Underwriting Guideline Matrix

Transcription

1 Prgram / Prduct Cdes: FHA 30 Year Fixed (W201) FHA 20 Year Fixed (W202) FHA 15 Year Fixed (W213) FHA 10 Year Fixed (W214) FHA 20 Year Fixed High Balance (W208) FHA 15 Year Fixed High Balance (W219) FHA 10 Year Fixed High Balance (W220) FHA 5 Year ARM (W225) FHA 30 Year Fixed High Balance (W207) NewLeaf Whlesale FHA ID Number: SKYLINE FINANCIAL CORPORATION Subject t Change Withut Ntice Valid as f: 12/18/2017 Cpyright 2017 Skyline Financial Crp. dba NewLeaf Whlesale, Natinwide Mrtgage Licensing System (NMLS) Cmpany ID# Arizna Mrtgage Banker License #927740, Licensed by the Department f Business Oversight under the Califrnia Residential Mrtgage Lending Act File N: , Clrad Registered with Clrad Divisin f Real Estate, Flrida Mrtgage Lender/Servicer License N. MLD947 issued by the Flrida Office f Financial Regulatin, Gergia Mrtgage Lender License #42980, Hawaii Licensed by the Hawaii Divisin f Financial Institutins N. HI , Idah Licensed by the Idah Department f Finance MBL-7422, Illinis Residential Mrtgage License # MB , Luisiana Residential Mrtgage Lending License, Nebraska Mrtgage Bank License, New Jersey Residential Mrtgage Lender License, New Mexic Financial Institutins Divisin, Registered Mrtgage Cmpany License # 01653, Oregn Mrtgage Lender License ML-2797, Suth Carlina Mrtgage Lender / Servicer License MLS #12072, Tennessee Mrtgage License #108815, Texas Registered with Texas Department f Savings and Mrtgage Lending, Utah Licensed by the Divisin f Real Estate License # , Virginia Lender License MC-5861, Washingtn Cnsumer Lan Cmpany License CL This is a business t business cmmunicatin intended fr Real Estate and Lending Prfessinals nly. Refer t and input NMLS #12072 t see where Skyline Financial Crp. is a licensed lender.

2 NewLeaf Whlesale FHA ID Number: SKYLINE FINANCIAL CORPORATION Please nte that this matrix is intended as an aid t help determine whether a lan is eligible fr FHA financing. This matrix is nt intended as a replacement fr FHA guidelines. Users are expected t knw and cmply with FHA requirements. Additinally, this matrix includes verlays, which may be mre restrictive than FHA requirements. A thrugh review f this matrix is highly recmmended. Fr any circumstance that is nt addressed in this matrix, refer t the HUD Handbk Transactin Parameters LTV /CLTV Owner Occupied: Purchase FICO 96.50% / 100% 600 LTV /CLTV Owner Occupied: Rate / Term Refinance FICO 97.75% 600 LTV /CLTV Owner Occupied: Cash Out FICO 85.00% 600 Mrtgage Insurance: Purchase, Rate/Term, Cash Out 15 Year Term **Effective with case number assignments n r after June 3, 2013** Lan Limits General Guidelines FHA mrtgage limits fr all areas: Maximum Base Lan Amunt cannt exceed the FHA Statutry Mrtgage Limits fr each cunty. The abve limits are the maximum allwable lan amunts. See link abve fr specific FHA Cunty Mrtgage Limits. Maximum CLTV's Purchase: Max CLTV is % Nn-Streamline Rate/Term Refinance: Max CLTV is 97.75% Cash Out: Max CLTV is 85.00% Refer t FHA Matrix fr details Prperty Types Ineligible Prgrams Eligible: SFR, 2-4 Units, Cnd's (Must be FHA Apprved), PUDs, Manufactured Husing, Rural Prperties in accrdance with HUD guidelines & must be residential in nature Ineligible: Htel/Resrt Prjects, Mbile Hmes, Cnd-htels, Gedesic Dmes, Incme Prducing Prperty, Unimprved Land and C-ps, Lava Znes 1 & 2 203k, Hawaii Hmelands, Cnstructin Financing, Cash Out in Texas, Hpe, Indian Reservatin, GPM's, N Energy Efficient Hmes (EEH), MCCs Eligible States AZ, CA, CO, FL, GA, HI, ID, IL, LA, NJ, NE, NM, OR, SC, TN, TX, UT, VA & WA Minimum Lan Amunt $75,000 Maximum Lans t One Brrwer NewLeaf Whlesale SM, a divisin f Skyline Financial, maximum expsure per brrwer is limited t the lesser f 4 prperties r $2,000,000 in aggregate lans Purchases Purchase: Brrwer must cntribute 3.5% twards the transactin frm their wn funds r anther acceptable surce. See Assets sectin fr details Page 1 f 14 Last Updated 12/18/2017

3 Limited Cash Out/Rate & Term Refinance: Refinances Maximum LTV is 97.75%: When brrwer has ccupied subject prperty fr the previus 12 mnths, OR When the brrwer has acquired the subject prperty within the previus 12 mnths and has ccupied the subject prperty since: Acquisitin, and Case number assignment Maximum LTV is 85%: When the brrwer has ccupied subject prperty fr less than 12 mnths prir t the case number assignment date, OR When the Brrwer has acquired the subject prperty within the previus 12 mnths and has nt ccupied subject prperty fr the entire perid f wnership Prceeds can be used t pay ff a first mrtgage regardless f age Prceeds can be used t pay ff any junir liens that are purchase mney r any junir liens that have been seasned at least 12 mnths. If the junir lien being paid ff is a HELOC and any draws within the past 12 mnths have nt exceeded $1000 besides dcumented repairs, the lien may be paid ff with prceeds f the lan. Pay related Clsing Csts and Prepaid items Disburse cash t the brrwer in an amunt nt t exceed $500 Nn-FHA t FHA The LTV is based n the lesser f purchase price r appraised value if prperty is wned less than 12 mnths Nn-Occupant c-brrwers are permitted If any mrtgage tradeline including mrtgage line f credit payments, during the mst recent 12 mnths reflects the fllwing belw the lan must be dwngraded t a manual underwrite: three r mre late payments f greater than 30 Days; ne r mre late payments f 60 Days plus ne r mre 30-Day late payments; r ne payment greater than 90 Days late. Eligible Terms Cash Out: Subject prperty must have been wned and ccupied by the brrwer as their principle residence fr the 12 mnths prir t the date f the case assignment If subject prperty was inherited, the brrwer is nt required t ccupy the prperty fr a minimum perid f time befre applying fr a cash-ut refinance transactin prvided that the brrwer has nt utilized the subject prperty as an investment prperty at any time since the inheritance f the prperty Brrwer may nt have any 30 day mrtgage lates in the past 12 mnths n subject prperty. If Brrwer has any 30 day mrtgage lates in the past 12 mnths n subject prperty, the lan must be dwngraded t a manual underwrite Nn-ccupant c-brrwers are nly permitted if they were n the riginal lan and their incme is nt used fr qualifying purpses Satisfactry six mnths f payment histry is required fr all cash ut transactins See 3 t 4 Unit sectin belw fr further clarificatin Fixed Rate (15, 20, 25 & 30 Year) Sectin 203(b) with ADP cdes f 703 & 734 fr Cndminiums ARMs (5/1) Sectin 203(b) with ADP cde f 729 & 731 fr Cndminiums