DU 9.1 Revisions and Other Agency Enhancements

Transcription

1 Bankruptcies Products (non AUS & DU) If a public record does not indicate a bankruptcy, but an individual tradeline does, the borrower must meet these bankruptcy guidelines. Generally, bankruptcies (except Chapter 13) must be discharged or dismissed at least four (4) years before the disbursement date of the new loan. Chapter 13 bankruptcies must be: discharged at least two (2) years before the disbursement date of the new loan, or dismissed at least four (4) years before the disbursement date of the new loan. A shorter time of two (2) years from the bankruptcy discharge or dismissal date may be considered if extenuating circumstances existed, as defined below: extenuating circumstances are created by non recurring events out of the borrower s control that cause a reduction in income or increase in liabilities and are not defined solely by an event (i.e., a job layoff or divorce is not acceptable by itself without an explanation and documentation of the lack of reasonable options), and there must be an interrelationship between the event, the severity of the hardship and the borrower s efforts to resolve the situation. If a public record does not indicate a bankruptcy, but an individual tradeline does, the borrower must meet these bankruptcy guidelines. Generally, bankruptcies (except Chapter 13) must be discharged or dismissed at least four (4) years before the disbursement date of the new loan. Chapter 13 bankruptcies must be: discharged at least two (2) years before the disbursement date of the new loan, or dismissed at least four (4) years before the disbursement date of the new loan. A shorter time of two (2) years from the bankruptcy discharge or dismissal date may be considered if extenuating circumstances existed, as defined below: extenuating circumstances are created by non recurring events out of the borrower s control that cause a reduction in income or increase in liabilities and are not defined solely by an event (i.e., a job layoff or divorce is not acceptable by itself without an explanation and documentation of the lack of reasonable options), and there must be an interrelationship between the event, the severity of the hardship and the borrower s efforts to resolve the situation. Note: No exceptions are permitted to the two (2) year time period after a Chapter 13 discharge. Note: No exceptions are permitted to the two (2) year time period after a Chapter 13 discharge. For borrowers with multiple bankruptcy filings, the following applies: A five (5) year time period from the most recent dismissal or discharge date is required for borrowers with more than one (1) bankruptcy filing within the past seven (7) years. A shorter time period of three (3) years from the most recent discharge or dismissal date may be considered if extenuating circumstances existed. The most recent bankruptcy filing must have been the result of extenuating circumstances. Borrowers with a bankruptcy that has been discharged or dismissed for four (4) years or more, as evidenced by the credit report, are NOT required to provide a complete copy of the bankruptcy documents. If the discharge or dismissal is less than four (4) years (i.e., in the case of a Chapter 13 bankruptcy or when extenuating circumstances existed), the borrower must provide a copy of the bankruptcy documents or a complete copy of documentation to establish the date of the bankruptcy, written explanation, and documentation to support claim of any extenuating circumstances. The borrower must show a re established satisfactory credit history. The borrower s credit will be considered re established if all of the following requirements are met: The waiting period and the related LTV and occupancy requirements are met. The borrower meets all other credit requirements outlined in the product guidelines. The borrower has traditional credit. Non traditional credit or thin files are not acceptable. For borrowers with multiple bankruptcy filings, the following applies: A five (5) year time period from the most recent dismissal or discharge date is required for borrowers with more than one (1) bankruptcy filing within the past seven (7) years. A shorter time period of three (3) years from the most recent discharge or dismissal date may be considered if extenuating circumstances existed. The most recent bankruptcy filing must have been the result of extenuating circumstances. Borrowers with a bankruptcy that has been discharged or dismissed for four (4) years or more, as evidenced by the credit report, are NOT required to provide a complete copy of the bankruptcy documents. If the discharge or dismissal is less than four (4) years (i.e., in the case of a Chapter 13 bankruptcy or when extenuating circumstances existed), the borrower must provide a copy of the bankruptcy documents or a complete copy of documentation to establish the date of the bankruptcy, written explanation, and documentation to support claim of any extenuating circumstances. The borrower must show a re established satisfactory credit history. The borrower s credit will be considered re established if all of the following requirements are met: The waiting period requirements are met. The borrower meets all other credit requirements outlined in the product guidelines. The borrower has traditional credit. Non traditional credit or thin files are not acceptable. Last Revision Date: 08/08/14 () guidelines apply with the following exceptions: The waiting period begins on the dismissal/discharge date and ends on the credit report date. If Approve/Eligible the following applies: The borrower s credit will be considered re established if all of the following are met: The waiting period and the related LTV and occupancy requirements are met. The borrower meets all other credit requirements outlined in the product guidelines. The minimum allowable time period between the file date of the bankruptcy and the date of the credit report is 48 months. Loans that include a borrower with a bankruptcy filed within 48 months prior to the credit report date are NOT eligible. Page 1 of 6 guidelines apply with the following exceptions: The waiting period begins on the dismissal/discharge date and ends on the credit report date. If Approve/Eligible the following applies: The borrower s credit will be considered re established if all of the following are met: The waiting period requirements are met. The borrower meets all other credit requirements outlined in the product guidelines. The minimum allowable time period between the file date of the bankruptcy and the date of the credit report is 48 months. Loans that include a borrower with a bankruptcy filed within 48 months prior to the credit report date are NOT eligible.

