Ability to Repay/ROR question

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    We have an existing mortgage loan and a couple of small consumer loans and the customer is requesting to refinance his mortgage and consolidate the smaller consumer loans into the mortgage loan. The purpose of the refinance is to remove his spouse’s name from the loans due to a divorce. When we calculate his DTI he is at 66% due to new support payments, which means he does not qualify for a QM and we cannot prove his ability to repay. Our parameters state that we will grandfather renewals in only when new money is not added to the loan. Do we consider the consolidated loans “new money” for the mortgage? What would be our options on making this loan, and would Right of Rescission apply due to adding in the funds from the smaller consumer loans?

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