Product Changes

Product Changes

FHA Product Updates, August 3rd

FHA DTI Caps
GURU Section FHA Product Matrix

Old

New

FHA DTI Caps Rate and Term Refinance with minimum 640 score and all LTVs: 50%

Cash out Refinance with minimum 680 score and max LTV of 75%: 50%

Rate and Term Refinance with minimum 640 score and all LTVs: 55%

Cash out Refinance with minimum 680 score and max LTV of 75%: 55%

**All other DTI rules remain the same (Refer, Streamline, ETC)

Agency/VA Product Updates, July 25th

Agency/VA Escrow Waiver
GURU Section 6.17.2 Escrow Waiver

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New

Escrow Waiver Agency: 90% LTV

VA: Not Allowed

Agency: 95% LTV

VA: Allowed with:

  • 90% max LTV
  • Minimum 720 FICO
  • .25 price adjustment

FHA Product Updates, June 14th

FHA Overtime and Bonus Update
GURU Section 4.21 Overtime Income and 4.03 Bonus Income

Old

New

FHA Overtime and Bonus Income 2 year history was required Can now be used with at least 12 months:

  • Must still meet standard document requirements

Agency Product Updates, June 9th

DU Cash Out on Student Loans
GURU Section 2.18.1 Cash Out

Old

New

Student Loans Not Applicable When paying off student loan debt on DU loans, get a cash out loan with rate & term pricing:

    Payoff at least one student loan in full
    1. Client must be obligated on the loan
    2. Partial payments not allowed
    3. No additional debt can be included, such as, car loans or credit cards

  • Loan Purpose must still be set as cash out
  • Purchase money seconds can be included
  • Cannot receive more than lower of 2% of loan or $2000 cash back
  • Standard cash out LTV/CLTV/HCLTV limits apply

VA Product Updates, June 5th

VA Primary Residence
GURU Section 2.11.2 Primary Residence

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New

Primary Residence Veteran and spouse not allowed to own any other properties other than the subject The primary residence is occupied by the spouse due to the veteran either serving on active duty or veteran cannot occupy due to distant employment

Agency, Jumbo, FHA & VA Product Updates, May 24th

Conversion of Primary to Investment
GURU Section 2.06 Conversion of a Primary Residence and Primary Pending Sale

Old

New

Conversion of Primary to Investment with Non Arms Length Leases Agency and Jumbo:Not Allowed

FHA:
Allowed without cash flow restrictions

VA:
Allowed with cash flow restrictions

All Products: Allowed, positive cash flow may not be used as income

NOTE: The lesser of the lease + vacancy factor or 1007/1025 must be used, fully executed 12 month lease required. See GURU for complete details

Agency & Jumbo Product Update, May 18th

Court Ordered Assignment of Debt
GURU Section 3.03.3 Court Ordered Assignment of Debt

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New

Court Ordered Assignment of Debt for DU, LP and Jumbo no longer matters Debts assigned to an ex-spouse by a divorce decree may still need to be included in the DTI if there are late payments in the previous 24 months Debts assigned to another individual in a divorce decree/separation agreement, including delinquent debts, do not need to be included in our client’s ratios

Agency, Jumbo, FHA & VA Product Updates, May 10th

VOR from Private Landlord
GURU Section 3.08.1 Acceptable Verifications for Mortgage and Rent History

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New

VOR from Private Landlord VOR must be completed by a professional management company VOR allowed from any non-family member landlord.

Additional Jumbo Restriction: VOR’s not allowed if the landlord is a party in the transaction

NOTE: 12 – 24 months cancelled checks or bank statements are required if the landlord is the client’s family member, land contract transaction, or a VOR is not available

Agency, Jumbo, FHA & VA Product Updates, May 9th

Co-Signed Debt
GURU Section 3.03.2 Co-Signed Debt

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New

Co-Signed Debt – DU Only non-mortgage debts Debt could only be excluded if the person paying was a co-signer The person paying does not have to be obligated on the debt in order to exclude a debt from a client’s DTI

NOTE: 12 months of timely payments must be documented through cancelled checks or bank statements

Agency Product Update, April 26th

Student Loans
GURU Section 3.06.02 Student Loans

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New

Student Loans Agency:
Qualify with the GREATER of:

  • The actual payment reporting on credit
  • 1% of the outstanding balance
  • $10

Note: If documentation can be obtained indicating the actual monthly payment will not increase and will pay the balance off in full, the actual payment can be used.

VA:
For loans in Repayment or Forbearance

Qualify with the actual payment reporting on credit or on the monthly statement.
If no payment is listed the client must be qualified with the GREATER of:

  • 1% of the outstanding balance
  • $10
Agency:
Student loan payments must be included in the DTI even if the account is deferred or in a period of forbearance.
A $0 payment is NOT acceptable.Use the following steps to determine the correct payment.

