Misc Loan

Question 1

Give me one example of when we can omit mo’s off of work for a clients ytd calculation for agency fnma/fhlmc?

How is it seen with Covid?

Answer 1

If a client was off for Family leave and employer can verify this we can discount year to date mo’s for calc.

Covid related layoffs require us to still consider the mo’s off work in the ytd calc.

Question 2

One click automated Edisclosures are available on all loan types except which of the following that would affect us?

Answer 2

• Loans with Co-Mortgagers
• Loans with 10 Year Terms
• Brokered Loans
• Split mi loans

These loans will go out via docusign since not One click compatible

Question 3

How are RMD’s calculated

Answer 3

You would need to find take year to date and divide by complete year…so we had client who recieved payments but only from feb to october, we took ytd and divided by 12 mo’s for amount we could use.

Need to also prove continuance of 3 years,

Question 4

What Jumbo Lenders no longer require Business bank statements and will just look at Profit and Loss?

Answer 4

JP Morgan, Goldman Sachs, BAML or Bank United 11/16/2020

Question 5

On investment property transactions, is it okay to just use the current lease and past returns for rental income on subject?

Answer 5

no we can’t save money that way. we are required to get the market rent analysis.

Question 6

How high of loan amount can we go with VA? does higher amount come with extra qualification requirements?

Answer 6

Up to 2 million but above 1.2 mill ratios go to 41 max

Once you get to 1.5 miliion max purch ltv goes to 95%

side note: C/O refis go to 90% above 1.2 mill.

Question 7

what are lender requirements for minimum insurance coverage and deductible?

Answer 7

Coverage:

Dwelling coverage must cover the lesser of the Loan Amount or the value listed on the insurance providers Replacement Cost Estimator (must include 100% replacement cost up to the dwelling limits of the policy)

Max Deductible:

45% of the face amount of the policy

Question 8

Can we use Ravenswood in Oregon?

Answer 8

No

Question 9

Can employer gift for va, fha. Or conventional?

Answer 9

Only VA will allow this

Question 10

FNMA/Freddie job after extended absence gap:

What are 2 reasons this would be acceptable after gap and what is required to support the extended absence?

Answer 10

For a Borrower returning to the workforce after a period of extended absence, for any reason, documentation is provided to support a stable employment history that directly preceded the extended absence

For a Borrower new to the workforce, documentation is provided that supports the Borrower’s recent attendance at school or in a training program prior to their current employment

Question 11

How do FAnnie and Freddie see Trust income?

What is needed?

Answer 11

FNMA: you need a copy of the trust agreement or trustee’s statement confirming the amount, frequency, and duration of the payments.

​

FHLMC: If the payments fluctuate, provide a copy of the trust agreement showing the payment terms, 2 years most recent federal tax returns, and sufficient assets to support the qualifying income.

If the payments are fixed, provide a copy of the trust agreement confirming the amount, frequency and duration of the payments, a bank statement or equivalent documentation evidencing receipt of current payment, and sufficient assets to support the qualifying income.

Question 12

How are hi usa and FHB deals labeled as far as compensation?

Answer 12

They are lender paid compensation, we don’t put fee on 2015.

If deal was borrower paid, it would goin 801 broker fees, not broker comp spot, bit confusing

Question 13

1. Do Hawaii USA and FHB require SE covid Analysis?
2. What 2 docs are needed to be docusigned with Hawaii USA on day of registration and lock?
3. Who is our Hawaii USA Rep?
4. If there is Mi what do we need to remember? aus?

Answer 13

1. No, neither, just profit/loss
2. Credit authorization, so they can pull credit and Intent to proceed
3. Yvonne Konia
4. have to get mi conditional approval with mi company maybe as well, they go off of du or lp AUS

Question 14

Can you use short terms rents on portfolio transactions?

Answer 14

Can’t use past tax returns but can use long term market rental analysis from apprasial at 75% on subject property.

Question 15

Q: On a Rate/Term refi transaction, what if borrower is not on title at time of application? Can the borrower be added to title at closing?

Answer 15

FNMA only permits borrowers who are not yet in title to complete a rate/term refinance provided lender can get a satisfactory 12-month mortgage history to meet AUS requirements. Freddie: At least one Borrower on the refinance Mortgage was a Borrower on the Mortgage being refinanced; or At least one Borrower on the refinance Mortgage held title to and resided in the Mortgaged Premises as a Primary Residence for the most recent 12-month period

Question 16

What are rules of timeline of profit and loss for Self employed covid guideline?

b. What if profit and loss is updated and out of date , how does it need to coincide with Bank statements

Answer 16

Profit and loss needs to be within 60 days of note date

if not We can try to move closing up or get new P&L if not within 60 days of Note date.

b. needs to be within 30 days of each other

Question 17

Can we ever use appraiser designation on property type over county records?

Answer 17

in some cases yes, like for VA we can’t use legal accessory dwelling for rental income but if the appraiser notes property as 2 unit we can jam and use rents.

Case by case but in some cases appraiser designation holds weight

Question 18

How many year tax returns are needed for FHB for rental properties?

Answer 18

Always 2 years, they will utilize 1 for non subject rentals if that is all we have. Subjects go off of MRA. especially cause most likely short term rental and we won’t have a lease or anything

Question 19

Q: Can assets held in a Trust Account be considered when utilizing Asset Depletion assets as a basis for repayment for Fannie/Freddie?

Answer 19

A: No. Funds held in a Trust Account are not considered borrower’s own funds and cannot be used to qualify

Question 20

How much is a subordination hit, when does it take affect, how much is the fee? .