Qualifying Rate Fixed Rate & ARM's - Nte Rate Ratis Ttal Screcard Apprval Ratis determined by AUS HPML: Any lan that is determined t be HPML has a maximum DTI f 48% Ttal Screcard Refer/Eligible: May be manually underwritten See Manual Underwriting Sectin Belw Eligible Brrwers Ineligible Brrwers U.S. Citizens & Permanent Resident Aliens are allwed with prf f lawful permanent residence Inter Vivs Revcable Trusts: The brrwer(s) must be the settler and the beneficiary and the trustee. Nn-permanent Resident Aliens with acceptable Visas per HUD guidelines and MUST have an EAD card All brrwers must have a valid scial security number Crpratins, LLC's, & Partnerships, Irrevcable Trusts, Nn-US Citizen with n lawful residency status in the US, Individuals with diplmatic immunity, Brrwers with TIN numbers, Freign Natinals, Land Trusts, Nn-Resident Aliens (Freign Natinals) are nt allwed, Brrwers n public assistance, cmmnly knwn as sectin 8, are nt permitted Escrw Hldbacks Permitted: See NewLeaf Brker Manual AUS Lans must have a Ttal Screcard Apprval Gd Neighbr Prgram Prperty must be a HUD REO and has t be designated eligible by HUD SFR, PUDs and Cnds nly Eligible brrwers: Law Enfrcement, Firefighters, EMTs and Teachers Brrwer must agree t ccupy the prperty as a primary residence fr three years withut interruptin Minimum dwn payment is $ AND clsing csts may be included in the mrtgage up t a maximum f 100% LTV based n the current value Required Dcuments: Certificate f Law Enfrcement Officer, Teacher, Firefighter r EMT (HUD-9549-A) Land Use Restrictins Addendum (HUD-9549-B) Assignment f Sales Cntract (HUD-9549-C) Emplyer Verificatin f Participant Enrllment (HUD-9549-E) Page 2 f 14 Last Updated 12/18/2017

4 Mrtgage Insurance Premium Financing Cncessins Nn-Occupant C-Brrwer Identity f Interest See Mrtgage Insurance Premium Matrix in Tls sectin f website Must be entirely financed int the mrtgage (runded dwn t a whle dllar) r paid entirely in cash in full If paid entirely with cash - cash can be cmprised f each r the aggregate f Brrwer s wn funds, Brrwer cash ut refinance prceeds, lender s credit, r seller s credit Nt permissible t pay sme in cash and finance the balance Financing cncessins cannt exceed 6% f the sales price. Nn-ccupying c-brrwers are permitted fr purchase and rate/term transactins. The definitin f a nn-ccupying cbrrwer can be fund in the HUD handbk, sectin The LTV is limited t 75% fr Purchase and Rate/Term transactins when: The nn-ccupant c-brrwer is nt a family member A transactin fr 2-4 unit prperties A family member selling t a family member wh will be a nn-ccupying c-brrwer (see Identify f Interest sectin belw) When a nn-ccupying c-brrwer is participating in a purchase r rate/term transactin, blended ratis are permitted Fr cash ut transactin, nn-ccupant c-brrwers are nly permitted if they were n the riginal lan being refinanced Identity f Interest transactins are restricted t a maximum LTV f 85%. Hwever, maximum financing abve 85% LTV is permitted under the fllwing circumstances: A family member purchasing anther family member's principal residence A current tenant purchasing the prperty that the tenant has rented/ccupied fr at least six mnths prir t the date n the purchase cntract. A lease r ther written evidence must be submitted verifying ccupancy Crpratin transfers an emplyee t anther lcatin, purchases that emplyees hme, and then sells the hme t anther emplyee Restricted Family Member Transactins: If the prperty being sld frm ne family member t anther is the prperty seller's investment prperty, the maximum mrtgage is the lesser f either 85% f the lesser f the sales price r appraised value r the current maximum mrtgage calculatin frmula per ML Definitin f Family Member Includes: Child, parent r grandparent (bilgical, fster r step) Spuse Legally adpted child r fster child Brther/stepbrther r sister/stepsister Aunt r Uncle Identity f Interest Additinal Restrictins: "Flip" transactins are nt permitted An "as is" appraisal is required Cmmissin frm the sale r listing f the prperty may nt be used fr the dwn payment An emplyee f a builder purchasing ne f the builder's new hmes r mdels as a principal residence - is limited t 85% LTV/CLTV CAIVRS & LDP/GSA NewLeaf will run CAIVRS & LDP/GSA, brrwer(s) must btain a clear rating Number f Financed Prperties Maximum number f financed prperties is fur ( 1-4 units) PACE If the prperty has a PACE lien, subrdinatin r pay ff is allwed Paying ff a PACE lien is allwed thrugh a cash-ut transactin Prperties which will remain encumbered with a PACE bligatin are eligible fr FHA-insured financing prvided that the Mrtgagee determines that the fllwing requirements have been met: Under the laws f the state where the Prperty is lcated, the PACE bligatin is cllected and secured by the creditr in the same manner as special assessment taxes against the Prperty; The Prperty may nly becme subject t an enfrceable claim (i.e., lien) that is superir t the FHA-insured Mrtgage fr delinquent regularly scheduled PACE special assessment payments. The Prperty shall nt be subject t an enfrceable claim (i.e., lien) superir t the FHA-insured Mrtgage fr the full utstanding PACE bligatin at any time (i.e., thrugh acceleratin f the full bligatin). Hwever, a ntice f the lien fr the full PACE bligatin may be recrded in the land recrds; There are n terms r cnditins that limit the transfer f the Prperty t a new hmewner. Legal restrictins n cnveyance arising frm a PACE bligatin that culd require cnsent f a third party befre the wner can cnvey the Real Prperty are prhibited, unless such prvisins may be terminated at the ptin f, and with n cst t, the hmewner; The existence f a PACE bligatin n a Prperty is readily apparent t Mrtgagees, Appraisers, Brrwers and ther parties t an FHA-insured Mrtgage transactin in the public recrds and must shw the bligatin amunt, the expiratin date and cause f the expiratin f the assessment. In n case may default accelerate the expiratin date; and In the event f a sale, including a freclsure sale, f the Prperty with utstanding PACE financing, the bligatin will cntinue with the Prperty causing the new hmewner t be respnsible fr the payments n the utstanding PACE amunt. Page 3 f 14 Last Updated 12/18/2017

