A Fannie Mae borrower personally pays a car lease with four $540 payments remaining and plans to return the car. No separate debt-exclusion provision applies. How is this lease treated in monthly DTI obligations?
Correct Answer
D) Include the full $540 monthly lease payment despite the short remaining term
D. Include $540 per month in this scenario. The lease rule does not shorten the debt-counting period based on remaining payments. Lease expiration commonly leads to replacement transportation expense; it does not prove this borrower will buy another car. Scope and exceptions: This answer addresses remaining term under the specified program, not every possible debt-exclusion provision or every loan program. Do not convert a typical replacement-expense rationale into a factual certainty. Source: Lease Payments; Installment Debt — https://selling-guide.fanniemae.com/sel/b3-6-05/monthly-debt-obligations
Why This Is the Correct Answer
D. Include $540 per month in this scenario. The lease rule does not shorten the debt-counting period based on remaining payments. Lease expiration commonly leads to replacement transportation expense; it does not prove this borrower will buy another car. Scope and exceptions: This answer addresses remaining term under the specified program, not every possible debt-exclusion provision or every loan program. Do not convert a typical replacement-expense rationale into a factual certainty.
Why the Other Options Are Wrong
Option A: The $540 counts at half, since the car is being returned soon
Returning the car does not authorize counting half the payment.
Option B: The $540 is excluded, as just 4 payments is under the 10-month rule
It incorrectly applies installment-debt treatment to a lease.
Option C: The $540 is excluded once the borrower signs a return notice
A return notice does not establish an applicable exclusion.
Exam Tip
Identify the obligation type before applying a remaining-payment rule.
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