What if heloc is closed?

what is cltv based off of?

Answer 20

.375% if ltv is over 60%. the sub fee is $200

If heloc is closed no worries at all about ltv hit.

Based off of line limit of heloc fyi, not amoutn owed.

Question 21

Scenario My client, would like to buy this property to save it from foreclosure. He intends to make it his principal residence. He is related to the current owners, however the plan is to get the existing owners to sign off leaving Client & his wife as sole owners. His relatives defaulted on the mortgage as well as a loan modification. Foreclosure is pending. Client is not included on this mortgage and is seeking sole ownership

Answer 21

No, this would be perceived as a bail out situation due to the identity of interest. We require an acceptable 12 month payment history on the current mortgage of the seller. Reference : Identity of Interest Transactions

Question 22

Scenario client has two commercial buildings on his Schedule E, his accountant lists the mortgage interest under other interest, confirming we can still include this on our net rental calc in Loan beam?

Answer 22

Yes, you can include commercial properties just like any other type of rental income I would have the CPA explain that it is mortgage interest. I think commercial properties are a little different, but yea, with evidence it’s a mortgage you can add it back in.

Question 23

True of False, on a 10 year fixed disclosures will be sent out via transfersafe?

Answer 23

False. 10 year fixed is not supported by One Click so it is disclosed via Docusign.

Question 24

If a client is SE, gets w’2’d from biz, but also has other SE business’s with losses do we have to hit for losses?

What if we are not using any of the SE business’s but just say SS and pension, however still losses on SE biz’s?

Answer 24

1. if using SE income yes have to hit for losses
2. if not using any SE then don’t need to hit for losses.

Question 25

Why is a trimerge credit report score different from a consumer credit report pull score

Answer 25

it is a different algorythm , they are pulling a consumer credit score and we are pulling a mortgage credit report.

Question 26

What are possible Ltv’s for non occupying coborrowers with Freddie?

Fannie?

Answer 26

Freddie max 90%

Fannie 95%

FHA can go 100%

Question 27

What is needed on VA if wanting to use rents from a 2nd unit?

Answer 27

Management company to manage if no prior managment experience and 1 year lease

Question 28

What is required if a client is w’2’d but Family owns the company?

Answer 28

2 years tax returns to make sure no ownership in company and to validate receipt of income/ accomany w’2.

Freddie requires as well for 1 year

i belieeve aus dependent on number of years.

Question 29

Can you use Boarder income ever?

Answer 29

You can use with FNMA or fhlmc via homepath or homeready. outside of that it fannie can use for

When a borrower with disabilities receives rental income from a live-in personal assistant, whether or not that individual is a relative of the borrower, the rental payments can be considered as acceptable stable income in an amount up to 30% of the total gross income that is used to qualify the borrower for the mortgage loan. Personal assistants typically are paid by Medicaid Waiver funds and include room and board, from which rental payments are made to the borrower.

Question 30

When do we require to prove 24 month payment and living history?

Answer 30

Only on jumbo.

Question 31

FHA is run through Freddie or fannie?

Who is the investor?

What is funding fee?

does mi drop off?

What is Front end and back end ratios limit?

Answer 31

either freddie or fannie can be run

Ginnie mae is investor

1.75

no

Most cases, 47 front/57 back dti

Question 32

What documents are required on VA Irrl’s?

Answer 32

Mortgage Note on past loan

Question 33

What can’t we collect upfront in Washington?

Answer 33

Application fee

Question 34

New developements like Kahoma Village

What do buyers pay that normal purchases usuallly are covered by sellers?

Answer 34

Transfer Tax.

Transfer taxes don’t apply to primary residence, Transfer taxes are 0 tolerance fees so need to disclose or eat em.

Question 35

How do we find out dates for foreclosures?

HOw about bankruptcy discharge dates?

Answer 35

foreclosures etc we will get off trustees deed

B.k’s we look at Bk discharge papers. Credit report doesn’t give the exact date of discharge but just idea of date/month.

Question 36

What is the new conforming loan limits for single unit agency?

Hawaii? Mainland?

Answer 36

High cost areas, Hawaii: $822,375

mainland is $548,250

Question 37

Departing residence lease Does it have to be 12 months or can the lease be 6 months, mahalo

Answer 37

Freddie requires a 12 month lease. Fannie doesn’t state, but they too, as well as GRI, would require a signed 12 month lease. I hope this helps

Question 38

Q; Can we do rapid Rescores right now?

Answer 38

A. No , covid not allowing as of 11/16/2020

Question 39

True of False and reasoning:

Fannie Mae and Freddie mac are okay with accounts in dispute as long as not mortgage account?

Answer 39

False. Fannie is okay with accounts in dispute. Freddie is not okay with accounts in dispute as when an account is put in dispute it is not being consideredd in credit scores.

It doesn’t matter what kind of account. If you must go Freddie then you have to get letter from credit holder stating account is not in dispute and you have to do a rapid rescore. We can do rapids on certain things and this is one of them.

Question 40

How long is credit good for?

HOw about asset statements?

how about RR105c’s?

Answer 40

120 days

60 days

If within 12 mo’s usually good for review

Question 41

Name 3 zero tolerance fees:

Name some 10% tolerance fees

Name some unlimited tolerance fees

Answer 41

Zeros would be fees to GR/ and GR affiliates, transfer taxes, appraisal fees (if complex or excessive property we have 3 days to redisclose), condo q’s and subordination fees

10% are recording fees and svcs borrowers can shop for

unlimited would be interest, escrows and svcs borrowers can shop for.

