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Updated Guidelines for Multiple Financed Properties for Conventional Loans

Dear Licensed Partner,

Fannie Mae has updated its guidelines for Multiple Financed Properties where borrower is financing a second home or investment property and has additional financed properties. Sun West Mortgage Company is aligning its guidelines for Multiple Financed Properties as per Fannie Mae announcement SEL 2016-03. The revised policy is effective for loan submissions on or after 06/30/2016. The updated guidelines can be accessed through our website.

  • Click here for the Correspondent channel
  • Click here for the Wholesale and Hybrid Correspondent channel

Below is a summary of SWMCs Conventional product guidelines for borrowers, who own multiple financed properties and are financing a second home or investment property:

  • Standard Conventional product is now expanded to include borrowers with up to six (6) financed properties.
  • SWMC will continue to require a minimum credit score of 740 for borrowers, who own seven to ten (7-10) financed properties.
  • Cash-Out Refinance loan on properties purchased greater than six (6) months since the date of acquisition is now allowed for borrowers, who own two to ten (2-10) financed properties.
    • If the seasoning is less than six (6) months then all delayed financing guidelines must be met.
  • Financed property has been re-defined as a residential one- to four-unit (1-4) property with a mortgage for which the borrower is personally obligated.
    • A property financed in the name of a Limited Liability Company (LLC) where the borrower has more than twenty five percentage (25%) ownership is no longer included in limitation.
    • Additional details on determining the number of financed properties can be accessed here.
  • Maximum number of financed properties for a borrower continues to be ten (10).
    • SWMC will finance a maximum of two (2) properties for a borrower.
  • Reserve requirement for other financed properties will now be calculated by applying a specific percentage based on the aggregate Unpaid Principal Balance (UPB) for all the mortgages and Home Equity Line of Credit (HELOC).
    • The percentage is determined by the number of financed properties owned by the borrower as explained below:
    Number of financed properties   Reserves (as percentage of UPB)
      One to four (1-4)  2%
      Five to six (5-6) 4%
      Seven to ten (7-10)  6%
  • The Desktop Underwriter (DU) reserve requirement for the subject property remains unchanged and the requirement is independent of the reserve requirement for the additional financed properties.
    • Additional details on reserve requirement and an example on calculating reserves can be accessed here.
  • Reserves for financed properties will be manually calculated until the release of Desktop Underwriter (DU) Version 10.0, which is scheduled to release on Sep 24, 2016.

If you have any questions, please contact yourClient Relations Manager at (855) OK-SUNWEST or (855) 657-8693.

Sincerely,

Sun West Mortgage Company, Inc.
18000 Studebaker Road, Suite 200
Cerritos, CA 90703
Phone: (800) 453-7884
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Equal Housing Opportunity This information is provided to licensed brokers/lenders 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.