Conventional Quick Reference
Conventional Loan Programs - Quick Reference Guide Wholesale Lending LTV/(H)CLTV Matrices Minimum credit score is determined by LP or DU Loans with >80% LTV, the credit score must meet the minimum required by the MI provider Program Highlights Purpose Conforming or High Balance Units 1 Eligible Products 10, 15, 20, 25 and 30 year Fully Amortizing Fixed Rate 5/1 ARM with 2/2/5 caps 7/1 ARM with 5/2/5 caps Primary Residence Conventional and Freddie Only Products Purchase, R/T Fannie Only Products Program Features Fully-Amortized Fixed Rate and ARMs LP Accept/Eligible or DU Approve/Eligible required Minimal Overlays Blended ratios allowed on LP Primary Residence with a non-occupant co-borrower Loan Limits Second Home 10, 15, 20, 25 and 30 year Fully Amortizing Fixed Rate Up to the maximum allowed per applicable Conforming or High Balance loan limit based on property location and number of units Investment Property Refer to the Loan Limits topic for complete details 1. 2. 3. 4. Conventional Quick Reference Guide –Wholesale Lending Conforming 2 3-4 Purchase, R/T C/O High Bal Conforming Conv DU Only Fixed Rate LTV/(H)CLTV Fannie Freddie DU Only 1 LP Only 2 Conv DU Only Freddie LP only1 95% 1 95% 90% 95% 80% 1 80% 85% 75% 80% 80% 75% 65% 80% 75% 97% 4 ARM LTV/(H)CLTV 1 90% 1 90% 90% 75% 90% 2-4 75% 1 75% 75% 65% 75% 1 80% 1 80% 75% 80% 2-4 75% 1 75% 75% 65% 75% 80% 3 1 60% 75% 60% 60% 75% 2-4 N/A 65% N/A N/A 65% C/O High Bal Purchase, R/T Conforming 1 85% 1 85% 90% 80% 85% C/O Conforming 1 75% 1 75% 75% 65% 75% Purchase, R/T High Bal 1 65% 80% 65% 65% 80% C/O High Bal 1 N/A 65% N/A N/A 65% 1 85% 1 85% 85% 75% 85% 2-4 75% 1 75% 75% 65% 75% 1-4 75%1 75% 75% 65% 75% Purchase Conforming R/T Conforming C/O Purchase Conforming High Bal R/T High Bal C/O High Bal 1 75% 1 75% 75% 65% 75% 2-4 70% 1 70% 70% 60% 70% 1 65% 80% 65% 65% 80% 2-4 65% 70% 65% 65% 70% 1 65% 75% 65% 65% 75% 2-4 65% 70% 65% 65% 70% 1-4 N/A 65% N/A N/A 65% For loans with Secondary Financing, the maximum LTV is 5% lower than the maximum CLTV. LTV/CLTV and credit score restrictions may apply if the borrower owns 5-10 financed properties. Refer to Multiple Financed Properties section. Refer to Cash-out refinance section below. See LTV >95 to 97% for eligibility requirements. page 1 of 19 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program Overlays and Conventional Comparison This table highlights Pacific Union Financial restrictions and overlays. In addition, this document identifies how our Conventional programs differ between investors and provides guidance for several scenarios where we needed to enhance investor guidance to ensure consistent application of credit policy. Exceptions to these guidelines may be considered only with strong documented compensating factors. Note: This is summary information only. Additional restrictions may apply on ARM loans, which are only eligible under the Conventional and Freddie Mac Programs. Complete details are outlined in the Conventional Program Guide. Loans that are evaluated using Loan Prospector (LP) are eligible only under the Freddie Mac program. These loans must be coded and priced as Freddie Mac only. Loans evaluated using Desktop Underwriter (DU) are eligible under the Conventional or Fannie Mae Fixed Rate programs or the Conventional ARM program and may be coded and priced under the applicable product. Program O verl ays and Conventional Comparison Topic Overview 1031 Tax Deferred Exchange Conventional DU Approve/Eligible required. No manual underwriting. Allowed on Second Home and Investment Property No manual underwriting. No Caution or A- approvals. DU Approve/Eligible required. No manual underwriting. Same as Conventional All files must include an acknowledgement signed by the Same as Conventional Same as Conventional Full appraisal required Same as Conventional Follow DU requirements with the purchases only. The equity from the 1031 Exchange may be used for all or part of the down payment Reverse exchanges are not allowed because the borrower is not on title to the property at the time of closing. No seller provided secondary financing The loan closing must be handled by a qualified intermediary. File must contain copies of all closing documents and the Purchase Agreement on the relinquished property must be obtained. Required documentation includes: 1031 Exchange Agreement Settlement Statement (HUD-1) Title Transfer The Purchase Agreement for both properties must contain appropriate language to identify the 1031 exchange. borrower regarding receipt of appraisal prior to closing or waiver of the right to receive the appraisal. Appraisal Forms LP Accept/Eligible required. Fannie Mae –Fixed Rate only Same as Conventional Appraisal Freddie Mac Conventional Quick Reference Guide –Wholesale Lending page 2 of 19 following exception: Property 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program O verl ays and Conventional Comparison Topic Conventional Freddie Mac Fannie Mae –Fixed Rate only Inspection Waiver (PIW) is not allowed. An origination appraisal may be used for a subsequent Rate/Term Refinance transaction subject to the following: The borrower(s) and lender on the new transaction must be the same as on the origination transaction. See LP exception below. The appraisal may not be more than 12 months old on the Note Date of the new transaction. An Appraisal Update (Form 1004D) must be provided if the initial appraisal will be more than four months old on the Note Date of the new transaction. The subject property must not have undergone any significant remodeling, renovation, or deterioration, or have been affected by a disaster to the extent that the improvement or deterioration would materially affect the market value of the subject property. Appraisal – Reuse for a Subsequent Transaction An