5 Multiple FHA Lans t ne Brrwer Credit Requirements Disputed Accunts Any persn individually r jintly wning a hme cvered by a mrtgage insured by FHA in which wnership is maintained may nt purchase anther principal residence with FHA mrtgage insurance except under the situatins described belw: Relcatin: A Brrwer may be eligible t btain anther FHA-insured Mrtgage withut being required t sell an existing Prperty cvered by an FHA-insured Mrtgage if the Brrwer is: Relcating r has relcated fr an emplyment-related reasn; and Establishing r has established a new Principal Residence in an area mre than 100 miles frm the Brrwer s current Principal Residence. If the Brrwer mves back t the riginal area, the Brrwer is nt required t live in the riginal huse and may btain a new FHA-insured Mrtgage n a new Principal Residence, prvided the relcatin meets the tw requirements abve. Increase in Family Size: A Brrwer may be eligible fr anther huse with an FHA-insured Mrtgage if the Brrwer prvides satisfactry evidence that: the Brrwer has had an increase in legal dependents and the Prperty nw fails t meet family needs; and the Lan-t-Value (LTV) rati n the current Principal Residence is equal t r less than 75% r is paid dwn t that amunt, based n the utstanding Mrtgage balance and a current residential appraisal Tax assessments, market analyses by real estate brkers, etc., are nt acceptable as prf f LTV cmpliance. Vacating a Jintly Owned Prperty: A Brrwer may be eligible fr anther FHA-insured Mrtgage if the Brrwer is vacating (with n intent t return) the Principal Residence which will remain ccupied by an existing c-brrwer. Acceptable situatins include instances f divrce, after which the vacating ex-spuse will purchase a new hme, r ne f the c-brrwers will vacate the existing prperty. Nn-Occupying C-Brrwer: A nn-ccupying c-brrwer n an existing FHA-insured Mrtgage may qualify fr an FHA-insured Mrtgage n a new Prperty t be their wn Principal Residence. Credit Each brrwer must have at least tw valid credit scres t be eligible If the brrwer des nt have a credit scre, Nn-traditinal credit is permitted. Please refer t the Nn-Traditinal Credit and the manual underwriting sectins fr additinal requirements If Ttal Screcard issues a referral t manual underwriting based n the presence f ne r mre disputed accunts n the credit reprt, the Ttal Screcard finding may be ignred if any f the fllwing circumstances are present: The disputed accunt has a zer balance, r The disputed accunt is marked as "paid in full" r "reslved" r The disputed accunt is bth less than $1000 AND mre than 24 mnths ld If Ttal Screcard issues an apprval and the ttal utstanding balance f all disputed dergatry accunts (excluding medical) is less than $1,000 then dwngrade t a manual underwrite is nt required. Hwever, if the ttal utstanding balance f all disputed dergatry accunts (excluding medical) have an aggregate balance equal t r greater than $1,000 then dwngrade t a manual underwrite is required (Disputed dergatry accunts f a nn-purchasing / nn-brrwing spuse in a cmmunity prperty state are nt included in the cumulative balance fr purpses f determining if the mrtgage is dwngraded t a manual underwrite.) Refer t ML & ML fr cmplete requirements Cntingent Liability If a brrwer is c-bligated n a mrtgage, car lan, student lan r any ther bligatin including credit cards - the mnthly payments must be included in the DTI unless dcumentatin is prvided t prve that the ther party that cbligated n the accunt has been making payments during the mst previus 12 mnth perid and there have been n delinquencies. This must be dcumented by 12 mnths cancelled checks r ther acceptable evidence including but nt limited t a cpy f the payment cupn and 12 mnths bank statements. Authrized Users Accunts fr which the brrwer is an authrized user must be included in the DTI unless the brrwer can prvide dcumentatin that shws the primary accunt hlder has made all the required payments n the accunt fr the previus 12 mnths. If less than three payments have been required n the accunt in the previus 12 mnths, the payment amunt must be included in the DTI. Timeshare A lan secured by an interest in a timeshare must be cnsidered an installment lan Deferred Obligatins Deferred Obligatins (excluding Student Lans) The actual mnthly payment t be paid n a deferred liability must be used, whenever available. If the actual mnthly payment is nt available fr installment debt, must utilize the terms f the debt r 5 percent f the utstanding balance t establish the mnthly payment. Student Lans Regardless f the payment status, either ne f the fllwing must be used: The greater f 1% percent f the utstanding balance n the lan r the mnthly payment reprted n the Brrwer s credit reprt; r The actual dcumented payment, prvided the payment will fully amrtize the lan ver its term. Exclusin f Debts Installment lans nt secured by real estate may be excluded frm ratis IF: The debt will be paid ff within 10 mnths, AND The remaining cumulative payments are less than r equal t 5% f the brrwer s grss qualifying mnthly incme, AND The brrwer may nt pay dwn debt t achieve this percentage Paying Off Debt Installment debt-allwed, payment excluded frm qualifying ratis Revlving Debt may be paid ff in rder t qualify at NewLeaf underwriter s discretin Page 4 f 14 Last Updated 12/18/2017

6 Paying Dwn Debt Nt allwed Revlving Accunts When the credit reprt des nt indicate a mnthly payment fr the accunt, use the payment shwn n the mst current accunt statement r 5% f the utstanding balance Undisclsed Mrtgage Debt When an existing debt r bligatin that is secured by a Mrtgage but is nt listed n the credit reprt and nt cnsidered by the AUS is revealed during the applicatin prcess, the Mrtgagee must btain a verificatin f Mrtgage directly frm the lender must be btained. The lan must be dwngraded t a Refer and manually underwritten if the mrtgage histry reflects: A current delinquency Any delinquency within 12 mnths f the case number assignment date; r Mre than tw 30 day late payments within 24 mnths f the case number assignment date A Mrtgage that has been mdified must utilize the payment histry in accrdance with the mdificatin agreement fr the time perid f mdificatin in determining late mrtgage payments 30 day Accunts Business Paid Debt 30 Day Accunts Are nt included in the DTI if: Dcumentatin t shw that the brrwer paid the utstanding balance in full every mnth fr the past 12 mnths must be prvided (i.e. credit card statements), AND There have been n late payments n in the past 12 mnths, AND Dcumentatin is prvided t shw that funds are available t pay ff the balance in excess f any fund t clse and required reserves If the three requirements abve cannt be met, 5% f the utstanding balance must be included in the DTI Definitin Business Debt in Brrwer s Name refers t liabilities reprted n the Brrwer s persnal credit reprt, but payment fr