[mcarey]

We have a consumer applying for a residential real estate loan that is a guarantor on a commercial loan. Does the payment for the commercial loan have to be included in the ATR calculation?

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[rcooper]

The below from Appendix Q would apply to contingent liability on commercial debt as well as consumer debt.

From Appendix Q:
IV. Consumer Liabilities: Contingent Liability
1.Definition: Contingent Liability. A contingent liability exists when an individual is held responsible for payment of a debt if another party, jointly or severally obligated, defaults on the payment.
and
5. Contingent Liability on Cosigned Obligations.

a. Contingent liability applies, and the debt must be included in the underwriting analysis, if an individual applying for a mortgage is a cosigner/co-obligor on:

i. A car loan;

ii. A student loan;

iii. A mortgage; or

iv. Any other obligation.

b. If the creditor obtains documented proof that the primary obligor has been making regular payments during the previous 12 months, and does not have a history of delinquent payments on the loan during that time, the payment does not have to be included in the consumer’s monthly obligations.

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