Section 2.01 - Agency Loan Programs - STMPartners

1 Section August 24, 2018 Agency Loan Programs Page 1 of 594 Correspondent Seller Guide Section - Agency Loan Programs In This Product Description This product description contains the following topics. Overview .. 6 Product Summary .. 6 Related Bulletins .. 7 Loan Terms .. 8 Minimum Loan Amount .. 8 Maximum Loan Amount .. 8 Agency Maximum LTV/TLTV/ HTLTV Ratio Requirements .. 9 Agency Plus Maximum LTV/TLTV/ HTLTV Ratio Requirements .. 12 ARM Disclosures .. 15 ARM Parameters .. 15 Assumability Provisions .. 17 Interest Only Parameters .. 17 Multiple Financed Properties for the Same Borrower .. 17 Ability-to-Repay and Qualified Mortgage .. 21 General .. 21 Eligible Transactions .. 21 Calculation of LTV/TLTV/HTLTV Ratios .. 21 Construction Lending Single 25 Construction Lending 31 Fannie Mae s HomeStyle Energy for Improvements on Existing Properties/Freddie Mac s Energy Conservation Improvements .. 32 Fannie Mae s HomeStyle Renovation Mortgage.

2 41 Installment Land Contract .. 53 Maximum Allowable Points and Fees .. 54 Non-Arm s Length Transactions .. 54 Property Assessed Clean Energy (PACE) Loans .. 55 Purchase Transactions .. 57 Refinance Transactions .. 58 Validation of Parties to the Mortgage Transaction .. 58 Refinances .. 60 Continuity of Obligation .. 60 Cash-Out Refinance .. 61 Delayed Financing Cash-Out Refinance .. 63 Home 64 Limited Cash-Out Refinance (LPA Terminology: No Cash-Out Refinance) .. 65 Refinance of a Restructured Mortgage Loan .. 70 Spousal/Partner Buy-Out and Inherited Properties .. 71 Streamline Refinance Program .. 72 Student Loan Cash-Out Refinance .. 72 Net Tangible Benefit Form or Appropriate Documentation Required .. 73 Secondary Financing .. 74 General .. 74 Community Seconds (Fannie Mae) / Affordable Seconds (Freddie Mac) .. 80 Home Equity Lines (HELOCS) .. 87 Geographic Restrictions .. 88 Introduction .. 88 Occupancy/Property Types.

3 89 Primary Residences .. 89 Second Homes .. 91 Investment Properties .. 93 Occupancy Verification .. 95 Address/Unit Verification .. 97 Condominiums .. 97 PUDs .. 97 Leasehold Estates .. 98 Manufactured Housing .. 107 Section August 24, 2018 Agency Loan Programs Page 2 of 594 Correspondent Seller Guide Mixed-Use Properties .. 108 Modular, Prefabricated, Panelized, or Sectional Housing .. 109 Properties Listed For Sale .. 110 Properties Purchased at Auction .. 110 Short Sale Property .. 111 Properties with Private Transfer Fee Covenants .. 112 Properties with Resale Restrictions .. 112 Properties with Solar Panels .. 120 Properties With Two or More Parcels .. 123 Rural Properties .. 124 Group Homes .. 124 Ineligible Properties .. 125 Eligible Borrowers .. 126 Permanent Resident Aliens .. 126 Non-Permanent Resident Aliens .. 127 Homeownership Education and Housing Counseling .. 128 Inter Vivos Revocable Trusts/Living Trust.

4 133 Non-Occupant Borrowers .. 137 Land Trusts .. 138 Co-Signers and Guarantors .. 142 Number of Borrowers on Loan Application .. 143 Social Security Number Verification .. 143 Ineligible Borrowers .. 145 Income .. 146 General Income Information .. 146 General Income Documentation Requirements .. 168 IRS Forms Reference .. 186 Alimony, Child Support and/or Separate Maintenance Payments .. 187 Assets: Employment-Related Assets as Qualifying Income / Assets as a Basis for Repayment of Obligations (LPA Terminology) .. 189 Automobile Allowances and Expense Account Payments .. 195 Boarder Income .. 197 Bonus and Overtime Income .. 198 Borrowers Employed by a Family Member or Interested Party to the Transaction .. 199 Borrowers Re-Entering the Workforce .. 199 Capital Gains 200 Commission Income .. 201 Employment Offers or Contracts .. 204 Farmland Income .. 208 Foreign Income .. 209 Foster Care Income .. 210 Gaps in Employment.

5 210 Housing or Parsonage 211 Interest and Dividend Income .. 212 Long-Term Disability Income .. 213 Military Income .. 216 Mortgage Credit Certificates .. 217 Mortgage Differential Payments Income .. 219 Non-Occupant Borrower Income .. 220 Notes Receivable .. 221 Part-Time Income .. 221 Public Assistance Income .. 222 Rental 224 Restricted Stock (RS) and Restricted Stock Units (RSU) .. 245 Retirement, Government Annuity, and Pension 247 Royalty Payment Income .. 251 Salaried or Hourly Wage Income .. 252 Schedule K-1 Income (For borrowers with Less than 25% Ownership in Business) .. 254 Seasonal Income / Seasonal Unemployment Income .. 256 Second Job Income .. 257 Section 8 Homeowner-ship Assistance Payments .. 259 Self-Employment Income .. 260 Social Security Income .. 276 Tax Exempt Income .. 279 Section August 24, 2018 Agency Loan Programs Page 3 of 594 Correspondent Seller Guide Temporary Leave and Short-term Disability Income.

