DTI % Calculation on Interest Only Loans??

[sonickitty]

Paragraph 6.1.2 of the Making Home Affordable "Handbook for Services of Non-GSE Mortgages" Version 3.4 Dated 12/15/2011 states "The monthly mortgate payment used to determine borrower eligibility includes the monthly payment of principal, interest, property taxes, hazard insurance, flood insurance, condominium association feeds and homeowner's association feeds, as applicable, regardess of whether these expenses are included in the borrower's current mortgage payment."

Does this mean if my currently loan is a fixed rate loan (NOT an arm) in which I am only required to pay interest for next 3 years, that my "DTI" ratio calculation used should include interest AND principal?? This is how I interpret this paragraph. This is also how my REST report was run.

I just received a denial from BofA saying I am not eligible for mod b/c my mortgage and other noted expenses (the usual list noted above) are not equal to or greater than 31% of my gross monthly income. This may be barely true if you only count interest. But if you count principal AND interest, it's approx 41%.

Can someone please confirm that they should be using interest and principal regardless of my current loan payment requirements?

Thanks in advance.

Frustrated in California
p.s. To make matters worse my single point of contact told me on Friday I was approved and should be getting a letter soon. Although I was skeptical until I see it in writing - I was really hopefull when opening the FedEx envelope today only to see the denial. Frigging *@#$*@#$(

[sonickitty]

Paragraph 6.1.2 of the Making Home Affordable "Handbook for Services of Non-GSE Mortgages" Version 3.4 Dated 12/15/2011 states "The monthly mortgate payment used to determine borrower eligibility includes the monthly payment of principal, interest, property taxes, hazard insurance, flood insurance, condominium association feeds and homeowner's association feeds, as applicable, regardess of whether these expenses are included in the borrower's current mortgage payment."

Does this mean if my currently loan is a fixed rate loan (NOT an arm) in which I am only required to pay interest for next 3 years, that my "DTI" ratio calculation used should include interest AND principal?? This is how I interpret this paragraph. This is also how my REST report was run.

I just received a denial from BofA saying I am not eligible for mod b/c my mortgage and other noted expenses (the usual list noted above) are not equal to or greater than 31% of my gross monthly income. This may be barely true if you only count interest. But if you count principal AND interest, it's approx 41%.

Can someone please confirm that they should be using interest and principal regardless of my current loan payment requirements?

Thanks in advance.

Frustrated in California
p.s. To make matters worse my single point of contact told me on Friday I was approved and should be getting a letter soon. Although I was skeptical until I see it in writing - I was really hopefull when opening the FedEx envelope today only to see the denial. Frigging *@#$*@#$(

In case anyone cares, I have confirmed with 3 HUD counselors and attny that in fact, on an interest only loan the should be using both principal and interest as the mortgage amount.

[Cat Damiano]

sonickitty,


If your loan is backed by Fannie Mae or Freddie Mac, the guidelines are different, you can check this here first;

For Fannie Mae: 1-800-7FANNIE (8am to 8pm EST)
www.FannieMae.com/loanlookup

For Freddie Mac:
1-800-FREDDIE (8am to 8pm EST)
www.FreddieMac.com/mymortgage