origination appraisal may be used for a subsequent Rate/Term Refinance transaction subject to the following: The borrower(s) and lender on the new transaction must be the same as on the origination transaction. A borrower may be removed on the new transaction in the case of a divorce or legal separation that has occurred since the initial transaction. The loan file must include documentation of the divorce or legal separation. The appraisal may not be more than 12 months old on the Note Date of the new transaction. The subject property must not have undergone any significant remodeling, renovation, or deterioration, or have been affected by a disaster to the extent that the improvement or deterioration would materially affect the market value of the subject property. The new refinance transaction may not be paying of any subordinate financing. An Appraisal Update (Form 1004D) must be provided regardless of the age of the initial appraisal. Same as Conventional ARM Closing Documents Note: Fannie Mae Form 3528 or state specific version Rider: Fannie Mae Form 3187 - Non-Convertible Fully Same as Conventional Not applicable Same as Conventional Same as Conventional Amortizing 5/1, 7/1 and 10/1 LIBOR Adjustable Rate Rider. Acceptable ARM disclosure. Authorized User Accounts When the repository file used to create the credit report contains any authorized user accounts, the Loan Prospector (LP) or Desktop Underwriter (DU( decision is considered valid if the loan file includes documentation to evidence that at least one of the following for each authorized user account: Another borrower on the loan owns the tradeline in question, The account belongs to the borrower’s spouse, or The borrower has been making the payments on the account for the last 12 months. If at least one of the above requirements is not documented for each authorized user account, the LP or DU decision may be considered valid and the loan may be underwritten as an LP or DU approved loan only if is determined that the Conventional Quick Reference Guide –Wholesale Lending page 3 of 19 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program O verl ays and Conventional Comparison Topic Conventional Freddie Mac Fannie Mae –Fixed Rate only authorized user accounts have an insignificant impact on the borrower's overall credit history and the information on the credit report is representative of the borrower's own credit reputation. This determination must be based on the number of the borrower's own tradelines, as well as their age, type, size and the payment history, as compared to the authorized user accounts. The determination must be documented on the 1008, Uniform Underwriting and Transmittal Summary, or another document in the loan file. If it is determined that the authorized user tradelines are not an accurate reflection of the borrower's credit history and that the loan would not receive an LP or DU approval without the authorized user accounts, the loan is not eligible. Auto Allowance Follow Fannie Mae rules The full amount of the auto Auto Allowance may be treated as addressed in Freddie Program or as follows: If the borrower reports auto allowances on Employee Business Expense (Form 2106), or IRS Form 1040, Schedule C: Funds in excess of the borrower’s monthly expenditures are added to the borrower’s monthly income, or Expenses in excess of the monthly allowance are included in the borrower’s total monthly obligations. If the borrower used Form 2106 and recognized “actual expenses” instead of the “standard mileage rate”, the “actual expenses” must be used to identify the borrower’s actual lease payments and make appropriate adjustments. Borrowers in Construction Industry When the borrower is acting as his/her own builder and Same as Conventional Same as Conventional Borrowers The following requirements apply when one or more Same as Conventional except the Same as Conventional allowance may be added to the borrower’s qualifying income. When calculating the DTI ratio, the full amount of the monthly automobile financing expense must be included in the calculation of the monthly DTI ratio. his/her primary occupation is in the construction industry, the following restrictions apply: Primary Residence only Acquisition cost must be documented LTV/(H)CLTV is based on the lower of documented acquisition cost or appraised value Borrower may not receive any cash back at closing that is not a verifiable reimbursement Conventional Quick Reference Guide –Wholesale Lending page 4 of 19 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program O verl ays and Conventional Comparison Topic Without a Useable Credit Score Business Accounts Business Debt in Borrower’s Name Conventional Freddie Mac borrowers do not have a usable credit score: At least one borrower on the transaction must have a usable credit score, as determined by DU. The transaction must be a Purchase or Rate/Term Refinance. Subject is a one unit Primary Residence. All borrowers must occupy the property as a Primary Residence. Borrower with a usable credit score must contribute more than 50% of the total monthly qualifying income. Income from self-employment from any borrower is not permitted For all borrowers without a credit score, any debt that is not reported must be verified to have a satisfactory payment history and the payment must be included in the DTI ratio. Loan will be priced assuming a minimum 620 score. Business assets may be used for down payment, closing costs, financing costs, prepaids/ escrows, and/or reserves provided: Assets must be verified per DU documentation requirements Assets must be related to a documented borrower-owned business. The borrower must be listed as an owner of the business account. A cash flow analysis for the borrower’s business must be documented using individual and/or business tax returns, as