Student Loan Repayment Rules: FHA, VA, USDA and Conventional Comparison Chart AS OF 9/4/2015

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1 Student Loan Re Rules: FHA, VA, USDA and Conventional Comparison Chart AS OF 9/4/2015 FHA- CASE NUMBERS DATED PRIOR TO 9/14/15: The Rule: Handbook :4.C.6.a- If debt such as a student loan is scheduled to begin within 12 months of the mortgage loan closing, the lender must include the anticipated monthly obligation in the underwriting analysis unless the borrower provides written evidence that the debt will be deferred to period outside this timeframe. Specific time frame for further deferment must be documented rather than eligible for further deferment and borrower to state he will apply for this continued deferment. Similarly, balloon notes that come due within one year of closing must be considered in the underwriting analysis. monthly. Do not count if proof that is deferred 12 months from note date. Credit report alone is not acceptable documentation. If deferment is < 12 months remaining, but documentation from creditor specifically verifies time frame for another 12 months of deferment is available, borrower to state he will apply for this further deferment. Proof of monthly to support not counting. There has been no additional guidance from FHA regarding what to expect in the future in regards to a potential increase in.

2 FHA: ***EFFECTIVE SOON* FHA: CASE NUMBERS DATED ON OR AFTER 9/14/2015 PER HANDBOOK Case # on or after 9/14/15 Case # on or after 9/14/15 Case # on or after 9/14/15 Case # on or after 9/14/15 All deferred obligations (including loans in forbearance), regardless of when they will commence, must be included in the qualifying ratios.. If is $0, count 2% monthly, if not available count 2% of outstanding balance monthly. If actual is zero or not available, use 2% of outstanding balance If on / graduated/ IBR plan and the is verified on credit report: Use the provided. The lender must obtain evidence of: If IBR is less than 12 months or is ZERO, must very the final mpnthly or use 2% the deferral; STILL WAITING FOR FHA RULING ON THIS TO SEE IF PROOF OF AMORTIZED PYMT IS REQ D. the outstanding balance; the terms of liability; and the anticipated monthly. For a student loan, the lender must use the actual monthly or if the actual monthly is zero or is not available then use 2% of the outstanding balance.

3 VA The Rule: If student loan re is scheduled to begin of the VA closing, lenders should. monthly Do not count if proof is deferred Proof of. No guidance consider the anticipated monthly obligation in the loan analysis. If the borrower is able to provide evidence that the debt may be deferred for a period of time outside that timeframe, the debt need not to be considered in the analysis. 12 months from note date. from VA regarding future, potential increase in Fannie Mae or 1% whichever is higher. or 1% whichever is higher. Count the higher of 1% of The Rule: For all student loans, whether deferred, in forbearance, or in re (not deferred), the lender must use the greater of the following to determine the monthly to be used as the borrower s recurring monthly debt obligation: or 1% whichever outstanding balance or is higher. If actual If actual the actual documented 1% of the outstanding balance; or the actual documented (documented in the credit report, in documentation obtained from the student loan lender, or in documentation supplied by the borrower). If actual If the currently being made cannot be documented or verified, 1% of the outstanding balance must be used. If actual cannot be verified, use 1% Calculation. Exception: If the actual documented is less than 1% of the outstanding balance and it will fully amortize the loan with no adjustments, the lender may use the lower, fullyamortizing monthly to qualify the borrower.

4 Freddie The Rule: Requires lenders to use a monthly and must provide supporting documentation on how lender arrived at the amount. listed on credit report Verify Payment or must count 1% of the outstanding balance Provide proof of. Student loan must be considered part of borrower's recurring debt if more than 10 months are remaining. When a monthly on an installment debt is not reported on the credit report or is listed as deferred, the Seller must obtain documentation verifying the monthly amount included in the monthly debt -to-income ratio. If no monthly is reported on a student loan that is deferred or is in forbearance, and there is no documentation in the Mortgage file indicating the proposed monthly amount (e.g., the loan verification letter), 1% of the outstanding balance will be considered to be the monthly amount for qualifying purposes. Examples of documentation of the required amount include: -A direct verification obtained from the creditor -A copy of the installment loan agreement obtained from the borrower, or -If s are currently deferred, the amount that will be required once the deferment or forbearance period has ended, as stated in a copy of a financial institutions student loan certification or the installment loan agreement.

5 USDA The Rule: Handbook 3555, Chapter 11, Page 11-4: Student loans are long-term debt obligations and must be included in the debt ratio, regardless of whether deferred or in forbearance. Must include the greater of 1% Must include the greater of 1% Must include the greater of 1% Must include the greater of 1% *Exception: Fixed s have a monthly amount that is not subject to change through the fixed re time frame. Income Based Re (IBR) plans, graduated plans, adjustable rates, interest only and deferred plans are examples of re plans that are subject to change and do not qualify for the exception. No additional documentation is required if a credit report is obtained and the lender can confirm the represented is a fixed. of the outstanding balance or of the outstanding balance or of the outstanding balance or of the outstanding balance or the verified fixed as reflected on the student loan letter and supported by the credit report. *Exception: monthly pymt amounts listed on the credit report that are less than 1% may be used when evidence from loan show: 1) applicant is on a fxd pymt plan terms of the agrmt and 2) the. the verified fixed as reflected on the student loan letter and supported by the credit report. *Exception: monthly pymt amounts listed on the credit report that are less than 1% may be used when evidence from loan show: 1) applicant is on a fxd pymt plan terms of the agrmt and 2) the the verified fixed as reflected on the student loan letter and supported by the credit report.. *Exception: monthly pymt amounts listed on the credit report that are less than 1% may be used when evidence from loan show: 1) applicant is on a fxd pymt plan terms of the agrmt and 2) the the verified fixed as reflected on the student loan letter and supported by the credit report. *Exception: monthly pymt amounts listed on the credit report that are less than 1% may be used when evidence from loan show: 1) applicant is on a fxd pymt plan terms of the agrmt and 2) the