Guideline Reference Applies to ALL Products

Transcription

1 Guideline Reference Applies to ALL Products 4506-T CG Ch 5E Loan Documents & Notes CG Ch 6F Employment & Documentation CG Ch 7G FHA Employment & Evaluation & Documentation Product summaries IRS Form 4506T must be processed and income validated for most recent 2 years (tax transcripts) or 1 year for AU loans requiring less than 2 years of income and employment verification Amended Tax Returns CG Ch 6F Employment & Documentation CG Ch 7G FHA Employment & Evaluation & Documentation Tax Returns filed Prior to Application Date The original filed return and the amended return are required. If the returns were amended 60 days or less from the application, evidence of payment must also be provided. Tax Returns Filed with the IRS After Application Date Tax returns filed after the application date may be acceptable with 1) evidence of filing, 2) payment and the ability to pay the tax if the check has not cleared, and 3) a letter of explanation regarding the reason for re-file. Closely examine the original tax return & the amended tax return for consistency with previous filings. An underwriter will use prudent judgment in reviewing the amended return. If the amended income is needed for qualification, an Underwriting Manager must approve the use of the amended income. The underwriter must provide justification and commentary on the Transmittal Summary regarding its use Asset Verification CG Ch 6D Assets A written VOD cannot be standalone documentation. At least one month's bank statement is required on all loans Verification CG Ch 6E Employment & Analysis/ Documentation A written VOE cannot be standalone documentation. A pay stub and W2 is required on all loans Non-Taxable

2 CG Ch 6F Employment & Analysis All disclosed non-taxable income MUST be grossed up CG Ch 7G FHA Employment & Evaluation & Documentation Guideline Reference Conforming ELIGIBILITY Cash Out Refinance Seasoning CG Ch 5B Transactions Product Summaries All borrowers must hold title to subject property for a minimum of 6 months Closing Costs Paid With Credit Card CG Ch 6D Assets Manually Underwritten Loans: Credit card financing for the payment of common and customary fees paid outside of closing are permitted up to a maximum of 2% of the loan amount. Community Seconds CL /20/2007 Magnolia Bank does not permit first mortgage transactions with Community Seconds Compressed Buydowns Product Summaries Compressed Buydowns are not permitted EA Recommendation Product Summaries Maximum 80% LTV Minimum 620 credit score Multiple Properties Financed CG Ch 5A Loan Eligibility Product Summaries Primary Residence: Total number of Magnolia Bank financed properties to one borrower is 4 with a maximum $2 million Magnolia Bank exposure Second Home & Investment Property: The total number of financed properties to one borrower is 4 with a maximum $2 million

3 Non-Arm s Length Transactions CG Ch 5B Transactions Manually Underwritten Loans: Non-arm s length transactions are not permitted on new construction second home purchase transactions Primary Occupancy for Parent or Disabled Child CG Ch 5A Loan Eligibility Purchase or Rate and Term Refinances eligible May not own any investment properties Detailed explanation identifying the situation and need for financing Maximum 95% LTV/CLTV/HCLTV within product guidelines Full income and asset documentation required regardless of AU documentation APPRAISAL/PROPERTY RELATED REQUIREMENTS Requirement Product Summaries If the original appraisal report is not of investment quality, at a minimum, a field review may be obtained. A desk review is not permitted. Cooperatives CG Ch 5D Property Types Cooperatives are not eligible Deferred Maintenance CG Ch 6G Requirements Documentation & Evaluation Excessive deferred maintenance (with a cost to cure above 2.5% of the property value) and any items that affect basic habitability and safety will require an Update and/or Completion Report Florida Condominiums CG Ch 5D Property Types Condominium Matrices Second homes and investment properties are not eligible A lender full review is required for all primary residence existing projects Product Summaries Leasehold Estate CG Ch 6G Requirements Documentation & Evaluation At least two comparable sales subject to a lease are required