Question 42

Do C Corps have K1’s and what form are they filed on?

Answer 42

C corps don’t have k1’s and are filed on 1120 forms

Question 43

VA, when can you not do a manual underwrite?

Answer 43

When you are above the conforming loan limit

Question 44

If we have already disclosed on a refi and want to add someone to an application do we have to adverse and redo it?

Answer 44

No, only if you are removing a borrower after disclosure do you have to withdrawal. YOu can just add new borrower, pull credit and merge.

Question 45

When are some cases when Buyers pay transfer taxes?

Answer 45

in Hawaii: new developements

In nevada buyers pay and maybe some other states but Pull fees should list that as needed.

Question 46

When are we ordering WVOE’s? also work number?

Answer 46

WVOE’s order on all transactions unless SE. Work number same which can take place of WVOE.

Question 47

Can Rental income from a legal ADU be used on a VA loan?

How about fnma or fhlmc?

Answer 47

Rental income from an ADU can’t be used on any product or program with the exception of Freddie’s Home Possible and Fannie’s Home Ready.

If the VA appraiser determines it’s highest and best use is a two-unit and it’s legally acceptable as that, then you can use the rental income, but if not, then you can’t.

Question 48

What are guidelines for using POA for Veteran?

Answer 48

See attached POA for a purchase. The name has to match the proposed deed so it is recordable.

A written LOX signed & dated by borrower is also required stating who the signor will be, their relationship, and the reason they need to use the POA. (deployment etc…. )

These are sent to our GR POA dept for approval once executed AND the title/escrow company has to approve.

You will also need a local contact person and their easy contact # to do an Alive and Well Contact the day docs are signed. (Commanding officer or Supervisor)

Question 49

Scenario mom and auntie are on deed now, auntie wants off and we are going to add the son, we can do a cash out because mom is staying on the deed and title and has been for over 6 months

Answer 49

Mom is staying on and son is coming on? OK, as long as mom is also a borrower on our loan and providing she has owned the property for at least 6 months, you can do a cash out. Remember, it has to be a “borrower” that satisfied the ownership seasoning requirements - being on title is only part of it - the other part is being a borrower ;)

Question 50

VA cancellations of contracts, What document is needed to be completed?

Answer 50

the borrower has to sign the VA escape clause, although MC will jam this.

if just chagning properties we will also need , escrow cancellation, transfer of escrow deposit to new escrow etc.

Question 51

portfolio lending

Can we use RSU’s as income? if so how calculated?

Same question with dividends / interest and capital gains

Answer 51

cap gains 3 years average,

Div and interest income is 2 year average

Can’t use RSU’s.

Question 52

Scenario VA: vet’s wife hasn’t worked, as they have been over seas for 10 years in the military, they just relocated to Hawaii and she starts a salaried job with the Air Force as a GS5 employee 7-5, since she is salaried, are we able to use her income with a lack of history on VA, let me know

Answer 52

I think you’re going to have difficulty using this income. Generally, employment with less than a 12 month history is not considered stable with VA. Does she have prior employment is the same or similar field that you can verify? Can you go back that far? Dues she have training or education in her current field? The underwriter will need to justify using income with less than a 12 month employment history.

Question 53

When can you not use appraisal waivers?

Answer 53

When over 1 million value or investmnet property

Question 54

Can we do an investmnet property as second home if there is rental income on Schedule E but is less than 365 days? if so what else is required?

Answer 54

yes as long as no managment company. Lets say a client is renting out a property when they are not at the property. That is okay if these conditions are met, no mngmt co and less fair market days than 365 on Sch E

Question 55

How are investment properties cashflowed?

Answer 55

We take gross rents , subtract total expenses, add back deprec, , mtg interest tax, insur, hoa then with that next we subtract out the mortgage payment, as applicable

Question 56

What is a bridge loan?

Appraisal just on subject?

Ltv’s?

Answer 56

someone wants to buy a new place before selling currrent, usually they do them because qualification is not possible Do them all day long, take them to keenan at finance factors Up to 70% loan to value both props Appraisal on both required

Question 57

What is the doc autho code required for docusign?

Answer 57

subject zip and last 4 of social

Question 58

How old does a person have to be for asset depletion?

Answer 58

Depends on what type of account you’re using. Retirement accounts require the borrower to be able to access the fund without the early withdrawal penalty, or 59 1/2. For brokerage and deposit accounts, they have to be 62. If it’s a joint account, both have to be on the loan, but only one needs to be 62 yrs old.

Question 59

What are the benefits of FHB’s O/O 1st STep program?

What is the mi requirement?

True/False, clients can have over 20% down funds available in retirement account?

Do we run findings on 1st step?

Answer 59

10.01% minimal down/ o/o you can waive Non warrantable adder.

No mi is required, enabling clients to qualfy at higher sales price

Note: 2 mo’s reserves needed, min fico 700, has to take Homebuyer education

Can;t be offered to clients with adequate assets to cover 20% more or down , okay if in retirement but not checking/ savings.

Yes we run DU or LP on 1st step

Question 60

Scenario Client closing conventional Freddie R/T refi. They will be bringing in like 15k to closing, Can these funds be from Business account as along as no affect on liquidity of biz?

