CORRESPONDENT JUMBO LOAN GUIDELINES FIXED & ARM’S
[Pages:29]2020
CORRESPONDENT JUMBO LOAN GUIDELINES FIXED
& ARM'S
Jumbo Underwriting Guidelines
Membership Eligibility Borrower Eligibility Non-Arms-Length Transactions Occupancy Types Multiple Properties Financed/Owned Transaction Types Purchase Rate/Term Refinance Cash-Out Refinance Continuity of Obligation Requirements for All Refinances Delayed Purchase Refinance LTV/CLTV/HCLTV Ratio Calculation Escrows Qualifying Rate Credit Credit Standards Trade Line Requirements Mortgage/Rent Ineligible Credit Events Paying Off Debt to Qualify Tax Liability Debts Paid by Business Student Debt Calculation Disputed Accounts Credit Inquiries Financing Secondary Financing Income and Employment Stability of Employment Income Documentation Standards Age of Documentation IRS Form 4506-T/Tax Transcripts Pay stubs W-2 Forms Verification of Employment (VOE), Verbal VOE (VVOE), or Self-Employed Confirmation Tax Returns Income Analysis Forms Income Documentation Requirements Employment Income Self-Employed Income Multiple Business Ownership Rental Income
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Revised: 6/05/2020
Fixed Income Funds Checking and Savings Accounts Large Deposits Marketable Securities Retirement Accounts Business Funds (Maximum 80% LTV) Gift Funds Interested Party Contributions Seller Concessions Cash to Close Requirements Reserve Requirements Property Eligible Property Types Ineligible Property Types Appraisal Requirements Properties Affected by Disasters Re-Inspection Requirements Title and Closing Title Policy Forms Title Requirements Applicable Endorsements Title Exceptions Ownership Homeowners Insurance
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Revised: 6/05/2020
TruWest Credit Union Membership Eligibility To obtain a loan from TruWest Credit Union, a borrower must become a member at TruWest. TruWest Credit Union will not purchase loans for borrowers who are not eligible to become members of TruWest Credit Union.
Membership requirements: ? You live, work, own a business or go to school in Maricopa, Pinal, Pima, Yavapai Counties, AZ You live, work, own a business or go to school Travis or Williamson Counties, TX ? You know someone who is currently a member and you are there: o Spouse, Natural or adopted child, Foster or stepchild o Parent or parent-in-law, Grandparent or grandchild o Brother, sister, stepbrother or stepsister; o Brother-in-law or sister-in-law o Son-in-law or daughter-in-law o Surviving spouse of a deceased member o You work for or are retired from any of the following employers: o Motorola, Freescale, ON Semiconductor, General Dynamics Decision Systems, Compass Group PLC (Food Works division of Compass Group), Diversified Human Resources, Inc. o TruWest Credit Union will allow membership throughout the state of Arizona and Texas through its alliance with The American Lung Association. Please contact TruWest Credit Union Membership at 1-855-878-9378 for additional information.
All loan underwriting is based upon Fannie Mae's Desktop Underwriter system. All Jumbo loans must receive an approve/ineligible due to loan size. For documentation purposes please follow Fannie Mae's DU approval for documentation purposes unless addressed below in this document. Please NOTE TruWest Credit Union does not allow for Property Inspection Waivers (PIW) regardless of the AUS findings. Please NOTE, TruWest Credit Union has the right to decline a loan regardless of the AUS findings. TruWest will review loans based on the Credit, Collateral, Character and Capacity. Unless otherwise addressed below, Fannie Mae underwriting guidelines should be followed.
For applications dated on or after 1/10/2014, all CFPB rules for Ability to Repay (ATR) must be adhered too.
HPML loans are not eligible, including those covered under QM Rebuttable Presumption. The APR must be less than 1.5% over the APOR.
MAXIMUM LOAN AMOUNT: Up to $1,500,000 for a primary residence. On an exception basis, loan amounts may be considered up to $2,000,000 for a primary residence. A price adjustment will be added to the interest rate of the loan. Price adjustments can be found on the rate sheet. Second Home maximum loan amount is $650,000 MINIMUM LOAN AMOUNT: Must be greater than FNMA high balance loan limits for the designated area.