4 Manufactured Homes CG Ch 5D Property Types Manufactured homes are not eligible PIW/FIW Product Summaries Disclosure required advising borrower not to rely on waiver of appraisal to support value and that they may independently obtain an appraisal of value PUD/Condo Warranty CG Ch 5D Property Types Condominium Matrices A PUD/Condominium Warranty is valid for up to three months. Resale Restrictions CG Ch 5D Property Types Resale restrictions are not permitted CREDIT Bankruptcy CG Ch 6B Conforming Credit Manually Underwritten Loans: Multiple bankruptcy filings due to extenuating circumstances require a minimum 3 year waiting period from discharge/dismissal of the last bankruptcy Credit Score Requirement CG Ch 6B Conforming Credit When using credit score for qualification, Magnolia Bank requires a minimum of two reported credit scores for each borrower. If the borrowers do not have two reported credit scores, document credit using non-traditional credit guidelines. Housing Payment History Product Summaries Manually Underwritten Loans - 0x30 late mortgage payments in the last 12 months or life of loan, whichever is less Major Adverse Credit CG Ch 6B Conforming Credit AU loans 1 unit primary residence: Follow AU unless the total balance of collection and charge-off accounts is > $5000, which must be paid in full Non-Traditional Credit CG Ch 6B Conforming Credit The following transaction types require a credit score and are not eligible for borrowers who have only non-traditional credit. 2- to 4-unit primary residence

5 Second homes INCOME Commission CG Ch 6E Employment & Analysis/Documentation Manually Underwritten Loans: Commission income must be reflected on the borrower s tax returns for a minimum of 12 months Investment Property Purchase Rental CG Ch 6E Employment & Analysis/Documentation All investment property purchase transactions where the borrower does not currently own a primary residence or any other investment properties must qualify with the full PITIA payment Other Real Estate Owned CG Ch 6E Employment & Analysis/Documentation Manually Underwritten Loans: A two year history managing rental properties is required if using rental income to qualify Paystub CG Ch 6E Employment & Analysis/Documentation Manually Underwritten Loans: Paystubs must reflect the borrower s gross year-to-date earnings covering the most recent 30-day period Proposed Rental CG Ch 6E Employment & Analysis/Documentation A family member, individual with an Established Relationship or an interested party to the transaction may not sign the lease agreement as the tenant Manually Underwritten Loans: A two year history managing rental properties is required if using rental income to qualify Rental (property management) CG Ch 6E Employment & Analysis/Documentation Manually Underwritten Loans: Borrower must have a two-year history managing rental properties if using rental income to qualify for the subject investment property Rental : Converted Primary to CG Ch 6E Employment & A 2055 exterior only appraisal report is required when the borrower is retaining their current

6 Second Home/ Investment Property Analysis/Documentation primary residence as an investment property, and evidencing 30% equity in order to use the proposed rental income to qualify PRODUCT SPECIFIC DU Refi Plus LTV Product Summaries Maximum 105% LTV Mortgage Insurance Product Summaries New mortgage insurance certifications are required. Transferring MI is not permitted Fannie Mae High Balance/Freddie Mac Super Conforming Product Summaries An Interior/Exterior appraisal report is required, regardless of AU decision MI Product Summaries Reduced MI is not permitted Freddie Mac Relief Refi Open Access Collection and Charged-off Accounts Product Summaries Collection and charged-off accounts must be paid off based on the following, regardless of the LP Feedback Certificate: 1-unit primary residence: Follow LP unless the total balance of all accounts is > $5000, which must be paid off 2- to 4-unit primary residence: Pay off if the balance of an individual account is > $250 or if the total balance of all accounts if > $1,000 Second home: Pay off if the balance of an individual account is > $ or if the total balance of all accounts if > $1,000 Investment property: Pay off if the balance of an individual account is > $ or if the total balance of all accounts if > $1,000 LTV Product Summaries Maximum 105% LTV

7 Mortgage Insurance Product Summaries New mortgage insurance certifications are required. Transferring MI is not permitted Property Listing Product Summaries Validation that the property is not listed for sale at time of application HomePath Product Summaries Magnolia bank does not participate in the Renovation loan program Texas Home Equity Products Certification of Receipt of Closing Documents Product Summaries The borrower is required to certify, at closing, that he or she received the required copies. The certification could be on each document that the borrower signs or on a separate certification. MORTGAGE INSURANCE Reduced MI Product Summaries Minimum or reduced mortgage insurance coverage is not permitted. Must obtain standard mortgage insurance coverage Guideline Reference FHA ELIGIBILITY 90-Day Flipping Rule - Private Sale CG Ch 7B Loan Eligibility Will not waive policy regarding seller that is private individual or business Cash Out Refinance Refinance Matrix All borrowers must hold title to the subject property for a minimum of 6 months Down Payment Assistance Product Summaries Magnolia Bank must approve all down payment assistance programs Adjustable Rate Mortgages are not eligible with a down payment assistance program DTI

