VA-IRRRL Eligibility; Conventional Self-Employment K-1 Distributions & Cash Flow Analysis; New Medical Doctor Loan Product Thanksgiving Day Closure

Transcription

1 VA-IRRRL Eligibility; Conventional Self-Employment K-1 Distributions & Cash Flow Analysis; New Medical Doctor Loan Product Thanksgiving Day Closure Purpose This announcement includes the following topics: VA IRRRL Loan Seasoning Conventional K-1 Cash Flow Analysis for Distributions being used as qualifying income. New Loan Prospector Medical Doctor Loan Product Conforming and Super Conforming Thanksgiving Day Closure VA IRRRL Eligibility Changes Effective with Loan Applications and VA Case Assignements for VA IRRRLs issued on/after November 21, 2016 To align with GNMA standard pool requirements, the VA loan being refinanced must be seasoned for at least six months from the date of the loan application as evidenced by: Six consecutive mortgage payments made on the existing loan, and At least 210 days have elapsed from the closing date (aka Note date) of the mortgage being refinanced Reminder Per the FNMA Selling Guide B and Utilization of K-1 Cash Distributions for qualifying income. If the borrower has a two-year history of receiving guaranteed payments to the partner from a partnership or an LLC, these payments can be added to the borrower s cash flow. If the Schedule K-1 reflects a documented, stable history of receiving cash distributions of income from the business consistent with the level of business income being used to qualify, then no further documentation of access to the income or adequate business liquidity is required. But if the Schedule K-1 does not reflect a documented, stable history, then the lender must confirm adequate business liquidity. New LP Medical Doctor Product Offering MSI is pleased to announce a new product offering specific to degreed Medical Doctors and Dentists that hopefully encompasses the specific needs of these borrowers The Eligibility Matrix is attached to this announcement. MCPA Page 1 of 7

2 Thanksgiving Day Holiday November 24, 2016 MSI will be closed November 24 th for the Thanksgiving Day Holiday. We will reopen the following day, November 25 th. Since the Federal Reserve is closed the 24 th, this day is not to be utilized as a disbursement date or as a rescission date for any refinances.. Questions If you have questions, contact your Account Executive. MCPA Page 2 of 7

3 Medical Doctor Product Product Codes Eligible Terms Eligible Amortization / with / with / with / with LPMD 10 Year 10 Years( 120 months) LPMD-15 Year Years ( months) LPMD-20 Year Years ( months) LPMD 30 Year Years ( months) Product Overview and General Information Underwriting and AUS Submission Calculation of Borrower DTI/Exclusion of Certain Student Loan Payments Income Received from a Salary Increase Income Received from Future Primary The Medical Doctor Loan must be submitted through LP and receive a Risk Classification of Accept. Manual Underwriting or FNMA Desktop Underwriter (DU) and Desktop Originator (DO) are NOT allowed. Deferred student loan payments of the borrower meeting medical licensing requirements that are in a period of deferment or forbearance a minimum of 12 months after the note date may be excluded from the calculation of the borrower s DTI for a borrower in, or who has recently completed a medical residency program and/or medical clinical fellowship program provided that: *Evidence supporting the length of the deferment or forbearance period is provided. Additional borrowers without the required medical licensing must be included in the DTI. *If a student loan is not deferred or in forbearance, then the credit report payment(s) may be utilized provided they will fully retire the debt, otherwise 1% of the outstanding balance is to be utilized as a payment. Income received from a salary increase that will be effective no more than 60 days after the Note date may be used to qualify the borrower provided that: *The borrower s employer verifies in writing the amount and effective date of the increase and it is not subject to any pre-requisites. Income received from future primary employment that wil be effective no more than 60 days after the Note MCPA Page 3 of 7

4 Employment Age of Documents Credit Report Escrow Accounts Geographic Restrictions Condominiums HPML date may be used to qualify the borrower provided that: *Borrower s fully executed employment contract must be non-contingent. *Borrower must have adequate reserves after the Note date to pay the monthly housing (PITI), during the employment gap plus 1 additional month. Max of 120 days as of the Note Date Must be dated within 30 days of the loan application Escrow accounts are required for all loans with LTV s greater than 80.00%. Properties located in the state of California may waive escrows up to but not greater than 89.99% LTV. Florida condos are ineligible. Condominiums must be Freddie Mac approvable. Use of FNMA CPM or PERS is not acceptable. The threshold is: An APR 1.5% or more than the APOR for a loan secured by a first lien. Eligibility Matrix Transaction Number of Type Units Purchase and NCO Refinance Max LTV/TLV Minimum Fico all borrowers Maximum Loan Amount One (1) 95% 680- Conforming up to $625,500 Max DTI Per LP AUS Borrower Eligibility Eligible Designation: At least one borrower on the loan must have one of the following designations/professions (as stated on the 1003 and indicated in the employment documentation: A valid Social Security Number (SSN) is required for all borrowers. Taxpayer Identification Number (TIN) borrowers are not eligible. U.S. Citizens Permanent Resident Alien Non-Permanent Resident Alien *Medical Resident *Medical Doctor (MD) *Doctor of Dental Science (DDS) *Doctor of Dental Medicine (DMO) and dental surgeons specializing in oral and maxillofacial surgery *Doctor of Optometry (OD) *Doctor of Podiatric Medicine (DPM) *Doctor of Osteopathy (DO) A valid social security number Copy of I-551 Permanent Resident Card (Green Card) Employment Authorization Document and Visa. MCPA Page 4 of 7

