Underwriting Guideline Matrix

Transcription

1 Program / Product Code: 30 Year Fixed (W601) Subject to Change Without Notice Valid as of: Copyright 2016 Skyline Financial Corp. dba Skyline Home Loans, Nationwide Mortgage Licensing System (NMLS) Company ID# Arizona Mortgage Banker License #927740, Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act File No: , Georgia Residential Mortgage Licensee, Oregon Mortgage Lender License ML 2797, Washington Consumer Loan Company License CL Refer to and input NMLS#12072 to see where Skyline Financial Corp. is a licensed lender. View full NewLeaf Wholesale footprint here.

2 - 30 Year Fixed (W601) Please note that this matrix is intended as an aid to help determine whether a loan is eligible for financing. It is not intended as a replacement for guidelines. Users are expected to know and comply with requirements. Additionally, this matrix includes overlays, which may be more restrictive than requirements. A thorough review of this matrix is highly recommended. For any circumstance that is not addressed in this matrix, refer to the Handbook. Owner Occupied: Purchase and Rate / Term Refinance Transaction Parameters # Units Conforming Max Loan Amount - Contiguous 48 States LTV/CLTV Min FICO 1 $417,000 Including Financed Guarantee Fee 100% 640 General Guidelines Maximum LTV is 100% of the appraised value, regardless of sales price and may include all of the recurring and nonrecurring Maximum LTV's closing costs as long as LTV does not exceed 100% The maximum LTV may exceed 100% of the appraised value only by the amount of the Guarantee Fee being financed in the loan amount The maximum loan amount permitted will be limited by the maximum allowed Household Income limitations, but, can never exceed $417,000 including the guarantee fee Maximum CLTV's CLTV is unlimited for Purchase or Refinance Attached / Detached SFR s and PUD s & Modular Homes Condominiums currently approved by HUD, VA, & FNMA. To verify that a project is HUD approved, go to Site Condo s permitted, use 1073 form Leaseholds All properties must be located in a rural area as designated by the local RHS office. To determine if a property is located Eligible Properties in a designated rural area, go to the Rural Family Housing website From the home page, go to Property Eligibility section and select Single Family Housing. Enter the property address to get an instant determination or to view a map. No portion of the land is allowed to be tillable, rentable or capable of producing income. GUS findings or the local office may require evidence that the land cannot be subdivided Properties may only have minimal, small outbuildings. (A silo or large barn, etc. could be rented out, making the property ineligible for financing.) Properties must be located on a paved or all weather roads Properties must have dependable water and waste disposal systems that are approved by local authorities. 1 unit properties with accessory units Cond-hotels, Co-ops, Timeshare Units, Manufactured Homes Properties subject to the right of redemption Properties located in an area not designated as rural by RHS Working farms, ranches, orchards, commercial operations, mixed use properties, wind turbines, cell towers Unique Properties Geodesic domes, stilt foundations, etc. Ineligible Properties Properties with water purification system 2 4 unit properties Condo / PUD with pending litigation Properties located in a flood or mudslide zone Properties without a permanent heat source and, if typical for the area, cooling (Excluding Hawaii) Properties with problem drywall (aka Chinese drywall) Loans with a Conditional Commitment Issued by on or after October 1, 2015: The upfront Guarantee Fee is 2.750% for purchases and refinances, with a 0.5% annualized monthly fee for the life of the loan. If the initial Guarantee Fee is financed, the Fee calculation is based on the final loan amount, which results in an Guarantee Fee amount slightly higher than 2.750%. To confirm the upfront and monthly amounts, use the Guarantee Fee Calculator at Two months of the monthly guarantee fee payments are collected at time of closing Transactions Subject to 's Funding NewLeaf will not close a loan where the Conditional Commitment is subject to Funding Authorization Authorization Contingency Eligible States AZ, CA, CO, CT, FL, GA, HI, ID, MD, NE, NM, OR, TN, TX, UT, WA & WV Minimum Loan Amount $75,000 Payoff of existing guaranteed loan, plus closing costs, not to exceed 100% LTV is permitted prior to financed Guaranty Fee Refinances where the current financing is NOT a loan to the applicants is not permitted Streamline & Streamline Pilot Refinances are ineligible. If the credit report reflects the current mortgage lender for the subject as, then the existing loan is a Direct loan and is ineligible under any refinance program Properties with in-ground pools are not eligible for refinancing Cash Out Refinances are not permitted