HB-1-3555
Paragraph 11.3 Debt Ratio Waivers and Compensating Factors
(03-09-16) SPECIAL PN 11-9
Revised (01-05-24) PN 602
statements that meet the requirements of Chapter 9. Cash on hand is
not eligible for consideration as a compensating factor.
o The applicant(s) (all employed applicants) has been continuously
employed with their current primary employer for a minimum of two
years. A Request for Verification of Employment (VOE) (Form RD
1910-5, comparable HUD, FHA, VA or Fannie Mae form, or other
equivalent), or a VOE prepared by an employment verification service
(e.g., The Work Number.) must be provided. Applicants that have
received Social Security benefits or retirement income for two years
may utilize this compensating factor with documentation to support
the history of receipt of benefits. This compensating factor is not
applicable for self-employed applicants.
• Debt Ratio Waiver Request and Agency Approval:
o Debt ratio waivers must be requested and documented by the approved
lender. The lender requests Agency concurrence with the debt ratio
waiver by submitting a signed underwriting analysis that cites one or
more of the above acceptable compensating factors. Lenders may
utilize Fannie Mae 1008 / Freddie Mac 1077, Uniform Underwriting
and Transmittal Summary, or similar form. Evidence of the
compensating factor, such as a VOR, VOD, and/or VOE, must be
submitted to the Agency for approval.
o The issuance of the Conditional Commitment for a Loan Note
Guarantee represents Agency approval of the ratio waiver.
B. Refinance Transactions: Debt ratio waivers
1. GUS Accept loans:
• GUS files that receive an Accept or Accept Full Documentation
underwriting recommendation do not require debt ratio waivers.
2. GUS Refer, Refer with Caution, and manually underwritten loans without GUS
assistance:
• GUS files that receive a GUS recommendation of Refer, Refer with
Caution, or are not supported by GUS require debt ratio waivers, and
supporting documentation must be submitted to the Agency.