5 Ineligible Borrowers Table: Foreign Nationals Borrowers with Diplomatic Immunity Land Trusts Life Estates Real Estate Syndicates Religious/Non-Profit Organizations Corporations, General and Limited Partnerships Irrevocable Trusts Non-Revocable Trusts Partnerships Non-Occupying Co-Borrowers Co-Signors or Guarantors are ineligible. All borrowers must be in title. Income Eligibility Tax Transcripts General Types of Income Salary and or Hourly Income Bonus and Overtime Income Commission Income Self-Employment Income Paystub must be dated no earlier than 30 days prior to the loan application Borrowers most recently paystub and W-2 for most recent 2 year period. Commission income must have a consistent 2 year period to include as qualifying income.. A prior 2 year history is required as a means of demonstrating the likelihood that the income will continue Personal transcripts (1040 s and W-2s as per the AUS findings). Business transcripts will not be required unless MSI determines that additional confirmation of the business income documentation is needed. Minimum Documentation Requirements: Additionally, the paystub must include sufficient information to appropriately calculate income. Bonus income must be annualized unless documented as paid more frequently. >25% commission income must calculate in non-reimbursable expenses incurred. Declining income must be address and declining income cannot be averaged. MCPA Page 5 of 7

6 General Types of Assets Depository Accounts Business Assets Donations from Entities Employer Assistance Gift Income Received from Future Primary Employment Bank Statements or investment portfolio statements must cover account activity for the most recent two-month period. Cash flow analysis must be completed using (3) three months bank statements to determine if the use of fund will have a negative impact on the business. *Letter from borrower or CPA confirming any impact to the business if funds are withdrawn. *Borrower must be listed as an owner of the account, have >51% ownership of the funds. *Funds must be sourced if any large deposits *The funds are not a loan against any future earnings. A copy of the letter awarding the gift or grant to the borrower with a copy of the legal agreement that specifies the terms and conditions. The document must include language indicating that repayment is not expected. A copy of the letter awarding the gift or garnt to the borrower or a copy of the legal agreement that specifies the terms and conditions. The document must include language indicated that repayment is not expected. Gifts must be evidenced by a letter signed by the donor and must: *Specify the dollar amount of the gift. *Specify the date the funds were transferred. *Include the donor s statement that no repayment is expected. *Indicate the donor s name, address, phone number and relationship to the borrower. In additional to the required reserves determined by LP, the borrower must have adequate reserves after the Note date to pay monthly housing (PITI) MCPA Page 6 of 7

7 during the employment gap plus one additional month. Reserves should be liquid or readily accessible. Property Eligibility Eligible Property Types 1 unit primary residence SFR, PUD and Warrantable Condo Ineligible Property Types Time Share Projects Manufactured Homes Co-operatives Non-Warrantable Condos Unimproved Land Mixed use Properties Condotels Working and/or hobby Properties with >10 acres farms Log Homes Houseboats Properties without utilities Geodesic Dome Homes Properties with re-sale Builder model leaseback restrictions Appraisal Conditions C5 Quality of Q6 Assisted Living Projects or C6 Resort Properties Mobile Homes Subterranean Homes Assisted Living Projects Commercial Properties Properties where value cannot be supported with like comps. The maximum number of financed properties, including the subject property, regardless of the financing is limited to (8) eight. Interested Party Contributions (IPC) Table Occupancy LTV/TLTV Maximum IPC Primary Residence >90% 3% 75.01% -90% 6% <+75% 9% Private Mortgage Insurance (PMI) MGIC will be the provider for mortgage insurance. MSI will order the coverage as follows: LTV AMORTIATION TERM <20 AMORTATION >20 YEARS YEARS % 25% 30% % 12% 25% % 6% 12% Custom or Reduced MI that may be available per the LP findings are not allowed. Acceptable and Eligible Mortgage Insurance Types: *Borrower Paid Mortgage Insurance (BPMI) *Single Premium MI *Lender Paid MI (Note Separate Product Code for ) MCPA Page 7 of 7