Comparison Chart Waiting Periods to Count Child Support or Alimony FHA/VA/Fannie/Freddie/USDA Effective

Transcription

1 Comparison Chart Waiting Periods to Count Child Support or Alimony //// Effective How long must borrower receive child support/alimony in order to count as qualifying income? Court Ordered 3 months Voluntary Agreement 12 months Bank statement Tax returns Documentation from child support agency 3 months Bank statements Child support ledger 12 months (May be less than 12 months if lender determined income dependable and stable) Bank statements Tax returns Court records Document no less than six months of the borrower s most recent regular receipt of the full payment Bank statements confirming direct deposit Canceled checks from the payer s account to the borrower Court records, or Copies of the borrower s bank statements showing the regular deposit of these funds Document no less than six months of the borrower s most recent regular receipt of the full payment Bank statements confirming direct deposit Canceled checks from the payer s account to the borrower Court records, or Copies of the borrower s bank statements showing the regular deposit of these funds

2 What legal documentation is required for the loan file? Final divorce decree, or, or Voluntary payment agreement, or Front page and details of divorce decree, or, or Voluntary payment agreement Legal separation agreement (if divorce not final) Any other type of written legal agreement or court decree describing the payment terms for the alimony or child support Legal separation agreement (if divorce not final) Any other type of written legal agreement or court decree describing the payment terms for the alimony or child support

3 What child support/alimony income can be counted towards income? Use child support/alimony received over the most recent 3 months If voluntary payments use most recent 6 months If inconsistent payments average income over 2 years If inconsistent payment received less than 2 years average income over the time received Use child/support alimony received over the most recent 3 months. (Note that history of receipt and overall circumstances must always be analyzed as well.) When lenders are considering if this type of income is stable, consider the extent that payment is likely to be consistently made by the payer and can reasonably be expected to continue for at least the next three years based on documentation. Many factors should contribute the determination and likelihood of consistent payments from other income sources, such as: Are payment received pursuant to a written agreement, court decree or law? How long have payments been received? Are payments regular? What procedures are available to compel payment of other income? Have full or partial payments been made? What are the ages of each child for which child support payments are made (if applicable)? What is the eligibility criteria governing continued receipt of income, such as age of dependents or accumulation of assets. Cannot exceed the amount awarded (unless income is eligible to be grossed up ) Cannot be used if documentation indicates that the payments will not continue for a minimum of three years from date of mortgage application Cannot be used as stable income if payments are not full, regular and timely, or have a history of receipt of less than six months Cannot exceed the amount awarded (unless income is eligible to be grossed up ) Cannot be used if documentation indicates that the payments will not continue for a minimum of three years from date of mortgage application Cannot be used as stable income if payments are not full, regular and timely, or have a history of receipt of less than six months

4 How to determine the likelihood child support/alimony will be received. of 3 years from the date of the first mortgage payment. NOTE: states will continue for at least 3 years but doesn t define measurement of 3-year period Alimony Must indicate that income will be received a minimum of 3 years from the date of the first mortgage payment. NOTE: states will continue for at least 3 years but doesn t define measurement of 3-year period. of 3 years from the date of the first mortgage payment. NOTE: says evidence of at least 3 years continuance with no defined measurement. Alimony Must indicate that income will be received a minimum of 3 years from the date of the first mortgage payment. NOTE: says evidence of at least 3 years continuance with no defined measurement. When lenders are considering if this type of income is stable, consider the extent that payment is likely to be consistently made by the payer and can reasonably be expected to continue for at least the next three years based on documentation. Many factors should contribute the determination and likelihood of consistent payments from other income sources such as: Are payment received pursuant to a written agreement, court decree or law? How long have payments been received? Are payments regular? What procedures are available to compel payment of other income? Have full or partial payments been made? What are the ages of each child for which child support payments are made (if applicable)? What is the eligibility criteria governing continued receipt of income, such as age of dependents or accumulation of assets? of 3 years from the date of the mortgage loan application. Alimony Must indicate that income will be received a minimum of 3 years from the date of the mortgage loan application of 3 years from the date of the mortgage loan application Alimony Must indicate that income will be received a minimum of 3 years from the date of the mortgage loan application

5 What formula is used to gross up the income for non-taxable child support income? 15% or actual tax rate Use actual tax rate. (DTI Calculation only. Gross up not allowed for residual income calculations) May be grossed up 25% - lender must verify that the income source is nontaxable May be grossed up 25% - lender must verify that the income source is nontaxable May be grossed up 25% - lender must verify that the income source is nontaxable