conventional underwriting guidelines conventional underwriting guidelines section 1.03 program terms

Download Conventional Underwriting Guidelines Conventional Underwriting Guidelines Section 1.03 Program Terms

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  • CONFORMING

    CONFORMING HIGH BALANCE & SUPER CONFORMING

    HOMEREADY & HOMEPOSSIBLE

    Conventional Underwriting

    Guidelines Version 03.05.2020

  • Section 1.01

    Return to Page 1 Conventional Programs Version 03.05.2020 Underwriting Guidelines Page 2 of 118

    FCM CONVENTIONAL UNDERWRITING GUIDELINES

    (INCLUDES: CONFORMING, CONFORMING FNMA HIGH BALANCE, FHLMC SUPER CONFORMING, HOMEREADY AND HOMEPOSSIBLE)

    1.01 Table of Contents 1.02 Program Overview ............................................................................................................................ 6

    1.02.01 Multiple Risk Layering ........................................................................................................... 7

    1.03 Program Terms .................................................................................................................................. 8

    1.03.01 Program Code ....................................................................................................................... 8

    1.03.02 Term ...................................................................................................................................... 8

    1.03.03 Loan Type .............................................................................................................................. 8

    1.03.04 Occupancy Type .................................................................................................................... 8

    1.03.05 Higher Priced Mortgage Loans ............................................................................................ 10

    1.03.06 Loan-To-Value ..................................................................................................................... 10

    1.03.07 Manufactured Homes Requirements and Restrictions ...................................................... 10

    1.03.08 Mortgage Insurance ............................................................................................................ 11

    1.03.09 Minimum and Maximum Loan Amount .............................................................................. 13

    1.03.10 Acceptable AUS Findings ..................................................................................................... 13

    1.03.11 DU Tolerances ..................................................................................................................... 13

    1.03.12 LPA Tolerances .................................................................................................................... 14

    1.03.13 Reduced AUS Documentation ............................................................................................. 15

    1.03.14 Fannie Mae Day 1 Certainty ................................................................................................ 15

    1.03.15 Acceptable Documentation Formats: ................................................................................. 15

    1.03.16 Sales Contract Review ......................................................................................................... 15

    1.03.17 Red Flags, Fraud Alerts, LQI and QC Policies ....................................................................... 16

    1.03.18 General Letters of Explanation ........................................................................................... 17

    1.03.19 Secondary Financing ........................................................................................................... 17

    1.03.20 Escrows ............................................................................................................................... 19

    1.03.21 Repair Escrows .................................................................................................................... 20

    1.03.22 Ineligible Transactions ........................................................................................................ 20

  • Section 1.02 Program Overview

    Return to Page 1 Conventional Programs Version 03.05.2020 Underwriting Guidelines Page 3 of 118

    1.04 Borrower Eligibility .......................................................................................................................... 21

    1.04.01 Eligible Borrowers ............................................................................................................... 21

    1.04.02 Ineligible Borrowers ............................................................................................................ 22

    1.04.03 Non-Occupant Co-Borrowers .............................................................................................. 23

    1.04.04 Power of Attorney (POA) .................................................................................................... 23

    1.04.05 Non-Arms-Length/Identity of Interest Transactions........................................................... 24

    1.04.06 LDP/GSA Screening ............................................................................................................. 24

    1.04.07 Social Security Number Verification ................................................................................... 24

    1.05 Income Assessment ........................................................................................................................ 25

    1.05.01 Overview ............................................................................................................................. 25

    1.05.02 Length of Employment ........................................................................................................ 25

    1.05.03 Continuance ........................................................................................................................ 25

    1.05.04 Salaried or Hourly Wage Earner .......................................................................................... 27

    1.05.05 Self-Employed ..................................................................................................................... 28

    1.05.06 Commission Income ............................................................................................................ 31

    1.05.07 Rental Income ..................................................................................................................... 31

    1.05.08 Other Types of Income ........................................................................................................ 39

    1.05.09 New Employment ................................................................................................................ 46

    1.05.10 Non-Taxable Income ........................................................................................................... 48

    1.05.11 Temporary Leave/Short Term Disability ............................................................................. 48

    1.05.12 Income Types Not Addressed ............................................................................................. 49

    1.05.13 Unacceptable Sources of Income ........................................................................................ 50

    1.05.14 4506-T Requirements .......................................................................................................... 50

    1.05.15 IRS Tax Transcript Requirements ........................................................................................ 50

    1.05.16 Amended Tax Returns ......................................................................................................... 53

    1.06 Asset Assessment ............................................................................................................................ 54

    1.06.01 Checking and Savings Accounts and Certificates of Deposit............................................... 54

    1.06.02 Stocks, Bonds, and Mutual Funds ....................................................................................... 55

    1.06.03 Retirement Accounts (Employer Held) ............................................................................... 55

    1.06.04 Retirement Accounts (Privately Held) ................................................................................. 55

    1.06.05 Personal Gifts ...................................................................................................................... 55

    1.06.06 Gift of Equity ....................................................................................................................... 58

    1.06.07 Donations from Entities ...................................................................................................... 58

    1.06.08 Employer Assistance ........................................................................................................... 59

    1.06.09 Proceeds from the Sale of Property .................................................................................... 60

    1.06.10 Borrowed Funds .................................................................................................................. 61

    1.06.11 Earnest Money Deposit ....................................................................................................... 61

    Receipt of the deposit must be verified by either a copy of the borrower’s canceled check or a written

    statement from the holder of the deposit. .....................................

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