Issue: Q&A – August 25, 2018

Compliance – Borrower Signature on Loan Application – Is the borrower required to sign the initial loan application or other disclosures in the initial loan application package?

Answer:  There is no specific federal regulation that requires the initial 1003 to be signed, but there may be state-specific requirements that Mortgage Currentcy does not monitor.  There also may be specific lender requirements from different wholesale or correspondent lenders; you should check with each of them on what their own specific requirements may be. […]

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Compliance – Lender Credits – If the borrower locks the rate, and then decides to lower the loan amount, can we lower the lender credit to the borrower?

Answer: The quick answer probably won’t make you happy. It is my opinion, based on information from the CFPB’s Small Entity Compliance Guide, that the lender credit cannot be changed even if there is a material change to the loan amount. Reference:  Question 7.13 on page 59 of the small entity compliance guide from the […]

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USDA – Computing Ratios – What is the guideline for front- and back-end ratios for GUS and Manually underwritten loans.

Answer: Maximum ratios for GUS in order to maintain an “Accept” finding.  Keep in mind that every piece of data you enter in GUS gets a point value towards the scorecard. (GUS is an adopted version of FHA TOTAL Scorecard.) Generally speaking…the total debt ratio should be less than 46%. While not in all cases…45% […]

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VA – Assumption – Can a VA loan be assumed by a non-veteran?

Answer: Yes.  But the eligibility used to obtain the original loan will stay “tied up” with the loan until the loan is paid off.  The Veteran selling the home will not be able to use it, but could use any remaining eligibility that they have available. Reference:  VA Lenders Handbook, Chap 5, Section 7 Social Media […]

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VA – Rental Income – How does VA count rental income when computing the debt ratio?

Answer: VA does not use the same methodology for rental income on a newly departed residence as they do for an investment property.  You do not use 75% of the rent as effective income.  You simply use the full amount of the rent per the lease to the point that it offsets the current mortgage […]

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