Issue: Q&A – April 25, 2019

USDA – Voluntary Child Support: If child support is not court ordered and only voluntarily paid, do I need to include this in the DTI? [Divorced Borrowers Quick Comparison Chart]

Answer: Voluntary payments do not need to be included in the DTI.  Beyond this it will be up to your underwriter as to how they will choose to interpret this part of the guidelines, and the documentation they will accept that will satisfy their requirements for due diligence. I assume that there is also no […]

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Fannie Mae and Freddie Mac – Rental Income – Exiting Property: My client is moving to another state and needs the rental income on his exiting property. Will either agency accept rental income on an existing primary residence when there is no lease in place? [Rental Income Requirements Chart]

Answer: Great question. This actually happens a lot. There really is no real specific guidance in the selling guides for Fannie Mae (and Freddie Mac is more restrictive) other than to state that the income could be used as long as the lender provides justification to use the income. They leave it to the lender […]

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FHA – Donor Gift Funds – Alternative to Bank Statement: Will FHA accept a statement from the donor’s bank letterhead with the account number, owner of account, and a statement that the balance is greater than “X” which is the amount of the gift? [Gift Funds and Gift of Equity Chart]

Answer: While FHA doesn’t provide detailed instructions on documentation from alternative accounts, the guideline does state: If the gift funds are not verified in the Borrower’s account, obtain the certified check or money order or cashier’s check or wire transfer or other official check evidencing payment to the Borrower or settlement agent, and the donor’s bank […]

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VA- Co-Signor Obligation: My veteran client co-signed for both siblings on 2 separate cars. One I can prove 12 months paid by another and the other is only 10 months. Help! [Debts Paid by Others Chart]

Answer: VA doesn’t have a ’12-month rule’ like FHA and Fannie/Freddie when it comes to contingent debt payments from the primary borrower.  (See the guideline below.)  Unfortunately, (but understandably), it is usually the standard that an underwriter will rely on to determine that there appears to be no reason that the co-signor will have to […]

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VA Derogatory Credit & Collections: I have a veteran with a low 623 credit score, collections and spotty history on other loans, which is why I have a refer/eligible. How will the underwriter handle the collections on a manual underwriting?

Answer: Your underwriter will be using the criteria below to evaluate your borrowers.  From the information you’ve provided, I’m not sure that they will be able to meet the requirements below.  In these situations, the underwriter decides if they can approve the loan, but it sounds like your underwriter will want to see a solid […]

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