ALTLOAN INCOME DOCUMENTATION REQUIREMENTS

Transcription

1 ALTLOAN INCOME DOCUMENTATION REQUIREMENTS DOC TYPES: Bridge NoDoc Fix&Flip NoDoc Investor NoDoc Foreign National No Doc DSCR >= YR FullDoc 2 YR FullDoc 3 Month Business 24 Month Business 12 Month Personal 24 Month Personal Occupancy NOO NOO NOO NOO NOO OO/NOO OO/NOO OO/NOO OO/NOO OO/NOO OO/NOO LTV Max (LTC if Fix & Flip) 80% 90% 75% 70% 80% 85% 90% 90% 90% 80% 90% 1007 or Lease Income No No No No Yes n/a n/a n/a n/a n/a n/a State Employment on App. No No Yes Yes Yes Yes Yes Yes Yes Yes Yes State Income on App. No No No No No Yes Yes Yes Yes Yes Yes IRS 4506T Verification No No No No No Yes Yes no no no no Salaried: 1 W2 & Paystub n/a n/a n/a n/a n/a Yes n/a n/a n/a n/a n/a Self Employ.: 1 Year Taxes n/a n/a n/a n/a n/a Yes n/a n/a n/a n/a n/a Salaried: 2 W2 & Paystub n/a n/a n/a n/a n/a n/a Yes n/a n/a n/a n/a Self Employ.: 2 Year Taxes n/a n/a n/a n/a n/a n/a Yes n/a n/a n/a n/a Personal Bank Statements n/a n/a n/a n/a n/a n/a n/a n/a n/a Business Bank Statements n/a n/a n/a n/a n/a n/a n/a P&L- Borrower Prepared n/a n/a n/a n/a n/a YTD YTD n/a 24 Mo. n/a n/a P&L- Tax Preparer/CPA n/a n/a n/a n/a n/a n/a n/a 24 Mo. n/a 24 Mo. 24 Mo. Expense Letter (or P&L) n/a n/a n/a n/a n/a n/a n/a n/a Yes n/a n/a Years of Self Employment n/a n/a n/a n/a n/a % of Business Ownership n/a n/a n/a n/a n/a n/a n/a 100% 100% 100% >= 25% BRIDGE LOAN NO DOC No Employment or Income Stated on 1003 Investment Properties Only FIX & FLIP LOAN NO DOC No Employment or Income Stated on 1003 Investment Properties Only Loan to Cost (LTC) = Loan Amount / (Purchase Price + Rehab Budget) After Repair Loan to Value (ARLTV) = Loan Amount / After-Repair-Value INVESTOR NO DOC TERM LOAN No stated personal income on 1003 No lease required if 1) purchase 2) refi <= $1.0M & <= 65% LTV 3) refi > $1.0M $ <= 60% If leased, provide lease, but no monthly income qualification required with appraisal 620 min credit score, max 65% 1st time home buyer, no gift funds, consumer lates can t exceed 1x60 last 12 months, no 4506

2 75% max LTV if Experienced Investor. Must have 2+ properties owned in most recent 12 months (can use primary residence) with one have documented rental income of 12 months or more 65% max LTV if First Time Investor: Must have owned a residence (primary or rental) for a minimum of the most recent 12 months FOREIGN NATIONAL NO NOC TERM LOAN Use INVESTOR NO DOC TERM LOAN (DSCR < 1.15) guidelines above and guidelines below... If <= $1.0M, Max 70% Purch & 65% Refi (R&T and CO) If > $1.0M, Max 65% Purch & 60% Refi (R&T and CO) Copy of the borrowers valid and unexpired passport (including photograph) Copy of the borrower s valid and unexpired visa (including photograph) OR an I-797 form with valid extension dates and I-94. Borrowers from countries participating in the State Department s Visa Waiver Program (VWP) are not required to provide a valid visa (Visa types allowed: B-1, B-2, H-2, H-3, I, J-1, J-2, 0-2, P-1, P-2, TN NAFTA, Laser Visa) Foreign National Borrowers without Qualifying U.S. Credit (Including borrowers without a valid Social Security Number and borrowers with or without an Individual Tax Identification Number) must provide evidence of three (3) active and open tradelines with a 2 year history. No derogatory credit history is permitted. ANY combination of the following is acceptable to arrive at the tradeline requirement At least 3 tradeline active and open 24 months Tradelines evidenced via a U.S. credit report; AND/OR Tradelines evidenced via international credit report; AND/OR Tradelines evidenced via a credit reference letter from a verified financial institution in the borrower's country of origin Assets must be verified in U.S. Dollar equivalency at the current exchange rate via either or the Wall Street Journal A copy of the two (2) most recent statements of that account. If the funds are not seasoned a minimum of sixty (60) days, a letter of explanation is required along with the information to comprise a sixty (60) day chain of funds. INVESTOR TERM LOAN (DSCR >= 1.15) No stated employment and no personal income stated income on 1003 Debt Service Coverage Ratio = Monthly Gross Income divided by the PITIA of the subject property Gross Income is the lower of gross rents indicated on the lease agreement(s) and Form If the lease(s) agreement reflects higher rents then the 1007, the lease(s) amount may be used for gross rents if two months proof of receipt is verified. For purchase transactions without an existing lease and Unleased Property refinance transactions the gross rents indicated on the 1007 may be used without the lease agreement(s) 620 min credit score, max 65% 1st time home buyer, no gift funds, consumer lates can t exceed 1x60 last 12 months, no % max LTV if Experienced Investor. Must have 2+ properties owned in most recent 12 months (can use primary residence) with one have documented rental income of 12 months or more 65% max LTV if First Time Investor: Must have owned a residence (primary or rental) for a minimum of the most recent 12 months 12 MONTH FULL DOC - WAGE EARNER Most recent pay stub and last year W2 s 4506-T for most recent year