2 Products If DU is not able to determine when the bankruptcy was filed, it must be confirmed that the bankruptcy was not filed within 48 months prior to the credit report date and that the bankruptcy complies with the DU bankruptcy guidelines. If DU is not able to determine when the bankruptcy was filed, it must be confirmed that the bankruptcy was not filed within 48 months prior to the credit report date and that the bankruptcy complies with the DU bankruptcy guidelines. Note: All bankruptcies must be satisfied prior to the credit report date in order for the mortgage to be eligible. Note: All bankruptcies must be satisfied prior to the credit report date in order for the mortgage to be eligible. Extenuating circumstances for bankruptcy actions are not eligible for DU processed loans. If a trade line is reported in bankruptcy status (payment code of 7 ), a bankruptcy is reported in the public records, and the DU Findings Report reflects the bankruptcy, no additional underwriting is required. If the DU Findings Report does not address a bankruptcy, the loan must be traditionally underwritten to non AUS guidelines. Extenuating circumstances for bankruptcy actions are not eligible for DU processed loans. If a trade line is reported in bankruptcy status (payment code of 7 ), a bankruptcy is reported in the public records, and the DU Findings Report reflects the bankruptcy, no additional underwriting is required. If the DU Findings Report does not address a bankruptcy that does not meet minimum waiting period requirements, the loan must be traditionally underwritten to non AUS guidelines. Construction Permanent Single Closing Transactions (DU) For Accept/Eligible mortgages, the significance of the bankruptcy information has already been considered by Loan Prospector and the borrower's credit reputation has been deemed acceptable. No further evaluation of the bankruptcy is required.. Agency manually underwritten and DU Expanded Approval DU loans are not permitted for the construction permanent product. If the credit documentation is dated more than 120 days but not exceeding 365 days old at the time of conversion to the permanent financing, the loan will not require updated documentation and no borrower re qualification IF ALL of the following requirements were met at the time of the original closing of the construction loan: documents were dated within 120 days of the original construction close, all borrowers have a minimum credit score of 700, LTV/TLTV/HTLTV was 70% or less at the time of the original construction close, and the loan was submitted to DU and received an Approve/Eligible recommendation at the time of the original construction close. Note: If all of the above requirements are not met or if the appraised value has declined, updated documents must be obtained and the borrower must be re qualified. Not eligible Note: All other currently published guidelines remain unchanged. For Accept/Eligible mortgages, the significance of the bankruptcy information has already been considered by Loan Prospector and the borrower's credit reputation has been deemed acceptable. No further evaluation of the bankruptcy is required.. Agency manually underwritten and DU Expanded Approval DU loans are not permitted for the construction permanent product. If the credit documentation is dated more than 4 months (120 days) but not exceeding 18 months at the time of conversion to the permanent financing, the loan will not require updated documentation and the borrower will not need to be re qualified if all of the following requirements were met at the time of the original closing of the construction loan: documents were dated within 4 months (120 days) of the original construction loan closing date, all borrowers have a minimum credit score of 700, LTV/TLTV/HTLTV was 70% or less at the time of the original construction loan closing, and the loan was submitted to DU and received an Approve/Eligible recommendation at the time of the original construction loan closing. Note: If not all of the above requirements are met or if the appraised value has declined, updated documents must be obtained and the borrower must be re qualified at the time of conversion to permanent phase. Not eligible Credit History Requirements Section 2.04 DU Refi Plus Loan Program Guideline Last Revision Date: 08/08/14 () DU Refi Plus Credit History Requirements STM to STM Transactions The acceptable mortgage payment history for all mortgage tradelines will be determined by DU. If a mortgage tradeline was NOT 60 days or more past due when the account was last reported (i.e., loan was current when last reported), BUT has been 60 days or more past Page 2 of 6 Note: All other currently published guidelines remain unchanged. Credit History Requirements STM to STM Transactions The acceptable mortgage payment history for all mortgage tradelines will be determined by DU. If a mortgage tradeline was NOT 60 days or more past due when the account was last reported (i.e., loan was current when last reported), BUT has been 60 days or more past