Answer 60

Funds from a Borrower’s business account may be used to qualify the Borrower for the Mortgage transaction, provided they meet the requirements of this chapter, except as stated below. Reviews a minimum of the most recent two months of the business account statements, and Determines the deposits are typical for the Borrower’s business

Question 61

Q: VA, Can installment debts with < 10 months remaining be excluded from the borrower’s DTI?

Answer 61

A: Yes, provided the payment is not considered “significant” (> 2% of the borrower’s monthly income) and provided it won’t impact the borrower ability to make the payment during that time.

Question 62

How many years history is required for commission income for fnma and freddie?

Answer 62

Freddie 2 years, fannie 1 year is acceptable, better if positive factors to offset shorter history.

Question 63

Do we care about HOA delinquency? what is the timeline of delinquency that we care about?

Both full and limited review?

Where does it show up?

Answer 63

We only care if HOA delinquency of 15% or more is over 60 days.

Only care on Full review

Shows up on RR105C

Question 64

On a 1031 Exchange, can you bring on Cosigners to help qualify, so going on mortgage but not on title?

Answer 64

Yes this is fine per FHB, i believe we just need to make sure title is remaining similiar and of course property type same kine

Question 65

Canadian Clients, How do we need them to complete application? what should they put for address? State? Zip?

Answer 65

Use normal can address and list ca for state and 00000 for the zip code

Question 66

if a client started a job 6 mo’s ago and had same line large gap prior , was working in another line of work, but prior to that was in same line of current work, but say 4 or 5 years ago worked in that profession do we need 1 year of income for agency? what about govy, fha?

Answer 66

AGency cares most about guaranteed income, so guaranteed salary or full time hourly. will most likely need to be prepared to prove past experience.

FHA and govy would definelty need to show the history’s

Question 67

What fees need to be added when dealing with a PUD?

Where checking if Pud? verbiage to look out for?

what line on 2015 itemz page do we add hoa transfer and hoa fees for puds?

Answer 67

295$ pud questionairre, add in 820 range line item

County tax, if says SUBD

Trick question, no hoa fees or transfer fees added on puds

Question 68

What are the 2 Flood zone designations and which is good which is not?

Answer 68

X is good, A and V are not eligible

Question 69

Multi unit property. Do we have to go directly off county 2 contemporary verbiage for pricing?

Answer 69

On 2 unit property we can go off of what the appraiser notes on appraisal. So we can order as SFR with accessory dwelling and as long as that is how appraiser sees then we can jam.

All good with full kitchens in both. Only concerned if additional kitchen making 3, that would be an issue and need stove removal.

Question 70

FHB are both application fee and appraisal charged upfront?

Answer 70

FHB Appraisal fee is not charged upfront. It is charged at the end but the application fee is charged upfront.

Question 71

What do we need to get an appraisal ordered?

Answer 71

Anytime but you will be on the hook if borrower doesn’t consent.

we cannot charge the borrower or accept payment information until the Loan Estimate is delivered and an intent to proceed has been obtained.

I guess its just that the VP is in the hook for the fee until the intent is signed then we can charge the fee to clients card

Question 72

If a client is trying to buy a rental property , use the rents but lives rent free what do we need to be aware of?

Can a client that owns a rental property but lives rent free /no primary use rental income to qualify?

Answer 72

Unless you can show paid rent checks for 12 mo’s hsitory you won’t be able to use rents on investment property

No fannie and freddie both will not allow to use income to qualify, have to hit for full liablity of subject property

Or
Show paid rent checks for 12 mo’s,

Question 73

FHA,,

What is the funding fee? is that in place of the monthly? When does it drop off?

What are the ff and monthly included in ?

Answer 73

1.75% funding fee, doesn’t drop off at all

Funding Fee and monthly are included in the apr which is craziness

Question 74

Scenario, Short Term rental, Client has a lot of liquid cash, no retirment accounts to setup distribution as not irs qualified. So client has funds to put down and could afford a lower ltv. What are the options?

Answer 74

FHB won’t do asset depletion, if client can do like 60 ltv we could do an asset depletion loan, just take asset and divide by 60 mo’s with Hawaii USA and can jam.

Question 75

What does a client need to do if they get locked out of account or blocked and who would we contact for help in that matter if needed?

Answer 75

We would contact customercare@guaranteedrate.com.

They will have client look for email named

Complete GR Identity Verification” and he should click finish my application to proceed and create an account.

Question 76

Can we go agency on lava zone 2?

Answer 76

Can go Freddie but not fannie. Insurance has to be available and jamming. Good contacts for lava insurance are

Joe Marsh jmarsh@bisihi.com

Question 77

How many months of child support do you need to show to use as income?

Answer 77

6 mo’s no breaks.

Question 78

Rental income

if client has newly established rental properties but less than a year history, not on taxes etc but has leases, can we use 75% of leases?

Answer 78

You can with Fannie and use positive income without landlord history. Fannie only cares about landlord history when it’s the subject property.

With Freddie, without a year landlord history, you can only offset the payment with the leases at 75%. They will also want an appraisers rent survey (not available on commercial properties) or receipt of two months rent for each lease.

Question 79

What is required for Fannie and Freddie Foreign income? Can we use?

Gross or net off returns? 1 year okay?

Answer 79

We can use gross, will need to verify employemnt/income, so may require translation.

2 years returns required

Question 80

Can we use temporary disability as income?

Answer 80

no clients have to be back at work and working , can’t use Tdi.

Question 81

If a client is buying a new a multiunit property and wanting to use the rental income to qualify, can we? To just cover debt amount? how about if rents are more than the subject mortgagepayment will be?

What if rental history is in an LLC?