3 12 MONTH FULL DOC - SELF EMPLOYED Most recent tax return including all schedules (personal and business if applicable) YTD P&L and balance sheet (borrower prepared acceptable) T for all borrowers and any business entity filing a separate return for most recent year 24 MONTH FULL DOC - WAGE EARNER Most recent pay stub and last 2 years W2 s 4506-T for most recent 2 years No tax returns unless business income on transcripts or own multiple rental properties 24 MONTH FULL DOC - SELF EMPLOYED Most recent 2 years tax returns including all schedules YTD P&L and balance sheet (borrower prepared acceptable) T for all borrowers and any business entity filing a separate return for most recent 2 years or licensing Bureau; 3 MONTHS BUSINESS BANK STATEMENTS Primary borrower must be self employed, 580 minimum credit score, no non-occupant co-borrowers Add W2 income not associated with business (4506T required but check box 8 for W2 earnings only) Verify borrower owns 100% of business (include in tax professional letter) Split ownership between husband and wife allowed if both are no note INCOME GUIDELINES 3-months of business bank statements (last three) must support the sales reflected on the 24-month CPA P&L. P&L most recent 24 months matching time period prepared by CPA (copy of license required) Average bank statements deposits must be within 10% of the average monthly sales. If 10% tolerance is not met, continuous bank statements may be added to the analysis until the tolerance is met. The qualifying income is the lower of the net income from the P&L divided by 24 or the income disclosed on the initial 1003 Non-sufficient funds or negative balances occurence tolerance.. Up to five (5) occurrences in the most recent twelve (12) month time period is acceptable if there are zero (0) occurrences in the most recent three (3) month time period. Up to three (3) occurrences are allowed in the most recent twelve (12) month time period if there are one (1) or more occurrences in the most recent two (2) month time period. Exception requests for tolerance deviations must include (a) a letter of explanation from the borrower outlining the reason for the occurrences and an explanation of how and when the issue leading to the occurrences was rectified, and (b) additional compensating factors outlined by the underwriter supporting the viability of income.

4 12 MONTHS PERSONAL BANK STATEMENTS Average 100% of deposits on 12 months of bank statements (explain large irregular deposits) Max 43% DTI, no non-occupant co-borrowers, Min 660 credit score, primary borrower must be sole proprietor or 100% business owner. First time homebuyer not allowed. Tax professional letter verifying of self employment in same business for 4 years, or regulatory agency 24 month most recent personal bank statements: 2 months most recent business bank statements (to verify active business) Non-sufficient funds or negative balances occurence tolerance.. Up to five (5) occurrences in the most recent twelve (12) month time period is acceptable if there are zero (0) occurrences in the most recent three (3) month time period. Up to three (3) occurrences are allowed in the most recent twelve (12) month time period if there are one (1) or more occurrences in the most recent two (2) month time period. Exception requests for tolerance deviations must include (a) a letter of explanation from the borrower outlining the reason for the occurrences and an explanation of how and when the issue leading to the occurrences was rectified, and (b) additional compensating factors outlined by the underwriter supporting the viability of income. 24 MONTHS PERSONAL -OR- BUSINESS BANK STATEMENTS Primary borrower must be self employed, 580 minimum credit score, no non-occupant co-borrowers Add W2 income not associated with business (4506T required but check box 8 for W2 earnings only) Non-sufficient funds or negative balances occurence tolerance.. Up to five (5) occurrences in the most recent twelve (12) month time period is acceptable if there are zero (0) occurrences in the most recent three (3) month time period. Up to three (3) occurrences are allowed in the most recent twelve (12) month time period if there are one (1) or more occurrences in the most recent two (2) month time period. Exception requests for tolerance deviations must include (a) a letter of explanation from the borrower outlining the reason for the occurrences and an explanation of how and when the issue leading to the occurrences was rectified, and (b) additional compensating factors outlined by the underwriter supporting the viability of income. 24 month most recent personal bank statements Average 100% of deposits on 24 months of bank statements (explain large irregular deposits) Verify borrower owns >= 25% of business (include in tax professional letter) 2 months most recent business bank statements (to verify active business) 24 month most recent business bank statements Verify borrower owns 100% of business (include in tax professional letter) Split ownership between husband and wife allowed if both are no note CHOOSE ONE OF THE THREE FOLLOWING SALES/EXPENSE OPTIONS: I. CPA/Tax Preparer Expense Statement (EASIEST OPTION) An expense statement specifying business expenses as a percent of the gross annual sales/revenue prepared and signed by either a CPA or tax preparer. Expense Statement Net Income determined by total deposits per bank statements less total expenses. Total expenses calculated by multiplying total deposits by the expense factor provided by CPA or tax preparer. Qualifying income is the lower of the net income from the analysis or the income indicated on the initial 1003 Sample CPA/Tax Preparer Letter (On letterhead, signed and dated):

