Wholesale VA Guidelines

Transcription

1 Wholesale Introduction These VA Program Guidelines provide a general overview of the VA products and policies eligible for delivery to EA for financing consideration. The details are based on the policies outlined in the VA Handbook. This document should be used solely as a reference to EA s interpretation of the VA Handbook and does not constitute a commitment to lend. Product Overview Endeavor America currently offers the following VA loan programs: High Balance Standard Advantage IRRRL 30 year Fixed > $417,000 loan amount 30 year Fixed 15 year Fixed 640 min FICO 30 year Fixed 15 year Fixed FICO AUS Refer 30 year Fixed 15 year Fixed No FICO 580 FICO with Appraisal 620 FICO with No Appraisal Principal Residence Maximum Base Loan 1 Base Loan Purpose Units LTV FICO Units Conforming High Balance Purchase, IRRRL % $75,000 - $417,000 $417,001 - $1,200,000 Conforming IRRRL No Appraisal 1 Unlimited $75,000 - $533,850 $533,851 - $1,200,000 Cash-out Refinance % $75,000 - $645,300 $645,301 - $1,200,000 High Balance Purchase, Cash-out, IRRRL % $75,000 - $801,950 $801,951 - $1,200,000 2, 3, 4 IRRRL No Appraisal 1 Unlimited 620 Maximum Potential Guaranty Second Home and Investment Property Base Loan Guaranty Conforming IRRRL % 580 $45,000 50% of Loan High Balance IRRRL % 600 $45,001 - $56,250 $22,500 Funding Fee $56,251 - $144,000 40% of Loan with a maximum of $36,000 Type of Veteran Down Payment 1 st Time Subsequent $144,001 - $417,000 25% of the Loan with a maximum of $104,250 Purchase > $417,001 5 Lesser of 25% of VA county limit, OR 0% - <5% 2.15% 3.30% 25% of loan amount Regular Military 5% to < 10% 1.50% 1.50% NOTES 10% 1.25% 1.25% 1. Maximum guaranty is 25% of VA high costs county limit. 0% - <5% 2.40% 3.30% 2. VA guaranty or combination of guaranty plus down payment/ subject Reservists/National Guard 5% to < 10% 1.75% 1.75% equity must equal 25% of the total loan amount including funding fee. 10% 1.50% 1.50% 3. The maximum guaranty is the lesser of available entitlement or the Cash-out Refinance maximum potential guaranty amount indicated above. Regular Military 2.15% 3.30% 4. Minimum guaranty of 25% is required on IRRRLs. Reservists/National Guard 2.40% 3.30% 5. CLTV is unlimited. The maximum LTV is 100% unless stated IRRRL: Regular Military AND Reservists/Nat. Guard 0.50% 0.50% otherwise in a subtopic in the EALS Wholesale. Endeavor America Loan Services 07/07/2015 Page 1 of 58

2 Wholesale Endeavor America s Credit Philosophy... 9 Ability to Repay... 9 Age of Documents... 9 Credit Documents... 9 Appraisal... 9 Appraisal... 9 General Information... 9 Appraisal Form Requirements Acreage Age Restricted Properties (55 + senior communities allowed) Carbon Monoxide Detectors Farm Residence Inspection Requirements Minimum Property Requirements New/Existing Construction New/Existing < 1 Year Exhibits and Inspections Proposed/Under Construction Proposed/Under Construction Exhibits and Inspections Notice of Value (NOV) Property Listed for Sale Swimming Pool/Spa Requirements Assets Cash to Close Bank Statements Large Deposits Endeavor America Loan Services 07/07/2015 Page 2 of 58

3 Wholesale Business Funds Documentation Down Payment Earnest Money Gift Funds Retirement Account Sale of Home Assumability Borrower Eligibility Other Eligible Borrowers Foreign Address CAIVRS Certificate of Eligibility Certificate of Eligibility (COE) Automated Certificates of Eligibility (ACE) Credit and Obligations Day Charge Accounts Alimony/Child Support Bankruptcy Chapter Chapter Child Care Expenses Co-Signed Loans Consumer Credit Counseling Endeavor America Loan Services 07/07/2015 Page 3 of 58