applicable. The cash flow analysis may be in any format that allows the underwriter to determine that the withdrawal of the funds will not have a detrimental effect on the business. The cash flow analysis must be included in the loan file. Debt that appears on the borrower’s credit report but is paid by the borrower’s company may be excluded from DTI ratios subject to the following: The account does not have a history of delinquency, and The business provides acceptable evidence that the obligation was paid out of company funds (such as 12 months canceled checks), and The cash flow analysis of the business took the payment into consideration If the debt is included in the DTI ratios, the net income of the business should be adjusted by the amount of interest, taxes, or insurance expense, if any, that relates to the account in order to avoid counting the debt twice. Conventional Quick Reference Guide –Wholesale Lending Fannie Mae –Fixed Rate only borrower without a useable credit score may not be using selfemployment as qualifying income Same as Conventional Same as Conventional Same as Conventional Same as Conventional page 5 of 19 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program O verl ays and Conventional Comparison Topic Conventional Freddie Mac Cash-out Refinance – Fannie Mae Not applicable Not applicable Commission Income Follow Fannie Mae rules Borrowers with less than a 24 Condos Pacific Union allows Condominium Approval based upon the applicable GSE (Fannie Mae/Freddie Mac) for the subject loan and Condominium Type. Refer to the Condominium Approval Method Table in the Conventional program guide for details. month history of receiving commission income may be eligible. Additional requirements apply. Fannie Mae –Fixed Rate only Effective with loans approved through DU Version 9.2: The maximum LTV/CLTV for a conforming one unit Primary Residence cash-out transaction has been reduced from 85% to 80%. 85% loans approved through a previous version of DU must have been locked on or before December 12, 2014 and must be closed on or before April 1, 2015. Commission income received less than 2 years will not be considered as qualifying income. Same as Conventional Same as Conventional Same as Conventional Same as Conventional, except: Condominium Approval Methods Conventional and Freddie products require Freddie approval types. Fannie Only products require Fannie Mae approval types. Additional product restrictions are outlined in the Condominium Approval Method Table below. Contingent Liability The following restrictions apply to attached condos in Florida: Investment Property not allowed Minimum 700 credit score Maximum 45% DTI ratio Miami-Dade-Broward (in addition to Florida restrictions): Only minor adjustments (10% net/15% gross for each comp sale vs. 15%/25% standard). No evidence of declining markets on appraisal. If the borrower is a Co-signor or Guarantor on any debt (including mortgage debt), the payment must be included in the monthly debt-to-income ratio, unless: Documentation is provided to show that the other party is making timely payments on the debt. Twelve months cancelled checks or a statement from the creditor must be provided to show that the other party is making the Conventional Quick Reference Guide –Wholesale Lending page 6 of 19 The underwriter may consider a payment history less than 12 months on a case by case basis. 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program O verl ays and Conventional Comparison Topic Conventional Freddie Mac Fannie Mae –Fixed Rate only payments. Evidence of timely payments may be provided through verification on the credit report or direct verification with the creditor. If evidence of payments by another party obligated on the debt cannot be provided, or if the payments have not been made in a timely manner over the most recent 12 months, the debt must be included. If the borrower is listed as the borrower on a mortgage that has been assumed by another party, the file must include documents transferring the property and any assumption agreement by the transferee. As long as the borrower no longer owns the property, the contingent liability may be disregarded, without documenting the most recent 12 month payment history. Continuity of Obligation Follow Fannie Mae rules Transfer of title from a borrower- owned LLC does not comply with Freddie Mac’s continuity of obligation requirements Allows transfer from borrower’s LLC to borrower. Fannie also allows exceptions to Continuity of Interest if certain parameters are met. Refer to Conventional Loan Program Guidelines. Same as Conventional Court Ordered Assignment of Debt The contingent liability on a secured debt or Mortgage may Credit Charges for Loan Fees Follow Fannie Mae rules Credit card may be used to pay Credit card may be used to pay Debt to Income DTI: Maximum 50% LTV >80%: Must meet MI provider requirements. Determined by LP LTV >80%: Must meet MI Determined by DU LTV >80%: Must meet MI Deferred Payments Deferred installment debts, such as deferred student loans, must be included as part of the borrower’s monthly debt obligations. If the borrower’s credit report does not indicate the monthly payment amount at the end of the deferment period, payment letters or forbearance agreements may be provided. Exception: For a student loan, in lieu of obtaining copies of payment letters or forbearance agreements, a monthly payment may be calculated using no less than 2% of the outstanding balance. However, if any documentation is Same as Conventional, except be disregarded and the documentation of the most recent 12 month’s payment history is not required, if the obligation to make the payments on a debt of the borrower: Has been assigned to another party by court order, such as a divorce decree, and The assignment of debt is