3 Products due in the last 12 months, the loan casefile will receive an Ineligible recommendation. If the DU Findings Report does not address a mortgage tradeline that is 60 or more days past due within the last 12 months, that appears on the credit report, the tradeline must be manually evaluated outside of DU. Restructured mortgage loans do not need to be seasoned for 24 months or meet the payment history requirements. It is not required that the borrower(s) comply with the waiting period and reestablishment of credit criteria following a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale. However if the credit history includes a bankruptcy which includes the subject property and is still open, in order for the DU Refi Plus loan to be eligible for origination, written permission from the bankruptcy court must be obtained to proceed with the refinance. Investigation of bankruptcies or foreclosures declared by the borrower in the Declarations section of the loan application is not required. All other declarations must be investigated. All other credit requirements must meet all other standard Agency DU guidelines. due in the last 12 months, the loan casefile will receive an Ineligible recommendation. If the DU Findings Report does not address a mortgage tradeline that is 60 or more days past due within the last 12 months, that appears on the credit report, the tradeline must be manually evaluated outside of DU. Restructured mortgage loans do not need to be seasoned for 24 months or meet the payment history requirements. It is not required that the borrower(s) comply with the waiting period and reestablishment of credit criteria following a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale. However if the credit history includes a bankruptcy which includes the subject property and is still open, in order for the DU Refi Plus loan to be eligible for origination, written permission from the bankruptcy court must be obtained to proceed with the refinance. Investigation of bankruptcies or foreclosures declared by the borrower in the Declarations section of the loan application is not required. All other declarations must be investigated. All other credit requirements must meet all other standard Agency DU guidelines. Collections & Non Mortgage Charge off Accounts Last Revision Date: 08/08/14 () (non AUS, DU & LP) Non STM to STM Transactions The borrower s payment history must reflect 0X30 on all housing debts (including all mortgage and rental payments) for the last 12 months. If the payment history is seasoned less than 12 months, the borrower s payment history must reflect 0X30 over the life of the loan period. Restructured mortgage loans are ineligible to be refinanced. All other credit requirements (i.e., bankruptcies, foreclosures, late payments, etc.) must meet all other standard Agency DU guidelines. Collections and/or Charge Offs All collection and charge off accounts must be paid off at or prior to closing. The only exceptions apply when an individual account balance is less than $250 or if the total balance of such accounts is $1,000 or less. Gift funds may be used to pay off collection and charge off accounts. Note: Regardless of the funds used (borrower s own funds or gift funds), it is NOT acceptable to pay down the aggregate balance of these accounts to $1,000 and allow them to remain open. Page 3 of 6 Non STM to STM Transactions The borrower s payment history must reflect 0X30 on all housing debts (including all mortgage and rental payments) for the last 12 months. If the payment history is seasoned less than 12 months, the borrower s payment history must reflect 0X30 over the life of the loan period. Restructured mortgage loans are ineligible to be refinanced. It is not required that the borrower(s) comply with the waiting period and reestablishment of credit criteria following a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale. However if the credit history includes a bankruptcy which includes the subject property and is still open, in order for the DU Refi Plus loan to be eligible for origination, written permission from the bankruptcy court must be obtained to proceed with the refinance. Investigation of bankruptcies or foreclosures declared by the borrower in the Declarations section of the loan application is not required. All other declarations must be investigated. All other credit requirements must meet all other standard Agency DU guidelines. Collections and/or Non Mortgage Charge Offs All collection and non mortgage charge off accounts must be paid off at or prior to closing except in the following cases: Collection accounts or non mortgage charge off accounts do not have to be paid off at or prior to closing when an individual account balance is less than $250 or if the total balance of such accounts is $1,000 or less. Collection accounts or non mortgage charge off accounts that exceed the above limits do not have to be paid off at or prior to closing, provided the borrower has at least six months of reserves, no late payments in the last two years, and is not relying on non traditional credit to qualify.

