Mortgage Underwriting Policy Manual Table of Contents

[Sample Client]

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Table of Contents

TABLE OF CONTENTS............................................................................................................................................ 1 CHAPTER 1 INTRODUCTION ....................................................................................................................... 9

1.1 GOALS AND OBJECTIVES ................................................................................... 9 1.2 REQUIRED REVIEW ............................................................................................ 9 1.3 APPLICABILITY ................................................................................................... 9

CHAPTER 2 ACCOUNTABILITY AND MONITORING ......................................................................... 10

2.1 INTERNAL CONTROLS ..................................................................................... 10 2.2 BOARD/SENIOR MANAGEMENT OVERSIGHT .............................................. 11

CHAPTER 3 STAFF AND TRAINING ........................................................................................................ 12

3.1 ONGOING TRAINING ........................................................................................ 12 3.2 NEW HIRE TRAINING ....................................................................................... 13

CHAPTER 4 GENERAL INFORMATION .................................................................................................. 14 CHAPTER 5 GENERAL REQUIREMENTS ............................................................................................... 15

5.1 REGULATORY REQUIREMENTS...................................................................... 15

5.1.1 Construction-to-Permanent Disclosures .............................................................. 15 5.1.2 Rural and Underserved Counties ............................................................................ 16

5.2 ELIGIBLE BORROWERS ................................................................................... 16

5.2.1 Borrower ....................................................................................................................... 16 5.2.2 Co-Borrower ................................................................................................................ 16 5.2.3 Non-Occupant Co-Borrower .................................................................................... 17 5.2.4 Non-Borrowing Spouse/Non-Purchasing Spouse .............................................. 17 5.2.5 Separated Borrower ................................................................................................... 17 5.2.6 First-Time Homebuyer .............................................................................................. 17 5.2.7 Inter Vivos Revocable Trust ..................................................................................... 17 5.2.8 Non-U.S. Citizen ........................................................................................................... 18 5.2.9 Power of Attorney ...................................................................................................... 21

5.3 INELIGIBLE BORROWERS ............................................................................... 21

5.3.1 Diplomatic Status ........................................................................................................ 21 5.3.2 Co-Signers ..................................................................................................................... 22 5.3.3 Other Ineligible Borrowers ...................................................................................... 22

5.4 OCCUPANCY ....................................................................................................... 22

5.4.1 Primary Residence ..................................................................................................... 22 5.4.2 Second Home ............................................................................................................... 22

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Mortgage Underwriting Policy Manual Table of Contents

[Sample Client]

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5.4.3 Investment Property .................................................................................................. 23

5.5 TRANSACTION TYPES ...................................................................................... 23

5.5.1 Purchase ........................................................................................................................ 23 5.5.2 Refinance ...................................................................................................................... 23 5.5.3 Cash-Out Refinance .................................................................................................... 25

5.6 TEXAS OWNER-OCCUPIED HOMESTEAD PROPERTY ................................ 26

5.6.1 General Requirements ............................................................................................... 26 5.6.2 Purchase Transaction Requirements..................................................................... 29 5.6.3 Refinance Requirements ........................................................................................... 29 5.6.4 Agency Cash-Out Refinances .................................................................................... 32 5.6.5 Texas 50(a)(6) Fee Restrictions ............................................................................. 33 5.6.6 Texas 50 (a)(6) Appraisal Requirements ............................................................. 34 5.6.7 Texas 50 (a)(6) Title Insurance .............................................................................. 34 5.6.8 Texas 50 (a)(6) Right to Rescind ............................................................................ 35 5.6.9 Texas 50 (a)(6) Closing Date Requirements ........................................................ 35 5.6.10 Ineligible Loan Programs .................................................................................... 35 5.6.11 Required Documents ............................................................................................ 35

5.7 TITLE VARIATIONS .......................................................................................... 37

5.7.1 Fee Simple .................................................................................................................... 37 5.7.2 Leasehold Estate ......................................................................................................... 37

