Issue: Q&A - June 25th, 2019

FHA – Family Member Seller as Non-Occupant Borrower: If a father is selling to his daughter and he also needs to be a co-borrower, can she get maximum financing? – Chart – Non-Occupant Co-Borrower Guidelines – All Agencies

Answer: The family member seller can be a non-occupant co-borrower, but the LTV will be limited to 75%.  See the applicable guidelines below. Reference: 4000.1  II.A.2.b.ii (B) LTV Limitations Based on Non-Occupying Borrower Status (1) Definition: A Non-Occupying Borrower Transaction refers to a transaction involving two or more Borrowers in which one or more of the Borrower(s) will not […]

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VA – Future Income: How does VA handle future income when the borrower has an employment contract but no paystub? Chart – Expected Income – New Job Starting After Closing – All Agencies

Answer: VA does not prescribe a certain time frame regarding commencement of a new job. A paystub is not required in order to close when there is a valid offer of employment. (See highlighted portion of the guideline below.) Because VA doesn’t provide any other details regarding offers of employment, you can expect a standard […]

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Freddie Mac – Using Liquid Assets as Income: I have a client with $3.4 million in liquid assets. Will Freddie allow depletion of assets as income?

Answer: I wouldn’t specifically call it ‘asset depletion’ since the agencies do not use those terms. Review the sections below that most closely resemble your client’s situation. References: Freddie Mac 5307.1: Assets as a basis for repayment of obligations (04/03/19) Refer to Bulletin 2019-7, which announced revisions to the calculation for establishing the debt payment-to-income ratio […]

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FHA – Original Purchase Documents – Streamline Refinance: If an FHA borrower cannot provide a copy of their original FHA note, how would you suggest proceeding?

Answer: A copy of the note provides the FHA case number as well as the terms of the current loan for determining Net Tangible Benefit. Is there any chance that the borrowers can go to their original lender for a copy? There should be an executed electronic copy on file that would have been created […]

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VA – Well Testing: Does VA require a well test on a cash-out refinance where the present loan is VA and the new loan is VA?

Answer: Yes. Each time a property is going to have a new VA loan placed on it (with the exception of an IRRRL) a water test must be performed to ensure that the property meets VA requirements. VA does not provide an exception for cash out refinances when there is an existing VA loan on […]

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