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A question we received from a member:
When using the 8 factor ATR, would we have to include the co-signor in the debt/ratio calculation? We are thinking not, but aren’t sure.
The issue came up because the person who does our monitoring, wanted to know if we had to verify employment for the co-signor? Thus, we were not sure about this question either.
Bottom line: we aren’t sure how to handle co-signors for ATR (debt calculation, verification of employment).
Only the consumer (borrower and any co-borrowers) information should be used in determining their ability to repay. If you want a co-signer you can consider that persons dti separately from the borrower’s dti.
I think it is prudent of your bank to verify the co-signers dti and employment to ensure they are a viable co-signer. But keep in mind the borrower(s) needs to be able to meet the ATR requirements on his/her/their own.
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