4 Products For one (1) unit primary residence transactions, collections and/or charge off accounts are not required to be paid off, regardless of the amount. For two to four (2 4) unit primary residence and 1 unit second home transactions, collection and charge off accounts that total more than $5,000 must be paid off at or prior to closing. Gift funds may be used to pay off collection and charge off accounts. Regardless of the funds used (borrower s own funds or gift funds), it is NOT acceptable to pay down the aggregate balance of these accounts to $5,000 and allow them to remain open. Conventional non AUS guidelines apply for investment property transactions. guidelines apply. Gift funds may be used to pay off collection and non mortgage charge off accounts. Note: Regardless of the funds used (borrower s own funds or gift funds), it is NOT acceptable to pay down the aggregate balance of these accounts to $1,000 and allow them to remain open. For one unit primary residence transactions, collections and/or non mortgage charge off accounts are not required to be paid off, regardless of the amount. For two to four unit primary residence and one unit second home transactions, collection and nonmortgage charge off accounts that total more than $5,000 must be paid off at or prior to closing. For investment properties, individual collection and/or non mortgage charge off accounts equal to or greater than $250 and accounts that total more than $1,000 must be paid in full prior to or at closing. Gift funds may be used to pay off collection and non mortgage charge off accounts. Note: Regardless of the funds used (borrower s own funds or gift funds), it is NOT acceptable to pay down the aggregate balance of these accounts to $5,000 and allow them to remain open. Past Due Accounts Retirement Income Last Revision Date: 08/08/14 () (non AUS & DU) DU Refi Plus (non STM to STM transactions ONLY) (non AUS & DU) DU Refi Plus (non STM to STM transactions ONLY) All past due accounts must be brought current at or prior to closing. guidelines apply. The LP Feedback Certificate will not identify specific messages concerning past due accounts and/or collection accounts. It is the discretion of underwriting as to whether or not these accounts must be paid by closing, factoring any effect that this may have on the borrower s ability to make future mortgage payments. The borrower must have unrestricted access, without penalty, to the account(s). The borrower must document regular and continued receipt of the income and must provide one of the following: letter from organization providing the income, copies of retirement awards letter(s), copies of signed Federal tax returns filed with the IRS, IRS W 2s, or 1099 forms, or copies of most recent bank statements reflecting regular deposits. If there is a defined expiration date for the source of income, or if retirement income is paid in the form of a monthly distribution from a 401(k), IRA, or Keogh retirement account, document whether the income is expected to continue for at least three years after the date of the loan application. If the borrower has recently retired and set up an account for income draws, income from the principal balance may only be used if a payment schedule has been set up. Page 4 of 6 For Accept/Eligible mortgages, the significance of a collection/non mortgage charge off has already been considered by LP and the borrower s credit reputation has been deemed acceptable. No further evaluation of the collection/non mortgage charge off is required. All past due accounts must be brought current at or prior to closing and funds sufficient to settle these items must be verified and documented. guidelines apply. The LP Feedback Certificate will not identify specific messages concerning past due accounts and/or collection accounts. It is the discretion of underwriting as to whether or not these accounts must be paid by closing, factoring any effect that this may have on the borrower s ability to make future mortgage payments. The borrower must have unrestricted access, without penalty, to the account(s). The borrower must document regular and continued receipt of the income and must provide one of the following: letter from organization providing the income, copies of retirement awards letter(s), copies of signed Federal tax returns filed with the IRS, IRS W 2s, or 1099 forms, or copies of most recent bank statements reflecting regular deposits. If there is a defined expiration date for the source of income, or if retirement income is paid in the form of a monthly distribution from a 401(k), IRA, SEP, or Keogh retirement account, document whether the income is expected to continue for at least three years after the date of the loan application. If the borrower has recently retired and set up an account for income draws, income from the

5 Sales Proceeds Last Revision Date: 08/08/14 () Products (non AUS, DU & LP) If the assets are in the form of stocks, bonds, or mutual funds, 70% of the balance of the asset (less any funds used for down payment, closing costs, prepaids/escrows, and/or financing costs) must be used to determine the number of distributions remaining to account for the volatile nature of these assets. guidelines apply. Income must have been received for the most recent two months and be likely to continue for at least three years after the date of the loan application. Streamlined and Standard ation: To document, obtain the following: copy of the award letter or most recent year s 1099s, or other equivalent documentation showing income type, source, and amount, and most recent two months bank statements or other equivalent documentation showing receipt of the retirement or pension income. The borrower must provide a copy of the fully executed HUD 1 Settlement statement at the