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Clarifications to the Previous Lender Alert:
Updated Guidelines for FHA Streamline Refinances & Income Qualification for Self-Employed Borrowers

Dear Valued Partner,

Sun West would like to express its appreciation to the outstanding work done by its broker/correspondent partners. In order to provide a smooth pipeline transition to the new overlays, Sun West will accept loans that have an application date prior to February 1, 2012 without the new LTV/AVM over-lays.

Please note SWMC's minimum FICO requirements continue to apply for all Streamline transactions.

  • FHA Loan Programs, Fixed and ARM: 640
  • FHA Manufactured Loans: 680
  • FHA Jumbo Loans: 660

DTI and LTV Requirements for Streamline Refinance Transactions

  • If the borrower(s) acquired the subject property ON OR AFTER to May 1, 2010: LTV and CREDIT QUALIFICATION GUIDELINES ARE *NOT* NECESSARY.
  • If the borrower(s) acquired the subject property PRIOR to May 1, 2010: the loan *IS* subject to the LTV and CREDIT QUALIFICATION guidelines shown below.
  • A FHA appraisal dated on or after May 1, 2010 is an acceptable substitute for the AVM.
Loan To Value of the AVM
LTV <= 100%
No credit qualification required
LTV > 100%
Credit qualification required
LTV >= 125%
Not acceptable

Debt To Income Ratio (DTI) Credit Qualification Caps
Product Type
Unit Properties
Max. Front Ratio
Max. Back Ratio
Standard FHA Loans
1-2 Unit Properties
45
55
3-4 Unit Properties
31
43
FHA Jumbo
1-2 Unit Properties
45
47
3-4 Unit Properties
31
43
FHA Manufactured Housing
Manufactured Properties
35
45
Leasehold Properties
29
35

AVM Requirements

RELS and CORELOGIC are acceptable AVM vendors. You may place orders for the AVM and/or the Exterior-Only Appraisal, through the "Vendor Order" screen in SunSOFT.

SWMC requires an AVM Report for FHA Streamline loans if the acquisition date of the subject property was prior to May 1, 2010. If AVM is unable to determine a value, an Exterior-Only Appraisal is required.

Self-Employed Borrowers

  • The following guideline updates for Self-Employment Income Qualifying are effective for submissions as of 01/27/ 2012.

Income Qualification Guidelines for Self-Employed Borrowers

Requirement (s)
Income Decrease of 10%-20%
Income Decrease beyond 20%
Qualifying Income
Receipt of a minimum two- year self-employed income with business tax returns.
Use most recent business tax year
Not acceptable
  • If self-employment income is a secondary source of income, it cannot be used as qualifying income if there is a decline greater than 10% from the previous year.
  • CPA audited profit and loss statement for 2011 is an acceptable source of income verification.

If you have any questions, please feel free to call on your Account Executive at (800) 453-7884.

Sincerely,

Sun West Mortgage Company, Inc.
18303 Gridley Road
Cerritos, CA 90703
Phone : (800) 453-7884

Equal Housing OpportunityThis information is provided to licensed wholesale brokers only and may not be copied or distributed to customers or potential customers. All loans are subject to approval. Certain restrictions may apply. Listed pricing is a morning indication only. Program rates, prices, guidelines, fees, costs, terms and conditions are subject to change without notice.

Sun West Mortgage Company, Inc. (NMLS ID 3277) is licensed by the Department of Corporations as a California Finance Lender (License #603 0119) and is licensed by the Department of Real Estate (License #00793885). Refer to www.swmc.com to see where SWMC is a licensed lender. In all states, the principal licensed office of Sun West Mortgage Company, Inc. is 18303, Gridley Road in Cerritos, CA 90703; Phone: (800) 453-7884