the debt is attributed t the Brrwer s business. When business debt is reprted n the Brrwer s persnal credit reprt, the debt must be included in the DTI calculatin, unless it can be dcumented that the debt is being paid by the Brrwer s business, and the debt was cnsidered in the cash flw analysis f the Brrwer s business. The debt is cnsidered in the cash flw analysis where the Brrwer s business tax returns reflect a business expense related t the bligatin, equal t r greater than the amunt f payments dcumented as paid ut f cmpany funds. Where the Brrwer s business tax returns shw an interest expense related t the bligatin, nly the interest prtin f the debt is cnsidered in the cash flw analysis. Required Dcumentatin: When a self-emplyed Brrwer states debt appearing n their persnal credit reprt is being paid by their business dcumentatin that the debt is paid ut f cmpany funds and that the debt was cnsidered in the cash flw analysis f the Brrwer s business must be btained. Bankruptcy 2 years must have elapsed since cmpletin r discharge f Chapter 7 Bankruptcy. A perid f less than tw years, but nt less than 12 mnths may be acceptable if the brrwer can shw that the bankruptcy was caused by extenuating circumstances beynd cntrl an has since financially recvered and re-established credit If there is less than 2 years seasning since the Chapter 7 r 13 Bankruptcy, the lan must meet the requirements fr extenuating circumstances and will be dwngraded t a manual underwrite (see belw manual underwriting sectin) 2 years must have elapsed frm the discharge date f a Chapter 13 Bankruptcy. If the Chapter 13 has nt been discharged, then a perid f less than tw years but nt less than 12 mnths may be acceptable if all f the fllwing circumstances are present: There must have been at least a ne year pay-ut perid and All the payments must have been made n time and Brrwer must receive written permissin frm the bankruptcy curt t enter int the mrtgage transactin If the Chapter 13 has been discharged/cmpleted less than a perid f 2 years. There is n seasning requirement and manual underwrite is required. See the manual underwriting sectin. See Extenuating Circumstances sectin fr acceptable extenuating circumstances verlay fr High Balance / Bankruptcy / Freclsure Seasning perid begins frm the date f discharge t the date f the case assignment Freclsure Shrt Sale/Deed-inlieu f freclsure Mdified Lans Judgments/ Cllectins and Charge Offs 3 years must have elapsed since cmpletin f a Freclsure r Deed-in- Lieu. Less than 3 years seasning may be acceptable if the freclsure was a result f dcumented extenuating circumstances that were beynd the cntrl f the brrwer and the lan must meet the requirements fr extenuating circumstances and will be dwngraded t a manual underwrite (see manual underwriting sectin belw) Regardless f the circumstance, the minimum time that must have elapsed since the cmpletin f the freclsure r Deedin-Lieu is 1 year Seasning perid begins n the date the prperty transferred wnership t the freclsing lender thrugh the date f the case assignment. If the brrwer was nt in default at the time f the Shrt Sale, 3 years must have elapsed since cmpletin f Shrt Sale; the wait perid can be waived if all f the fllwing cnditins are met: The lan was current at the time f the shrt sale The lan was paid n time in the 12 mnths preceding the shrt sale All ther installment debts were paid n time in the preceding 12 mnths If the seasning f the shrt sale is less than 3 years, the lan must meet the requirements fr extenuating circumstances and will be dwngraded t a manual underwrite (see manual underwriting sectin belw) If the brrwer was in default at the time f the Shrt Sale, 3 years must have elapsed since the cmpletin f the Shrt Sale; the wait perid can be waived if the default was due t circumstances beynd the brrwer's cntrl and the brrwer s credit was satisfactry prir t the circumstances beynd the brrwer's cntrl that caused the default. If the brrwer pursued a Shrt Sale t take advantage f declining market cnditins and is purchasing a similar r superir prperty within a reasnable cmmuting distance, the 3 year waiting perid may nt be waived Seasning perid begins n the date the prperty was sld thrugh the date f the case assignment. If the mdificatin ccurred within the past 3 years and is the subject prperty, the lan must be dwngraded t a manual underwrite and must meet all manual underwriting requirements including mrtgage histry requirements If the mdificatin ccurred within the past 3 year and is nt the subject prperty, the lan des nt have t be manually dwngraded. If the mdificatin agreement prhibits the rental f the prperty, then rental incme cannt be used t qualify. In all cases, all payments must have been made n time since the mdificatin and meet all applicable mrtgage payment histry per transactin type All judgments must be paid Payment f Cllectin Accunts and Charge Offs are at the discretin f the underwriter If the cumulative utstanding balance f all cllectins f all brrwers (including a nn-purchasing / nn-brrwing spuse) is equal t r greater than $2,000 and the cllectin accunts will remain pen after clsing, the mnthly payment must be included in the DTI using the payment arrangement r 5% f the utstanding balance f each cllectin (This des nt include medical cllectins & medical charge ffs) Page 5 f 14 Last Updated 12/18/2017

7 Subrdinate Financing Nn-Traditinal Credit Nn-Purchasing Spuse / Nn- Brrwing Spuse Clsed ended subrdinate financing qualified using credit reprt payment Fr financing ther than HELOCs, the maturity date r amrtizatin basis f the junir lien must nt be less than five years after the Nte Date unless the junir lien is fully amrtizing. If the junir lien cntains a balln r call prvisin within the five-year perid, the First Lien Mrtgage is ineligible. HELOCs qualified using the greater f 1% f max line amunt r the credit reprt payment. Nn-subject prperty qualified using credit reprt payment, unless draw made at clsing -Then 1% f max line amunt used fr qualificatin Refer t HUD Handbk Sectin 4.d.J fr Secndary financing details Mdified Subrdinate Liens: FHA understands that many subrdinate lien hlders have requested mdificatin t the terms f the lien (typically a reductin in the amunt f the lien) in exchange fr remaining in subrdinate psitin. Mdifying subrdinate liens ften results in re-executing the legal dcuments at clsing, which is acceptable and nt cnsidered a new subrdinate lien. Existing r mdified subrdinate liens may remain in place All lans with Nn-Traditinal Credit must be manually