During intake, a HELOC will provide funds for the down payment on the same dwelling. What is the best compliant response?
Correct Answer
A) Include the HELOC payment in the ATR analysis
Why this is correct: When a HELOC is used for the down payment on the same dwelling, it creates a simultaneous loan. Per 12 CFR 1026.43(c)(2)(iv) and (c)(6), the payment on that HELOC becomes a known monthly obligation that must be included in the Ability-to-Repay (ATR) analysis. Therefore, the compliant response is to "Include the HELOC payment in the ATR analysis." Why the other choices are wrong: "Use funds from an undisclosed account without updating the file" is wrong because it violates asset verification and disclosure requirements. "Count gift funds without donor documentation or transfer evidence" is wrong because gift funds require proper sourcing and documentation. "Use unexplained large deposits as verified assets" is wrong because large deposits must be sourced and explained to be used as verified assets. Exam tip: For simultaneous loans, remember the debt created to fund the purchase is part of the borrower's obligations on Day 1. It must be counted in the debt-to-income ratio for the ATR analysis.
Why This Is the Correct Answer
The correct response is "Include the HELOC payment in the ATR analysis". A known simultaneous HELOC affects monthly obligations and must be considered for repayment ability.
Why the Other Options Are Wrong
Option B: Use funds from an undisclosed account without updating the file.
This choice is a tempting shortcut, but it conflicts with asset verification because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Option C: Count gift funds without donor documentation or transfer evidence.
This choice is a tempting shortcut, but it conflicts with asset verification because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Option D: Use unexplained large deposits as verified assets.
This choice is not the best answer because it applies the wrong file step for asset verification; the governing rule is tested by the correct option.
Memory Technique
Same dwelling plus known simultaneous credit means include the payment.
Exam Tip
For asset verification questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
Common Mistakes to Avoid
- -A separate loan can still be a simultaneous obligation for ATR.
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