6 280 Tip Income .. 284 Trailing Co-Borrower Income .. 285 Trust Income .. 286 VA Benefits Income .. 287 Verbal Verification of Employment (VVOE) / 10-Day Pre-Closing Verification (PCV) .. 289 Liabilities and Qualifying Ratios .. 294 30 Day Accounts/Open End Accounts .. 294 Alimony, Child Support or Maintenance Payments .. 295 Bridge 295 Business Debt in Borrower s Name / Self-Employed Borrower s Debt Paid by the Borrower s Business .. 296 Debt Paid by Others / Contingent Liabilities .. 297 Court-Assigned Debts .. 299 Deferred Installment Debt .. 300 Federal Tax Installment 301 Garnishments .. 302 Installment Debt .. 302 Job Related Expenses (Unreimbursed Employee Business Expenses) .. 303 Lease Payments .. 304 Loans Secured By Financial Assets .. 305 Mortgage Assumptions/ Property Settlement Buyouts .. 306 Property Taxes, Insurance and HOA Assessments .. 306 Mortgage Payments on Previous Home .. 307 Revolving Debt.

7 308 Student 309 Qualifying Rates .. 311 Qualifying Ratios .. 313 Undisclosed Debts .. 321 Documentation .. 322 Credit Requirements .. 323 General Credit Documentation 323 Bankruptcies, Foreclosures, Deeds-In-Lieu, Short Sales, and Mortgage Charge-Offs .. 324 Collections and/or Non-Mortgage Charge-Offs .. 335 Consumer Credit Counseling (CCC) .. 336 Credit 337 Credit Score Requirements .. 351 Credit Utilization .. 354 Inquiries .. 355 Judgments and/or Liens .. 356 Mortgage Payment History .. 357 Privately Held Mortgages .. 359 Rental/Other Payment History .. 360 Traditional Credit History .. 361 Authorized User Accounts .. 362 Nontraditional Credit History .. 363 Out of Country Addresses .. 375 Past Due Accounts .. 375 Cash Requirements .. 376 General Asset Information .. 376 General Asset Documentation Requirements .. 381 Minimum Borrower Contribution 386 529 Plans .. 388 1031 Tax Exchange (Also Known As a Like Kind Exchange).

8 388 Borrower s Real Estate Commission .. 389 Bridge Loans in Second Lien 389 Business Assets .. 390 Cash on Hand .. 391 Cash Reserve Requirements .. 392 Checking, Savings Money Market, Certificates of Deposit (CD), or Other Depository Accounts397 Credit Cards .. 398 Deposit on Sales Contract .. 400 Donations From Entities .. 402 Employer Assistance .. 404 Section August 24, 2018 Agency Loan Programs Page 4 of 594 Correspondent Seller Guide Funds Dispersed from a 409 Gifts .. 410 Gifts of Equity .. 413 Individual Development Accounts (IDAs) .. 414 Large Deposits .. 417 Lender Credit .. 420 Life Insurance Cash Value .. 421 Loans / Borrowed Funds Secured by an Asset .. 422 Non-Occupant Borrower Asset Requirements .. 424 Pooled Funds / Community Savings System Accounts .. 425 Rent Credit for Option to Purchase .. 427 Retirement Funds .. 428 Sale of Personal Assets .. 430 Sale of Real Property / Sale or Refinance of Real Property (LPA Terminology).

9 431 Stocks, Stock Options, Bonds, and Mutual Funds .. 433 Sweat Equity .. 435 Trade Equity .. 436 Unsecured Loans .. 437 Financed Permanent Interest Rate Buydowns .. 438 Financed Permanent Interest Rate Buydowns .. 438 Interested Party Contributions (IPCs) .. 439 Interested Party Contributions (IPCs).. 439 Temporary Interest Rate Buydowns .. 446 Mortgage Insurance .. 451 General .. 451 Appraisal Requirements .. 458 General .. 458 General Property Eligibility Requirements .. 460 Appraisal Age, Appraisal Update and/or Completion Report, and Appraisal Use Requirements462 Appraisal Analysis .. 466 Appraiser Eligibility .. 466 Appraiser Selection Criteria .. 467 Disclosure of Information to Appraisers .. 471 Representations and Warranties on Property Value and Mortgaged Premises .. 473 Home Value Explorer (HVE) .. 476 Electronic Transmission of Appraisal Reports .. 476 Fannie Mae Form 1007 / Freddie Mac Form 1000 (Single Family Comparable Rent Schedule)478 Fannie Mae Form 1004/Freddie Mac Form 70 (Uniform Residential Appraisal Report).

10 478 Fannie Mae Form 1004MC/Freddie Mac Form 71 (Market Conditions Addendum to the Appraisal Report) .. 480 Fannie Mae Form 1025/Freddie Mac Form 72 (Small Residential Income Property Appraisal Report) .. 482 Fannie Mae Form 1073/Freddie Mac Form 465 (Individual Condominium Unit Appraisal Report)482 Freddie Mac Form 466 (Exterior Only Individual Condominium Unit Appraisal Report) .. 483 Freddie Mac Form 2055 (Exterior Only Inspection Residential Appraisal Report) .. 483 Freddie Mac s LPA Automated Collateral Evaluation (ACE) .. 484 Upgrading an Appraisal .. 487 Fannie Mae s DU Property Inspection Waiver (PIW) .. 488 Leasehold Estates .. 491 Properties Affected by a Disaster .. 493 Property Flipping .. 496 Postponed Improvements .. 497 Second Appraisals .. 501 Property and Flood Insurance .. 502 Property Insurance Requirements for 502 General Property Insurance Coverage Requirements .. 505 Property Insurance Coverage Requirements for Units in Condominium and PUD Developments511 Liability Insurance Coverage Requirements for Condominiums.