Answer 81

• If the net rental income exceeds the full monthly payment of the new rental property or the converted Primary Residence, as applicable, the excess rental income cannot be added to the Borrower’s gross monthly income to qualify unless the file documentation demonstrates the Borrower has a minimum of one-year investment property management experience.

****If client doesnt have a current Primary then you can’t use any of it!!!!

LLC: if they have a primary but rental managment history is in LLC, you can use as proof of that history to use excess rental income above subjecct mortgage liability. …Although the above still applies, if no primary, no can use any

Question 82

Freddie Reserves

How many mos reserves are required for investment properties owned outside subject property? What metric determines this?

Answer 82

Depends on Financed property count.

1 to 6 financed properties require 2 mo’s of each 2nd home or 1-4 unit inv props.

7 to 10 financed props require 8 mo’s for each so big diff.

Question 83

Can we use Trust income? if so what is needed? can it be calculated off 2 years tax returns?

How about estate income?

Answer 83

Can use trust income but becomes calculated, can’t be calc’d off tax returns, will need copy of Trust agreement , show 12 mo’s reciept and will need to verify 3 year continuance

Can’t ever use Estate income as it is 1 time thing.

Question 84

What is schedule F? What do we care about with this?

Answer 84

F is for Farm, we just need to make sure not our subject property cause we can’t finance hobby farms,

If someone sells veggies and what not off farm it is legally supposed to be filed as self employed.

Question 85

If someone has a job that is paid production based, like a doctor who runs their own practice, what do we need to do/provide

Answer 85

Client needs to have 12 mo’s of history to use any production based . if salary it is all good but if no gurantee in place then no can

Question 86

If client is buying a 2nd home and n2 is marked on contract , what will need to happen?

Answer 86

We need to make sure if tenants currently, that they will be out within 60 days as needs to have ability to occupy by that time , or would have to be investor

Question 87

What condo docs are required for limited condo review? Ltv guides for limited?

What about full condo review, what docs needed?

Answer 87

Hawaii now requires Budget , CCR’s for all hawaii loans. for limited also RR105C , , legal docs, escrow will provide.

Ltd review, 90% or under for Primary, 2nd and inv is 75% or under

Full review docs are

RR105c or Lenders Disclosure, Budget, Legal docs aka Bylaws and Decs (escrow provides legals)

Master insurance

Question 88

What are some 1st time homebuyer benefits/programs available.

Answer 88

no real 1st time home buyer benefits, in hawaii homepath/homeready mtgs are great and all but the issue is the income restrictions are so low that it makes it super difficult to qualifty for anything.

Question 89

Tips commission income, we always take 2 year avg?

Answer 89

not if declining, then we look at last 12 mo’s /ytd avg.

We do need to see 2 years for work history

Question 90

Do we always need a Full Trust and Trust Attorney opinion letter?

What about Trust Cert?

Answer 90

Depends on Trust origination state..

If Conn, Hi, Lousianna, Ny, Oklahoma or Rhode island, need full copy trust, attorney opinion letter

All other states require either:

Cert of Trust (not older than 90 days) and Attorney opin letter

Or Cert of Trust and all relevant Trust pages

cert of Trust for all other states is from upload to internal in encompass with GR

Question 91

Can we impound escrow if under 20% down?

Answer 91

no can waive impounds with less than 20% down

Question 92

If 2 clients are apart of corp and have less than 25% ownership each but together over 25% do we need biz tax returns

Answer 92

Yes combined ownership will require biz tax returns

Question 93

Profit and loss timelines reqquired for income Stability.

1 What do we require if 2020 hasn’t been filed?

2 What do we require if 2020 tax returns have been filed?

Answer 93

When 2020 returns have not been filed, the P&L must cover 1/1 to 12/31, 2020 through the most recent month preceding application.

For example, if the application is dated February 15, 2021, then the P&L must cover January 1, 2020 through January 31, 2021 and bank statements would be required for November 2020, December 2020 and January 2021

When 2020 returns have been filed, the P&L must cover a minimum of 3 months, including YTD through the most recent month preceding application. Depending on application date, P&L may require 2020 P&L information. Refer to chart below for “2020 Taxes Filed”

For example, if the application is dated February 15, 2021, then the P&L and bank statements must cover November 2020, December 2020 and January 2021

Question 94

When do we use Distribution method vs ordinary income calc?

Answer 94

We only use ordinary income calc when Distributions are more than ordinary income or if we have done a liquidity test on ordinary income.

Question 95

what is the difference between Net S corp/ordinary income and distribution

2 How do we determine which calc method to run with

Answer 95

_{Distribution income is money already paid to the borrower where K1 is not. That is why the business must pass liquidity to use ordinary income, but not distribution income.}

_{We need to know the business is in a financial position to pay out the K1 income. Liquidity is not needed to use distribution as this income has already been paid to the borrower.}

_{If a business fails the liquidity test, that means there may not be sufficient assets to pay the borrower the K1 income, so it cannot be used and Loan beam will automatically flip to the distribution method. If there is no distributions on the K1, this means there is no viable income unless you use the Excel worksheet and obtain 3 months business statements to do another “test” with more recent assets than what the balance sheet shows}

_​

_{2 If a K1 shows both ordinary and distribution income, if distribution is less you must use that. You can never use both. If distribution exceeds ordinary, you may use ordinary even if the business fails liquidity}

Question 96

Can we do 2nd home in LLC?

Answer 96

No LLC is only investmnet properties

Question 97

What is max DTI for USDA?

What is max income you can make?