documented with applicable pages of the divorce decree or legal separation agreement Conventional Quick Reference Guide –Wholesale Lending transfer of title must be documented. for upfront fees up to 2% of loan or $1500 whichever is higher provider requirements. Same as Conventional page 7 of 19 for upfront loan fees up to 2% of the loan amount provider requirements. Same as Conventional 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program O verl ays and Conventional Comparison Topic Documentation Conventional Freddie Mac obtained that indicates the actual monthly payment, that figure must be used in qualifying the borrower. IRS Form 4506-T - A completed and signed IRS Form 4506-T is required for all borrowers at application and closing. Fannie Mae –Fixed Rate only Same as Conventional Same as Conventional Employed by a Family Member If the borrower is employed by a relative, a closely held Same as Conventional Same as Conventional Employment Offers or Contracts If the borrower is scheduled to begin employment after the Not eligible Same as Conventional Escrow Holdbacks Allowed for repairs that do not affect the livability, safety or Same as Conventional Same as Conventional Same as Conventional Same as Conventional Same as Conventional Same as Conventional Escrow Waivers Flip Properties family business, the property seller, or any party to the transaction, the following documentation is required: Borrower’s signed and completed personal federal tax returns for the most recent two years Written Verification of Employment, and W-2s for the most recent two years Current income reported on the VOE or paystub may be used if it is consistent with W-2 earnings reports on the tax returns. If the income is not reflected on the tax returns or the reported income is substantially lower than the income reflected on the VOE or paystubs, further investigation is needed to determine whether the income is stable. loan closes, the borrower’s offer letter or contract for employment may be used to underwrite and close the loan. The start of employment and the receipt of the income must be documented prior to the delivery of the loan. The borrower’s employment and income history must be documented per the DU Findings. The file must include a copy of the signed offer or contract for future employment and anticipated income. Loan must be run through DU structural integrity of the property or affect the ability to obtain a Certificate of Occupancy on new or proposed construction. Refer to the Escrow Holdback policy for detailed guidelines. Partial escrow waivers are not permitted All transactions must be thoroughly reviewed for red flags that may indicate the subject property is a flip and to determine whether a transaction is acceptable. If any characteristics and /or red flags exist that may be indicative of a potentially ineligible flip transaction, the following analysis is required: A Desk Review/Collateral Desktop Analysis is required when the seller has owned the property for less than or equal to 180 days or when the property has transferred more than two times within the most recent 12-month period. The Desk Review/Collateral Desktop Analysis must represent the appraised value within a tolerance not to exceed 10%. Increases in property value, in whole or part, must be Conventional Quick Reference Guide –Wholesale Lending page 8 of 19 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program O verl ays and Conventional Comparison Topic Conventional Foreign Income Freddie Mac Fannie Mae –Fixed Rate only supported by the appraisal, explained, documented, and analyzed as follows: The appraisal must identify, in detail, any changes made and include photographs of the rehabilitation or renovation. Improvements and renovations must be documented and substantiated with receipts, contractor invoices, and building permits. Regardless of length of ownership, Underwriter reserves the right to obtain a desk review if an unreasonable or unusually large increase in value has occurred within the context of the property’s market. Documentation must indicate that improvements were completed after the property seller acquired the property. Confirm that the property seller is the owner of the subject property. Ensure that appraisal sufficiently analyzes and provides detail on all pertinent offerings or listings, includes sufficient analysis of the contract of sale, and adequate justification of any significant increase in sales price/value over the seller’s acquisition costs. The analysis must be detailed enough to clearly explain the methodology and rationale used to justify the appraiser’s conclusions on this issue. Ensure all property flipping impacts as identified in the fraud detection report are satisfactorily resolved. Borrowers who are employed by a foreign corporation or Not eligible Same as Conventional Same as Conventional Same as Conventional Follow Fannie Mae rules Permitted if primary residence or Permitted if primary residence If the P&L statement shows an income stream greater than Same as Conventional Same as Conventional Manufactured/ mobile homes Same as Conventional Same as Conventional foreign government and are paid in foreign income or foreign currency are eligible subject to the following: The file must include signed copies of the borrower’s federal tax returns for the most recent two years and the foreign income must be reflected on the returns. Income must be documented per standard income documentation requirements. All income must be translated into U.S. dollars. Loan must be run through DU Geographic Restrictions Texas Cash-Out: Refer to Texas Home Equity Program Guidelines. Refer to Geographic Matrix for additional restrictions. Gift or Grant from Agency Income Calculations for Self-Employed Borrowers Ineligible second home what is supported by the tax returns, and the higher income is used in the income calculation, the borrower must provide an audited P&L statement. Conventional Quick Reference Guide –Wholesale Lending page 9 of 19 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program O verl ays and Conventional Comparison Topic Properties Conventional Freddie Mac Fannie Mae –Fixed Rate only Cooperative properties Large Deposits Follow Fannie Mae rules Except as stated below, Conventional Quick Reference Guide –Wholesale Lending page 10 of 19 documentation of the sources of unverified deposits for purchase or refinance transactions is required. However, when qualifying the borrower, any liabilities resulting from borrowed funds must be considered. For purchase transactions, document the source of funds for any single deposit exceeding 50% of the total monthly qualifying income for the mortgage if the deposit is needed to meet the requirements for funds to close and/or reserves. When a deposit is not documented and is not needed for funds to close and/or required reserves, reduce the funds used for qualifying purposes by the amount of the unverified deposit and enter the reduced amount of the asset into Loan Prospector. When a single deposit consists of both verified and unverified portions, the unverified portion may be used when determining whether the deposit exceeds the 50% requirement. When the source of funds can be clearly identified from the deposit information on the account statement (e.g., direct payroll deposits) or other documented income or asset source in the loan file (e.g. tax refund amounts appearing on the tax returns in the file), additional documentation is not required. Document the source of a deposit of any amount regardless of the transaction type if there is any indication that the funds are borrowed or are not from an eligible source. Refinance transactions: Documentation or explanation for large deposits is not required. However, if the funds were borrowed funds, any related liability must be considered. When appropriate, evidence that no new liability has been created may be required. Purchase transactions: Single deposits exceeding 50% of the total monthly qualifying income for the loan must be documented. If the funds are to be used for down payment, closing costs, or reserves, document that the funds are from an acceptable source. If the borrower does not have all of the documentation required to confirm the source of a deposit, use reasonable judgment based on the available documentation as well as the borrower’s debt-toincome ratio and overall income and credit profile. Examples of acceptable documentation include the borrower’s written explanation, proof of ownership of an asset that was sold, or a copy of a wedding invitation to support receipt of gift funds. Written documentation of the rationale for using the funds must be included in the loan file. Verified funds must be reduced by the amount (or portion) of any undocumented large deposit (as defined above), and the remaining funds must be sufficient for the down payment, closing costs, and reserves. When 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program O verl ays and Conventional Comparison Topic Conventional Freddie Mac When using a direct account a reduced amount (net of the undocumented large deposit) is used, the reduced amount must be used for underwriting purposes. When a deposit has both sourced and unsourced portions, only the unsourced portion must be used to calculate whether or not it must be considered a large deposit. Leaseholds must comply with Leaseholds must comply with Same as Conventional Same as Conventional Not applicable Eligible effective with the December 13, 2014 DU Version release. Allowed only on: DU Approve/Eligible Fannie Mae only product. Not allowed on Freddie or Conventional (CC) product. One unit Primary Residence Conforming loan amounts Purchase transactions: Maximum 97% LTV/CLTV/HCLTV At least one borrower must be a first-time home buyer, as verification (VOD) include documentation of the source of funds when an account is opened within 90 days of verification and/or when the current balance in an account is significantly greater than the average balance. If a portion of the borrower’s funds were to be saved by the borrower between the date of the loan application and the date of the loan closing, the loan file must include documents showing that funds were accumulated and on deposit prior to closing. Leaseholds Leaseholds must comply with Fannie Mae policies. Loan Limits Maximum Units Freddie Mac policies. Maximum and Minimum Loan Amounts Conforming Balance High Balance1 Contiguous Alaska and Contiguous Alaska and States Hawaii 3 States Hawaii 3 1 $417,000 $625,500 $625,500 $938,250 2 $533,850 $800,775 $800,775 $1,201,1502 3 $645,300 $967,950 $967,950 $1,451,9252 Fannie Mae –Fixed Rate only Fannie Mae policies. $1,202,9252 $1,804,3752 Maximum conforming loan Minimum None amount plus $1 1 High Balance: Refer to Maximum County Limits (select Fannie/Freddie in Limit Type field). 2 Conventional and Freddie Mac: Max $1,000,000 loan amount 3 AK and HI are not permitted. 4 LTV >95% to 97% (Fannie Mae only) $801,950 $1,202,9252 Not applicable Conventional Quick Reference Guide –Wholesale Lending page 11 of 19 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program O verl ays and Conventional Comparison Topic Conventional Freddie Mac Fannie Mae –Fixed Rate only Minimum Contribution Mixed Use Follow Fannie Mae rules Follow Fannie Mae rules Conventional Quick Reference Guide –Wholesale Lending indicated on the loan application (Form 1003) in Section VIII., when at least one borrower responds “No” to question M regarding ownership interest in a property in the last three years. Rate/Term Refinance transactions: The existing loan must be owned by Fannie Mae. The Fannie Mae Loan Look-Up Table may be used to determine if Fannie Mae owns the loan. A screen print of the results must be included in the loan file. When submitting the loan to DU, “Fannie Mae” must be entered in the “Owner of Existing Mortgage” field in DU. Loans may be submitted to DU effective with the December 13, 2014 DU 9.2 release. If the 97% option is desired on an existing DU loan, a new casefile must be created and the loan must be submitted to DU 9.2 as a new loan. Mortgage Insurance LPMI is not allowed. 