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      How to Troubleshoot DTI

      Mouse over “DTI” in Summary panel:

      “Qualify Expense” - Primary housing expense

      “Subject Negative Cash Flow” - negative cashflow by subject property when subject is investment property

      “Negative Net Rental” - Sum of REO properties excluding subject

      “All Other Payments” - Non-contingent liabilities from credit report

      “Present Housing Payments” - Primary housing expense

      “Positive Net Rental” - Sum of REO properties generate positive cashflow

      “Subject Positive Cash Flow” - positive cashflow generated by subject when subject is investment property

       

      If subject is primary residence, front DTI is calculated by

      Debt / Expense = Proposed Housing Expense + Liabilities (excluding mortgage tradelines) + REO Net Rental Loss (for other rental properties and/or second home)

      Income = Borrower Income + REO Net Rental Income (if net rental income is positive)

       

      If subject is second home

      Debt = Primary Housing Expense + Proposed Housing Expense + Liabilities + REO Net Rental if Negative

      Income = Borrower Income + REO Net Rental Income (if net rental income is positive)

       

      If subject is investment property

      Debt = Primary Housing Expense + Liabilities + REO + Subject Property’s Net Rental If Negative (Gross Rent - PITIA)

      Income = Borrower Income + REO Net Rental Income (if net rental income is positive) + Subject Net Rental Income (if positive)

       

      Fannie Mae uses net REO rental income as a whole summing up all borrowers' REO’s whereas Freddie Mac’s rental income takes in each borrower’s net rental income/loss as income or liability in a loan application’s DTI calculation.