5 To Whom It May Concern, - Business expenses for XYZ company represent % of gross annual sales/revenue. - Mr. owns 100% of XYZ Company, which been in business years. Sincerely, II. 24 Month Borrower Prepared P&L A business narrative provided by the borrower which includes detail regarding the size and operating profile of the business addressing; location/rent, number of employees/contractors, COGS, Trucks/Equipment (Owned or leased). The expenses listed on the P&L should address all items disclosed in the narrative. 24-months of business bank statements covering the most recent time-period and matching the same period covered by the P&L; and Eligibility Annual sales of business not to exceed $2,000,000 Number of employees not to exceed 10 Income Analysis P&L Sales/Revenue must be supported by the provided bank statements. Total deposits per bank statements, minus any inconsistent deposits, must be no more than 10% below sales/revenue reflected on the P&L. The bank statements and P&L must cover the same time periods. Qualifying income is the lower of the Net Income indicated on the P&L or the income indicated on the initial 1003 The Underwriter review of the business should confirm the sales and number of employees don t exceed the eligibility limits (Annual sale > $2MM and no more than 10 employees/contractors). The underwriter analysis of the business and P&L will require a basic understanding of the borrowers business. The narrative provided by the borrower should be reviewed to determine if the business provides a service or produces/manufactures goods. If the business has a web site, it should be reviewed to gain additional information on the business and its size. The goal of the analysis is to determine if the individual/total expenses as provided by the borrower on the P&L appear reasonable for the type of business. The items to consider in this analysis; Description of business from narrative Location of business Home based or lease space (Google address) Utilities Phone, electric, internet Number of employees or contractors employee taxes, payroll expense Cost of Goods Sold What type of materials does the business use or manufacture. Equipment or Trucks/Vehicles owned or leased Type of client base retail or commercial Any recurring payment on the bank statements should be matched to an expense item on the P&L. The underwriter should provide notes of their analysis on the U/W approval form/1008/or within the bank statement calculator. III. 24-month CPA or Licensed Tax Preparer P&L Must match the time period covered by the bank statements (signed by the preparer and borrower). P&L Sales/Revenue must be supported by the provided bank statements. Total deposits per bank statements, minus any inconsistent deposits, must be no more than 10% below

6 revenue reflected on P&L. The bank statements and P&L must cover the same time period. Qualifying income is the lower of the Net Income indicated on the P&L or the income indicated on the initial MONTH COMMINGLED BUSINESS AND PERSONAL ACCOUNT A single account reflecting both personal/business income and expenses Use same guidelines as 24 month business bank statements above). ASSET DEPLETION/UTILIZATION Available on Non-Prime Only (Not Alt-A or Jumbo Prime) for Primary Residence and Second Homes Minimum 680 credit score, non-occupant co-borrower not allowed, no cash-out refinances, can only combine with 24 month full income documentation Asset Utilization Income: Total Assets Eligible for Depletion, less down payment, less out of pocket closing costs less required reserves, divided by 180. Asset Utilization Income Documentation Minimum Eligible Assets required: the lower of $1,000,000 or 150% of the loan balance. All individuals listed on the asset account(s) must be on the Note and Mortgage Assets considered for this program must be verified with most recent 3 months of account statements or a VOD Assets must be seasoned 120 days Income other than Asset Utilization must be documented in accordance with the Credit Ascent program including tax returns and 4506-T. Assets Ineligible for Depletion 100% of Marketable securities (i.e. CD s, money market accounts); 100% of Checking and Savings; 70% of Stocks, Bonds, and Mutual Funds; 60% of Retirement Assets: Eligible if the borrower is of retirement age (at least 59 ½).