8 Product Summaries Manually Underwritten Loans: The maximum DTI is 50% Energy Efficient Mortgage CG Ch 7J Property Types and The Energy Efficient Mortgage program is not available Repair Escrow for FHA 203B CG Ch 7B Loan Eligibility Delegated Client: Repair escrows for FHA 203b program are eligible up to a maximum $5000 held for a maximum 60 days Non-Delegated Client: Repair escrows are not permitted Resale Restriction CG Ch 7B Loan Eligibility Magnolia Bank requires a minimum 90 days from the date of seller acquisition to the date of the sales contract with specific exemptions per the Client Guide APPRAISAL/PROPERTY RELATED REQUIREMENTS Orders CG Ch 7J FHA Property Types and Documentation/ Review Non-Delegated Client must use the Magnolia Bank VEROS process when ordering an appraisal for any loan transaction that will be underwritten by Magnolia Bank Compliance Certification CG Ch 7J FHA Property Types and Documentation/ Review Magnolia Bank requires a Compliance Certification completed by an FHA Fee Inspector for all new construction loans Condominiums Non-Delegated Clients Conversions CG Ch 7J Property Types and Subject legal phase + all previously completed legal phases and common areas must be 100% complete

9 Existing Projects CG Ch 7J Property Types and Project must be existing and at least one year old HUD REO CG Ch 7J Property Types and Magnolia Bank requires a Lender Certification for Individual Unit Financing for HUD REO properties Phasing CG Ch 7J Property Types and Subject legal phase + all previously completed legal phases and common areas must be 100% complete Presale CG Ch 7J Property Types and 75% of units must be sold and closed in subject legal phase + all previously completed legal phases to unit owners (under contract is not permitted) Right of First Refusal CG Ch 7J Property Types and The Right of First Refusal in condominium legal documents is not permitted unless the first mortgagee rights will not be adversely impacted to: Foreclosure or take title to a condo unit pursuant to the remedies in the mortgage Accept a deed or assignment in lieu of foreclosure in the event of default by a mortgagor Sell or lease a unit acquired by the mortgagee or assignee Delegated Clients HUD REO CG Ch 7J Property Types and Right of First Refusal CG Ch 7J Property Types and Magnolia Bank requires an Individual Loan Level Certification for HUD REO properties The Right of First Refusal in condominium legal documents is not permitted unless the first mortgagee rights will not be adversely impacted to:

10 Foreclosure or take title to a condo unit pursuant to the remedies in the mortgage Accept a deed or assignment in lieu of foreclosure in the event of default by a mortgagor Sell or lease a unit acquired by the mortgagee or assignee HUD REO Product Summaries Repairs that affect livability, safety, or structural soundness must be completed prior to closing for all HUD REO properties Manufactured Homes Product Summaries Manufactured homes are not eligible, with the exception of Streamline and Rate/Term Magnolia Bank to Magnolia Bank Refinances is required CREDIT Comprehensive Risk Assessment Credit Score Requirement CG Ch 7F Credit Product Summaries CG Ch 7F Credit Product Summaries Non-Traditional Credit CG Ch 7F Credit Product Summaries Housing Payment History Cash Out Refinance Refinance Matrix The Comprehensive Risk Assessment Worksheet for Manual Underwriting is required for all manually underwritten loans excluding Streamline Refinances Magnolia Bank requires a minimum of two reported credit scores Minimum 640 credit score is required regardless of AU decision All borrowers must have a credit score. Borrowers with non-traditional credit are not eligible All TOTAL Scorecard recommendations and Manually Underwritten Loans - 0x30 late mortgage payments in the last 12 months or life of loan, whichever is less MAGNOLIA BANK Rate/Term Refinance Refinance Matrix AU Refer Magnolia Bank to Magnolia Bank Refinance loans No 0 x 30 late mortgage payments within the past 6 months 2 x 30 or greater between months 7-12 Purchase and Rate/Term Refinance Refinance Matrix AU Refer and Manually Underwritten Loans - 0x30 late mortgage payments in the last 12 months or life of loan, whichever is less PRODUCT SPECIFIC

