No question, HUD acknowledged that the whole rule change is about individuals who may “provide misleading information regarding the rental income of the property being vacated to qualify for the new mortgage” [ML 08-25], who then walk away from the first home after closing on the second.
Plain and simple – If your clients are purchasing a new home and renting the home that they currently live in, both payments must be included in the qualifying ratios. UNLESS, they fit into one of the exceptions.
(FHA Mortgagee Letter 2008-25, September 19, 2008)
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