4 Wholesale Collections and Delinquent Accounts Deferred Student Loans Delinquent Federal Debt Foreclosures Inquiries Housing History Job Related Expenses Judgments/Tax Liens Modified/Restructured Loans Non-Traditional Credit Payoff of Debt to Qualify Significant Debt Short Sales Community Property States Conversion of Primary Residence Conversion of a Primary Residence to a Second Home Conversion of a Primary Residence to a Rental Property Pending Sale of Real Estate Disaster Re-Inspections Eligible Properties Ineligible Properties Eligible Transactions Ineligible Products or Transactions Employment/ Income Verification Endeavor America Loan Services 07/07/2015 Page 4 of 58

5 Wholesale Active Duty Military Allowances on LES Basic Allowances Flight Pay, Overseas Pay, Combat Pay Special Separation Benefit (SSB) Voluntary Separation (VSI) Auto Allowances Business Loss from Non-Purchasing Spouse Disability Income Foster Care Non-Taxable Income Rental Income Reserve/National Guard Retirement AUS Income Documentation Documentation Alimony/Child Support Gap in Employment Current Employment Documentation Previous Employment De-Minimis Self-Employment Documentation Self-Employed: Personal Tax Returns Endeavor America Loan Services 07/07/2015 Page 5 of 58

6 Wholesale Self-Employed: Commissioned Borrower Self-Employed: Profit & Loss Statements and Balance Sheets Self-Employed: Business Returns Entitlement Guaranty Escrow Waivers Fees and Charges Funding Fee Insurance Interested Party Concessions Manufactured Homes Restrictions General Eligibility Requirements Title II Additions, Modifications Special State Requirements Credit Score Elevation Certificate Flood Zones A & V Engineer s Certification of Foundation Compliance HUD Red Tags HUD Data Plate Ineligible properties Insurance Modular Homes New Construction Site Endeavor America Loan Services 07/07/2015 Page 6 of 58

7 Wholesale Title Binder Well and Septic Maximum Term Occupancy Power of Attorney Qualifying Reserves Interest Rate Reduction Refinance (IRRRL) Non-Credit Qualifying General Guidelines Borrower Eligibility IRRRL Credit Score Funding Fee Guaranty Loan Limit Matrix (LTC, Score, Units) Mortgage Verification Net Tangible Benefit Occupancy Online Status Inquiry (in lieu of COE) Recently Listed Property Subordinate Financing Rate Decrease and Maximum Term Endeavor America Loan Services 07/07/2015 Page 7 of 58

8 Wholesale Loan Documentation IRRRL Credit Qualifying Income/Assets IRRRL Exterior Appraisal (Including Credit-Qualifying IRRRL) IRRRL with NO Appraisal Residual Income Requirement Secondary Financing Underwriting Automated Underwriting (AUS) Manual Downgrades Manual Underwriting Compensating Factors Endeavor America Loan Services 07/07/2015 Page 8 of 58

9 Endeavor America s Credit Philosophy Endeavor America credit philosophy is to offer loan programs with minimal overlays to our clients. Endeavor America evaluates each loan individually based solely on the borrower(s) creditworthiness and in accordance with the following principles: All loans must be submitted to Desktop Underwriter (DU) or Loan Prospector (LP) using a Credco credit report and receive an Approve or Accept rating with the exception of IRRRL. Loans that receive AUS Refer may be manually underwritten with a DTI 50% and 120% residual income. All VA policies as outlined in the VA Handbook and applicable circulars have been met. All requirements of the DU Approve/Eligible or LP Accept/Eligible recommendation have been met for AUS-approvals. All prudent factors have been weighed and evaluated on the loan file and no reasonable doubt remains about the borrower s ability to meet the terms of the loan. Topic Ability to Repay Guidelines Endeavor America will verify borrower s income, employment, assets, credit, recurring expenses and other aspects of the loan to make ensure the borrower can reasonably repay the loan in accordance to VA guidelines. The EALS underwriter must complete an Ability-to-Repay form for purchases and cash-out refinances which will be retained in the loan file. Age of Documents Credit Documents (credit report, employment, income, and assets) must be no more than: Existing Property: 120 days from the Note date. New Construction: 120 days from the Note date. Title Report 90 days from the Note date. Appraisal 180 days from the issuance date of the VA Notice of Value (NOV). Appraisal General Information Endeavor America requires all brokers to be sponsored to transact VA loans. Loans from broker with pending sponsorship will be reviewed on a case by case basis and the broker may not process more than four loans on an annual basis. Transferred Appraisals must reflect the Any Qualified Veteran in the borrower field as per VA Circular Endeavor America Loan Services 07/07/2015 Page 9 of 58