11 Non-Credit Qualifying Streamline Refinance Refinance Matrix Non-credit qualifying streamline refinances including transactions are not eligible Streamline Refinance Refinance Matrix Investment properties are not eligible for streamline refinance Guideline Reference VA ELIGIBILITY Cash Out Refinance Product Summaries Maximum 90% LTV Down Payment Assistance Product Summaries MAGNOLIA BANK must approve all down payment assistance programs Adjustable Rate Mortgages are not eligible with a down payment assistance program DTI Product Summaries Manually Underwritten Loans: The maximum DTI is 50% Energy Efficient Mortgage Product Summaries Non-Delegated Clients: Energy Efficient Mortgage program is not available West Virginia Product Summaries Magnolia Bank limits the LTV to 100% including the VA Funding Fee APPRAISAL/PROPERTY RELATED REQUIREMENTS Manufactured Home Product Summaries Manufactured homes are not eligible CREDIT

12 Credit Score Requirement Product Summaries Refinance Matrix The minimum credit score for all loans is 640 If a credit score is provided for an IRRRL, the minimum credit score is 640 Housing Payment History Cash Out Refinance Product Summaries Refinance Matrix All loans - 0x30 late mortgage payments in the last 12 months or life of loan, whichever is less Purchase Product Summaries Refinance Matrix Manually Underwritten Loans - 0x30 late mortgage payments in the last 12 months or life of loan, whichever is less Non-Traditional Credit Product Summaries A credit scores is required for all loans. Non-traditional credit is not eligible INCOME Pending Sale of Current Primary Residence Product Summaries When the borrower's current primary residence is not going to close prior to the closing of the new primary residence, the borrower must have a minimum of 6 months PITI reserves for both properties OR 2 months PITIA reserves if there is 30% equity documented in the retained property

13 IRRRL Refinance Matrix A full AIR conventional appraisal Form 70/1004) with MC Addendum is required with an average or better rating. Repairs that impact safety, structural soundness or livability must be completed LTV Refinance Matrix Maximum LTV is 100% based on total loan amount including VA Funding Fe Mortgage Payment History Refinance Matrix All Loans - 0x30 late mortgage payments in the last 12 months or life of loan, whichever is less Occupancy Refinance Matrix All borrowers must occupy the subject property Guideline Reference Rural Housing ELIGIBILITY Assumptions Borrower Eligibility DTI Loan Amount CG Ch 6I Rural Development Not permitted Product Summary Non-Permanent Residents are not eligible Product Summary GUS Accept: Maximum 45% DTI GUS Refer: Maximum 41% DTI Product Summary $417,000 LTV/CLTV Product Summary LTV is based on lesser of sales price or appraised value No secondary financing on purchase transactions

14 Payment Shock Seller Concessions Temporary Buydown Product Summary GUS Accept and Refer Loans: The new fully indexed rate may not exceed two times the borrower s existing fully indexed PITIA Product Summary Maximum 6% seller contributions Product Summary Temporary Buydowns are not permitted APPRAISAL/PROPERTY RELATED REQUIREMENTS Age of CG Ch 6I 120 days Property Types Product Summary The following property types are not permitted: Condominiums Resale/deed restrictions Manufactured homes Leaseholds New construction Rehabilitation ASSETS Asset Sources Gift Funds CG Ch 6I Rural Development Must be fully document source, transfer and receipt of gift funds. Comply with FHA gift fund requirements Source of Funds CG Ch 6I Rural Development All funds required for closing must be fully documented Credit Product Summary Minimum 640 credit score

15 Non-traditional credit is not permitted Follow FHA guidelines for satisfaction of outstanding collections Clear CAIVRS Comprehensive Risk Assessment CG Ch 6I Rural Development GUS Refer Loans The Rural Development Comprehensive Risk Assessment form must be completed Housing Payment History CG Ch 6I Rural Development GUS Refer Loans - 0x30 late mortgage payments in the last 12 months or life of loan, whichever is less