  • The actual payment reporting on credit
  • If no payment is listed OR the payment is $0, use 1% of the existing balance
  • If the client does not qualify using 1% of the balance, obtain the statement and use the payment listed

LP Only: All installment debts must have <1,000 payments remaining. If have followed the correct steps above AND have >999 payments, adjust the payment amount to reflect ≤999 payments.

See the Home Possible for product specific guidelines.

VA:
For loans in Repayment or Forbearance

Qualify with the GREATER of:

  • Payment listed on the credit report
  • 5% of the loan balance divided by 12

Agency Product Update, April 18th

Primary Occupancy
GURU Section 2.11.3 Second Home

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New

Second Homes DU & LP 2 week maximum for a client to rent out their second home A second home can now be rented out up to 180 days*

*Rental Income cannot be used even if reported on the returns

All Product Update, April 4th

Social Security Income Verification
GURU Section 4.30.17 Social Security Income

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New

Social Security Income Verification Proof of current receipt is required through recent checks/statement Proof of current receipt is not required*

*If SSI has increased, client can use most recent proof of receipt to qualify

All Product Update, March 31st

Second Home
GURU Section 2.11.2 Primary Residence

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New

Primary Residence Verbiage on the Deed of Trust If a client expresses their intent to convert their current primary residence to an investment within 6 mos of closing, the property must be considered an investment property If a client expresses their intent to convert their current primary residence to an investment within 12 mos of closing, please follow Second Home or Investment Property topics in GURU.

FHA Product Update, February 23rd

Re-established Credit for Chapter 13 Bankruptcy
GURU Section 3.15 Re-Established Credit – FHA

Old

New

Re-established Credit after Chapter 13 BK Ch 13 BKs were required to meet re-established credit guidelines. No longer required to meet re-established credit guidelines.

Product Update, February 20th

Social Security Document Requirement — DU&LP
GURU Section 4.30.17 Social Security Income

Old

New

Social Security Documentation DU — 1099 or 1040 Not Allowed

LP — 2 months bank statement

DU — 1099 or 1040 Allowed

LP — Most recent bank statement

  • When getting a bank statement you still need an award letter

Product Update, February 16th

Co-Signed Debt
GURU Section 3.03.2 Co-Signed Debt

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New

Co-Signed Debt** When excluding co-signed debt mortgage debt from the DTI, taxes and insurance must still be included. In addition to the existing documents allowed, we now will accept the below as proof of receipt:
When excluding co-signed mortgage debt from DTI, we can not exclude the full PITIA from the ratios with proof that the client has not made any part of the PITIS in the past 12 months and there are zero lates.

**Applies on to Agency and Jumbo

Product Update, February 14th

VA Disability Income
GURU Section 4.30.21 VA Benefits

Old

New

VA Disability Income
  • Disability Policy
  • Benefit Statement
  • Award Letter
  • Certificate of Eligibility
In addition to the existing documents allowed, we now will accept the below as proof of receipt:

  • Verification of Benefits Form (VA Form 26-8937)
  • Request of Determination of Value (Case Number Form)

FHA/VA Checking and Savings
GURU Section 5.09 Checking and Savings

Old

New

Account Holder’s Address on Bank Statement for FHA/VA Needed to be listed on the statement No longer required.

FHA Credit Qualifying Streamlines
GURU Section 10.07 FHA Streamline

Old

New

FHA Credit Qualifying Streamlines Ratios Over 31/43 must meet one of the following:

  • Residual Income Requirements
  • 3 Mos PITI
Now only requires 1 month PITI

Jumbo Product Update, February 9th

Jumbo Self-Employment Omitting Notes Payable Due in Less Than 1 Year
GURU Section 4.23.1.4 S Corporation

Old

New

Omitting Mortgage/Notes Payable Deducting Mortgage/Notes Payable is not required if ANY of the following conditions are satisfied:

  • There is evidence the notes payable roll over regularly (documentation must be provided to show this).
  • The business has sufficient liquid assets to cover them. See the Asset Documentation topic for additional information.
  • The current amount due for this year is part of a larger debt (evidence must be provided to show that the amount due and payable this year is part of the larger note).
  • The debt is decreasing year-over-year and the business income is increasing year-over-year (showing the client’s business has a good history of maintaining its debt while maintaining its profitability).
Mortgage/Notes Payable less than 1 year must ALWAYS be included unless there is evidence the notes payable roll over regularly. (Documentation must be provided to show this).

FHA Product Update, February 8th

FHA Refer Eligible Tax Liens and Judgments
GURU Section 3.12.9 Public Records, Judgments and Liens

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New

IRS Tax Liens and Judgments Both had to be paid prior to application Can remain open if guidelines are met:

  • There is a repayment plan
  • Client has made 3 consecutive payments
  • A subordination agreement may be needed for an IRS tax lien

Product Update, February 1st

Self-Employment Income Changes
GURU Section 4.23 Self-Employment

Old

New

Self-Employment Income (DU only) No Guidance When a client qualifies using W2 wages or retirement income, self-employment income (or loss) can be excluded DTI on DU only.

GURU Section 4.23.3 Self-Employment 3rd Party Verification Requirements

Old

New

Third Party Self-Employment Verification Must be obtained within 30 days prior to close Must be obtained within 120 days prior to close on all products, excluding Jumbo

VA Product Update, January 18th

Property Repairs
GURU Section 7.05 Property Repairs

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New

Repairs on a Purchase Not allowed to be paid for by the buyer Allowed to be paid for by the buyer

Residual Income
GURU Section 4.22 Residual Income

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New

Post Exchange Letter for Residual Income Access letter from command to the Post Exchange No longer required to provide letter for a reduction to residual income

Power of Attorney
GURU Section 2.12 Power of Attorney

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New

Alive and Well Letter Must come from the Veteran or Service member Can now come from a Family Member*

*Only applicable to arm’s length transactions

Jumbo Product Update, January 12th

Mixed Use Properties
GURU Section 6.12 Mixed Use Property

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New

Mixed Use Property – Jumbo Only Allowed No longer allowed

DU Product Update, January 5th

Maximum Financed Properties
GURU Section 1.05 Maximum Financed Properties

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New

DU Maximum Finance Properties 1-4 financed properties with no minimum FICO

5-10 financed properties with 720 minimum FICO

1-6 financed properties with no minimum FICO

7-10 financed properties with 720 minimum FICO

**Note: When the client is purchasing or refinancing a 2nd home or investment property.

FHA Product Update, December 28th

FHA Manual Downgrade
GURU Section 3.08.9 Privately Held/Not on the Credit Report

Old

New

FHA Manual Downgrade for mortgages not on credit Loan had to be manually downgraded Employment Documentation
No longer required to be downgradedThe loan must still meet the max mortgage late requirements of:
  • 0x30 in 12 months
  • 2×30 in 24 months

FHA Streamline Product Update, December 8th

FHA Streamline Occupancy Documentation
GURU Section 10.07 FHA Streamline

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New

FHA Streamline Occupancy Documentation
  • Paystub
  • Phone Bill
  • Cable Bill
Employment Documentation

  • Paystub
  • 1099
  • W2*

Utility Bill

  • Phone Bill
  • Electric Bill*
  • Cable Bill
  • Gas Bill

*Document must be supported with a Real Estate Solutions report showing this is the client’s primary residence.

FHA Product Update, November 30th

FHA Short Sales Requirement – Minimum Tradeline
GURU Section 3.12.12 Short Sale

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New

FHA Short Sale Requirement – Minimum Tradeline 2 tradelines were required 1 tradeline now with a 12 mos history prior to application

*Applies when a short sale occurred within 3 years from case number assignment date

Agency, FHA, and VA Product Update, Wednesday, November 23rd

Loan Modification Documentation
GURU Section 3.12.7 Modification

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New

Loan Modification Documentation Obtain a copy of the note or modification agreement No longer needed

DU Product Update, Tuesday, November 22nd

Bonus and Commission Income
GURU Section 4.03 Bonus Income and 4.05 Commission Income

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New

Bonus and Commission with less than 2 years history
  • 680 FICO
  • 6 mos reserves required
  • 680 FICO

Thursday, November 17th

VA IRRRL Seasoning Requirement
GURU Section 10.14 VA IRRRL

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New

VA IRRRL Seasoning Prior loan must have closed at least 6 months before the application date of the new loan Previous loan must have 6 consecutive payments made prior to the application date

Thursday, November 17th

Economic Life of Roof
GURU Section 7.15.2 Improvement Section

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New

Economic Life of Roof Must have 3 years life left Only 2 years needed

Tuesday, November 8th

HARP Bankruptcy Update
GURU Section 10.03 DU Refi Plus or 10.12 LP Relief Refi

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New

HARP Bankruptcy Update If a client is currently in process of a BK that hasn’t been discharged/dismissed client is eligible for DURP or LP Relief Refi loan if the client provides documentation from the court to proceed Bankruptcies must be discharged prior to or at closing.

Monday, November 7th

New Construction Documentation
GURU Section 2.09 New Construction

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New

New Construction
  • Appraisal verifying home is 100% complete
  • Building Permit and Certificate of Occupancy
  • 10 Year Warranty
Appraisal verifying home is 100% completed

Wednesday, November 2nd
Solar Panels

Leased Solar Panels
GURU Section 6.25 Solar Panels

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New

Leased Solar Panels Allowed on LP only Eligible for all products

Monday, October 31st
VA IRRRL Appraisal

VA IRRRL – Non QL Serviced
GURU Section 10.14 VA IRRRL

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New

VA IRRRL Appraisal Conventional full appraisal was needed 2055/1075 Drive-By allowed

Friday, October 28th
Agency, FHA Social Security Income

Conversion of a Primary Residence and Primary Pending Sale
GURU Section 4.12 Grossing Up Non-Taxable Income

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New

Grossing Up Social Security Income Tax returns were required Tax returns are not required if you are only grossing up 15% of the income. The IRS caps taxable income at 85%.

Wednesday, October 12th
Income

Public Assistance Income
GURU Section 4.30.23 Public Assistance Income

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New

Public Assistance Income DU Products Only Allowed for all products with proof of current receipt

Hourly and Salary Income
GURU Section 4.13 Hourly and Salary

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New

Hourly and Salary for Prior Year — DU and LP Only Documents allowed for proof of prior year income:

  • W2 from prior employer
  • Proof of military training or college transcipts
Now allowed to use additional documents to prove prior year income:

  • Tax returns or 1099 documenting self employment
  • DU Only — LOX stating the client was not working

Wednesday, October 5th
Conventional and Jumbo – Rental Income on Conversion of a Primary to Investment

Conversion of a Primary Residence and Primary Pending Sale
GURU Section 2.06 Conversion of a Primary Residence and Primary Pending Sale

Old

New

Conversion of a Primary Residence to Investment
  • Full Executed 12 mos lease
  • Provide proof that a security deposit was received and deposited into the clients’ account
  • A 25% vacancy factor to be applied to the rental income
  • Jumbo Only: At least 30% equity in the property being converted, as documented by an appraisal (1004, 2055, or 1075).
  • A fully executed 12 month lease agreement
    • Non-Arm’s length leases are not allowed
  • 1007 or 1025 appraisal reports supporting the proposed monthly rental income amount
  • Provide proof that a security deposit was received and deposited into the client’s account
  • A 25% vacancy factor must be applied to the rental income
  • Jumbo Only: At least 30% equity in the property being converted, as documented by an appraisal (1004, 2055, or 1075)>

Note: Excess rental income (positive cash flow) may not be used as effective income.

Monday, September 19th
FHA and VA Product Updates

FHA Streamline Gift Funds
GURU Section 5.14.2 Gift Requirements

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New

FHA Streamline Gift Funds Not Allowed Now Allowed

FHA and VA Manual Downgrade

Old

New

FHA VA Manual Downgrade Foreclosure 3-7 years not on credit required a manual downgrade

Bankruptcy 2-7 years not on credit required a manual downgrade

No longer required to be manually downgraded

Friday, September 9th
VA Product Updates

Proposed Rent for FTHB and Rent Free Clients on Investment Properties
GURU Section 4.37 Future Retirement Earnings

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New

Future Retirement Earnings Not Allowed Allowed if the client has a future planned retirement date.

LOX
GURU Section 12.04 LOX

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New

LOX Must be hand written or typed and wet signed Electronic versions now acceptable

Cash Flow Analysis — R/E Loans
GURU Section 10.15 VA Refer/Eligible

Old

New

Cash Flow Analysis on Self-Employment Income for R/E Required No longer required

Friday, September 9th

Proposed Rent for FTHB and Rent Free Clients on Investment Properties
GURU Section 4.30.13.3 Proposed Rent and Rent Backs on Purchase Transactions

Old

New

Proposed Rent for FTHB and Rent Free Clients Allowed to use Clients who are first time homebuyers or rent free cannot use proposed rental income to qualify when purchasing a rental property

Friday, September 2nd

Proof of Taxes Owed
GURU Section 4.35 Income Taxes Owed

Old

New

Proof of Taxes Owed
  • Letter from organization(s)
  • 1 paystub covering a 30 day period
  • Retirement award letter
  • Most recent signed federal tax return that was filed with the IRS
  • IRS W-2 form or 1099 from previous employer
Most Recent 1040 tax return filed with the IRS

URL for Online Statement
GURU Section 5.05 Asset Documentation

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New

URL on Online Transaction Summary Printouts Must have URL on all pages No longer required**

**Applies to Agency loans only

Buyout of Other Owners Interest
GURU Section 2.03 Buyouts

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New

Buyout of Other Owners Interest — LP Only Allowed No longer allowed

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