10 Appraisal Appraisal Form Requirements Form 1004 is for 1-unit single family property and the appraisal report must include: Interior photos of the Kitchen All bathrooms Main living area Examples of physical deterioration, if present Examples of recent updates such as restoration, remodeling and renovation, if present Clear, original photos of the front and rear with different views of the subject sides in each photo, subject street views and front view of each comparable. Appraiser to comment if photos from multiple listing service are used (e.g. gated community). Include photos of any improvement, site feature or view that would affect the final market value. Form 1004C for manufactured housing Form 1073 is required for attached condominiums Form 1025 is required on 2-4 unit properties Form 2055 Exterior Appraisal with 1004MC for single family (Forms 1075 & 1004MC for condos) are required for IRRRLs Acreage Acreage must be common for the area Age Restricted Properties (55 + senior communities allowed) The appraisal must reflect the impact that the restrictions have on the property s value and marketability. The appraisal must be supported by comparables with similar restrictions. Borrower(s) must acknowledge the restriction terms by signing a Resale Restriction Notice at closing. Carbon Monoxide Detectors If required by the state the property and the carbon monoxide detectors are missing or nonfunctional: As-is appraisal requires a 1004D completed by the appraiser or a Lender Certification along with supporting photo(s) to verify the detectors have been installed and/or are currently functioning on every floor of the property. Subject to appraisal requires a 1004D completed by the appraiser to verify the detectors have been installed and/or are currently functioning on every floor of the property. Carbon monoxide detectors should not be listed as a MPR on the appraisal report. Endeavor America Loan Services 07/07/2015 Page 10 of 58

11 Appraisal Farm Residence The property must be occupied by the veteran as the primary residence and cannot be income producing. VA only gives value to the home and the physical buildings attached to the land that support the residence. The valuation cannot include any income producing aspects such as livestock, crops, equipment and/or supplies. The loan cannot cover the nonresidential value of the farm land. Inspection Requirements Appraiser must look for and report evidence of wood destroying insect infestation, fungus growth, and dry rot, in addition to any other VA requirements. Refer to VA Circular for guidance on repair inspection processing procedures. Minimum Property Requirements Subject property s overall condition must meet VA s Minimum Property Requirements (MPRs) for safety, sanitation and soundness. All readily observable repairs recommended by the VA appraiser must be satisfied prior to closing. Reference: VA LH, Chapter 12 and applicable VA circulars. New/Existing Construction (completed less than 1 year and never occupied) Builder must be VA approved with a valid VA builder ID number prior to NOV issuance, and Construction is 95% completed in accordance with VA MPRs with only customer preferences left (interior wall finishes, floor coverings, appliances, counter tops, fixtures sinks and toilets, equipment range, dishwasher, disposals, air conditioning compressors (not central A/C), minor trim work, insulation, final grading, sodding/seeding, etc.) Endeavor America Loan Services 07/07/2015 Page 11 of 58