Borrower(s) must have made a minimum of 6 payments on the current loan to be eligible for refinancing Refinances All payments for the previous 6 months must have been made in the month due (0 x 30 only) Refinance loans are permitted for properties in areas that have been determined to be non-rural since the current loan was funded Borrower(s) may only receive reimbursement for personal funds advanced for loan purposes such as the appraisal or credit report fee. Any nominal cash out to the borrower resulting, due to final escrow and interest calculations must be applied to a principal reduction of the new loan The interest rate on the new loan must be lower than the loan being refinanced Subordinate Financing Eligible Terms 30 Year Fixed Ratios - AUS Approval Through GUS 29 / 41% or as accepted by GUS AUS Loans must have a GUS approval Manual Underwriting Purchases: No maximum CLTV, however, subordinate financing is only permitted from a non-profit or religious organization OR a federal, state or local government agency Refinances: No maximum CLTV. All existing subordinate financing is permitted and must remain in secondary position All Manual Underwrites must be submitted to Rural Development Ratios may not exceed 29 / 41 and must have received a Refer through GUS If ratios exceed 29 / 41, a waiver may be requested from Rural Development. As of May 1st 2013, Rural Development will not grant a DTI waiver unless all of the following conditions are met: Page 1 of 4 Last Updated 3/24/2016

3 - 30 Year Fixed (W601) o The PITI is between 29 and 32 percent or the total debt ratio is between 41 and 44 percent AND o All applicants have a credit score of 680 or greater AND o At least one of the compensating factors listed below is present and supported Compensating Factors: The new PITI is equal to or less than the borrower s current housing for the 12 months preceding the loan application. This must be verified with either a complete Verification of Rent or the credit report. Rent or mortgage verification from a family member is not permitted At least three months PITI. This must be verified with two months consecutive bank statements. All employed borrowers have been continuously employed with their current primary employer for a minimum of two years. requires three separate income calculations to determine eligibility: Annual Household Income Income from all household members, whether they will be obligated on the subject loan or not. Adjusted Household Income Annual Household Income minus allowed deductions. Allowed deductions include: o Number of household members, o Child care expenses if the child care allows a borrower to attend school or work but cannot be provided by another household member, o Medical expenses for any elderly household member and the expenses associated with the care of disabled persons in the home. Repayment Income Income from Borrowers obligated on the subject loan. Including but not limited to: W2, Selfemployed, Retirement, Child Support, Alimony, etc Income Limits and Eligibility / Calculations Total adjusted income for the household cannot exceed the moderate level for the area as established in RD Instruction 1980-D, Exhibit C... Please note that borrowers and other household members may have income that is required to be included in the Annual / Adjusted Income calculation, but cannot be included in income used for qualification purposes. To determine annual household income and adjusted household income eligibility, go to the Rural Development web site at From the home page, select Income Eligibility. Enter the state, then county to calculate income and allowed deductions. Verification of Household Assets as Pertains to Income: Contingent Liability Conditions of Approval Non-Taxable Income Section (d)(3)(iii) requires net family assets with a cumulative total of $5,000 or greater to be considered in the Annual Household Income calculation. The greater of the actual income derived from all net family assets or a percentage of the value of such assets based on the current passbook saving rate must be used when calculating Annual Household Income. Section (a) defines net family assets as the value of equity in real property, savings, IRA s, demand deposits, the market value of stocks, bonds, other forms of capital investments. 