If the payment used for the monthly obligation is less than the monthly payment reported on the borrower’s credit report, the mortgagee must obtain written documentation of the actual monthly payment, the payment status, and evidence of the outstanding balance and terms from the creditor or student loan servicer.
For outstanding student loans, regardless of payment status, the mortgagee must use:
- the payment amount reported on the credit report or the actual documented payment, when the payment amount is above zero; or
- 0.5 percent of the outstanding loan balance, when the monthly payment reported on the borrower’s credit report is zero.
The Mortgagee may exclude the payment amount from the monthly debt calculation where written documentation from the student loan program, creditor, or student loan servicer indicates that the loan balance has been forgiven, canceled, discharged, or otherwise paid in full.
For additional information see:
Mortgagee Letter 2021-13, Student Loan Payment Calculation of Monthly Obligation https://www.hud.gov/sites/dfiles/OCHCO/documents/2021-13hsgml.pdf