12 Appraisal New/Existing < 1 Year Exhibits and Inspections Subterranean Termite Soil Treatment Builder s Guarantee (Form NPCA-99a/ NPMA-99-A) unless state specific form is more stringent. Form NPCA-99b/ NPMA-99-B is also required if builder treated with soil termiticide. If property is over 95% complete, a termite inspection report may be used. 1 year Builder s Warranty (Warranty of Completion of Construction, VA Form or HUD Form 92544) if property was inspected at least 3 times during the construction process. NOV requirements are: VA Not Inspected Acknowledgment for New Construction with 1-Year Builder s Warranty (NOV item 12a), AND "I am aware that VA did not inspect this property during construction and that VA assistance with construction complaints will be limited to defects in equipment, material and workmanship reported in writing during the one-year VA builder warranty period. 1 year Builder s Warranty on VA Form , Warranty of Completion of Construction OR, if 10-year protection plan, NOV requirements are: Evidence of enrollment in a 10 year insurance protection plan acceptable to HUD, AND VA Not Inspected Acknowledgment for New Construction with 10-Year Warranty (NOV items 12b and 13) "I am aware that VA did not inspect this property during construction and that it does not qualify for VA assistance with construction complaints. Builder Certification on company letterhead, signed and dated by the builder, architect or engineer. I certify that the construction exhibits for [subject legal address] met all local code requirements and are in substantial conformity with VA Minimum Property Requirements, including the energy conservation standards of the 1992 Council of American Building Officials Model Energy Code and the requirement for lead-free water piping. VA also accepts the HUD Form Lead/water distribution system from builder Off street improvements (unless SAR has evidence that the streets, drainage, water and sewer have been completed and accepted for maintenance by the local authority (i.e., the subject is a new home in an older established neighborhood. Clear Final Inspection with photos using VA Form , VA Compliance Inspection Report Certificate of Occupancy Well & Septic, if applicable Endeavor America Loan Services 07/07/2015 Page 12 of 58

13 Appraisal Proposed/Under Construction Builder must be VA approved, and Property must be constructed in accordance with VA Minimum Property Requirements (MPRs) and any applicable VA circulars. Proposed/Under Construction Exhibits and Inspections Certificate of Occupancy Warranty of Completion of Construction (VA Form or HUD Form 92544) Description of Materials (VA Form ) signed & dated by the builder and veteran borrower Plans of the Plot, identifying locations of the well/septic systems (if applicable) All exterior building elevations All floor levels Foundation or basement plan Sectional wall details Builder Certification on company letterhead, signed and dated by the builder, architect or engineer. I certify that the construction exhibits for [subject legal address] met all local code requirements and are in substantial conformity with VA Minimum Property Requirements, including the energy conservation standards of the 1992 Council of American Building Officials Model Energy Code and the requirement for lead-free water piping. VA also accepts the HUD s Builder Certification of Plans, Specifications and Site (Form HUD-92541) Construction Inspections must be completed to ensure: Property was built according to the plans and specifications Property meets VA s Proposed Construction MPRs [Refer to VA LH, Section 12.02] Endeavor America Loan Services 07/07/2015 Page 13 of 58

14 Appraisal IF Property is appraised as: Proposed/Under Construction without 10-Year Insured Protection Plan and 1 year Builder Warranty Proposed/Under Construction with 10-Year Insured Protection Plan and 1 year Builder Warranty Existing Construction with major alterations, improvements, or repairs New/Existing Construction < 1 year old Existing Construction (1 year old) Construction Inspections and Warranty Requirements 1 year builder warranty EITHER ONE of the following compliance Inspections: Local building authority completes inspections at 3 stages of construction and issues Certificate of Occupancy (CO) or equivalent, Stage 1/Foundation: completion of excavation and foundation walls Stage 2/Framing: completion of the superstructure AND below superstructure Stage 3/Final: completion of all onsite and offsite improvements IF local building authority does NOT issue CO, VA will accept copies of the inspections OR written statement from local authority that the required 3 inspections were performed satisfactorily as evidence completion in accordance with all applicable local building codes. BOTH 1 year builder warranty and 10 year HUD accepted insured protection plan are required. If local authority does NOT perform the required inspections, then the lender must certify the property is 100% complete (both on-site and off-site improvements) and that property meets VA s MPRs for existing construction. VA or LAPP underwriter will determine on case-by-case basis, based on the nature of the work: which regular or special inspections are required, if appropriate, AND appraiser or lender will certify satisfactory completion. EITHER 1-Year Builder s Warranty of Completion of Construction (VA Form or HUD Form 92544), OR 10-Year HUD accepted insured protection plan NO warranty is required. Endeavor America Loan Services 07/07/2015 Page 14 of 58