Answer 97

29% front end

Question 98

If AGent on a purchase is related to /has interest in buyer such as husband with wife being an agent example. Can they use wifes commission for cc and prepaids? how about can the wife gift funds for closing?

Answer 98

If the agent is on mortgage and title they can use agent credit towards cc and pp’s.

_{Gift funds cannot come from anyone with an interest in the transaction, including a spouse. Please see below (replace sister with wife)}

_​

_{<strong>Q: </strong> My borrower’s <strong><u>realtor</u></strong> is his sister. Can he receive a<strong> gift </strong>from her or her husband?}

_{<strong>A</strong>: No, neither FNMA nor FHLMC permit gifts from the real estate agent or allow funds from the <strong>realtor’s commission</strong> to be applied towards down payment. The realtor on the transaction, in this case a family member, can contribute a concession towards borrower’s closing costs. However, the concession that is given from the realtor will be subject to the transaction’s Interested Party Contribution limits.}

Question 99

Scenario, Husband and wife, husband on title/mtg but wife not , can we use wifes funds towards down/closing funds?

Answer 99

Yes Fannie and FHB will allow for this.

We will just have to show was not a gift, 2 mo’s statement from the spouse providing the funds and letter confirming is not a gift.

Question 100

For student loans in collection or with missed payments how does FHA look at this?

Freddie?

Fannie?

Answer 100

Fha requires paid off or in satisfactory repayment plan, and payment used in dti.

Fannie requires past due be made current

Freddie is all good , just goes off findings

Question 101

Asset Depletion with Hawaii usa, what is required

Answer 101

What ever account we like use, Divide by 60 mo’s

show 2 mo’s reciept

Usually around 75% ltv required

Question 102

If a client is self employed and already filed 2020’s. what is required on the profit/loss front,

What if jumbo

Answer 102

depends on when but for feb, it would be nov, dec and jan profit/loss

Bank sttms for those mos as well

Jumbo unless chase no need stability calc so would just be p/L nov/dec/jan

Question 103

How does Fannie/Freddie look at Differed Maintenance, such as an unfinished pool or something like that?

Answer 103

GR does not have a specific policy in regards to incomplete repairs/updates, etc.

We would rely on the appraiser as to any property issues -

If there are any issues affecting the safety or marketability, these of course would need to be repaired/completed prior to close.

But there is no hard and fast set of rules… minor conditions may be allowed to be completed ASIS, as the appraiser would take these minor conditions into the total valuation.

Below is from Fannie - Freddie would be the same -
_​

_{<strong>In what situations should a property be appraised as-is versus as-repaired?</strong>}

_{Share this answer}

_{<em>In what situations should a property be appraised as-is versus as-repaired?</em>}

_{Fannie Mae permits an appraisal to be based on the as-is condition of the property as long as any minor conditions, such as deferred maintenance, do not affect the safety, soundness, or structural integrity of the property, and the appraiser’s opinion of value reflects the existence of these conditions. Minor conditions and deferred maintenance items include worn floor finishes or carpet, minor plumbing leaks, holes in window screens, or cracked window glass. Minor conditions and deferred maintenance typically are due to normal wear and tear from the aging process and the occupancy of the property. Such conditions generally do not rise to the level of a “required repair.” Nevertheless, they must be reported.}

_{The appraiser must identify physical deficiencies that could affect the safety, soundness, or structural integrity of the property as part of his or her description of the physical condition of the property. These may include cracks or settlement in the foundation, water seepage, active roof leaks, curled or cupped roof shingles, inadequate electrical service or plumbing fixtures, etc. If the appraiser has identified any of these deficiencies, the property must be appraised subject to completion of the specific repairs or alterations. In these instances, the property condition and quality ratings must reflect the condition and quality of the property based on the hypothetical condition that the repairs or alterations have been completed.}

_{GR does not have a specific policy in regards to incomplete repairs/updates, etc.}

_{We would rely on the appraiser as to any property issues -}

_{If there are any issues affecting the safety or marketability, these of course would need to be repaired/completed prior to close.}

_{But there is no hard and fast set of rules… minor conditions may be allowed to be completed ASIS, as the appraiser would take these minor conditions into the total valuation.}

_{Below is from Fannie - Freddie would be the same - <br></br>​}

_{<strong>In what situations should a property be appraised as-is versus as-repaired?</strong>}

_{Share this answer}

_{<em>In what situations should a property be appraised as-is versus as-repaired?</em>}

_{Fannie Mae permits an appraisal to be based on the as-is condition of the property as long as any minor conditions, such as deferred maintenance, do not affect the safety, soundness, or structural integrity of the property, and the appraiser’s opinion of value reflects the existence of these conditions. Minor conditions and deferred maintenance items include worn floor finishes or carpet, minor plumbing leaks, holes in window screens, or cracked window glass. Minor conditions and deferred maintenance typically are due to normal wear and tear from the aging process and the occupancy of the property. Such conditions generally do not rise to the level of a “required repair.” Nevertheless, they must be reported.}

_{The appraiser must identify physical deficiencies that could affect the safety, soundness, or structural integrity of the property as part of his or her description of the physical condition of the property. These may include cracks or settlement in the foundation, water seepage, active roof leaks, curled or cupped roof shingles, inadequate electrical service or plumbing fixtures, etc. If the appraiser has identified any of these deficiencies, the property must be appraised subject to completion of the specific repairs or alterations. In these instances, the property condition and quality ratings must reflect the condition and quality of the property based on the hypothetical condition that the repairs or alterations have been completed.}

Question 104

What is cool about homepossible

Answer 104

if they qualify in the tight income guides, best things are low mi factor, can get the 10% mi factor on smaller down amounts, also lower rates.

