Does the lender need to consider a Paycheck Protection Program (PPP) loan in the borrower’s DTI?
Under the CARES Act, PPP loan terms allow deferred payments for a specified period, no personal loan guarantee, and the potential for all or some portion of the loan to be forgiven. Therefore, no payments would be expected to be included in the borrower’s liabilities at this time. Once it has been determined that any portion of the PPP loan must be repaid, follow the Selling Guide requirements for loans paid by a business.
For more information, refer to the published Lender Letter LL-2020-03, Impact of COVID-19 on Originations.