Teacher Denied Mortgage Over Purchase of School Supplies?

October 22, 2010 No Comments »

bad apple

An article over at the Huffington Post claims a teacher was denied a refinance loan because the money they used to pay for school supplies was deducted from their income.

As a result, the teacher’s debt-to-income ratio exceeded the mortgage lender‘s underwriting guidelines, leading to the loan being declined.

The article’s author, Mary Tootikian, who also wrote a book called “Stunned In America, Sub-Crime Mortgage Crisis,” notes that teachers who voluntarily supply classrooms with things like ink, toner and paper must deduct it from their income.

At the same time, she said supplemental income earned from after school activities is being disallowed, as it’s difficult to document that it’s continuous and guaranteed.

But the whole thing seems all too sensationalistic.

Do we know the teacher’s other monthly liabilities that count against their income? No.

What if they’ve got a luxury car lease or outstanding credit card debt tied to lavish purchases?

Is the cost of toner and paper really enough to push someone’s debt-to-income ratio over the top? And why is the teacher already on the brink of eligibility?

Sure, I get the author’s point that voluntary contributions to classrooms could/should be considered a charitable donation, and thus not deducted from income, especially since teachers are seemingly underpaid.

But it’s pretty important that underwriters ensure homeowners can actually make their mortgage payments too.

After all, isn’t that how we got into this whole mortgage crisis to begin with?

Related: Expectant mothers discriminated against?

(photo: MrB-MMX)

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