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Revised: 6/05/2020
Borrower Eligibility The following are eligible borrowers:
o U.S. Citizens o Permanent Resident Aliens are eligible if they meet the following requirements:
o Can provide acceptable documentation to verify that a non-U.S. citizen borrower is legally present in this U.S.
o Must be employed in the United States for the past 24-months. o Non-Permanent Resident Aliens are eligible if they meet the following requirements:
o Primary Residence Only o Maximum LTV, CLTV, HCLTV 75% o No other real estate ownership o Unexpired passport from the country of citizenship containing INS form I-94 which must
be stamped Employment Authorized o An Employment Authorization Card along with a copy of the Petition for Non-Immigrant
Worker (form I-140) in file o Unexpired H1B, H2B, and L1 visas only o Credit trade line requirements must be met; no exceptions o Employment history and income verification and validation requirements must be met
including a current 24-month history in the US; no exceptions o Acceptable interested party (non-arm's length) transactions as follows:
o Family sales or transfers Must provide a twelve (12) month Mortgage History on existing mortgage securing subject property confirming Family Sale is not a foreclosure bailout
o Property Sellers are representing themselves as agent in real estate transaction o Buyers/Borrowers are representing themselves as agent in real estate transaction o The borrower is the employee of the originating lender and the lender has an
established employee loan program o Renter buying from landlord
24-months cancelled checks required to verify satisfactory pay history First time homebuyers may be approved on an exception basis. o All borrowers must have a social security number
The following borrowers are not eligible: ? Permanent and Non-Permanent Resident Aliens who do not meet the eligibility requirements above ? Non-occupant co-borrowers ? Diplomats ? Revocable or Irrevocable Trusts ? Land Trusts ? Limited partnerships, general partners, corporations, and limited liability companies ? Borrowers with only an ITIN (individual taxpayer identification number) ? First time home buyers are ineligible for second home occupancy. ? Borrowers that are party to a lawsuit
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Revised: 6/05/2020
Non-Arms-Length Transactions (Refer to the Borrower Eligibility section for acceptable relationships)
A non-arms-length transaction is any transaction where there is a relationship or business affiliation between the borrower(s) and/or any parties in the transaction. If a direct relationship exists between any of the parties to a transaction, including the borrower/buyer, seller (if applicable), employer, lender, broker or appraiser, then the transaction will be considered non-arms-length.
It is acceptable for a realtor in the transaction to be a relative of the buyer or seller, if the terms of the sale are standard.
Examples of unacceptable non-arms-length transactions include, but are not limited to: ? Borrower(s) purchasing a property from a builder who, in turn, is purchasing the borrower's existing property ? Property trades between buyer and seller ? Employer to employee sales or transfers ? Borrowers or co-borrowers employed in the real estate or construction trades who are involved in the construction, financing or sale (i.e. listing agent) of the subject property
Occupancy Types
Eligible occupancy types include: ? Primary residences for 1 to 2-unit properties ? Second home residences for 1-unit properties. (Limited to $650,000) ? Investment properties NOT ELIGIBLE
Second Home Eligibility: ? One (1) unit properties are eligible for second homes. ? The borrower may not own any other second homes or investment properties in the same geographic market as the subject property.
Ineligible occupancy types include: ? Primary residences for 3-4-unit properties ? Investment Properties/Non-Owner Occupied ? Second home residences for 2 to 4-unit properties
Multiple Properties Financed/Owned
Portfolio loans Jumbo Loans
1st Mortgage
Max # of Properties
Max # of Properties
Max R/E Balance Exposure
Financed (Total)
Financed with TW
with TWCU
Primary/Owner Occ Transaction
Unlimited
1*
$2,000,000
Second Home
1
1
$2,000,000
Non-Owner OCC/Investment
n/a
n/a
n/a
*TruWest Credit Union will allow a 2nd property with a TruWest loan if the departing residence is
currently listed for sale.
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Revised: 6/05/2020
All owned properties other than the subject property require an additional six (6) months reserve for each property.
See product matrix for subject property reserve requirements.
NOTE: Properties held in a business name where the business is liable for the mortgage are excluded from the count. Any properties owned by a borrower's business when the borrower is personally responsible for the mortgage including commercial properties or vacant land are included in the count.
