Issue: Q&A – October 25, 2018

Compliance – Pro-Rated Tax Credit Disclosure: The LE does not have a line item for a pro-rated tax credit from the seller. Where should this be disclosed?

Answer: There is no specific guidance regarding the location of the pro-rated tax credit on the LE, as there is on the CD.  This means it becomes a lender’s decision based on the best available information.  A consensus from our compliance experts stated the following: The purpose of the LE is to present a true […]

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FHA, Fannie Mae & Freddie Mac – Income from 1099 to W2: Is there a waiting period for a borrower that changes from a 1099 job to a W2 job?

Answer – FHA Says: While FHA has a ‘6-month rule’ regarding gaps in employment, I do not believe that your situation is necessarily a ‘gap in employment’.  The 6-month rule is referring to borrowers who leave the workforce for 6 months or more.  It sounds as if your borrower never stopped working.  That said, 1099 income […]

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Fannie Mae – Gift Funds Received as Bank Check: If a gift donor provides a bank check vs. a personal check, do we have to provide the donor’s bank statement?

Answer: See highlighted text below from FNMA selling guide.  You will notice that there is NO requirement to provide bank statements from the donor.  Any lender/underwriter requiring one would be asking for more than what the selling guide requires. Reference: B3-4.3-04: Personal Gifts (09/29/2015) Documentation Requirements Verifying Donor Availability of Funds and Transfer of Gift […]

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VA – Non-Veteran Co-Borrower: Can a Veteran get a VA mortgage if the co-borrower is not a spouse or a veteran?

Answer: When a veteran borrower and a non-veteran or non-spouse borrower do a VA loan together it is called a Joint Loan. On a joint loan, the veteran borrower’s VA entitlement will only provide the necessary 25% guaranty on the veterans 1/2 of the loan.  The 25% guaranty for the non-veteran borrower’s 1/2 of the […]

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VA-Leasing Exiting Residence to Relative: Are we permitted to use the rental income on the previous residence if the tenant is a relative?

Answer: There is no VA regulation that would prohibit the use of rental income based on the renter being a family member. Social Media Post: VA has no regulation that would prohibit the use of rental income based on the renter being a family member. [Article Published in Question & Answer Issue – October 25, […]

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