Further can use border income in some cases.

Question 105

Can a client choose or have a say in the appraiser chosen?

Answer 105

No they can’t, we dont have ability to choose

Question 106

SE calc distribution method or k1 net S corp (ordinary income) method?

Conventional?

Govy?

Answer 106

_{<strong>Conv:</strong>}

_{must pass liquidity to use ordinary income}

_{If a K1 shows both ordinary and distribution income, if distribution is less you must use that. if Distribution is more you can use as this is income actually paid to borrower}

_{<strong>FHA / VA / USDA</strong>}

• _{Government loans may only use the Net S-Corp Income Method}
• _{Liquidity is not required}

Question 107

What are some keypoints of the Fannie/freddie Familiy opportunity loan?

Who is it for?

Who needs to be on the loan?

What is needed?

Wha is different internally/encompass?

Answer 107

kids can do a loan for parents that are unable to qualify on their own. Parent can occupy property , kids dont need to and can be primary residence with just the kids income

LOX from parent confirming they are doing this as they can’t qualify on there own.

Pretty much nothing else different in Encompass

Question 108

What is the Hawaii conforming loan limits?

1 unit?

2 unit?

Answer 108

822,375,

1,053,000

Question 109

would FHB allow someone that paid cash for a property to refinance within 6 mos?

Answer 109

on short term properties and there I no vesting requirement if you pay cash for a property and want to do a cashout refinance down the line. The value at that time will be based off of lesser of the appraised value and property purchase price.

Question 110

LOt loan max loan?

Construction to perm Max?

Answer 110

1 million

1..5 mill max loan amount

Question 111

Asset Depletion, if using as income and client has self employed business’s that we are not using for income how do we approach that?

Do we have to show one month receipt?

Answer 111

We don’t need to even look at self employed income, Brady mentioned no need but also made mention of something of if it offsets losses all good but then backtracked and said no need at all.. so run with that.

No dont have to show any funds setup/distributions made.

Question 112

If going FHA and buying from interested party what are some things to watch out for

Do they have to put down 15%

Answer 112

must put 15% down ,

however if buyer was living in property for 6 mo’s can be waived. OR if they are buying from a family member who held this as their primary residence.

Question 113

In hawaii if a condo is a leasehold , are all the condos in the project leasehold?

HOw do Fannie and Freddie see this?

Who is strictist?

Answer 113

^{no in hawaii indiv units can buyout leases making them fee siimple where other units could be leasehold.}

^{Fannie is strict on requiring the client to then make sure leasehold guidelines are met even if you are in a leasehold unit. i.e. if a leashold is up within 5 years of end of loan , the fee simple financing has to adhere to this as well.}

^{Or have to get hoa docs to state that all unit owners/hoa/common areas will be buying lease at end of term or extending once lease is up. this seem difficult but an option}

^{Freddie doesn’t require this and will allow financing as fee simple.}

Question 114

^{Aloha T, client is a nurse going on maternity leave, do we have to wait until she goes back to work, let me know below is the pay schedule, mahalo.}

^{Maternity leave goes in this order}

^{8 weeks disability 60%}

^{6 weeks FMLA No pay}

^{4 weeks 100% pay}

^{Back to work}

^{However she can use PTO during the 6 weeks of FMLA if we need to.}

v

Answer 114

What you will need to do is average the income she will be receiving throughout her leave excluding any PTO. Once you have that established, you show they have that in cash reserves up to the amount of her regular employment income for the time between the first payment due date and the return to employment. will need to have confirmation she will be going back

Question 115

What rate do you have to qualify with when doing an arm with FHB?

Answer 115

YOu have to qualify 2% over the note rate.

Question 116

Client wants to purchase 2 different parcels at once, one house and the adjoining lot, Do they have to buy one parcel and 2nd lot cash?

Answer 116

No we can do as one transaction as long as the adjoining parcel is vacant lot can.

Question 117

2nd home purchase, since it is okay for 2nd homes to rent out partial year is it okay to have n2 rental docs selected on contract?

Answer 117

NO it must be removed, can’t honor future rental bookings

Question 118

What arm i/o options are available? And with who?

Answer 118

no arm i/o’s unless jumbo, Chase offers up to 2 mill delegated or up to 3 mill non delegated, 70% max ltv.

We do have 30 year i/o options as well

Question 119

Client is wanting to buy investment property that is a sfr and Adu, if currently adu and sfr rented can we qualify with 2 leases?

Answer 119

no only if legal 2 unit property

Question 120

What income can be grossed up?

Answer 120

Non taxable income, SS, child support, Disability and maybe alimony

Child support can be grossed up because it was never taxable to the person receiving it. Alimony was up till 2018, so to gross this up, the divorce agreement would have to be signed after 12/31/2018. If not it cannot be grossed up.

Question 121

US citizen, files us tax returns., lives abroad? Can do?

Answer 121

Can only do on DU/LP exception basis

_{<strong>Financing Requirements:</strong>}

• _{Full credit documentation}
• _{Must be a Fixed Rate product}
• _{Must be ATR/QM compliant}
• _{Written statement from the Borrower must be in the file at submission to explain current residency situation.}
• _{Compliance to agency written guidelines (must follow standard eligibility requirements)}
  
  • _{Fannie Mae has reduced LTVs for manually underwritten loans and requires full documentation (click <a>here</a> for the eligiblity matrix)}
  • _{Freddie Mac does not have reduced LTVs for manually underwritten loans, but requires full documentation (i.e. two months bank statements, W2s, etc.)}

Question 122

Scenario: client works construction and some months off work gets seasonal unemployment, can we use or just average off months working?

