Child Support as a Part of Loan Modification

by Kris
(Delran, NJ)

Is child support income required to be disclosed for mortgage loan modification?

In the first year when sending 3 new modification request modification packages, we did include child support every time. After sending third loan modification package, it was declined because of too high income. After a year, a Chase representative told us we do not need to include child support. 4th and 5th pkg we sent without this income. No response for the next 9 months. Now we are dealing with executive office and our case was escalated, they are asking us to disclose child support to be considered for loan modification.

Two years of applying and re-applying for a loan modification and got nowhere. With child support we might not even qualify.

We did qualify last year when I was out of work for over 9 months but .... no response from Chase.

Mortgage Loan Modification Answer:

Wow. I cannot believe how long you have been trying and it seems as though your lender has been giving you misinformation and the run around.

Have you been applying on your own? People have told me Chase is notorious for being difficult. It sounds like their reps have misinformed you on more than one occasion and it seems they are just not being straight with you.

Child support, if reported as income on your tax returns, and you are the borrower on the loan, will need to be included as a source of income on your loan modification application.

Since your income seems to have fluctuated due to your changing employment status, the addition and subtraction of the child support will change your financial picture and would either put you in the "too much income" or "too little income" category depending on whether you are employed or not.

Since you are getting nowhere with your application, maybe it's time to enlist the help of a professional. My first suggestion would be to contact a loan modification company who charges NO upfront fees. You can at least pick the brain of someone who processes and negotiates loan mods for a living and knows the ins and outs of lender's guidelines (which they will not disclose to you).

Your application will have "more teeth" and it costs you nothing but a minimal fee only once your loan modification is approved. You really have nothing to lose.

Please do not hesitate to contact us if you have any additional questions.

All the best to you and your family.

Comments for Child Support as a Part of Loan Modification

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May 12, 2011
child support disclosure
by: Anonymous

? If I don't have to disclose child support when applying for a loan modification, they will still know that I receive child support based on my bank statements. The child support I receive is automatically deposited into my checking account. They have requested 2 months worth of bank statements that show the deposits. So won't the bank think I'm being deceitful in my application?

Feb 03, 2011
Child Support
by: Anonymous

Banks cannot legally ask you if you receive child support as it is not taxable income. It can ONLY be used as qualifying income if you willingly disclose it to them. If you disclose it, it is not grossed up because it is not taxable. In most cases even if you do disclose it, if it results in you not qualifying due to too much income they will usually re run the numbers without the child support to see if you then qualify. I would agree that it is best not to disclose it unless you need it to help you qualify.

Oct 29, 2010
Comment on Child Support and Loan Mod
by: Dean

As a CPA, I can tell you that Child support is not taxable and does not appear on your Federal Tax Return.

You really need the help of a professional for this modification. The ratio's are important. Ie Mortgage payment 31% of Gross income -- the Back End Debt to income ration and the Front End Debt to income ratio. Determine those without Child Support. My advice is never include child support unless it is needed to meet the guidelines.

See the link for Front End and Back in ratio computations

I use an Excel Spreadsheet to do these computations and going in I will know that they are within the guidelines.

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