Deferred Obligations (excluding Student Loans)
Deferred obligations (excluding Student Loans) refer to liabilities that have been incurred but where payment is deferred or has not yet commenced, including accounts in forbearance.
The Mortgagee must obtain written documentation of the deferral of the liability from the creditor and evidence of the outstanding balance and terms of the deferred liability. The Mortgagee must obtain evidence of the actual monthly payment obligation, if available.
The Mortgagee must use the actual monthly payment to be paid on a deferred liability, whenever available. If the actual monthly payment is not available for installment debt, the Mortgagee must utilize the terms of the debt or 5 percent of the outstanding balance to establish the monthly payment.
The Mortgagee must include all Student Loans in the Borrower’s liabilities, regardless of the payment type or status of payments.
If the payment used for the monthly obligation is:
- less than 1 percent of the outstanding balance reported on the Borrower’s credit report, and
- less than the monthly payment reported on the Borrower’s credit report;
and evidence of the outstanding balance and terms from the creditor.
Calculation of Monthly Obligation
Regardless of the payment status, the Mortgagee must use either:
- the greater of:
- 1 percent of the outstanding balance on the loan; or
- the monthly payment reported on the Borrower's credit report; or
- the actual documented payment, provided the payment will fully amortize the loan over its term.
For additional information see Handbook 4000.1 II.A.4.b.iv(G) and (H) and II.A.5.a.iv(F) and (G) at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh