West Virginia’s regulations require the following (in relevant part):
“11.2 If a borrower’s household debt-to-income ratio will exceed fifty percent upon the extension of [sic] new residential mortgage loan as determined from a credit report, credit application, [sic] financial statement, then the broker and initial lender must document, in writing and maintain in accordance with the provisions of subsections 3.1.ff or 6.1.z of this rule, an assessment of the borrower’s ability to repay the loan according to its terms. Such assessment must be signed by the lender or the lender’s representative and the borrower(s) and must consider the household’s current debt obligations, the term of the loan, and the borrower(s) circumstances along with their current and projected income and assets, other than a security interest in the real estate taken to secure the loan.
11.3 The requirement of subsection (2) of this section shall not apply if the loan obtained qualifies under guidelines established by the West Virginia Housing Development Fund, the Veterans Administration or a non-profit housing provider licensed under W.Va. Code § 37-17-1, et seq.” (W. Va. Code St. R. § 106-5)
To help brokers and lenders fulfill this requirement, we will be providing a new “WV Ability-to-Repay Worksheet” (Cx21375). This worksheet is divided into six sections:
- Household Debt Obligations – Lists the debt obligations of the borrower’s household.
- Monthly Housing Expense – Lists other monthly expenses for the household.
- Assets – Lists the assets of the borrower.
- Gross Monthly Income – Lists the monthly income of the borrower.
- Gross Monthly Income Minus Monthly Expenses – Provides the difference between the borrower’s gross monthly income and the household’s monthly expenses.
- Schedule of Real Estate Owned – Lists the real estate owned by the borrower.
Because West Virginia’s regulations require an “assessment” (analysis) to be conducted to show that the borrower has the ability to repay the mortgage loan, it is necessary for clients who use this form to include additional information to satisfactorily demonstrate that an analysis has been conducted, since the information on the form itself merely provides a list of financial assets and liabilities. To this end, an additional “Notes” section has been added where clients can provide additional information (e.g. an analysis of the borrower’s ability to repay the loan) on the form itself. There is also hardcoded text to remind brokers and lenders to “attach any additional worksheets, information, or assessments.”
This document will be configured to print generically under the following conditions:
- Base Type = Conventional, FHA, and RD
- Debt-To-Income Ratio Greater than 50% = Yes
- Document Package Type = Closing
- State Code = West Virginia
Cx21375 will begin appearing in applicable packages on June 15, 2017. If you have any questions or concerns about this change, please contact Client Support at 1.800.497.3584.