Updated Underwriting Guidelines for Conventional Loans
Dear Licensed Partner,
Fannie Mae has provided several updates to its underwriting policies regarding the use of qualifying income and reserve requirements for conventional loans. The guidelines below also add more clarity to current policies on the submission of Fannie Mae conventional loans to Sun West.
Effective immediately for all conventional loans submitted to Sun West, the updated guidelines below will be implemented.
A) Conversion of Principal Residence requirements no longer apply:
- The equity and additional reserve requirements for conversion of a borrower’s principal residence into an investment property have been removed
- Standard rental income guidelines and reserve requirements are still applicable to the principle residence, second home, and investment properties
- For loans submitted to Desktop Underwriter® (DU), DU requirements will apply
- For additional properties financed, documentation and additional reserves will be required in addition to those required by DU and/or Sun West’s eligibility requirements
Number of Properties Financed (including the subject property)
|Additional Reserves Required
||2 months for each additional second home or investment property
||6 months for each additional second home or investment property
B) Use of other financial assets:
- 100% of the value of vested stocks, bonds, and mutual funds (including retirement accounts) can be used to determine available reserves instead of requiring a standard reduction in value
- Borrower’s receipt of funds from liquidation of assets must be documented when funds are required for cash to close
assets are not
eligible toward down payment, closings costs, and reserves.
C) Documentation of qualifying income:
- Tax returns and/or tax transcripts will not be required to verify qualifying income for:
- a borrower who is qualified using base pay, bonus, overtime, or commission income that is less than 25% of the borrower’s annual employment income
- Tax returns and/or tax transcripts will be required for:
- a borrower with commission income equaling to 25% or more of annual employment income
- a borrower who is using self-employed income to qualify
D) The conventional 97% LTV product from Fannie Mae is no longer offered by Sun West.
NOTE: The removal of the 97% LTV product will not affect loans that were already submitted to Sun West for underwriting on or before July 29, 2015.
If you have any questions, please contact your Client Relations Manager at (855) OK-SUNWEST or (855) 657-8693.
|Sun West Mortgage Company, Inc.
18000 Studebaker Road, Suite 200
Cerritos, CA 90703
Phone: (800) 453-7884
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.