Answer 122

You can use if seasonal..

Question 123

How does Hi usa approach Asset Dissapation/depletion?

How many mos do we divide asset for n o/o/ 2nd home?

INvestor? -

Do we have to market adjust accounts? if so what?

Answer 123

prim/2nd– 120/mos

inv–184/mos

Mark adj– Stocks/bonds, mutuaal funds use 70%

Retirmenet ira 60% unless over 59 1/2 then 70%

check/sav/ liquid can use 100%.

Question 124

What is the breakdown of owners title for buyer and seller?

How about Escrow fee?

Answer 124

40% buyer, 60% seller for owners title

Escrow fee is 50/50.

these will always be the case unless P/C dictates otherwise

Question 125

Client has mtgs on personal credit, but filed under partnership/LLC kine?

How would we calc income DU/LP

Answer 125

Fannie and Freddie treat properties held in an S-Corp differently.

Freddie treats it like any other self-employment. if 1065 and no 8825 avail then cpa letter breaking down props under biz.

Fannie treats it more like a Sch E on a 1040 with cashflowing method

Question 126

Do we have to hit a retirement acccount when doing distributions if client over 62?

Answer 126

Yes always have to hit for market adjustments on distributions.

Question 127

Distributions

Hi USA asset dissapation, how many mo’s divide for o/o? investment

Answer 127

distributions–always hit 30% market, divide by 38 mos

Hi/usa;;; O/O and 2nd–120/mo inv— 84 mo’s. , hit retirement, stocks etc 70%, cash using 100%.

Question 128

Client has someone going on Title and contract but not loan, can we use funds from them without it being a gift?

i.e. FHB investment, wife on contract and title but not giong on loan, can’t be a gift

Answer 128

we can use FHB and FAnnie only, it won’t be a gift will just need a letter stating not a gift, doesn’t need to be repaid.

Question 129

How many years of rental income is required for jumbo?

Answer 129

2 years.

Question 130

RSU, s when can use?

Answer 130

CAnt use with FHB, Can use Freddie , need 2 year avg and be vested.

Question 131

Distributions, What lender guide would require showing history of these before you can setup?

Answer 131

RATE jumbo you can’t setup distributions without history, below from cc

For Rate-if no distributions have been on the tax returns and there is no history of receipt, distribution needs to be set up 6 months prior to the note date since they can’t be set up only for loan qualification purposes. If there is history, you need 60 days of receipt.

JP requires 60 days of receipt and does not require any additional history. PENFED and Chase require 30 days.

Can use AUS express with 30 days receipt

Question 132

What is the minimum Fico for Hi USA on the portfolio side

Answer 132

700 fico

Question 133

Some reasons for FHA?

Answer 133

low credit, low down combined,

or if foreclosure or deed in lieu of, 3 years from completion date per trustees deed, whereas conventional is 4 years from completion

Also some BK benefits at 2 years since, VA same, but conventional is 4 years.

Question 134

Business Liquidity,

Do we require on Jumbo? what if last year doesnt meet but most recent does?

How do govy deals calculate liquidity?

Answer 134

Jumbo looks at most recent year liquidity.

Government products do not require liquidity nor can we use distribution. We have to use ordinary income on line 1, 2 or 3

😊

​

FHA / VA / USDA

• Government loans may only use the Net S-Corp Income Method
• Liquidity is not required

Question 135

If coborrowers are only going on note, not title , is this possible and do they need to be on the PC?

Answer 135

yes to just go on note , yes they have to be on pc

Question 136

How many credit scores are needed for a borrower?

Answer 136

All 3 unless one is not reporting, if just frozen or something we need all.

Question 137

What is the difference between the primissory note and mortgage/Deed of trust?

Answer 137

Promissory note is the iou that doesnt get recorded with county but is held by lender until satisfied, like an iou

The mortgage is the deed of trust that is recorded with the county,

Clients can be on note and note title but if on mortgage then must be on title.

if they are on the mortgage they need to be on title, but, if they are only on the note – then they do not need to be on title

Question 138

What is the DTI requirements for USDA?

Are condos eligible?

Answer 138

29/41

yes condos are fine as long as meeting agency guides

Question 139

Adjoining Vacant lot purchase

What are the main guides on this?

How do we price/structure this?

What is a key piece of the property legal description we have to make sure and cover?

Answer 139

Main guides, must be adjoining vacant lot, house next to empty lot works.

Cross Collateralized but priced as one normal transaction, same agency ltv guides, Value off gross appraised values

The vacant lot and house lot must be under the same legal description and Vacant lot can’t be buildable. Title can advise on if poth parcels are under same legal description. If not you would have to have the lot lines adjusted and legally combined.

Buildable Land means land that is suitable for residential development, not encumbered by easements, sublots, water, wetlands, utilities, isolation or restricted areas, topography (greater than 25% slope), or street right-of-way.

Question 140

True of false

With delayed financing client needs to have been on title /owned property for 6 mo’s or more?

Considered a cashout refinance?

Can do agency ?

Can do FHB?

Answer 140

False on 6 mo’s, can be less than 6 mo’s , the delayed financing exception makes this possilbe.

True Considered and priced as cashout refi

yes to agency and FHB