CHAPTER 6 FANNIE MAE DESKTOP UNDERWRITER® .................................................................... 38

6.1 CONFORMING LOANS ....................................................................................... 38

6.1.1 Loans with Approve/Eligible Recommendation ................................................. 38 6.1.2 Loans with a Refer to Lender’s Underwriter Recommendation ..................... 38 6.1.3 Loan Delivery Requirements ................................................................................... 39

6.2 NON-CONFORMING LOANS ............................................................................. 39

6.2.1 Basic Program Criteria .............................................................................................. 39 6.2.2 Reserves ........................................................................................................................ 40

CHAPTER 7 FREDDIE MAC LOAN PRODUCT ADVISOR® ................................................................. 41

7.1 CONFORMING LOANS ....................................................................................... 41

7.1.1 Loans with an Accept Risk Class ............................................................................. 41 7.1.2 Loans with a Caution Risk Class.............................................................................. 41 7.1.3 Loan Delivery Requirements ................................................................................... 42

7.2 SUPER CONFORMING LOANS .......................................................................... 42 7.3 COLLATERAL REPRESENTATION AND WARRANT RELIEF ....................... 43

CHAPTER 8 CONFORMING CONVENTIONAL LOANS ........................................................................ 44

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Mortgage Underwriting Policy Manual Table of Contents

[Sample Client]

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8.1 GENERAL INFORMATION ................................................................................ 44 8.2 ABILITY TO REPAY ELIGIBILITY ................................................................... 44

8.2.1 ATR Covered Loan ...................................................................................................... 45 8.2.2 ATR Exempt Loan ....................................................................................................... 45 8.2.3 Prepayment Penalties ................................................................................................ 46 8.2.4 Qualifying Interest Rates for Adjustable Rate Mortgages ................................ 46 8.2.5 Other Limits Relating to Ability to Repay............................................................. 46

8.3 QUALIFIED MORTGAGES ................................................................................. 46

8.3.1 Types of Qualified Mortgages .................................................................................. 46 8.3.2 Appendix Q ................................................................................................................... 47

8.4 LOAN-TO-VALUE RATIOS AND OCCUPANCY REQUIREMENTS ................. 48 8.5 AGE OF DOCUMENTS ........................................................................................ 48 8.6 UNDERWRITING DOCUMENTATION ............................................................. 49

8.6.1 Direct Written Verifications..................................................................................... 49 8.6.2 Additional Documentation ....................................................................................... 49

8.7 ALTERNATIVE DOCUMENTATION ................................................................. 50

8.7.1 Eligibility Criteria ....................................................................................................... 50 8.7.2 Fax Copies ..................................................................................................................... 50 8.7.3 Internet Documentation ........................................................................................... 50 8.7.4 Reverification Authorization ................................................................................... 51

8.8 CREDIT................................................................................................................ 51

8.8.1 Credit History .............................................................................................................. 51 8.8.2 Credit Score Requirements ...................................................................................... 51 8.8.3 Credit Score Selection ................................................................................................ 51 8.8.4 Adverse Credit ............................................................................................................. 52 8.8.5 Delinquent Payments ................................................................................................. 52 8.8.6 Limited or Non-Traditional Credit History .......................................................... 53 8.8.7 Inaccurate Credit History ......................................................................................... 53 8.8.8 Bankruptcy and Short Sale ....................................................................................... 53 8.8.9 Foreclosure .................................................................................................................. 54

8.9 LONG-TERM DEBT ............................................................................................ 54

8.9.1 Pay Down of Debt ....................................................................................................... 54 8.9.2 Revolving Accounts .................................................................................................... 54 8.9.3 Loans Secured by Retirement Accounts ............................................................... 54 8.9.4 Home Equity Lines of Credit .................................................................................... 55 8.9.5 Deferred Payment Accounts .................................................................................... 55 8.9.6 Student Loans .............................................................................................................. 55 8.9.7 Contingent Liabilities ................................................................................................ 56

