Issue: Q&A – January 25, 2020

Conventional Loans with No Credit Score?

Question: Can you get a Conventional loan with no traditional credit and no credit scores?  If so, what are the parameters,  and guidelines that must be met? Answer: Yes, both Freddie Mac and Fannie Mae will allow it.  However, Freddie allows you to go to 95% LTV vs a 90% LTV max allowed by Fannie, […]

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Are Reserves Required on Reverse Mortgages?

Question: I have a 3-Unit Reverse Mortgage and am being asked to provide reserves.  Is this required by FHA? Answer: Per the HECM Guidelines and Financial Assessment Guide, there are NO listed requirements for reserves on any, one-four family units when underwriting a HECM.   On a regular FORWARD mortgage, yes, that would be a HUD guideline […]

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VA Residual Income Method for Sole Proprietors & Add-Backs

Question: Our client is showing a net loss on line 31 of Schedule C, as a sole proprietor. We have enough allowable add-backs to still show some income when doing residual income for taxes. What do we use for income to determine the tax bracket and factor in deductions to calculate the correct residual?  This […]

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Can Employer Profit Sharing be Used as Reserves?

Question: Can we use profit sharing from an employer as reserves on a Fannie Mae loan? Answer: Here is what I have in the selling guide for Fannie Mae (Freddie is basically the same).  Unfortunately, this is not listed as an eligible asset.  I think the litmus test lives in the first statement under the […]

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Date Used for Derogatory Credit Waiting Period

Question: We are working on a conventional refinance where the borrower had a derogatory credit event.  To ensure that we meet the seasoning period required by Fannie Mae, what is the date that they use for the waiting period? – Mortgage Currentcy – Derogatory Credit Wait Periods Chart Answer: Per the requirements of B3-5.3-07, Significant […]

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