401K accounts are NOT considered in net family assets. For Household assets that will exceed $5,000 after closing, use dividend, interest or capital gains income reflected on prior year(s) tax returns. If none are reported, use current savings or certificate of interest rates. If a borrower is co-obligated on a mortgage, car loan, student loan or any other obligation including credit cards - the monthly payments must be included in the DTI unless documentation is provided to prove that the other party that is coobligated on the account has been making payments during the most previous 12 month period and there have been no delinquencies. This must be documented by 12 months cancelled checks or other acceptable evidence including but not limited to a copy of the payment coupon and 12 months bank statements. Accounts solely in the borrower s name must always be included in the DTI, regardless of who is making the payments. NewLeaf will submit the fully underwritten file to Rural Development requesting a Conditional Commitment for Loan Note Guarantee." This is for both GUS and Manual underwrites. Non-taxable income may be grossed up 25% for section 8 income. All other non-taxable income may be grossed up by the borrower's Federal Tax bracket... (tax obligation divided by the taxable income from the most recent tax return equals percentage to be used OR documentation from the IRS tax code) A flat percentage is not permitted. Required forms: Required Forms Eligible Borrowers Homebuyer Counseling Effective with loans submitted to the office on and after May 1, 2013 each loan file must utilize the following forms, as referenced in RD announcement 4714: o Attachment A: Household and Repayment income Calculation worksheet o Attachment C: Origination Submission checklist o Attachment D: Closed Loan Submission Checklist All forms are available on s website or NewLeaf's website All borrowers must have a valid social security number U.S. Citizens Permanent Resident Aliens: Prior to submission of the Request for Single Family Housing Loan Guarantee, a copy of the front and back of the borrower s Green Card must be sent to the local RD office for approval by the System Alien Verification for Entitlements (SAVE) System. An approved Green Card application is not acceptable Non-Permanent Resident Aliens: Borrowers must provide acceptable visa per guidelines to document their eligible immigration status. All Non-Permanent Resident Aliens must have a minimum of 2 years residency, credit and employment AND currently reside and work in the U.S. Additionally, verification that income used to qualify will continue for at least 3 years will be required. Funds for closing must be in a U.S. bank. Inter-vivos or Living Trusts are permitted as long as the following requirements are met: o The borrower(s) must be the Trustee, Settler and Beneficiary o Vesting must be solely in the name of the trust o A copy of the Trust must be provided as well as an Attorney Opinion Letter. In California only, a California Trust Cert is permitted If required by the state or local RD office, all first time home buyers must complete a homebuyer education course and provide a certificate of completion prior to closing. Fractional Title Vesting is not permitted. For Example: Borrower A s vested interest is 70% and borrower B s vested interest is 30%. Corporation, LLC s, Irrevocable Trusts, Partnerships, Non-US citizen who does not have lawful residency in the U.S., Ineligible Borrowers Individuals with Diplomatic Immunity, Borrowers with TIN numbers, Foreign Nationals, Land Trusts, Conservatorships, Non-Occupant Co-Borrowers Non-Arm s Length Transactions Escrow Holdbacks Not permitted unless the subject property is bank owned Financing Concessions Financing concessions cannot exceed 6% of the sales price. Page 2 of 4 Last Updated 3/24/2016

4 - 30 Year Fixed (W601) Condominiums Condominiums are acceptable when the project has been approved by FNMA, HUD or VA. Written documentation to show agency approval must be provided. Florida Condos Only allowed for primary residence / purchase or rate and term up to the lesser of 80% LTV or per product guideline Florida Condos in LeHigh Acres are not permitted A complete HOA Cert is required to ensure the project still meets agency requirements Non-Purchasing Spouse / Non- Borrowing Spouse Non-Occupant Co-Borrower Identity of Interest Number of Properties Owned Credit Requirements Bankruptcy Except for obligations specifically excluded by state law, the debts of the non-purchasing / non-borrowing spouse must be included in the borrower s qualifying ratios, if the borrower resides in a community property state, OR property being insured is located in a community property state. The non-purchasing / non-borrowing spouse s obligations must be considered in the debt-to-income (DTI) ratio unless excluded by state law. A credit report must be provided for the nonpurchasing / non-borrowing spouse in order to determine the debts that must be counted in the DTI ratio. The nonpurchasing / non-borrowing spouse must provide a signed / dated Borrower s Credit Authorization Non-purchasing / non-borrowing spouse s judgments and federal debt must be paid or provide an acceptable repayment agreement which has been seasoned for 12 months and all payments have been made on time Not Permitted Identity of Interest transactions is restricted to a maximum LTV of 85%. However, maximum financing above 85% LTV is permitted under the following circumstances: A family member purchasing another family member's principal residence An