Mortgage loans on investment (non-owner-occupied) properties are treated differently from other installment loans. The payments on such mortgage loans are not directly held against the applicant. Instead, these investment property loan payments are held primarily against the property.
Ideally, the rental income from investment properties should offset the monthly payment requirements for those properties. In fact, most investment properties should provide the owner with an operating profit, and 75% of this net profit is actually credited to the applicant as additional income.
However, if the property is operating with a net loss, that shortfall is counted against the applicant as long-term debt.
These liabilities are considered long-term debts if they will continue for at least ten more months. Separate maintenance is a form of support payments for couples who are involved in a formal separation, but not yet divorced.
If an applicant is divorced or separated, he or she must submit to the mortgage lender a copy of the separation agreement or divorce decree, with accompanying property settlement agreement. These documents will indicate the monthly alimony, child support and separate maintenance payments that is expected from the applicant.
Contingent liabilities are any debt obligations that may demand payment at a future date. The most common type of contingent liability is the co-signed loan, in which the applicant is normally not responsible for the monthly payments. However, if the primary borrower defaults, the co-signer will be held responsible for the loan and default. Another type of contingent liability is student loans, which do not require payment until six months after the borrower ceases his or her formal studies. With student loans, monthly payments will be taken into consideration if payments must begin within the next 12 months. If an applicant has co-signed for a loan but does not make payments on that loan, mortgage lenders will exempt those debt payments from consideration against the applicant. For this exemption, the applicant must provide copies (at least 12 to 18 months’ worth) of the canceled checks that the primary borrower used to pay the monthly charges of that loan. By showing that someone else was making the payments, the applicant can avoid having the co-signed debt counted against him or her.
Liabilities | admin | 
March 7, 2009 11:49 am | 
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