Louisiana is a community property state but has some alternative title guidelines for lenders on government loans. If you work on government loans in Louisiana, this is a must read.
Community Property States and Government Loans
In community property states, loan originators are required to count spousal debt against a borrower even if a spouse isn’t going on the loan. Read more here.
Exception in Louisiana
Unlike the other 8 community property states, Louisiana has some laws that the borrowing spouse can waive their rights to the home prior to loan submission and you can ignore their debt.
Wholesale Lenders offering exception
In the wholesale (TPO) side of the mortgage business, there are only a handful of lenders that allow this exclusion including EPM & AFR. This can make or break a deal.
Why does this matter?
If a spouse isn’t going on the loan for one reason or another (credit, derogatory event, etc) and if they have a lot of debt, that can be a deal killer! This allows you to possibly exclude that debt from the borrower’s DTI and close the loan.