Sample

Mortgage Underwriting Policy Manual Table of Contents

[Sample Client]

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8.10 DOWN PAYMENT GUIDELINES .......................................................................... 57

8.10.1 Minimum Down Payment Requirements ........................................................ 57 8.10.2 Cash Assets for Down Payment and Closing Costs ....................................... 58

8.11 SUBORDINATE FINANCING ................................................................................. 65

8.11.1 Terms ....................................................................................................................... 65 8.11.2 Acceptable Documentation ................................................................................. 66

8.12 QUALIFYING RATIOS ........................................................................................... 67 8.13 HOUSING-TO-INCOME RATIO ............................................................................ 67 8.14 DEBT-TO-INCOME RATIO ................................................................................... 67 8.15 MINIMUM DOWN PAYMENT REQUIREMENTS ................................................ 69 8.16 REQUIRED RESERVES .......................................................................................... 69 8.17 PREPAID COSTS .................................................................................................... 69 8.18 TOTAL CONTRIBUTION LIMITS ......................................................................... 70 8.19 EVALUATING INCOME ......................................................................................... 71

8.19.1 Stable Monthly Income ........................................................................................ 71 8.19.2 Income Documentation ........................................................................................ 72 8.19.3 Verification of Employment ................................................................................ 72 8.19.4 Income Analysis ..................................................................................................... 73 8.19.5 Self Employed Income .......................................................................................... 76 8.19.6 Rental Income ........................................................................................................ 76 8.19.7 Unemployment Benefits Income ....................................................................... 76

CHAPTER 9 APPRAISAL STANDARDS ................................................................................................... 77

9.1 LENDER STANDARDS ....................................................................................... 77 9.2 AGENCY GUIDELINES ....................................................................................... 77

9.2.1 Appraisal Alternatives ............................................................................................... 77 9.2.2 Disclosure of Contract Amendments to Appraiser ............................................. 78 9.2.3 Supervisory Appraiser .............................................................................................. 78

9.3 PROPERTY APPRAISAL REQUIREMENTS ..................................................... 79

9.3.1 Conventional Purchase Transactions .................................................................... 79 9.3.2 Conventional Refinance Transactions ................................................................... 79

9.4 APPRAISAL DELIVERY REQUIREMENTS ...................................................... 80 9.5 APPRAISAL REPORTING FORMS .................................................................... 80

9.5.1 Fannie Mae Form 1004/Freddie Mac Form 70: Uniform Residential Appraisal Report ................................................................................................... 80

9.5.2 Fannie Mae Form 1004C/Freddie Mac Form 70B: Manufactured Home Appraisal Report ................................................................................................... 81

9.5.3 Fannie Mae/Freddie Mac Form 2055: Exterior-Only Inspection Report ..... 81 9.5.4 Fannie Mae 1073/Freddie Mac Form 465: Individual Condominium Report81

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Mortgage Underwriting Policy Manual Table of Contents

[Sample Client]

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9.5.5 Fannie Mae 1075/Freddie Mac Form 466: Exterior-Only Inspection, Individual Condominium Unit............................................................................ 82

9.5.6 Fannie Mae 2090: Individual Cooperative Appraisal Report .......................... 82 9.5.7 Fannie Mae 2095: Exterior-Only Inspection, Cooperative Appraisal Report82 9.5.8 Fannie Mae Form 1025/Freddie Mac Form 72: Small Residential Income

Property Appraisal Report .................................................................................. 83 9.5.9 Fannie Mae Form 2075: Desktop Underwriter Appraisal Waiver ................. 83 9.5.10 Appraisal Exhibits ................................................................................................. 83

CHAPTER 10 SPECIFIC PROPERTY TYPES—ELIGIBLE PRODUCTS ............................................... 85

10.1 COOPERATIVES ..................................................................................................... 85

