Effective immediately, for Conventional Conforming and High Balance/Super Conforming loans, MortgageDepot will follow Fannie Mae (DU) or Freddie Mac (LP) guidelines regarding payoff of revolving debt to qualify. Revolving debt account balances may be paid off to qualify and such accounts do not need to be closed as a condition of excluding the payment from the DTI ratio.
If the Borrower pays off or pays down existing debts in order to qualify, the payoff or pay down of the debts and the source of the funds used must be documented in the Mortgage file. The DU message stating that revolving debts must be included in the total expense payment if the account is not being closed may be disregarded.
This will not apply to cooperative properties. This good news allows borrowers to qualify for loans by paying off debt if the debt to income ratios are too high.