ABA this week joined a coalition of housing and financial trade groups in a letter urging the Federal Housing Administration to change its current underwriting policy on student loan debt, noting that current requirements “may be disqualifying otherwise creditworthy borrowers” from qualifying for FHA financing.
The groups urged FHA to change its policy to permit the acceptance of the actual monthly payment obligation or borrowers actively participating in these plans or, as an alternative, allow or the determination of the monthly payment to be based upon the greater of 0.5% of the outstanding student loan balance and the actual monthly payment.
“The FHA program serves to facilitate homeownership for millions of first-time and low- to moderate-income borrowers throughout the country,” the groups wrote. “FHA’s acceptance of a more reasonable student loan debt calculation policy will remove unnecessary roadblocks that prevent FHA from fully carrying out this critical mission.”