10.1.1 Eligible Products ................................................................................................... 85 10.1.2 General Eligibility Criteria .................................................................................. 85 10.1.3 Required Documentation for Cooperative Project Approval ..................... 85 10.1.4 Ineligible Cooperative Projects ......................................................................... 86 10.1.5 Presale and Owner Occupancy Guidelines ...................................................... 87 10.1.6 Commercial Use ..................................................................................................... 87 10.1.7 Insurance ................................................................................................................. 87 10.1.8 Insurance Coverage Requirements ................................................................... 87 10.1.9 Recognition Agreement ....................................................................................... 88 10.1.10 Transfer Fees .......................................................................................................... 89 10.1.11 Litigation ................................................................................................................. 89 10.1.12 Exposure .................................................................................................................. 90 10.1.13 Financial Stability ................................................................................................. 90 10.1.14 Current Operating Budget ................................................................................... 90 10.1.15 Underlying Blanket Mortgage ............................................................................ 91 10.1.16 Pro Rata Share ........................................................................................................ 91 10.1.17 Subsidies/Tax Abatements ................................................................................. 91

10.2 DEGREE OF DEVELOPMENT ............................................................................... 91 10.3 PROPERTIES SUBJECT TO OCCUPANCY RESTRICTIONS ............................... 92 10.4 PROPERTIES SUBJECT TO GEOGRAPHIC RESTRICTIONS ............................. 92 10.5 PROPERTIES SUBJECT TO AGE RESTRICTIONS .............................................. 92

10.5.1 Government Housing Programs ........................................................................ 92 10.5.2 Age Restrictions - 62 Years of Age or Older ................................................... 92 10.5.3 Age Restrictions - Any Age Restriction ............................................................ 92

10.6 CONDOMINIUM PROJECTS .................................................................................. 93

10.6.1 Site Condos ............................................................................................................. 93 10.6.2 General Condo Eligibility Requirements ......................................................... 93 10.6.3 Ineligible Projects ................................................................................................. 94 10.6.4 Completion .............................................................................................................. 95 10.6.5 Multiple Ownership .............................................................................................. 95

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Mortgage Underwriting Policy Manual Table of Contents

[Sample Client]

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10.6.6 Commercial Use ..................................................................................................... 95 10.6.7 Right of First Refusal ............................................................................................ 95 10.6.8 Adverse Environmental Factors ........................................................................ 95 10.6.9 Litigation ................................................................................................................. 96 10.6.10 Delinquent HOA Dues ........................................................................................... 96 10.6.11 Insurance Requirements ..................................................................................... 96 10.6.12 Pooled Insurance ................................................................................................... 97

10.7 PLANNED UNIT DEVELOPMENTS ...................................................................... 97

CHAPTER 11 NON-CONFORMING CONVENTIONAL LOANS .............................................................. 98

11.1 GENERAL INFORMATION .................................................................................... 98 11.2 AGE OF DOCUMENTS ........................................................................................... 98 11.3 INTERNET DOCUMENTATION ............................................................................ 98 11.4 ELIGIBLE TRANSACTIONS .................................................................................. 99

11.4.1 Rate and Term Refinance Transactions ........................................................... 99 11.4.2 Cash-Out Refinance Transactions ................................................................... 100 11.4.3 Payoff of Installment Land Contract or Contract for Deed ....................... 100 11.4.4 Multiple Loans to One Borrower ..................................................................... 101 11.4.5 Property Ownership Limitations .................................................................... 101

