HAR §6-27-11. Monthly mortgage payment to income ratio

(a) As used in this section: “Applicant” means any person signing the note or mortgage, or both, and occupying the subject property, including an eligible member. “Guarantors, endorsers, or co-signers” means the persons signing the note or mortgage, or both, but who may or may not be occupying the subject property. (b) As a general rule, the lender shall require that the applicant’s monthly mortgage payment does not exceed twenty-eight and one-half percent of the applicant’s stable monthly income less any monthly debt payments. (c) Monthly mortgage payment shall include first mortgage payment, hazard and flood insurance payments, lease rent, property taxes, and monthly dues for common element/property charges and maintenance, but excluding unit utility charges for condominiums and property with similar dues and charges. (d) Monthly debt payment shall include all monthly payments on installment debts having a remaining term of one year or more. Secondary financing for the subject property, mortgage loan payment for other properties, alimony, child support, and separate maintenance payments shall be considered installment debts, unless the obligations terminate within one year. (e) Stable monthly income is the applicant’s gross monthly income from the applicant’s primary employment base earnings plus recognizable secondary income averaged for the past twelve months. Secondary income of the applicant, such as rental income, overtime or part-time employment may be included in stable monthly income only if those items of secondary income are substantiated by written evidence of the applicant’s previous year’s earnings and that the continuation thereof is probable. Interest and dividends may be considered if substantiated by written evidence and averaged for the past two years. Rental income for the subject property may be considered if substantiated by written evidence. (f) If the applicant chooses to disclose income from alimony, child support, or maintenance payments, the lender may consider those §6-27-11 payments as income to the extent that they are likely to be consistently made. Factors which the lender may consider in making that determination include, but shall not be limited to: (1) Whether the payments are received pursuant to written agreement or court decree; (2) The length of time the payments have been received; (3) The regularity of payments; (4) The availability of procedures to compel payment; (5) Whether full or partial payments have been made; (6) The age of any child; and (7) The creditworthiness of the payer, including the credit history of the payer where available to the lender under the Fair Credit Reporting Act (15 USC §§1681-1681t) or other applicable laws. The lender shall submit to the system evidence to support its determination. (g) Factors such as expected pay increases under union or other contract terms, education, training, technical skills, occupation, potential or expected pay increases, past employment history, and future employment expectations may be taken into account on a case-by-case basis in determining stable monthly income. Income necessary to qualify the borrower from sources not substantiated in the credit report shall be verified in writing from a reliable source. When the borrower is self- employed, the minimum acceptable documentation to verify income shall be the: (1) Profit and loss statements for the prior two years, the last statement covering the year ending before the applicant’s application; or (2) Tax returns for the previous two years. (h) If the applicant does not qualify for the loan under the above credit underwriting guidelines, the system shall consider purchasing on a case-by-case basis a loan with no more than two personal guarantors, endorsers or other co-signers. The guarantee, endorsement or agreement shall not be qualified or limited in any manner. All credit underwriting standards shall apply to the credit evaluation of a guarantor, endorser, or co-signer. The monthly mortgage payment shall not exceed twenty-eight and one-half per cent of the combined stable monthly income of the applicant and the guarantor, endorser, or co-signer less any monthly debt payments. In addition, the §6-27-12 applicant’s monthly mortgage payment shall not exceed forty per cent of the applicant’s stable monthly income less any monthly debt payments. (i) If an eligible member is already liable for a member home loan and wishes to guarantee, endorse or co-sign the note for another member home loan, the mortgage loan payment for both loans shall not exceed twenty-eight and one-half per cent of the eligible member’s stable monthly income less any monthly debt payments. (j) If an eligible member has guaranteed, endorsed, or co­ signed for an existing member home loan and is applying for his own member home loan, the mortgage loan payment for both loans shall not exceed twenty-eight and one-half per cent of the eligible member’s stable monthly income less any monthly debt payments. (k) If the applicant is applying for a leasehold conversion loan, the monthly mortgage payment shall not exceed twenty-eight and one-half per cent of the applicant’s stable monthly income less any monthly debt payment including the first mortgage payment for the subject property. [Eff 2/9/89] (Auth: HRS §§88-28, 88-119.5) (Imp: HRS §§88-119, 88­ 119.5) §6-27-12 First mortgage loans; minimum and maximum loan amounts. (a) No member home loan secured by a first mortgage on unencumbered improved real estate owned in fee simple shall exceed eighty per cent of the lesser of the purchase price or the appraised value of the real estate mortgaged to secure it. (b) No member home loan secured by a first mortgage on leasehold interest in improved real estate shall exceed eighty per cent of the lesser of the purchase price or the appraised value of the leasehold interest and improvements. (c) If the purpose of the member home loan is to satisfy an agreement of sale, the loan-to-value ratio shall be the lesser of the purchase price, if purchased less than one year ago, or the appraised value. (d) If the loan-to-value ratio is over eighty per cent, lenders shall obtain the system’s prior written approval for mortgage insurance. The mortgage insurance shall be obtained from a mortgage insurer licensed to do business in the State of Hawaii and shall insure or guarantee against the borrower’s default or loss sufficient to reduce the system’s exposure