15 Appraisal Changes to Exhibits: change is limited to substitution of mechanical equipment of equal value. After the appraisal was completed, use VA Form , Request for Acceptance of Changes in Approved Drawings and Specifications. VA staff must approve any VA Form Notice of Value (NOV) The Notice of Value (NOV) is issued by an Endeavor America SAR (Staff Appraisal Reviewer) on LAPP cases based on appraisal report completed by the VA fee appraiser. Cases ordered as IND in weblgy will be reviewed by the Regional Loan Center. The veteran must receive a copy of the NOV within 5 days of the NOV issuance. NOV is valid for six months SAR must issue the NOV at the fee appraiser s value estimate reflected in the appraisal report. SAR must consider the local requirements [VA web link: Property Listed for Sale For refinances including IRRRLs, a property listed for sale at the time of the loan application is ineligible for financing with Endeavor America. There is no minimum waiting requirement for properties with expired listings, or have had their listing cancelled or removed prior to the loan application. Swimming Pool/Spa Requirements If the pool/spa is included in appraised value (either above-ground or in-ground): The appraiser must state the swimming pool/spa does not pose any health, safety or environmental hazards. The appraiser must state the pool/spa equipment is fully operational. If the pool/spa is NOT included in appraised value: The appraiser must state the swimming pool/spa does not pose any health, safety or environmental hazards. An empty swimming pool/spa may be acceptable provide one of the following is met: o The swimming pool/spa is secured by a cover that is sufficiently sturdy to prevent a person from falling into the pool or through the cover. o The swimming pool/spa has been filled with dirt o The swimming pool/spa is surrounded by a fence. Endeavor America Loan Services 07/07/2015 Page 15 of 58

16 Assets Endeavor America requires the borrower(s) have sufficient assets to meet the down payment, closing costs not financed into the loan and the difference between the purchase and sales price (if higher), and cash reserves. AUS DU/LP findings will be followed with the exception of Verification of Deposits, which are not accepted by EALS. Cash to Close Bank Statements Large Deposits Verify sufficient cash to cover any veteran-paid closing costs or points AND Verify the difference between the sales price and loan amount IF the sales price exceeds the NOV. Borrower s explanation with source of funds documentation is required for: Large deposits which refers to a deposit amount that exceed 25% of the total qualifying income (or less at underwriter s discretion). Unless readily identified deposit source such as federal/state tax refund, SSA benefit, payroll direct deposit, etc. Current balance is significantly higher than average balance Any bank account opened within 90 days of application date. Business Funds Document borrower s ownership (e.g. business license, corporate/partnership returns) Used for down payment and closing costs (cannot be used for cash reserves) CPA provides a letter stating: Borrower has full use of business funds. No repayment is required and funds are not an advancement against future earnings/cash distributions. The withdrawal of funds does not have negative impact on business and comment on future tax implications. Documentation Down Payment AUS Approve/Accept Loans: Obtain most recent bank statement for each account AUS Refer/Manual Approval Loans: Obtain most recent two (2) months consecutive months for each account No down payment is required by VA (provided the borrower has full entitlement) unless: the sales price exceeds the appraised value, or the requested loan amount exceeds VA county loan limit: Endeavor America Loan Services 07/07/2015 Page 16 of 58