11.5 NON-U.S. CITIZEN BORROWERS ...................................................................... 101

11.5.1 Non-Permanent Resident Aliens ..................................................................... 101

11.6 LOAN-TO-VALUE RATIOS AND OCCUPANCY REQUIREMENTS .................. 102 11.7 QUALIFYING RATIOS ......................................................................................... 103 11.8 INCOME ANALYSIS—SELF EMPLOYED BORROWERS .................................. 103 11.9 LIQUIDITY REQUIREMENTS ............................................................................. 104 11.10 CREDIT HISTORY ................................................................................................ 104 11.11 DOWN PAYMENT REQUIREMENTS ................................................................. 105 11.12 ACCEPTABLE PRODUCT TYPES ....................................................................... 105 11.13 SPECIFIC PROPERTY TYPES ............................................................................. 106

11.13.1 Unacceptable Property Types .......................................................................... 106 11.13.2 Condominiums ..................................................................................................... 106 11.13.3 Planned Unit Developments ............................................................................. 106 11.13.4 Factory Built Housing/Manufactured Housing ........................................... 106 11.13.5 Manufactured/Mobile Homes .......................................................................... 106 11.13.6 Cooperatives ......................................................................................................... 106 11.13.7 Property/Appraisal Requirements ................................................................. 106

11.14 CONTRIBUTIONS LIMITS .................................................................................. 107

CHAPTER 12 GOVERNMENT LOANS ...................................................................................................... 107

12.1 ELIGIBLE TRANSACTIONS ................................................................................ 108

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Mortgage Underwriting Policy Manual Table of Contents

[Sample Client]

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12.1.1 Credit Score Requirements ............................................................................... 108 12.1.2 VA Products .......................................................................................................... 108 12.1.3 FHA Products ........................................................................................................ 110

12.2 INELIGIBLE TRANSACTIONS ............................................................................ 111 12.3 FHA STREAMLINE REFINANCE AND VA IRRRL TRANSACTIONS ............... 112 12.4 UNDERWRITING DOCUMENTATION ............................................................... 113 12.5 TEXAS REFINANCE TRANSACTIONS ............................................................... 113

12.5.1 Basic Requirements ............................................................................................ 113 12.5.2 Options When POCs are Credited to Closing Costs ..................................... 114

12.6 CO-SIGNERS ......................................................................................................... 116 12.7 MANUFACTURED HOUSING .............................................................................. 116 12.8 MODULAR HOMES .............................................................................................. 116 12.9 FANNIE MAE DU UNDERWRITTEN FHA LOANS ............................................ 116 12.10 FANNIE MAE DU UNDERWRITTEN VA LOANS .............................................. 117 12.11 FREDDIE MAC LPA UNDERWRITTEN FHA LOANS ....................................... 117 12.12 FREDDIE MAC LPA UNDERWRITTEN VA LOANS .......................................... 117

CHAPTER 13 INTEREST ONLY GUIDELINES ........................................................................................ 118

13.1 CREDIT PROFILE ................................................................................................ 118

13.1.1 Conforming ........................................................................................................... 118 13.1.2 Non-Conforming .................................................................................................. 118 13.1.3 Ineligible Borrowers .......................................................................................... 118 13.1.4 Qualifying .............................................................................................................. 118 13.1.5 Manual Underwriting ......................................................................................... 118 13.1.6 Temporary Buydowns ........................................................................................ 119

CHAPTER 14 NEW CONSTRUCTION ....................................................................................................... 120

14.1 CONSTRUCTION-TO-PERMANENT FINANCING ............................................. 120 14.2 CONSTRUCTION-TO-PERMANENT TREATED AS A PURCHASE

TRANSACTION ................................................................................................. 120 14.3 CONSTRUCTION-TO-PERMANENT TREATED AS A RATE AND TERM

REFINANCE ...................................................................................................... 120 14.4 CONSTRUCTION-TO-PERMANENT TREATED AS A CASH-OUT REFINANCE121 14.5 ACQUISITION COST DOCUMENTATION.......................................................... 122 14.6 BORROWER ACTED AS CONTRACTOR ........................................................... 122

CHAPTER 15 RELOCATION GUIDELINES .............................................................................................. 123