Transaction Types Eligible Transaction Types:
Transaction Type
# of units
Max LTV%
Max CLTV% TW 2nd Max CLTV%
Other Lender
2nd
Primary Residence
Purchase and Limited
1
75
85*
90
Cash-Out Refinance
2
75
80*
90
3-4
NOT ALLOWED
NOT ALLOWED
Cash-Out Refinance
1
75
80
90
2
75
80
90
3-4
NOT ALLOWED
NOT ALLOWED
Second Home
Purchase and Limited
1
75
80*
90
Cash-Out Refinance
2
75
80*
90
3-4
N/A
N/A
Cash-Out Refinance
1
75
80*
90
2
75
80
90
3-4
NOT ALLOWED
NOT ALLOWED NOT ALLOWED
TX Cash-Out Follow
1
75
80
80
50(a)(6)
2-4
NOT ALLOWED
NOT ALLOWED NOT ALLOWED
Investment Property/Non-Owner Occupied
NOT ALLOWED
* TruWest will subordinate an exsisting TruWest 2nd lien up to 90% CLTV in AZ and 95% CLTV in TX for
refinance purposes only. NO CASH OUT except for closing costs.
Purchase ? The loan to value (LTV) ratio is based on the lesser of the purchase price or the appraised value of the subject property. ? Borrower must contribute 10% of their own funds toward the purchase price. ? Proceeds from the transaction must be used to finance the acquisition of the subject property. ? If a departure residence is not sold prior to closing, the intended disposition of the property must be indicated on the loan application and included in the total debt to income ratios unless the loans are closing simultaneously. Evidence of simultaneous close will be required from the escrow and title company. ? NOTE: Principal curtailments at closing can only be used as a result of premium pricing or the amount represents a reimbursement to the borrower for overpayment of funds.
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Revised: 6/05/2020
Rate/Term Refinance ? Principal Curtailments: o If the borrower receives more cash back than the 1% permitted for rate term refinances, a curtailment may be applied to reduce the amount of cash back to the borrower to bring the loan into compliance with the maximum cash-back requirement. The maximum amount of the curtailment cannot exceed $2,500. ? Proceeds from a rate/term refinance may be used: o To pay off the principal balance of an existing first mortgage lien, regardless of age; o To provide cash to the borrower in an amount not to exceed the lesser of 1% of the principal amount of the new mortgage or $5000; o To pay related closing costs, discount points, and prepaid items. o The payoff of a subordinate lien, may be included in a rate and term refinance if the subordinate lien was incurred at the original purchase of the property (evidenced by a copy of the HUD-1/Closing Disclosure from the original purchase). ? If the subject property has been listed for sale within the previous six (6) months, the property is eligible for rate and term financing, evidence that the property is off the market is required, along with an explanation for previous intent to sell the property. ? Construction to permanent refinances are eligible if: o The lot was acquired 12 or more months from the note date for the subject transaction, the LTV/CLTV/HCLTV is based on the current appraised value of the property. o The lot was acquired less than 12-months from the note date for the subject transaction, the LTV/CLTV/HCLTV is based on the lesser of (i) the current appraised value of the property and (ii) the total acquisition costs (sum of construction costs and the lower of the sales price or current appraised value of the lot). o A certificate of occupancy from the applicable government authority if provided. If the applicable government authority does not require a certificate of occupancy, then proof of the absence of this requirement must be provided. o The proceeds are used to pay off an interim construction loan and allowable closing costs. o The borrower holds legal title to the lot and is named as the borrower for the construction loan. o The home is fully constructed per plans and specifications and is habitable at the time of closing.
Cash-Out Refinance ? Borrower must have owned the property for at least six (6) months prior to application date. ? Jumbo Maximum cash-out amount is limited as follows (any proceeds disbursed other than those to pay off the unpaid principal balances for mortgage liens of the subject property): o $500,000 to maximum 75% LTV ? Texas Home Equity Loans (cash-out (a)(6) are eligible; TruWest will have loan documents reviewed independently by a Texas attorney and remit the costs on the purchase advice. A6 to A4 loan conversions (a/k/a F2 transactions) are not eligible. ? A third refinance in less than twelve (12) months, from note date of first refinance to note date of third refinance, is not eligible. ? If the subject property has been listed for sale within the previous six (6) months, the loan is not eligible for Cash-out.
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Revised: 6/05/2020
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