underwritten. Please refer t the Manual Underwriting sectin Except fr bligatins specifically excluded by state law, the debts f the nn-purchasing / nn-brrwing spuse must be included in the brrwer s qualifying ratis, if the brrwer resides in a cmmunity prperty state, r, prperty being insured is lcated in a cmmunity prperty state. The nn-purchasing / nn-brrwing spuse s bligatins must be cnsidered in the debt-t-incme (DTI) rati unless excluded by state law. A credit reprt that cmplies with the requirements f HUD must be prvided fr the nn-purchasing / nn-brrwing spuse in rder t determine the debts that must be cunted in the DTI rati. The nn-purchasing / nn-brrwing spuse must prvide a signed / dated Brrwer s Credit Authrizatin Nn-brrwing spuse s credit reprt must indicate the scial security number and must be validated with the directly SSA Manual Underwriting In additin t meeting all standard FHA guidelines the fllwing guidelines apply fr Manual Underwriting in this sectin Mrtgages with Ttal Scre Card apprvals must be dwngraded and Manually underwritten: Manual Underwriting Regardless f AUS/Ttal Scre Card Credit Requirements fr Manual Underwriting Undisclsed Mrtgage Debt When AUS/TOTAL Scre Card cnditins cannt be met When a brrwer r c-brrwer has less than 2 credit scres When a brrwer is using nn-traditinal credit When a brrwer s bankruptcy discharge is less than 2 years frm the case number assignment date When a date f transfer f title by shrt sale r deed in lieu f freclsure is less than 3 years frm the date f the case number assignment TOTAL Scre Card date When a freclsure seasning is less than 3 years frm the case number assignment date When the Brrwer has $1,000 r mre cllectively in Disputed Dergatry Credit Accunts When the Brrwer has undisclsed mrtgage debt with any lates in the past 12 mnths When any mrtgage rating des nt appear n the credit reprt with a cmplete 12 mnth histry When any mrtgage trade line, including mrtgage line f credit/heloc payments, during the mst recent 12 mnths reflects any f the f the fllwing: Purchase and Rate/Term Refinances: three r mre late payments f greater than 30 Days; ne r mre late payments f 60 Days plus ne r mre 30-Day late payments; r ne payment greater than 90 days late. Cash-ut transactins: A current delinquency, r Any delinquency within 12 mnths f the case number assignment date When the Brrwer s self-emplyed business incme shws greater than a 20% decline ver the tax years being analyzed If there has been a 20% r greater decline, the incme is still deemed stable if: The reductin was a result f dcumented extenuating circumstances AND The incme has been stable r increasing fr at least the last 12 mnths AND The brrwer qualifies using the reduced incme The Brrwer s credit histry may be acceptable IF: The brrwer has made all husing and installment debt payments n time fr the previus 12 mnths, AND Has n mre than tw 30-day late mrtgage payments r installment payments in the previus 24 mnths, AND The brrwer has n majr dergatry credit n revlving accunts in the previus 12 mnths. Majr dergatry credit n revlving accunts includes: Any payments made mre than 90 days after the due date OR Three r mre payments made mre than 60 days after the due date When an existing debt r bligatin that is secured by a Mrtgage but is nt listed n the credit reprt and nt cnsidered by the AUS is revealed during the applicatin prcess, the Mrtgagee must btain a verificatin f Mrtgage directly frm the lender must be btained. The lan must be dwngraded t a Refer and manually underwritten if the mrtgage histry reflects: A current delinquency Any delinquency within 12 mnths f the case number assignment date; r Mre than tw 30 day late payments within 24 mnths f the case number assignment date A Mrtgage that has been mdified must utilize the payment histry in accrdance with the mdificatin agreement fr the time perid f mdificatin in determining late mrtgage payments. Cllectins/Charge Offs fr Manual Underwriting The brrwer must prvide a letter f explanatin with supprting dcumentatin fr each utstanding Charge Off r Cllectin accunt which must be cnsistent with ther credit infrmatin in the file. Mrtgage/Rental Histry fr Manual Underwriting Brrwer s husing bligatin payment histry fr previus 12 mnths must be dcumented with the fllwing: The credit reprt OR VOR frm a licensed management cmpany, OR Verificatin f mrtgage received directly frm the mrtgage servicer, OR Review f cancelled checks (frnt & back) that cver the mst recent 12 mnth perid Fr brrwers wh indicate that they are living rent free, the lender must btain written verificatin frm the prperty wner where they are residing that the brrwer has been living rent free and the amunt f time the brrwer has been living rent free Mrtgages that have been mdified the payment histry must be analyzed starting with the date f the mdificatin agreement in determining late husing payments Page 6 f 14 Last Updated 12/18/2017

8 Nn-Traditinal Credit Permitted fr cnfrming lan limits nly Brrwer s with n credit scre cannt exceed 31/43 DTI The credit histry must include three credit references, with at least ne f the fllwing: Rental payments via 12 mnths cancelled checks (frnt and back) r a VOR frm a licensed management cmpany, OR Utility cmpany reference (if nt included in the rental payment), including gas, electricity, water, televisin service r internet service If all three credit references are nt btained frm the previus list abve, the fllwing surces may be used: Insurance premiums nt payrll deducted (medical, aut, life, renters insurance, etc.) Payment t child care prviders made t licensed business that prvide such services; schl tuitin Retail stre credit cards nt reprted t the credit bureaus (example: furniture stres, appliance stres, specialty stres, etc.) Rent-t-wn (furniture, appliances, etc.) Payment f medical bills t prviders that are nt cvered by insurance A dcumented 12 mnth histry f savings evidenced by regular depsits resulting in an increased balance t the accunt that were made at least quarterly, were nt payrll deducted and caused n insufficient (NSF) checks A persnal lan frm an individual with repayment terms in writing and supprted by cancelled checks t dcument the payments A dcumented 12 mnth histry f payment by the brrwer n an accunt fr which the brrwer is an authrized user. Nn-Traditinal and Insufficient Credit (Manual) Fr Brrwers withut a credit scre, a Nn-Traditinal Mrtgage Credit Reprt (NTMCR) frm a credit reprting cmpany must be btained r Skyline must independently develp the Brrwer s credit histry using