Issue: Q&A - January 25, 2018

VA – Use of Future Retirement Income: If a VA borrower is closing in February and they will receive a raise in retirement income in July, can we use the July Income?

Answer: VA doesn’t discuss this scenario exactly in their guidelines.  A typical prudent underwriting approach would be to allow the July retirement income amount if the file is documented regarding the retirement increase and the veteran has reserves equivalent to at least 6 months of the income difference. Of course, your underwriter will make the […]

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VA – Student Loan Default: If a borrower has a defaulted student loan but no CAIVRS alert, how do we calculate liability?

Answer: If this is a federal student loan, it would fall under the guidelines below.  If, by chance, it’s a private loan, then it would be disregarded. Reference: VA Lenders Handbook VA –  If student loan repayment is scheduled to begin within 12 months of the date of VA closing, lenders should consider the anticipated […]

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Fannie Mae – HomeReady® – Non-First Time Buyer: Does a borrower have to be a first-time homebuyer to qualify for a HomeReady® loan? [Fannie Mae HomeReady® Fact Sheet Attached]

Answer: You DO NOT have to be a FTHB for the HomeReady® product. Following is a link to a fact sheet published by Fannie Mae that clearly points out that the borrower is NOT required to be a first-time homebuyer. This program does have income limitations unless property is located in a low-income census tract. The […]

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Fannie Mae & Freddie Mac – Rental Property Homeowner’s Insurance: Does Fannie require a homeowner’s policy on rental properties owned free and clear which are not the subject property being financed?

Answer: There is nothing in the Fannie Mae (or Freddie Mac) selling guide that tells a lender, or otherwise indicates, that a rental property, whether owned free and clear or financed, must have homeowner’s insurance. This is unless of course it is the subject property. Now let’s say that they don’t have insurance and don’t […]

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Fannie Mae – High DTI – QM Eligibility: If a client has a DTI over 43% and is approve/eligible is this considered a non-QM loan?

Answer: As a Fannie Mae loan it would be considered QM.  However, if it is a portfolio loan for a specific lender/investor that is not a Fannie Mae agency loan, then it would likely be considered a non-QM loan.  Some portfolio lenders will use DU or LPA to evaluate risk and determine if the loan […]

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