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Saxon Mortgage Guidelines
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Saxon / Indymac
Mortgage Guidelines
Increasing Your Sales Volume
Through Diversified Loan Products
Overview of Program Descriptions
• Borrower Benefit
– All loans must provide a benefit to the borrower
• Credit Reports & Credit Scores
– Primary borrower has the greatest monthly income
– Borrowers with same income, higher of the two scores
used for qualification
– When uploading to the Saxon AU system, if credit is
accidentally ordered, new report becomes the report for
qualification
Saxon Indymac
60 days to Funding 120 days to Note Date
Overview of Program Descriptions
• Mortgage / Rental History– History for previous 12 months required for all
programs
– No 30-day lates allowed for 12 month period for Indymac Alt-A
• Saxon & Indymac NP: Refer to rate sheet for 30 day lates
– Six (6) rolling equates to 1x30
• Collections, Charge-offs & Judgments– If any affects title, must be paid at closing
regardless of amount
– IRS or state / local tax judgment or settlement < $5K does not need to be paid at closing
• Only if not yet a recorded lien against property
Overview of Program Descriptions
• Collections, Charge-offs & Judgments
– If not a recorded lien against property…
• Payment evidenced by payment plan from IRS
Or…
• Estimated payment calculated at 2% of reported
balance included in the DTI
– IRS or state / local tax judgments > $5K must
be paid or evidenced to be in debt repayment
plan
– Judgments requiring payment must be verified
as paid and dismissed or paid at closing
– Past due child support must be paid current
• Exception: Child support wage garnished by Court
Overview of Program Descriptions
• Collections, Charge-offs & Judgments– Alt-A Loans
• Primary and Second Homes
– Collections and Charge-offs up to $5,000 aggregate do not have to be satisfied
• Investment Properties
– Collections and Charge-offs up to $250 per account and $1,000 aggregate do not have to be satisfied
– NonPrime Loans• Medical accounts, regardless of amount, need not
be paid
• Judgments, collections and charge-offs older than12 months that do not affect title and no wage garnishments, do not have to be satisfied
• Collections and charge-offs dated within 12 months up to $5,000 aggregate do not have to be satisfied
Overview of Program Descriptions
– Twelve Months measured as follows:
• Charge-offs: The date account became a charge-off
• Collections: Opening date of the original collection
account
– If sent to collection agency, opening date with agency
is used
• Judgments: Either the date the judgment was
granted by the court or the date judgment was filed
Overview of Program Descriptions
• Foreclosure & Foreclosure Events
– Term ‘foreclosure’ used to define a reporting on
credit report and includes:
• Foreclosure filed
• Foreclosure redeemed
• Foreclosure started
• Notice of default
• Real estate mortgage settled for less than full balance
• Deed in Lieu of Foreclosure
• Any delinquency reported 120 days late or more on
credit
Overview of Program Descriptions
• Mortgage Foreclosure
– Must be greater than 2 years if…
• Credit score greater than or equal to 600
• LTV does not exceed 90%
– All other scenarios, foreclosure must be
greater than 3 years
• Mortgage Delinquencies
– A+ & A programs do not allow rolling lates,
each late counted individually
– A- allows rolling 30 day lates
• Maximum of 6 counted as 1 delinquency
• Lates greater than 30 days are counted individually
Overview of Program Descriptions
• Income Documentation Requirements
– Saxon & Indymac NP
• Last 2 consecutive pay stubs
• Previous 1 years’ W2s
– Indymac Alt-A
• Last 2 consecutive pay stubs
• Previous 2 years’ W2s
– Self-Employed, Full Documentation (S/I)
• Previous 2 years’ tax returns signed and filed by
borrower, and…
• Year to Date profit and loss for the current year if
self-employed
Overview of Program Descriptions
• Twelve Months Bank Statements
– Personal (W2 Borrower) or Business (Self-
Employed) bank statements from a checking
account allowed
• 100% of normal gross deposits
– No NSF activity allowed for loans in excess of
80% LTV
• NSF activity requires tax returns and a current P&L
or pay stub
– Borrower may use two accounts to qualify
• Accounts must be of the same bank account type
– 2 personal or 2 business, not 1 personal and 1
business
Overview of Program Descriptions
• Twelve Months Bank Statements continued
– All pages of each statement are required
– All parties on bank statements must be on the
loan application
– Proof & Verification of 2 years employment or
business is required
– Fixed income sources must be documented
through awards letter and evidence of current
receipt
• Twenty Four Months Bank Statements
– Same as twelve months except…
– Borrower may not use 2 accounts to qualify
Overview of Program Descriptions
• Indymac Bank Statement Program– Only available for NonPrime Loans
– Not available if employed by relative or in a family business
– Must have 1 year employment with same employer (self-employed, in the same business)
– Borrower(s) must be only person(s) shown as account holders
• Statements showing other individuals can not be used for qualifying purposes
• Unusual deposits must be explained
• 100% of deposits from personal accounts
• 50% of deposits from business accounts
Overview of Program Guidelines
• Limited Documentation