the requirements utlined belw. Nn-Traditinal Mrtgage Credit Reprt Definitin- An NTMCR is designed t access the credit histry f a Brrwer wh des nt have the types f trade references that appear n a traditinal credit reprt and used either as: a substitute fr a TRMCR r an RMCR; r a supplement t a traditinal credit reprt that has an insufficient number f trade items reprted t generate a credit scre. A NTMCR develped by a credit reprting agency may be used that verifies the fllwing infrmatin fr all nn-traditinal credit references: the existence f the credit prviders; that the credit was actually extended t the Brrwer; and the creditr has a published address r telephne number. The NTMCR must nt include subjective statements such as satisfactry r acceptable, must be frmatted in a similar fashin t traditinal references, and prvide the: creditr s name; date f pening; high credit; current status f the accunt; required mnthly payment; unpaid balance; and payment histry in the delinquency categries (fr example, 0x30 and 0x60). Independent Verificatin f Nn-Traditinal Credit Prviders - Skyline may independently verify the Brrwer s credit references by dcumenting the existence f the credit prvider and that the prvider extended credit t the Brrwer. T verify the existence f each credit prvider, Skyline must review public recrds frm the state, cunty, r city r ther dcuments prviding a similar level f bjective infrmatin. T verify credit infrmatin, the Mrtgagee must: use a published address r telephne number fr the credit prvider and nt rely slely n infrmatin prvided by the applicant; and btain the mst recent 12 mnths f cancelled checks, r equivalent prf f payment, demnstrating the timing f payment t the credit prvider. T verify the Brrwer s rental payment histry, Skyline must btain a rental reference frm the apprpriate rental management cmpany, prvided the Brrwer is nt renting frm a Family Member, demnstrating the timing f payment f the mst recent 12 mnths in lieu f 12 mnths f cancelled checks r equivalent prf f payment. Nn-Traditinal Credit (Cnt.) Extenuating Circumstances Sufficiency f Credit References- T be sufficient t establish the Brrwer s credit, the credit histry must include three credit references, including at least ne f the fllwing: rental husing payments (subject t independent verificatin if the Brrwer is a renter); telephne service; r utility cmpany reference (if nt included in the rental husing payment), including: gas; electricity; water; televisin service; r Internet service. If all three credit references are nt btained frm the previus list abve, the fllwing surces may be used: Insurance premiums nt payrll deducted (medical, aut, life, renters insurance, etc.) Payment t child care prviders made t licensed business that prvide such services; schl tuitin Retail stre credit cards nt reprted t the credit bureaus (example: furniture stres, appliance stres, specialty stres, etc.) Rent-t-wn (furniture, appliances, etc.) Payment f medical bills t prviders that are nt cvered by insurance A dcumented 12 mnth histry f savings evidenced by regular depsits resulting in an increased balance t the accunt that were made at least quarterly, were nt payrll deducted and caused n insufficient (NSF) checks An autmbile lease A persnal lan frm an individual with repayment terms in writing and supprted by cancelled checks t dcument the payments A dcumented 12 mnth histry f payment by the brrwer n an accunt fr which the brrwer is an authrized user. The fllwing are extenuating circumstances which may apply t requested seasning exceptins fr Bankruptcy, Freclsure, Deed-in-Lieu and Shrt Sale: Death f a wage earner Serius illness Divrce may be cncerned an extenuating circumstance fr Shrt Sale, Freclsure r Deed-in-Lieu if the brrwer s lan was current at the time f the divrce and the ex-spuse received the prperty and the lan later went int freclsure, deed-in-lieu r was shrt sld Page 7 f 14 Last Updated 12/18/2017

9 Lans receiving a Ttal Screcard Refer/Eligible r dwngraded frm an Apprve/Eligible due t HUD guidelines may be manually underwritten and must meet the belw requirements: DTI requirements fr Manual Underwriting 31/43 DTI: Brrwer s with n credit scre cannt exceed 31/43 DTI 37/47 DTI: The fllwing is required: Verified and dcumented cash Reserves in additin t the reserve requirements listed belw, AND Minimum increase in husing payment; OR Residual incme as calculated per VA requirements 40/40 DTI: The fllwing requirements must be met: Brrwer with established credit and pen credit lines carries n discretinary debt. Mnthly husing payment is nly pen installment accunt and revlving credit is paid ff mnthly 40/50 DTI: Tw f the fllwing requirements must be met: Verified and dcumented liquid cash reserves f three mnths fr ne-t-tw unit prperties and six mnths fr three-t-fur units in additin t the reserve requirements listed belw Minimum increase in husing payment; Significant additinal incme nt reflected in effective incme; and/r Residual incme as calculated per VA requirements Reserve Requirements fr Manual Underwriting Overtime and Bnus Hurly Incme In ALL cases, the maximum DTI fr manual underwriting is 50%. Als, an AUS is required in the file Reserves equivalent t ne mnth s PITI after clsing fr ne- t tw-unit Prperties. Reserves equivalent t three mnths PITI after clsing fr three- t fur-unit Prperties. Incme/Emplyment Overtime r bnus incme, the incme must be averaged ver the previus tw years Hwever, if the vertime r bnus incme frm the current year decreases by 20% r mre frm the previus year, the current year must be used Less than tw years may be cnsidered if dcumentatin is prvided t shw that vertime has been cnsistently earned ver a perid f nt less than ne year and is likely t cntinue This applies t bth AUS apprvals and manually underwritten lans Fr emplyees wh are paid hurly and the hurs d nt vary, the brrwer s current hurly rate is used t calculate the qualifying incme Fr emplyees wh are paid hurly and the hurs vary, an average f the incme ver the previus tw years is used t calculate the qualifying incme. If there is a decline in the incme between the previus and current year, the lwer amunt will be used If dcumentatin is prvided t shw an increase in pay rate, incme can be calculated using the mst recent 12 mnths f average f hurs at the current pay rate This applies t bth AUS apprvals and manually underwritten lans Part Time Emplyment Incme may be used as qualifying incme if the brrwer has wrked a part time jb uninterrupted fr the past tw years and the current psitin is reasnably