35% MI coverage is required. Refer to the MI Matrix or MI provider website as some MI providers have credit score overlays for 97% LTV loans. None if 1 unit conforming balance and primary residence 5% all others if primary residence or second home The entire down payment must be from the borrower’s own funds if investment property 5% must be from the borrower’s own funds if the LTV >80% The entire down payment must be from the borrower’s own funds if investment property Permitted if 1 unit primary Same as Freddie except square residence and the square footage of the property devoted to commercial use does not exceed page 12 of 19 footage that exceeds 20% of the subject property is permitted when the primary use of the 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program O verl ays and Conventional Comparison Topic Conventional Freddie Mac 20%. Additional guidelines apply. Mortgage Insurance When LTV exceeds 80%, MI must be obtained through Multiple Financed Properties Essent, Radian, Genworth, United Guaranty, MGIC, or National. Loans must comply with all MI provider guidelines No reduced cost or lower cost MI permitted. No financed MI permitted. On Split MI, the upfront MI premium must be paid in whole by borrower, seller or lender (upfront portion may not be split between parties). LPMI is permitted via an adjustment to the price. LPMI is not allowed on: Fannie Mae >95% to 97% LTV. Investment properties. If the subject loan is for a Primary Residence, there is no limitation on the number of properties that the borrower can currently be financing. If the subject loan is for a Second Home or Investment Property, each borrower individually and all borrowers collectively may not own more than four 1-4 unit financed properties, including the subject property. Fannie Mae –Fixed Rate only property is residential. Same as Conventional Same as Conventional If the subject loan is for a Primary If the subject loan is for a Primary Residence, there is no limitation on the number of properties that the borrower can currently be financing. If the subject loan is for a Second Home or Investment Property, each borrower individually and all borrowers collectively may not own more than four 1-4 unit financed properties, including the subject property. If the subject is an Investment Property and the borrower owns more than one Investment property, the loan type is limited to Fixed Rate or 7/1 ARM. Residence, there is no limitation on the number of properties that the borrower can currently be financing. If the subject loan is for a Second Home or Investment Property, the borrower may own or be obligated on up to 10 financed properties, subject to the following: DU is not able to determine the number of financed properties that the borrower owns or is obligated on, but does issue a message on Second Home and Investment Property transactions when the borrower appears to have other financed properties. The eligibility and underwriting requirements must be applied manually to each loan. Fixed Rate only Minimum 720 credit score. Six months of reserves required for each additional Second Home or Investment Property owned. LTV/CLTV Limits (Fixed Rate only): Subject: Second Home or One Unit Conventional Quick Reference Guide –Wholesale Lending page 13 of 19 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program O verl ays and Conventional Comparison Topic Conventional Freddie Mac Fannie Mae –Fixed Rate only Investment Property: Purchase or Rate/Term Refinance Conforming Balance: 75% High Balance: 65% Cash-out Refinance (allowed under Delayed Financing only): Conforming Balance: 70% High Balance: Not allowed Subject 2-4 Unit Investment Property: Purchase or Rate/Term Refinance Conforming Balance: 70% High Balance: 65% Cash-out Refinance (allowed under Delayed Financing only): Conforming Balance: 65% High Balance: Not allowed Non-Arm’s Length Transaction Follow Fannie Mae rules Not permitted on new construction, all occupancies Not permitted on delayed financing Non-Occupying Co-Borrower Follow Fannie Mae rules Open Ended Accounts Follow Fannie Mae rules Pricing/Products The following programs and features are not eligible: Loan amounts >$1,000,000 Freddie Mac Home Possible Affordable Merit Mortgages A-Minus Mortgages or Caution Mortgages Temporary buydowns Conventional Quick Reference Guide –Wholesale Lending Subject 2-4 unit Investment Property: Cash-Out Refinance (>6 months since purchase): Not eligible. Not permitted if new construction and occupancy is Second Home or Investment property Not permitted on delayed financing Income from a non-occupying co- Income from a non-occupying co- Same as Conventional except: Loans must be evaluated using LP and must be coded and priced as Freddie Mac only. Same as Conventional except: Allowed on Fixed Rate only Loan amounts >$1,000,000 permitted up to the maximum permitted by Fannie Mae. Loans must be evaluated using DU and must be coded and priced borrower may be used as qualifying income Open-end accounts do not have to be included in the monthly debt payment if the borrower has sufficient funds to pay off the outstanding account balance. The verified funds must be in addition to any funds required for the transaction. page 14 of 19 borrower may not be used as qualifying income Will not require open 30-day accounts to be included in DTI ratios. 