7 OBLIGATIONS NOT INCLUDED IN DEBT-TO-INCOME RATIOS
- Added: “unless a payment plan is in place” to the second bullet concerning Federal, state, and local taxes.
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