What if reducing the interest rate is not enough to get the borrower’s front-end DTI down to 31%?
If the rate is reduced as low as the 2% floor and the DTI is still above 31%, the Guidelines specify that the lender next extend the amortization period and, at its option, the maturity date up to 40 years. If the DTI still exceeds 31%, then the lender must forbear principal. A lender, at its option, may forgive principal in place of reducing the rate, or in place of extending the term or forbearing principal. 20.