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program O verl ays and Conventional Comparison Topic Conventional Freddie Mac Interest-only loans Construction-to-Perm – Single Closing Renovation Mortgages Balloon Mortgages Loans must be evaluated using DU must be coded and priced as Conventional Follow Fannie Mae rules as Fannie Mae. Primary Residence Fannie Mae –Fixed Rate only At least one borrower must occupy the property as their primary residence Principal Curtailment Maximum is the lower of $2,500 or 2% of the loan amount. Curtailment must be applied prior to closing. Same as Conventional Property Listed for Sale Properties listed for sale are eligible for refinancing subject to the following: The listing must have been cancelled at least one day prior to the disbursement date of the new loan. A copy of the MLS cancellation meeting this requirement must be included in the loan file. A signed letter of explanation from the borrower explaining why property was listed for sale and removed, and if Primary Residence, statement of intent to continue to occupy the property. A final appraised value lower than lowest previously listed sale price. Same as Conventional The following scenarios may also be treated as a Primary Residence even though the borrower will not occupy the property: Parents wanting to provide housing for their physically handicapped or developmentally disabled adult child. If the child is unable to work or does not have sufficient income to qualify for a mortgage on his or her own, the parent is considered the owner/occupant. Children wanting to provide housing for elderly parents. If the parent is unable to work or does not have sufficient income to qualify for a mortgage on his or her own, the child is considered the owner/occupant. Same as Conventional Principal reduction must be corrected prior to delivery Same as Conventional Additional Requirements for Cash-Out Refinance Transactions A property that was listed for sale within the six months prior to the disbursement date of the new loan is limited to the lower of 70% LTV/CLTV/H(CLTV) or the maximum Conventional Quick Reference Guide –Wholesale Lending page 15 of 19 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program O verl ays and Conventional Comparison Topic Conventional Freddie Mac Fannie Mae –Fixed Rate only allowed for the transaction. Qualifying Rate Fixed Rate: Qualify at note rate. 5/1 ARM: Qualify at the greater of the note rate plus 2% or the fully indexed rate. 7/1 ARM: DU Version 9.1: Qualify at the greater of the note rate or fully indexed rate. DU Version 8.3 or 9.0: Qualify at note rate. Note: The following states require qualifying at the fully indexed rate on all ARM products. For these states, the 7/1 ARM must be qualified at the greater of the note rate or the fully indexed rate. DU Version 9.1 loans will meet this requirement without a manual overlay. Illinois Maryland Minnesota New Mexico Pennsylvania Vermont Rate/Term Lien Seasoning No minimum seasoning requirement if purchase money Re-entering the Workforce Not eligible Refinance Pacific Union Financial does not allow delinquent taxes or being paid off Fixed Rate: Qualify at note rate 5/1 ARM: Qualify at the greater Fixed Rate: same as Conventional of the note rate plus 2% or the fully indexed rate. 7/1 ARM: Qualify at the note rate. Note: The following states require qualifying at the fully indexed rate on all ARM products. For these states, the 7/1 ARM must be qualified at the greater of the note rate or the fully indexed rate. Illinois Maryland Minnesota New Mexico Pennsylvania Vermont Purchase money liens paid off at closing must be at least 120 days old. ARM: Not allowed. DU loans Income from a borrower who is Not eligible re-entering the workforce and has less than a two year history of employment and income may be considered in qualifying income subject to the following: Borrower must have been with current employer for a minimum of six months, and The file must include documentation of previous employment prior to the borrower exiting the workforce. Same as Conventional must be priced and closed under the Conventional product. No minimum seasoning requirement if purchase money being paid off Same as Conventional taxes that were due 60 days prior to closing to be added to the loan amount on refinance transactions. All loans must provide a Net Tangible Benefit to the borrower. Refinance of Second Home with Rental Income Not eligible Conventional Quick Reference Guide –Wholesale Lending Minimal rental income reported on the tax return may be acceptable subject to the following: Tax returns prior to 2011: Schedule E, Part I, Question 2 page 16 of 19 Not eligible 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program O verl ays and Conventional Comparison Topic Conventional Freddie Mac Fannie Mae –Fixed Rate only reads “For each rental income real estate property listed on Line 1, did you or your family use it during the tax year for personal purposes for more than the greater of 14 days or 10% of the total days rented at fair market value?”