17 Assets Earnest Money Gift Funds Retirement Account Sale of Home Assumability Verify earnest money deposit (EMD) if: EMD will be credited back to the veteran borrower at closing EMD exceeds 2% of sales price Appears excessive based on the borrower s accumulated savings history. Document as follows: Copy of the cancelled check and deposit holder s acknowledgment of receipt. Bank statements to source the deposit check as determined by the AUS findings. Gift letter must: Certify the gift was not sourced from an interested party to the transaction (e.g. seller, realtor, builder, loan originator, etc.) Identify the relationship, donor s name and address, gift amount and date given, donor s source account Executed by the donor and recipient(s) Donor may be: An immediate family member A close friend with a clearly defined and documented interest in the borrower A local, federal, state agency, or a VA approved non-profit agency that is considered an instrumentality of the government Donor s ability must be documented from an acceptable source (not an interested party). Cashon-hand is not acceptable. Document the gift transfer 60% of the vested balance can be considered as cash reserves AUS Approve/Accept Loans: Obtain executed HUD-1 or equivalent closing statement If relocation, obtain buyout agreement. AUS Refer/Manual Approval Loans: Additionally, verify source of funds for payment of any differences between sales price and loan amount plus closing costs, if sales price exceeds the NOV. A VA mortgage is assumable by qualified borrower(s) during the life of the loan. Endeavor America Loan Services 07/07/2015 Page 17 of 58

18 Borrower Eligibility For veterans who served active duty and were honorably discharged, the minimum service periods shown in the following table are based on continuous days of active duty. Eligible Veterans Era Dates Minimum Service Requirement World War II 09/16/ /25/ days Post World War II 07/26/ /26/ days Korean 06/27/ /31/ days Post-Korean 02/01/ /04/ days Vietnam 08/05/ /07/ days Post-Vietnam 05/08/ /07/ days 09/08/ /01/ years: Enlisted after 09/07/1980 and Officer after 10/16/1981 Persian Gulf 09/08/1980 present 2 years OR full period called to active duty, not less than 90 days Other Eligible Borrowers Additionally, the following table addresses identifies other eligible borrowers including Reserves/National Guards. The service times for Reservists and Nation Guards can be pieced together and do not have to be consecutive. Active Duty, Reserves/National Guards Other Eligible Borrowers Minimum Service Requirement Active duty member 90 days minimum wartime service when called up under U.S.C. Title days minimum peacetime service of continuous active duty. Active Reserve or National Guard 6 years in Selected Reserves Except if discharged due to a service connected disability before completion of 6 years. Honorably discharged from service unless: Inactive status awaiting final discharge, or Still serving Other Eligible Borrowers Unmarried surviving spouse POW/MIA Spouse Endeavor America Loan Services 07/07/2015 Page 18 of 58 Spouses Minimum Service Requirement No time requirement. Veteran must have died on active duty or from a service-connected disability. VA Form , Request for Determination of Loan Guaranty Eligibility Unmarried Surviving Spouses must be completed and submitted to applicable VA Eligibility Center in Winston Salem, NC. or Atlanta, GA. A loan obtained with a surviving spouse COE requires an affidavit at closing that the surviving spouse is not married. Veteran must have been POW or MIA for 90 days.

19 Borrower Eligibility CAIVRS Certificate of Eligibility Foreign Address Borrowers currently residing in a foreign country must have a primary residence or second home in the U.S. The borrower s U.S. residence must be reflected as the present address on the loan application. The borrower s foreign address must be reflected as the mailing address on the loan application. A LOE from the borrower must be obtained to explain the borrower s current residency situation. Perform and document a CAIVRS screening on each veteran and any co-obligor. An applicant cannot be considered a satisfactory credit risk if he or she is presently delinquent or in default on any debt to the federal government until the delinquent account has been brought current or satisfactory arrangements have been made between the veteran and the federal agency. CAVIRS is not required for non-purchasing spouses in community property states. Certificate of Eligibility (COE) The Certificate of Eligibility (COE) shows the available entitlement amount that VA will use to guaranty the loan. The borrower who is using his/her entitlement to guarantee the loan must be listed as the primary borrower. COE can be obtained by sending to the appropriate VA Eligibility Center the following documentation: VA Form Proof of service documentation (DD214, active duty statement of service, or Reserve/National Guard points statement) Copy of HUD-1 if veteran had a previous VA home that was sold Automated Certificates of Eligibility (ACE) Lenders can obtain an online COE through the ACE system accessed on VIP website: ACE certificate has an authorization number for authenticity ACE cannot make all determinations for Reserves/National Guard Prior VA loan foreclosure Insufficient time/discharge type Unmarried surviving spouse Endeavor America Loan Services 07/07/2015 Page 19 of 58

