How must a Mortgagee determine the monthly payment for an Installment Loan?

Installment Loans (excluding Student Loans) refer to loans not secured by real estate that require the periodic payment of Principal & Interest (P&I).  A loan secured by an interest in a timeshare must be considered an Installment Loan.
 
The Mortgagee must include the monthly payment shown on the credit report, loan agreement or payment statement to calculate the Borrower’s liabilities.
If the credit report does not include a monthly payment for the loan, the Mortgagee must use the amount of the monthly payment shown in the loan agreement or payment statement and enter the amount into TOTAL Mortgage Scorecard.
 
If the monthly payment shown on the credit report is utilized to calculate the monthly debts, no further documentation is required. 
 
If the credit report does not include a monthly payment for the loan, or the payment reported on the credit report is greater than the payment on the loan agreement or payment statement, the Mortgagee must obtain a copy of the loan agreement or payment statement documenting the amount of the monthly payment.  If the credit report, loan agreement, or payment statement shows a deferred payment arrangement for an Installment Loan, refer to the Deferred Obligations section of Handbook 4000.1.
 
For additional information see Handbook 4000.1 II.A.4.b.iv(I) and II.A.5.a.iv(H) at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-02725