. If the response to this question is “No”, the property must be treated as an Investment Property. Tax returns from 2011 or later: Schedule E requires the owner to complete the exact number of days that the property was used for personal use and the number of fair rental days. To be considered a Second Home, the property type must be “Vacation/Short-Term Rental”, and the number of personal use days must be more than 14 or more than 10% of the number of days it is rented. Note: Rental income may never be used to qualify on a Second Home. Refinance to Buy Out a Co-Owner Rent Credits Follow Fannie Mae rules Code and price loan as cash-out Code and price loan as rate/term Follow Fannie Mae rules Rent credit may not be used to No min contribution required File must contain 12 months Rent Loss Insurance Not required Subject Investment Property: Not required Resale Restricted Properties Not eligible Not eligible Restructured/ Modified Mortgages Restructured: Not allowed. Modified: Follow Fannie Mae rules Refer to Program Guide for additional definitions and pay the 5% contribution cancelled rent checks requirements. Conventional Quick Reference Guide –Wholesale Lending page 17 of 19 Rent Loss insurance is required when the rental income is being used as qualifying income. Permitted in accordance with Freddie Mac’s policies. Additional guidelines are outlined in the Conventional Program Guidelines. Restructured: Not allowed Modified: Allowed with LP approval Refer to Program Guide for additional definitions and requirements. Refinance of a Restructured Mortgage: Allowed with DU approval and 24 months paid as agreed under the new terms. Other Restructured Mortgage: Allowed with DU approval and 0 x 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program O verl ays and Conventional Comparison Topic Conventional Freddie Mac Fannie Mae –Fixed Rate only 60, 90, 120 or 150 in last 12 months. Modified: Allowed with DU approval and 0 x 60, 90, 120 or 150 in last 12 months. Refer to Program Guide for additional definitions and requirements. Retirement Funds for Assets Follow Fannie Mae rules The value of stock, bonds or The value of stock, bonds or Retirement, Government Annuity and Pension Income If the retirement income is paid in the form of a distribution Same as Conventional except file Same as Conventional except only Revolving Debt Self-Employed Income from CoBorrower mutual funds that have been discounted at least 30% or the minimum amount of federal income tax withholding required by IRS may be used for cash reserves from a 401(k), IRA, or Keogh retirement account, determine whether the income is likely to continue for 3 years. In addition: The borrower must have unrestricted access without penalty to the accounts, and If the assets are in the form of stocks, bonds, or mutual funds, 100% of the value (remaining after any applicable costs for the subject transaction) must be used to determine the number of distributions remaining. Follow Fannie Mae rules Follow Fannie Mae rules Conventional Quick Reference Guide –Wholesale Lending must contain evidence the income is expected to continue for 3 years mutual funds that have been discounted at least 40% (30% if 59.5 years old) may be used for cash reserves if the assets are in the form of stocks, bonds, or mutual funds, 70% of the value (remaining after any applicable costs for the subject transaction) must be used to determine the number of distributions remaining. If no payment disclosed on credit, If no payment disclosed on the use 5% of outstanding balance Revolving debt may be paid off to qualify. Evidence that the account is closed is NOT required. No additional review of income required initial application, use 5% of outstanding balance Revolving debt may be paid off to qualify if the loan is closed. page 18 of 19 When a salaried borrower and a self-employed co-borrower jointly apply for a mortgage, and the self-employed co-borrower’s income will not be used for qualifying, the self-employed coborrower may provide a copy of the first page of his or her latest individual federal income tax return. This documentation will be used to determine whether there was a meaningful business loss. The underwriter may request additional information about the co-borrower’s business income in 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity. Program O verl ays and Conventional Comparison Topic Conventional Freddie Mac Fannie Mae –Fixed Rate only Title may not be taken in the name of a Trust Same as Conventional order to reach a final underwriting decision Same as Conventional Follow Fannie Mae rules Proof of receipt of trust funds is Proof of receipt of trust funds is Verbal VOE Verbal VOE must be completed by Pacific Union closer within required if funds used for closing Same as Conventional Same as Conventional Verification of Assets for NonUS Citizen Funds that a non-U.S. Citizen recently deposited in a U.S. Same as Conventional Same as Conventional Trust Trust Accounts not required five business days of closing. depository institution are acceptable subject to the following: Documented evidence of funds transfer from the country from which the borrower immigrated, and Documentation to evidence that the funds belonged to the borrower before the date of the transfer, and The source(s) of all funds used for closing can be verified just as they would for a U.S. Citizen. Product Codes Product 10 Year Fixed Rate 15 Year Fixed Rate 20 Year Fixed Rate 25 Year Fixed Rate 30 Year Fixed Rate 5/1 ARM (2/2/5 caps) 7/1 ARM (5/2/5 caps) Conventional Conforming High Balance Balance CC10 CC10HB CC15 CC15HB CC20 CC20HB CC25 CC25HB CC30 CC30HB CC51L CC51L HB CC71L CC71L HB Conventional Quick Reference Guide –Wholesale Lending Freddie Mac Conforming High Balance Balance CFH10 CFH10HB CFH15 CFH15HB CFH20 CFH20HB CFH25 CFH25HB CFH30 CFH30HB CFH51L CFH51LHB CFH71L CFH71LHB page 19 of 19 Fannie Mae – Data Trac Conforming High Balance Balance FNMA 10 FNMA 10 HB FNMA 15 FNMA 15 HB FNMA 20 FNMA 20 HB FNMA 25 FNMA 25 HB FNMA 30 FNMA 30 HB N/A N/A N/A N/A 12/15/2014 For business and professional use only. Not for consumer distribution. This document is not an advertisement as defined in 12 CFR 226.2 (a) (2). All products are subject to credit and property approval. Other restrictions and limitations may apply. California DOC CFL 6053971,CRMLA # 4150081, #NMLS-2221, Pacific Union Financial, LLC. Subject to change without notice. All rights reserved. Equal Housing Opportunity.
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