15.1 CORPORATE SPONSORED RELOCATION ........................................................ 123

15.1.1 Qualifications ....................................................................................................... 123

15.2 U.S. MILITARY PERSONNEL TRANSFER ......................................................... 123

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Mortgage Underwriting Policy Manual Table of Contents [Sample Client]

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15.2.1 Qualifications ....................................................................................................... 123

15.3 TRANSACTION TYPE AND OCCUPANCY ......................................................... 124 15.4 TRANSFER COMPENSATION ............................................................................. 124 15.5 LUMP SUM CASH PAYMENTS ........................................................................... 125 15.6 DEPARTURE RESIDENCE POLICY .................................................................... 125

15.6.1 Conforming Loans ............................................................................................... 125 15.6.2 Non-Conforming Loans ...................................................................................... 125

CHAPTER 16 MONTHLY SAVINGS PLAN FEASIBILITY WORKSHEET ......................................... 126

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Mortgage Underwriting Policy Manual Conforming Conventional Loans Ability to Repay Eligibility

[Sample Client]

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8.2.1 ATR Covered Loan

An ATR Covered Loan is subject to the ability to repay requirements under Regulation Z, is not deemed

an ATR Exempt Loan, and meets all the following requirements for qualified mortgages:

• Has a maximum loan term of 30 years

• Is fully amortizing

• Meets the points and fees6 limitations for qualified mortgages based on total loan amount

Effective January 1, 2019 through December 31, 2019

o 3% of the total loan amount for loans >$107,747

o $3,232 for loans with a total loan amount of >$64,648 but <$107,747

o 5% of the total loan amount for loans >$21,549 but <$64,648

o $1,077 for loans with a total loan amount of > $13,468 but <$21,549

o 8% of the total loan amount for loans <$13,468

Exceptions

• Agency assumptions or modifications

• A Fannie Mae single-closing construction-to-permanent loan exceeding 30 years including the

construction period

• A Freddie Mac interim construction financing loan

8.2.2 ATR Exempt Loan

An ATR Exempt Loan is defined as either not subject to TILA or exempt from the Ability to Repay

requirements as defined in §1026.43(a) or (d) of Regulation Z. These loans are eligible for sale as long

as they meet the other eligibility and underwriting requirements of the agencies. For purposes of

determining whether a loan is an ATR Exempt Loan, [Sample Client] must follow the TILA and

Regulation Z definitions. Loan types excluded from ATR include the following:

• HELOCs

• Time-share plans

• Reverse mortgages

• Bridge loans with terms 12 months or less

6 Points and fees are adjusted annually by the Bureau of Consumer Financial Protection (CFPB) based on the annual

percentage change in the Consumer Price Index (CPI). Points and fees shown are effective January 1, 2019.

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Mortgage Underwriting Policy Manual Conforming Conventional Loans Alternative Documentation

[Sample Client]

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8.7 Alternative Documentation

8.7.1 Eligibility Criteria

Alternative documentation is allowed for all Fannie Mae and Freddie Mac eligible loans.

Alternative documentation provided in lieu of Verification of Employment and Verification of Asset

forms must be legible originals or certified true and exact copies . The documentation cannot contain

any alterations, erasures, or white-outs.

Each copy must be stamped and signed by the loan processor or branch manager, certifying that it is a

true copy of the original. The individual certifying the original must include a signature, which contains

at least his first initial and full surname.

8.7.2 Fax Copies

Fax copies in lieu of original documents or certified copies are acceptable subject to the following:

• Verification is transmitted directly from the loan processor to an employer, depository institution,

mortgagee, or landlord. The employer, depository institution, mortgagee, or landlord must

transmit the verification directly back to the loan processor.

• Photocopies or faxes received by the loan originator or loan processor directly from the borrower

are acceptable.

• Copies or faxes from a builder, real estate agent, property seller, or other third party are

unacceptable.

