Does the VA consider childcare costs a debt? If so, what documentation is required?
Yes, the VA considers childcare expenses as debt. The lender must obtain a letter from the Veteran documenting the childcare expense or detailing why no expense is incurred. Ensure that the current daycare provisions will remain logical based on the location of the new home. If applicable, the name and address of the child care provider should be obtained. This expense should be listed under section D, job related expense on the VA Loan Analysis Form.
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Is it required to obligate the Veteran for a mortgage that has been assigned to the ex-spouse by the courts?
No, in general, you do not have to obligate the Veteran for a debt that the courts assigned to an ex-spouse - even if that debt is delinquent.
This is specified in Chapter 4 of the VA Lender's Handbook.
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For military applicants, do we need to consider separate household expenses if the applicant will be living in quarters and says he will not have any expense?
If the Veteran states that s/he will be living in military quarters at no cost and his/her spouse will be living in the subject property, you do not have to consider separate household expenses. However, if a review of the Leave and Earnings Statement shows a withdrawal for housing or there is any indication in the file of current expenses, clarification should be obtained.
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Can we disregard the Veteran's monthly debt if it is to be paid off within the next 5 months?
The underwriter must consider the following for installments with less than 10 months remaining:
- The payment must not be so large that it will have a severe impact on the financial situation of the household. The amount of "severe impact" is left to the underwriter's discretion.
- If the payment is large, the underwriter may consider if there are reserves to cover the debt after closing or a source of income they were unable to use in the analysis.
- The final determination is the underwriter's. If a debt is not considered and the logic is not highly visible, a notation should be made in the remarks section of the Loan Analysis Form.
Specifics may be found in Chapter 4 of the VA Lender's Handbook.
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If a Veteran co-signed a loan, must it be considered as his/her obligation?
Not always, the debt may be disregarded if there is proof in the file that the payments are being made by someone else (e.g., a year's worth of canceled checks) and there is no reason to believe this will not continue. This is specified in Chapter 4 of the VA Lender's Handbook.
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How are student loans considered?
If student loan repayments are scheduled to begin within 12 months of the date of the VA loan closing, lenders should consider the anticipated monthly obligation in the loan analysis. If the borrower is able to provide evidence that the debt may be deferred for a period outside that time frame, the debt need not be considered in the analysis.
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How is child support considered from a debt and credit report standpoint?
Child support is considered as a debt and must be listed in section D of the Loan Analysis Form. If late payments appear on the credit report, it should be addressed and considered in the overall credit picture.
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Should an underwriter use a debt against a borrower that is secured by deposited funds?
No, as long as the loan is secured against a deposited fund (i.e. a signature loan, cash value of life insurance policy, 401k loan, etc.) in which repayment may be obtained through extinguishing the asset. However, please note that the assets securing these loans may not be included as an asset on the loan analysis form.
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