Carrington Mortgage Services, LLC Wholesale Lending Division

Underwriting Guideline Overlays Update March 1, 2017

 

Carrington Mortgage Services, LLC (CMS) is pleased to announce the following Underwriting Guideline changes effective March 1, 2017.

Government Loan Programs

CMS FHA Guideline
Overlays

Guideline Updates

Minimum 550 FICO , CMS to CMS
serviced loans minimum 500 FICO for Government streamlines

Removed overlay.

No minimum FICO required for
all Govt Streamlines (FHA Streamline, VA IRRRL and USDA
Streamlined-Assist). This applies to both Retail and Wholesale. A 12 month
current mortgage only rating is required. A FICO score is not required, but
if one is reflected on the mortgage only credit report, FICO’s less than
500 can be disregarded.

Manual Downgrade for FICO 640
and under and DTI > 43, regardless of AUS decision

CMS will continue to obtain
manual UW conditions for LOE of derogatory credit and VOR current for 12
month rating.

However, CMS will not apply
the downgrade requirements for acceptable credit history and allow
following AUS approve/eligible.

The DTI for manual
underwrites will require a second signature.

Cash out limits: < 620
FICO max cash out is limited to $50,000, > 620 FICO is unlimited up to
the max LTV allowed per the program.

Removed overlay.

Follow HUD at 85% LTV
maximum.

Cash out not eligible with
loans having prior modifications

Removed overlay.

Follow HUD requirements for
acceptable payment history according to the modification agreement.

CMS requires residual income >= to
$800, using VA residual income calculations

Removed overlay.

Handwritten pay stubs require
WVOE and signed payroll ledger

Removed requirement for WVOE.

Maintained signed payroll
ledger requirement.

 

 

CMS FHA Guideline Overlays

Guideline Updates

Items paid outside closing
(POC) cannot be included in borrowers MRI

Removed overlay.

Allow POC for appraisal and
credit report, only if documented with cancelled check or bank statement to
source borrower’s own funds and not a credit card or seller contributions.

Manufactured homes:

No alterations or additions to
the original home

Removed overlay.

Manufactured homes with
acceptable alterations or additions must have marketability,
“like” comparables, gross
living area (GLA) and structural engineer’s certificate required.

Manufactured home with an
additional manufactured home on the property

Removed overlay.

Permitted if the 2nd
manufactured home is being used as a storage building, the kitchen is rendered
inoperable and the utilities are disconnected. Follow HUD requirements.

Mixed use properties require
75% of entire building square footage is for residential use

Removed overlay.

Follow HUD requirements for
residential building use.

Unpermitted addition or conversions greater
than 15% of GLA require permits

Removed overlay.

Appraiser must comment if the
addition or conversion meets all local and county building codes. All
additions/ alterations must be in a workman like manner, market acceptance
and have
“like”
comparables
.

Ineligible properties with
Cisterns, or privately hauled water

Removed overlay.

Requirement for both home inspection and
203k Consultant

Updated overlay. If Consultants are
state-approved home inspectors or members of accredited State or National
Home Inspection Associations, home inspections will not be required.

Currently CMS requires the bid prior to
Underwriting for 203k.

Removed the overlay for the Underwriter to
use the bid. The bid will be sent directly to the Appraiser and will be
conditioned accordingly. The Underwriter will just use the cost breakdown to
calculate the loan amount, instead of the bid.

 

 

CMS VA Guideline Overlays:

Guideline Updates

Max cash out to 90% LTV for FICO 550- 619

Allow up to 100% LTV for FICO
550-619.

Require LOE for purpose of cash
out.

Maximum cash out up to 100% LTV
is $5000

No maximum cash out up to 100%
LTV.

Require LOE for the purpose of
cash out.

Requirement for 100% joint
access letter with a non-borrowing spouse

Removed overlay.

 

CMS All
Govt Guideline Overlays

Guideline
Updates

Revolving accounts paid off through closing
must be closed at the Underwriters discretion.

Removed requirement to close
accounts.

Credit procedure for
Manufactured home Affidavit of Affixation (AofA)

Current process requires CMS
associate to execute and notarize the AofA, FedEx to title the day before
closing and record with docs.

Procedure revised to send AofA
with closing documents and a limited POA.

Title or Closing Agent will
execute the AofA document and ensure document gets recorded (if required in
that State).

 

 

Conventional Loan Programs

CMS
Conventional Guideline Overlays:

Guideline
Updates

Transferred appraisal not permitted

Allow
transferred appraisals with proof that transferred appraisals comply with
Appraiser Independence Requirements (AIR)

Condo minimum square footage requirement is
400 square feet

No restriction for minimum square footage;
however, appraiser must confirm that there is no negative impact on
marketability and provide “like” comparables.

Future employment is not permitted

Permit future employment.

Require contract or employment offer at the prior to documents and a paystub prior to
funding.

Full appraisals are required

Removed overlay.

Follow FHLMC Home Value Explorer (HVE)
and/or FNMA Property Inspection Waiver (PIW) for AUS feedback.

Freddie Mac Open Access and DU Refi Plus limited
to Maximum conforming loan amounts

Removed overlay.

Follow Open Access and DU Refi Plus for AUS
Approve/Eligible findings.

Open Access investment properties are
ineligible

Removed overlay.

Allow investment properties meeting all
FHLMC guide requirements.

95% Maximum LTV

Launch FNMA HomeReady on 3/1 with 97% LTV

Financed Mortgage Insurance (MI) is not
eligible

Removed overlay.

CMS will permit financed MI.

Rent loss insurance is required for 2-4
unit primary properties and all 1-4 unit investment properties when rental
income from the subject property is used to qualify borrower.

Removed overlay.

Rent loss insurance will not be required.

Appraisal updates are not acceptable to CMS

Removed overlay.

Allow for appraisal updates following
guidelines.

 

 

CMS
Conventional Guideline Overlays:

Guideline
Updates

Flip transactions less than 90 days are
ineligible

Removed overlay.

Allow flips less than 90 days with
Underwriter to review for valid transaction, transfer of title and inflation
of value or sales price to be properly supported.

Chipping paint on homes built prior to 1976
will need to be repaired.

Removed overlay.

Follow guidance for health and safety if
appraiser comments or part of sale contract.

Minimum two (2) reported credit scores for
each borrower required (matrix)

Removed overlay.

Allow one (1) minimum score for each
borrower with a tri-merge credit report.

Non-Owner Occupant on Cash – Out Refinance
Not Allowed

Removed overlay.

Follow FNMA.

Max Financed properties 6

Removed overlay.

For FNMA only, allow up to 10 maximum
financed properties with 720 minimum FICO.

 

 

 

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