closing of the home being sold, to verify the source of funds. When the borrower s employer assumes responsibility for paying off the existing mortgage in connection with a corporate relocation plan, a copy of the executed buy out agreement may be used to document the source of funds. A copy of a sales contract or a listing agreement may not be used as verification of the proceeds from the sale. guidelines apply with the following exception: The borrower must provide a copy of the fully executed HUD 1 Settlement statement at the closing of the home being sold, to verify the source of funds. Equity on properties listed as Pending Sale in the REO section of the application is calculated as follows: (sales price x 90%) any outstanding mortgages. guidelines apply in addition to the following requirements: Streamlined and Standard Accept documentation requirements are the same. Settlement statement or evidence of sale of asset must: be computer generated or typed, identify the borrower as the seller of the property, identify the property sold, show the proceeds to the property seller, show the disposition of all liens against the property, and be signed by the buyer and seller, or authorized agents. Page 5 of 6 principal balance may only be used if a payment schedule has been set up. If the assets are in the form of stocks, bonds, or mutual funds, 70% of the balance of the asset (less any funds used for down payment, closing costs, prepaids/escrows, and/or financing costs) must be used to determine the number of distributions remaining to account for the volatile nature of these assets. guidelines apply. Income must have been received for the most recent two months and be likely to continue for at least three years after the date of the loan application. Streamlined and Standard ation: To document, obtain the following: copy of the award letter or most recent year s 1099s, or other equivalent documentation showing income type, source, and amount, and most recent two months bank statements or other equivalent documentation showing receipt of the retirement or pension income. If the proceeds from the sale of a currently owned home are needed for the down payment and closing costs on the new house, the source of funds must be verified by obtaining a copy of the final HUD 1 Settlement Statement on the existing home before, or simultaneously with, the settlement on the new home, showing sufficient net cash proceeds to consummate the purchase of the new home. Note: The HUD 1 is not required to be fully executed by all parties (in recognition of the fact that the seller of a property may not receive a fully executed copy of that HUD 1). At a minimum, the HUD 1 needs to be signed by the seller and settlement agent. When the borrower s employer assumes responsibility for paying off the existing mortgage in connection with a corporate relocation plan, a copy of the executed buy out agreement may be used to document the source of funds. A copy of a sales contract or a listing agreement may not be used as verification of the proceeds from the sale. guidelines apply with the following exception: The borrower must provide a copy of the fully executed HUD 1 Settlement statement at the closing of the home being sold, to verify the source of funds. Equity on properties listed as Pending Sale in the REO section of the application is calculated as follows: (sales price x 90%) any outstanding mortgages. guidelines apply, except as follows: Streamlined and Standard Accept documentation requirements are the same. Settlement statement or evidence of sale of asset must: be computer generated or typed, identify the borrower as the seller of the property, identify the property sold, show the proceeds to the property seller, show the disposition of all liens against the property, and

6 Single Family Comparable Rent Schedule (Fannie Mae Form 1007/Freddie Mac Form 1000) Section 1.07 Appraisal Guideline & Products (non AUS, DU & LP) Currently our guidelines reference Single Family Comparable Rent Schedule (Fannie Mae Form 1007/Freddie Mac Form 1000). Freddie Mac no longer publishes or requires a Single Family Comparable Rent Schedule. As a result, all references to the Freddie Mac Form number in the Section 1.07 Appraisal and Programs guideline documents are being removed. : Programs Fannie Mae Form 1007/Freddie Mac Form 1000 (Single Family Comparable Rent Schedule) This form is used on investment properties. It is not required if rental income on the subject property is not used to qualify the borrower. However, since lenders must report the gross monthly rent at delivery even when the borrower is NOT utilizing rental income to qualify, lenders have the option of obtaining a Single Family Comparable Rent Schedule (Fannie Mae Form 1007/Freddie Mac Form 1000) to meet this requirement. guidelines apply. guidelines apply. be signed by the buyer and seller, or authorized agents. All references to the Freddie Mac Form 1000 in the Section 1.07 Appraisal and Programs guideline documents are being removed. Revised references will read as follows: Single Family Comparable Rent Schedule (Fannie Mae Form 1007). The following additional update is also being made. : Programs Fannie Mae Form 1007 (Single Family Comparable Rent Schedule) This form is used on one unit investment properties. It is not required if rental income on the subject property is not used to qualify the borrower. However, since lenders must report the gross monthly rent at delivery even when the borrower is NOT utilizing rental income to qualify, lenders have the option of obtaining a Single Family Comparable Rent Schedule (Fannie Mae Form 1007) to meet this requirement. guidelines apply. The Single Family Comparable Rent Schedule is not required for a LP transaction. Last Revision Date: 08/08/14 () Page 6 of 6