employee of a builder purchasing one of the builder's new home or models as a principal residence A current tenant purchasing the property that the tenant has rented / occupied for at least six months prior to the date on the purchase contract. A lease or other written evidence must be submitted verifying occupancy Corporation transfers an employee to another location, purchases that employees home, and then sells the home to another employee Restricted Family Member Transactions: If the property being sold from one family member to another is the property seller's investment property, the maximum mortgage is the lesser of either 85% of the lesser of the sales price or appraised value OR the current maximum mortgage calculation formula per ML Definition of Family Member Includes: Child, parent or grandparent (biological, foster or step) Spouse Legally adopted child or Foster Child Brother / stepbrother or sister/stepsister Aunt or Uncle Identity of Interest Additional Restrictions: "Flip": transactions are not permitted An "as is" appraisal is required Commission from the sale or listing of the property may not be used for the down payment The borrower(s) may not presently own a property which is within the local commuting area and is structurally sound, functionally adequate and large enough to meet the needs of the borrower(s) household. The borrower may only retain ownership in one property other than the subject property. It must meet the above criteria for retaining ownership and must be outside of the borrower(s) local commuting area or not be structurally sound or functionally adequate. Each borrower must have at least two valid credit scores to be eligible Nontraditional credit is not permitted. Disputed Accounts: If a borrower s credit report indicates a trade line in dispute, a GUS Accept will be downgraded to a refer unless one of the following conditions is met: The trade line has a zero balance The trade line is marked paid in full or resolved The trade line has a balance of less than $500 and is more than 24 months old. For loans manually underwritten, a 12 month rental history must be verified for borrowers with credit scores less than 680. Either a VOR from an independent management company or 12 months cancelled checks (front and back) must be provided. 0 x 30 in previous 12 months Chapter 7-36 months seasoning Chapter month seasoning since completion of payments Foreclosure, Pre-foreclosure, Short Sale, 36 months seasoning from time of sale Short Refinance, Deed-in-Lieu CAIVRS All borrowers must obtain a clear CAIVRS rating. CAIVRS will be run by GUS. Judgments & Collections All judgments and collection accounts must be paid Installment debt-allowed, payment excluded from qualifying ratios Paying Off Debt Revolving Debt may be paid off to qualify per underwriter discretion upon review of DTI, Income, Assets Non-Traditional Credit Not allowed Paying Down Debt Not allowed Installment Debt Installment debt with more than six payments remaining must be included in the borrowers DTI With Less Than Six Months Remaining If an installment debt has less than six months remaining but the monthly payment is determined to be significant relative to the borrowers income, it must be included Cash Back to Borrower(s) at Closing Assets The HUD-1 cannot reflect cash back to the borrower(s) except for items prepaid by the borrower outside of closing. These would include the credit report, appraisal, earnest money deposit or pre-paid hazard insurance with appropriate documentation. Borrower s with cash on hand must meet the profile for a borrower who has minimal does not use traditional bank accounts AND are considered on a case by case basis Use of Business Funds: Borrower must file a Schedule C or be 100% owner of the corporation or LLC A CPA letter stating that the use of business funds will not negatively impact the business is required A cash flow analysis of the business and its capacity must be performed by the underwriter, broker must provide a minimum of three months complete business bank statements although the underwriter may request more if needed to determine eligibility Page 3 of 4 Last Updated 3/24/2016

5 - 30 Year Fixed (W601) Gifts are permitted for down payment and closing costs, but are not allowed for reserves for the purpose of compensating factors when requesting ratio waivers from Gift funds from a household member are prohibited In addition to a signed / dated gift letter, documentation to show proof of receipt of the gift is required as well as donor s ability to give the gift. Proof of receipt of the gift may be documented as follows: Gifts If the gift funds are already in the borrower s account, provide a copy of the wire, cancelled check or cashier s check from the donor If the gift funds are not already in the borrowers account, provide a copy of the wire transfer to escrow, a copy of a cancelled check or cashier s check to the borrower and deposit