likely t cntinue If dcumentatin is prvided t shw an increase in pay rate, incme can be calculated using the mst recent 12 mnths f average f hurs at the current pay rate This applies t bth AUS apprvals and manually underwritten lans Cmmissin Incme May be used if the brrwer earned the incme fr at least ne year in the same r similar line f wrk and it is reasnably likely t cntinue Cmmissin must be calculated by using the lesser f The average net cmmissin incme earned ver the previus tw years, r the length f time the cmmissin incme has been earned if less than tw years OR The average net cmmissin earned ver the previus ne year Unreimbursed business expenses (2106) as shwn n Schedule A f tax returns must be subtracted frm the grss cmmissin incme t calculate net cmmissin incme Frequent Jb Changes If the brrwer has changed jbs mre than three times in the previus twelve mnths perid t advance incme r benefit r has changed their line f wrk the fllwing is required: Emplyment dcumentatin evidencing cntinual increases in incme and/r benefits, OR Transcripts f training and educatin demnstrating qualificatin fr a new psitin Gaps in Emplyment Brrwers with gaps in emplyment less than six mnths are nt required t prvide an explanatin Brrwer s with gaps f six mnths r mre (an extended absence) may be cnsidered if: The brrwer has been emplyed in the current jb fr at least six mnths at the time f the case assignment AND A tw year wrk histry prir t the absence frm emplyment can be dcumented Page 8 f 14 Last Updated 12/18/2017

10 Temprary Reductin f Incme Fr brrwers with a temprary reductin f incme due t shrt term disability r similar temprary leave, the current disability incme may be cnsidered as effective incme if it can be dcumented with the fllwing requirements regardless if they are returning t wrk befre r after the first payment due date: A written statement frm the brrwer s emplyer cnfirming all f the fllwing: Date f return t wrk Psitin and cmpensatin will remain the same A written statement frm the brrwer cnfirming their intent t return t wrk, and the intended date f return The brrwer qualifies fr the mrtgage using the reduced disability incme If the brrwer will be returning t wrk after the first mrtgage payment due date, the brrwer s current incme plus available surplus liquid asset reserves, abve and beynd any required reserves, as an incme supplement up t the amunt f the brrwer s pre-leave incme may be used t qualify The amunt f the mnthly incme supplement is the ttal amunt f surplus reserves divided by the number f mnths between the first payment due date and the brrwer s intended date f return t wrk. Dcumentatin f sufficient liquid assets, used t supplement the brrwer s incme thrugh the intended date f return t wrk with current emplyer If the brrwer will be returning t wrk befre r at the time f the first payment due date, the brrwer s pre-leave incme may be used t qualify. Disability Incme Scial Security: Mst recent award letter t establish a minimum three year cntinuance and ne f the fllwing is required: Mst recent federal tax returns, r Mst recent bank statement, r Cpy f the brrwer s scial security statement (frm SSA-1099/1042S) VA Disability: Private Disability: VA frm (Verificatin f VA Benefits) shwing the amunt f the assistance and establishing a minimum f three year cntinuance and ne f the fllwing is required: Mst recent federal tax returns, r Mst recent bank statement Dcumentatin frm the private disability insurance prvider t verify the amunt and a minimum f three year cntinuance f the benefit and ne f the fllwing is required: Mst recent federal tax returns, r Mst recent bank statement Child and Spusal Supprt Incme A fully executed cpy f the final divrce decree, legal separatin agreement, curt rder, r vluntary payment agreement with dcumented receipt is required Required dcumentatin: When using a final divrce decree, legal separatin agreement r curt rder, evidence f receipt using depsits n bank statements, canceled checks, r dcumentatin frm the child supprt agency fr the mst recent three mnths that supprts the amunt used in qualifying is required If the payments are vluntary the agreement must be dcumented with 12 mnths f cancelled checks, bank statements r tax returns Calculatin f effective incme: If the brrwer has received cnsistent Alimny, Child Supprt and Maintenance Incme fr the mst recent six mnths, the current payment may be used When using a final divrce decree, legal separatin agreement r curt rder, if the Brrwer has received cnsistent Alimny, Child Supprt and Maintenance Incme fr the mst recent three mnths, the current payment t calculate Effective Incme may be used If the Alimny, Child Supprt and Maintenance Incme have nt been cnsistently received fr the mst recent six mnths, the average f the incme received ver the previus tw years must be used t calculate effective Incme. If Alimny, Child Supprt and Maintenance Incme have been received fr less than tw years, the average ver the time f receipt must be used t calculated effective incme Military Incme If the brrwer s Leave and Earnings Statement (LES) indicates that the brrwer will be separating frm the service within the first 12 mnths f the mrtgage, military incme may nly be used if the brrwer states their intent in writing t cntinue military service Retirement Incme Scial Security Dcumentatin t verify the Brrwer s receipt f incme frm the SSA and that it is likely t cntinue fr at least a three year perid frm the date f case number assignment is required. The current amunt f Scial Security Incme received must be used t calculate effective incme. Fr SSI, ne f the fllwing dcuments is required: federal tax returns; Mst recent bank statement evidencing receipt f incme frm the SSA; Prf f Incme Letter, als knwn as a Budget Letter r Benefits Letter that evidences incme frm the SSA; r Cpy f the Brrwer s frm SSA-1099/1042S, Scial Security Benefit Statement. In additin t verificatin f incme, the fllwing dcumentatin is required t supprt the cntinuance f SSI incme: a cpy f the last Ntice f Award letter which states the SSA s determinatin n the Brrwer s eligibility fr SSA incme r an equivalent dcument that establishes award benefits t the Brrwer (equivalent dcument). If any incme frm the SSA is due t expire within three years frm the date f case number assignment, that incme may nt be used fr qualifying. If the Ntice f Award r equivalent dcument des nt have a defined expiratin date, the incme will be cnsidered f effective and reasnably likely t cntinue. N additinal dcumentatin frm the Brrwer t demnstrate cntinuance f Scial Security Administratin incme is required If the Ntice f Award letter r equivalent dcument specifies a future start date fr receipt f incme, this incme may nly be cnsidered effective n the specified start date Page 9 f 14 Last Updated 12/18/2017

