If the Borrower resides in a community property state or the property being insured is located in a community property state, debts of the non-borrowing spouse must be included in the Borrower’s qualifying ratios, except for obligations specifically excluded by state law.
The Lender must not consider the credit history of a non-borrowing spouse. The non-borrowing spouse’s credit history is not considered a reason to deny a mortgage application.
The lender must
• verify and document the debt of the non-borrowing spouse.
• make a note in the file referencing the specific state law that justifies the exclusion of any debt from consideration.
• obtain a credit report for the non-borrowing spouse in order to determine the debts that must be included in the liabilities. The credit report for the non-borrowing spouse is for the purpose of establishing debt only, and is not submitted to TOTAL Mortgage Scorecard for the purpose of credit evaluation. The credit report for the non-borrowing spouse may be traditional or non-traditional.
For additional information see Handbook 4000.1 II.A.4.b.iv(F); II.A.5.a.i; II.A.5.a.iv(E) available at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh