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When calculating mortgage related obligations under the general ATR rule for a large bank, on a permanent financing loan where the home was recently built and the tax card has not yet been updated to reflect taxes on improvements, what is the requirement for including taxes in the mortgage related obligations for computing debt to income?
Is it sufficient to use what the tax card currently states to compute DTI and for escrow, or are we required to estimate county and city taxes for ATR under Reg Z? If we must estimate is the appraisal ok to use for the estimate?
The preamble to the ATR/QM rules state that the mortgage related obligation definition under the ATR rules are substantially similar to the requirements in 1026.34(a)(4)(i). The commentary to 1026.24(a)(4)(i) states “expected” property taxes as a mortgage related obligation. Using the expected taxes seems to be in line with the requirement to determine the consumer’s reasonable ability to repay.
An appraisal seems to be a reasonable means of determining an estimate.
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