10.15 NON-PURCHASING SPOUSE CREDIT HISTORY (03/09/16)

© RHS HB-1-3555 SFH Guaranteed Loan Program Technical Handbook

The non-purchasing spouse's (NPS) credit history is not considered a reason to deny a loan application. In community property states, the non-purchasing spouse's obligations must be considered in the debt-to-income ratio unless excluded by State law. Lenders must comply with applicable lending laws in community property states. Lenders must obtain a credit report that meets the requirements of this Chapter for the non-purchasing spouse in order to determine the debts that must be counted in the debt-to-income ratio.

The Agency's automated underwriting system will retrieve credit reports for applicants only. Therefore, lenders must obtain an acceptable credit report outside of the system. Liabilities for a non-purchasing spouse should be entered on the “Asset and Liabilities” page in the liability section. When recording the debt, lenders should reference the liability as a non-purchasing spouse debt in the “Notes” data field of the credit liability line. Lenders will retain a copy of the non-purchasing spouse credit report in their permanent mortgage file. Submit a copy to Rural Development when requesting a commitment for Loan Note Guarantee. Loans that received an “Accept” in the Agency's automated underwriting system, GUS, do not require a downgrade to “Refer” when manually inputting and capturing the debts of a NPS.

Community property states include: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Puerto Rico allows property to be owned as community property as do several Indian jurisdictions. Alaska is an opt-in community property state. Property is separate unless both parties agree to make it community property through a community property agreement or a community property trust.