20 Credit and Obligations 30-Day Charge Accounts Alimony/Child Support Open 30-day charge accounts (monthly payment reported as equal to outstanding balance or as $0) requires the balance to be paid in full every month. If additional liquid assets are verified to sufficiently cover the unpaid balance, the debts may be excluded from the DTI. Otherwise, the entire outstanding balance must be included in the DTI. Verify the payment amount and current status of the account Delinquent child support must be considered in the overall creditworthiness If the account is >90 days past due and there is no repayment arrangement, downgrade to a Refer. Bankruptcy Chapter 7 AUS Approve/Accept: a Chapter 7 bankruptcy may be disregarded if discharged more than 2 years ago. Manual underwrites or AUS Refer allow Chapter 7 that was discharged within 1-2 years provided both requirements are met: Obtain complete and thorough documentation trail of the circumstances that led up to the bankruptcy were beyond the borrower s control (e.g. unemployment, prolonged strikes, medical bills not covered by insurance). Document reestablished credit with 4 consumer debts opened after the bankruptcy with satisfactory 12 months pay history Bankruptcy discharged within the past 12 months is not permitted. Chapter 13 Documentation of debt restructure Most recent 12 months acceptable payment history in accordance to the Ch. 13 Approved Plan. Court s approval to proceed with VA loan If borrower converts a Chapter 13 into Chapter 7 that was subsequently discharged within the past 12 months, then refer to Chapter 7 guidance above. Endeavor America Loan Services 07/07/2015 Page 20 of 58

21 Credit and Obligations Child Care Expenses Co-Signed Loans Consumer Credit Counseling Collections and Delinquent Accounts Deferred Student Loans Delinquent Federal Debt Child care letter is required for all children 13-years-old or younger (state specific requirement supersedes) and must include: child care costs, name and address of the provider) Child care expenses must be included in the DTI and residual income If there is no child care expense, obtain an explanation. A co-signed loan may be excluded from the borrower s monthly obligations with: Documentation loan payments are being made by someone else, AND Verification that the loan is current and being paid on time Late payments reported on debts assigned to the ex-spouse in a divorce do not need to be charged to the borrower, if the delinquencies occurred after the divorce. Consumer Credit Counseling Services (CCCS) is acceptable if ALL of the following are met: Documentation of debt restructure is required Acceptable 12 months payment history of debts included in the consumer s debt restructure. Counseling agency provides written authorization to proceed with new VA loan. AUS Approve/Accept loans: the credit has met VA guidelines and the CCCS is not impacting the loan. Consequently, a written authorization is not necessary. Any additional requirements per AUS findings. Delinquent accounts including collections do not necessarily have to be satisfied prior to closing, subject to the underwriter s discretion and the AUS findings. Reestablished credit with 12 months satisfactory payments after the date of the last late payment if prior derogatory payments didn t involve a bankruptcy. Qualify with the monthly for ALL student loans due within 12 months of closing. Education loans with > 12 months verified deferment may be excluded in the debt calculation. ANY delinquent federal debt (e.g. student loans; tax liens; etc.) must be brought current, paid in full, resolved with satisfactory repayment plan between the federal agency and the borrower. Written verification is required from the federal agency to document that the delinquency has been paid in full, or repayment arrangements have been established. Even though a debt may be satisfied, it doesn t take away from the fact the delinquency occurred and must be considered in the credit risk analysis. Endeavor America Loan Services 07/07/2015 Page 21 of 58