receipt to show the gift being deposited into the borrower s account. Cash on hand is not an acceptable source of the donor s gift funds Reserves are not required; however, they may be used as a compensating factor to request DTI waivers. Reserves must come from the borrower s own funds and may not be a gift. Reserves For Household assets that will exceed $5,000 after closing, use dividend, interest or capital gains income reflected on prior year(s) tax returns. If none are reported, use current savings or certificate of interest rates. Documentation Validated IRS Tax transcripts are required for each borrower whose income is utilized as a source of repayment. The most recent two year tax transcripts are required. Type / Tax If last year's tax returns are not able to be validated and the borrower is qualified with tax returns from the prior two years, Transcripts a signed / dated P & L for last year is required. Collateral All properties must meet HUD minimum property requirements. Additionally, the appraiser must state that the water heater is strapped, a head and shoulders inspection was done and all utilities are turned on and in working order In-Ground Swimming Pools: State Directors or their designees can approve the purchase of properties that include an inground swimming pool as long as the contributory value of the swimming pool is not included in the guaranteed loan amount. Typically, a swimming pool has a contributory value and adjustments are made for comparable sales that do not have swimming pools. It is possible for a swimming pool to not have a contributory value and the appraiser should address this issue in the appraisal report. An appraiser may not indicate that a swimming pool has no contributory value simply because the loan is a Rural Development guaranteed loan. Per USPAP, the appraiser must address the swimming pool and its contributory value relative to the market. If the in-ground swimming pool has a contributory value, it will be deducted from the appraisal before the maximum loan Appraisal amount is computed. Requirements Private Septic System must be certified to be in good working order by an FHA Appraiser, licensed septic professional, government health authority or qualified home inspector. Private Well/Water Supply must have a Well Cert from the local health authority or state certified laboratory The value of the site cannot exceed 30% of the total value of the property. If the land value exceeds 30%, the appraiser must document that the site value is typical for the area and confirm that the land cannot be subdivided into two or more sites. The local office has final determination for accepting properties with > 30% land value. No portion of the land is allowed to be tillable, rentable or capable of producing income. GUS findings or the local office may require evidence that the land cannot be subdivided Properties may only have minimal, small outbuildings. (A silo or large barn, etc. could be rented out, making the property ineligible for financing.) Properties must be located on a paved or all weather road Properties must have dependable water and waste disposal systems that are approved by local authorities. Deed Restrictions Properties with deed restrictions that limit transferability of title, including but not limited to age, income, sales price, etc. All projects must be HUD, VA or FNMA approved Site condominiums do not require project approval, however, they are required to meet agency minimum project standards Condominiums Florida condos Only allowed for primary residence/ purchase or rate/term up to the lesser of 80% LTV or per product guideline To look up a project to verify that it is HUD approved, go to and other links California properties with non-permitted space or additions are not acceptable. Unpermitted All other states: Non-permitted space or additions are not permitted unless approved in writing by the local Rural Development office. Originators should contact your local Rural Development office and include evidence of the RD office Additions response with the loan submission. If not requested as indicated, underwriting must request and receive the RD office s acceptance / response prior to Final Submit Properties Recently Listed for Sale Listing must be cancelled at time of application and appraisal date If the property has been owned by the seller less than 90 days prior to the date of the signed loan application, the Property Flipping Policy (properties resold within 90 days of purchase) following applies: Non-Arm s length transactions are prohibited A full 1004 / 1073 appraisal is required Significant Increases in value must be adequately supported by comparables and supported by evidence of improvements made via commentary by the appraiser with color photos of improvements. Properties with multiple transfers over several months after an REO sale or short sale are not eligible Page 4 of 4 Last Updated 3/24/2016