Problem: Sally and Ben Gates do not qualify for the standard Fannie Mae/Freddie Mac qualifying ratios of 28/36 based on all of the information that is provided for you under the CURRENT CASE ANALYSIS.

NOW, IT IS UP TO YOU, THEIR LOAN OFFICER, TO SUGGEST 2 OTHER/CREATIVE LOAN SOLUTIONS. REMEMBER YOU HAVE TO PROVIDE AT LEAST 2 OTHER SOLUTIONS for Sally and Ben Gates

a) Be creative in your solution recommendation(s).

b) Be sure and illustrate how the suggestions you make would play out and provide the numerical analysis.

c) Don't just make a recommendation without explicitly/difinitively SHOWING how it would work.

#1) First Solution loan officer could suggest to the Gates is:

a) Be sure and illustrate how the suggestions you make would play out and provide the numerical analysis.

b) Don't just make a recommendation without SHOWING me how it would work.

#2) Second Solution loan officer could suggest to the Gates is:

a) Be sure and illustrate how the suggestions you make would play out and provide the numerical analysis.

b) Don't just make a recommendation without SHOWING me how it would work.

*******Don't forget that that at the bottom of the page is an example from a previous homework solution you can refer to!

CURRENT CASE ANALYSIS is as follows:

Sally and Ben Gates are meeting with a loan officer to discuss applying for a housing loan. They have seen a property they would like to buy but do not know if they can qualify. The Gates have approximately $16,000 in savings. The property they are interested in purchasing is listed for $180,000. Calculate the monthly payment on a house selling for $180,000 with a down payment of $9,000 and first mortgage of $171,000 on a 30-year loan at five (5) percent interest. The loan will require private mortgage insurance at a rate of .75 percent of the loan amount. The annual property taxes are $3,000 per year and a hazard insurance policy will be $1,800 per year. The interest rate factor for a 30-year loan at 5 percent is $5.37 per thousand of loan amount.

Note, the Gates have Annual Incomes as follows: Bens annual income is $45,000 and Sally has part-time income of $18,000 per year.

Note, The Gates have 2 monthly debts of:

1) $390 for their car (three years left on loan)

2) $155 minimum payment on $ 2,500 balance on a credit card Note, Calculations are as follows based off of information provided in Case Analysis:

P & I :	$171,000		1,000	x	5.37	=	918.27
PMI:	$171,000	x	0.75%	=	$1,282.50		12	=	106.88	=	106.88
Taxes:	$3,000		12	=	250.00
Insurance:	$1,800		12	=	150.00
Total of B+C+D+E =	$918.27	+	106.88	+	250.00	+	150.00	=	$1,425.15
Fannie Mae Qualifying income & debt ratios:
a)	$45,000	+	$18,000	=	$63,000.00		12	=	$5,250.00			gross monthly income.
b)	$5,250.00	x	fm	28%	housing ratio		=	$1,470.00				Max. House Payment
c)	$5,250.00	x	fm	36%	debt ratio		=	$1,890.00				Max. Total Debt Payments
d)	$1,425.15	(PITI)		$5,250.00	(GMI)	=	0.271457			=	27%	(qualifies/less than 28%)
e)	$1,425.15	(PITI)	+	$545.00	(monthly debts)	=	$1,970.15
f)	$1,970.15	(PITI + debt)			$5,250.00	(GMI)	=	0.375266		=	38%	(does not qualify/greater than 36%).

***********Below please find a previous homework solution that you can refer to:

Case Analysis from previous homework solution: Jane and Bob Green, her parents have offered to give them $10,000 towards the purchase and they have approximately $3,000 in savings. The property they are interested in is listed for $140,000. The monthly payment on a house selling for $140,000 with a five percent down payment of $7,000 & first mortgage of $133,000 on a 30-year loan at eight percent interest. The loan will require private mortgage insurance at a rate of .75% of the loan amount. The annual property taxes are $2,640 and a hazard insurance policy will be $360 per year. The interest rate factor for a 30-year loan at 8 percent is $7.34 per thousandof loan amount. Jane annual income is $36,000 & Bob earns $25,500 year. The Greens have monthly debts of: $350 for car "a" (two years left on loan), $275 for car "b" (ten months left on loan), $150 for student loan, $30 minimum payment on $1,500 balance on VISA card, $16 minimum payment on $800 balance on MC

Creative Solution from previous homework: since they did not qualify for Fannie Mae/Freddie Mac 28/36, We suggested 2 other solutions as follows:

1) that Sues car loan will be paid off in ten months. They could pay down the car loan to six months remaining (4 pmts.x $275 = $1,100) using some of their available $13,000.

2) If this would not leave them enough money for closing, they could request the seller to contribute anywhere up to three percent of the sales price. Paying down the car debt, the lender would not need to include it in the debt ratio. The Greens total monthly debts will be reduced from $821 to $546. $1,309.35 (PITI) plus debt of $546 = $1,855.35. $1,855.35 $5,125 = 36%, which will qualify for the Fannie Mae affordable loan program.