• Documents that are faxed must clearly identify the name of the employer, depository institution,

mortgagee or landlord as the sender, and the source of information, for example by including that

information in the fax banner at the top of the document.

8.7.3 Internet Documentation

For conforming conventional loans, internet documents/downloads of credit reports as well as income,

employment, and asset verifications are acceptable. This allowance for internet documents does not

change the required content or level of documentation needed. The information must be easy to read,

understandable, and have no evidence of alterations, erasures, or white-outs, and must make sense

based on the borrower profile and transaction terms.

The following source validation criteria apply to all documents obtained via the internet:

• Identify the borrower as the employee or owner of the applicable account.

• Identify the credit reporting agency, employer, or depository/investment firm ’s name and source

of information.

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Mortgage Underwriting Policy Manual Appraisal Standards Lender Standards

[Sample Client]

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Chapter 9 Appraisal Standards

9.1 Lender Standards

All appraisals must comply with the Uniform Standards of Professional Appraisal Practice (USPAP), and

all applicable federal, state, or local requirements. In addition, [Sample Client] and its appraisers must

adhere to the regulations and requirements established as part of the Dodd-Frank Appraiser

Independence Requirements.

The appraiser must not have a direct or indirect interest, financial or otherwise, in the property or in

the transaction. Appraiser selection criteria must ensure that the appraiser is independent of the

transaction and is capable of rendering an unbiased opinion.

An appraisal prepared by an individual who was selected or engaged by a borrower, property seller,

real estate agent, or other interested party is not acceptable. Re-addressed appraisals or appraisal

reports that are altered by the appraiser to replace any references to the original client with [Sample

Client]’s name are not acceptable. Additionally, the borrower, property seller, real estate agent, or

other interested party is not allowed to select an appraiser from an approved appraiser list.

Effective internal controls require that only qualified and adequately trained underwriters, who are not

involved in the loan production process, review appraisals. To maintain independence, the underwriter

should not directly report to someone involved in loan production. [Sample Client] expects the

underwriting review to include confirming the independence of the appraiser in addition to a

comprehensive technical review of the appraiser’s analysis prior to making a final credit decision. Any

exceptions or red flags must be escalated accordingly.

9.2 Agency Guidelines

9.2.1 Appraisal Alternatives

Any appraisal or appraisal alternative submitted to [Sample Client] in connection with a mortgage loan

must be reviewed under [Sample Client]’s established review procedures to ensure it is acceptable in

accordance with the standards set forth in this policy and any other related standards published by

[Sample Client].

Fannie Mae

Fannie Mae DU may allow an alternative to a full URAR appraisal using either a DU Quantitative

Analysis Appraisal Report, Form 2055 or a DU Property Inspection Report, Form 2075. For some lenders

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Mortgage Underwriting Policy Manual Non-Conforming Conventional Loans General Information

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Chapter 11 Non-Conforming Conventional Loans

11.1 General Information

The information contained in this section represents general underwriting guidelines for non-

conforming loans. Non-conforming conventional loans sold to investors must be underwritten to the

standards and guidelines stated in the specific investor guidelines, or the more restrictive of standard

Fannie Mae and Freddie Mac guidelines.

11.2 Age of Documents

Information used to make the credit decision must be current. The maximum age of documents at

closing is as follows:

Table 11 - 1

Item Existing Property

Age as of Note Date

New Construction

Age as of Note Date

Initial Application (1003) 120 120

Credit Report 120 120

Income Documentation 120 120

Asset Documentation 120 120

Appraisal 120 120

Title Commitment 60* 60*

*Must be dated within 30 days of initial application and no more than 60 days of the note date.

Some documents, such as tax returns or divorce decrees, are not subject to these timeframes,

as their validity does not change over time.

11.3 Internet Documentation

For non-conforming conventional loans, internet documents/downloads of income, employment, and

asset verifications are acceptable. This allowance for internet documents does not change the required

content or level of documentation needed. The information must be easy to read, understandable, and

Sample