11 Retirement Incme - Pensin Retirement Incme IRA/401K Nn-Taxable Incme Future Incme Rental Incme Barder Incme Seasnal Emplyment Emplyed by Family Owned Business Dcumentatin t evidence the Brrwer s receipt f peridic payments frm the Brrwer s Pensin and that the payments are likely t cntinue fr at least three years is required. A cpy f the award letter dcumenting three years cntinuance AND any ne f the fllwing dcuments is required: Federal tax returns; The mst recent bank statement evidencing receipt f incme frm the frmer emplyer; r A cpy f the Brrwer s Pensin/retirement letter frm the frmer emplyer Dcumentatin t verify the Brrwer s receipt f recurring IRA/401(k) distributin Incme and that it is reasnably likely t cntinue fr three years is required. The mst recent IRA/401(k) statement and any ne f the fllwing dcuments are required: Federal tax returns; The mst recent bank statement evidencing receipt f incme Fr brrwers with IRA/401(k) incme that has been and will be cnsistently received, the current amunt f IRA Incme received must be used t calculate effective incme. Fr brrwers with fluctuating IRA/401(k) incme, the average f the IRA/401(k) incme received ver the previus tw years must be used t calculate effective incme. If IRA/401(k) incme has been received fr less than tw years, the average ver the time f receipt must be used t calculate effective incme. Nn-taxable incme may be grssed t the greater f 15% r the actual tax rate based n the brrwer s tax rate f the previus year If the brrwer was nt required t file a federal tax return fr the previus year, nn-taxable incme may be grssed up 15%. N additinal adjustments r allwances based upn the number f dependents is allwed Future incme may be cnsidered as qualifying incme except when the brrwer is t be emplyed by a family wned business A cpy f the fully executed nn-cntingent emplyment cntract is required and must verify the brrwer s emplyment start date t be within 60 days f the mrtgage s clsing Fr retirement incme t be used as future incme dcumentatin t verify the amunt and that it is guaranteed t be begin within 60 days f the mrtgage clsing is required The brrwer must have sufficient cash reserves t supprt the mrtgage payment and any ther bligatins between the time the mrtgage clses and the brrwer starts t receive the incme Histry f Rental Incme - Subject Prperty When the brrwer has a histry f rental incme frm the subject since the previus tax filing, the rental incme must be dcumented by the brrwer s mst recent tw years tax returns, including Schedule E. Fr prperties with less than tw years f rental incme histry, dcumentatin f the date f acquisitin with either the deed, HUD r similar legal dcument is required Rental Incme - Limited r N Histry f Rental Incme Subject Prperty When the brrwer des nt have a histry f rental incme frm the subject since the previus tax filing, rental incme must be dcumented by fair market rents btained frm the appraisal and, if available, the prspective leases T calculate the effective rental incme frm the subject prperty when the brrwer des nt have a histry f rental incme frm the subject prperty since the previus tax filing, rental incme will be based n the lesser f: The mnthly perating incme reprted n FNMA frm 216/Freddie Mac frm 998 OR 75% f the lesser f: Fair market rent reprted by the appraiser OR Rents reflected in the lease r rental agreement Rental Incme - Limited r N Histry f Rental Incme Other Prperties When the brrwer des nt have a histry f rental incme fr the nn-subject prperty since previus tax filing, including prperty being vacated by the brrwer, an appraisal must be btained evidencing market rent and that the brrwer has at least 25% equity in the prperty. The appraisal is nt required t be cmpleted by an FHA Appraiser Tw t Fur Units Rental incme must be dcumented by btaining an appraisal shwing fair market rents and a FNMA Frm 216/Freddie Mac Frm 998 and, if available, the leases One Unit Rental incme must be dcumented by btaining a FNMA Frm 1007/Freddie Mac Frm 70 and a FNMA Frm 216/Freddie Mac Frm 998 and, if available, the lease Rental Incme - Histry f Rental Incme Other Prperty The brrwer s last tw year s tax returns with Schedule E must be btained T calculate the net rental incme the amunt shwn n the Schedule E fr all prperties still wned by the brrwer must be averaged. Depreciatin may be added back t the net incme r lss If the prperty has been wned fr less than tw years, the rental incme must be annualized fr the length f time the prperty has been wned Fr prperties with less than tw years f rental incme histry, the date f acquisitin must be dcumented by btaining the deed, HUD r similar legal dcument Psitive net rental incme must be added t the brrwer s effective incme. Negative net rental incme must be included as a debt/liability Is acceptable if the brrwer has a tw year histry f receiving this type f incme with the fllwing requirements: Tw years persnal tax returns evidencing incme frm the barders and the current lease Fr purchase transactins a cpy f an executed written agreement dcumenting the barder s intent t cntinue t reside with the brrwer(s) Incme t be calculated by using the lesser f current lease r tw year average Seasnal incme is acceptable if: Incme must have been received fr tw years in same line f wrk, and Incme is likely t cntinue as dcument by VOE Unemplyment incme may be cnsidered if brrwer has received it fr the mst recent tw years Incme t be calculated by using the mst recent tw year average When a brrwer is emplyed by a family wned business the fllwing is required: Letter frm business CPA t state brrwer has n wnership in the business Mst recent tw years tax returns Calculatin f Effective Incme: Salary - Fr emplyees wh are salaried and whse incme has been and will likely cntinue t be cnsistently earned, the current salary must be used t calculate Effective Incme. Hurly - Fr emplyees wh are paid hurly, and whse hurs d nt vary, Brrwer s current hurly rate may be cnsidered t be used t calculate Effective Incme. Fr emplyees wh are paid hurly and whse hurs vary, the incme ver the previus tw years must be averaged. If there is an increase in the brrwers pay rate, the mst recent 12-mnth average f hurs at the current pay rate can be used and must be dcumented. Page 10 f 14 Last Updated 12/18/2017