– Six (6) months personal / business bank
statements required
– Corporate bank statements generally not
accepted at any LTV
• Stated Income
– Income must be reasonable for profession
– Fixed income borrowers not eligible
• Debt Ratios
– Maximum debt ratio is 55% or less
– Affordability & Disposable income guidelines
applied to each loan
Overview of Program Description
• Private Mortgage Insurance
– Borrower-paid mortgage insurance not
required on any Saxon loan
– IM Alt-A: Required for 80.01% or greater LTV
• Escrows for Taxes & Insurance
– Escrow required when property taxes are
currently delinquent
• Property Valuation
– Property valuations required on all loans
• i.e. Full appraisals, No AVMs allowed
Overview of Program Descriptions
• Ineligible Properties
– Manufactured Homes
– Attached dwellings without HOAs
– Square Footage Restrictions
• Properties less than 700 square feet
– Multi-family dwellings: All units
• IM Alt-A: Reasonable for area
• IM NP: less than 600 square feet
– Mixed-use properties regardless of zoning
classification
Overview of Program Descriptions
• Saxon State Restrictions
– Alaska
• > 90% LTV, minimum credit score of 620
• Single family within city limits of Fairbanks,
Anchorage or Juneau
• Limited doc: max 90% LTV
• Stated doc: max 85% LTV
– Ohio
• No Stated Income
• No Interest Only
Collateral Overview
• Saxon Rural Properties
– Limited to 80% LTV
– Maximum loan amount is $600K
– Acreage
• Parcels up to 15 acres will be considered
• No loans on working farms, orchards, or ranches
Collateral Overview – IM Rural
Indymac Alt-A
Number of Acres Max LTV & CLTV
20.01 - 30 75%
30.01 - 40 70%
40.01 - 50 65%
> 50 Not Permitted
Indymac NonPrime Loans
Number of Acres Max LTV & CLTV
10.01 - 20 70%
> 20 Not Permitted
Collateral Overview
• Condominiums
– Minimum number of units is 5
• 2-unit Condos accepted if prevalent for the market
– 60% of units must be owner-occupied
– No single entity may own more than 10%
– HOA has no pending litigation
– All common areas must be completed
– HOA certifications required for all loans
– Saxon does not allow single-unit condos
– HOA in control of property or have
FNMA/FHLMC approval confirmed
• www.efannymae.com
• State-by-State listing of approved Condo projects
Collateral Overview
• Two-to-Four Family Units– 75% of rental income allowed with current
rental agreements in file (S/I)
– Lesser of economic rent or actual rent will be used
• Investor & Second Homes– Number of Loans
• Three per individual
• Borrower may only have one loan with an LTV >80%
– Second Home Definition:• Property with no long-term lease, rental income not
used to qualify borrower, property not rental for more than three months of the year, not in the same area as the primary residence
Collateral Overview
• Land Value Ratios
– Typically, land should not exceed 35% of the
appraised value of the property
California, Connecticut,
New York
Up to 80%, providing it is
typical and customary for
the area
Florida
Up to 50%, providing it is
typical and customary for
the area
All other states
Up to 35%, providing it is
typical and customary for
the area
Collateral Overview
• Leaseholds
– Currently accepted in areas of Maryland,
Mississippi and California
• Maximum Loans Per Person
– Maximum of three loans and / or an aggregate
exposure of $2M will be allowed per individual
borrower
– Only one loan can be considered owner-
occupied
– Borrower may only have one property
considered as a second home
Collateral Overview
• Maximum Loans Per Person
– Alt-A & Conforming
• 10 total properties
• Total aggregate of $2M for second and investment
homes
• Total aggregate of all properties, including primary
residence, is $5M
– NP
• 4 total properties
• Total aggregate of $1M
– NINA
• No more than 2 total properties
– Total Ownership: No more than 20 properties
Appraisals
• Approved Appraisers
– Required to be licensed as required by state law
– Refer to web site QMR listing for appraisers who
have been suspended prior to full loan submission
• Maximum Loan Amounts / Appraisals
– Up to $500K: 1 Full Appraisal
• > $500K for IM NP, > $650K for IM Alt-A
– Total of five (5) comparables will be needed
– > $500K: 2 Full Appraisals
• > $650K: AZ, CA, CT, FL, MA, MD, OR, RI, VA, WA
– Second appraisals must be ordered from a
National / Regional Approved Appraiser
• Saxon maintains listing for second appraisals
Appraisals
• Age of Subject Property
– Appraiser expected to support the effective
age of the property through narrative
description and / or interior photos
– Interior photos may be required on properties
in excess of 75 years of age
• Permanent Heat Source
– All homes must be livable year-round
– Permanent Heat Source is defined as:
• Not portable
• Hard-wired or piped
• Externally vented
Appraisals
• Comparables
– Appraiser must report a minimum of three
closed sales
– May be required: Information pertaining to a
minimum of one current listing and one
pending sale
• Information may be needed to ensure most current
data regarding market trends is taken into
consideration
• Age of Comparables
– Within six months from date of appraisal
• Sales within 12 months acceptable if appraiser
explains necessity of using older sales
Appraisals
• Adjustments
– Net adjustments for each comparable should
not exceed 10% of that comparable’s price
– Gross adjustments for each comparable
should not exceed 20% of that comparable’s
sales price
• Appreciation
– > 10% during the last 12 months, appraiser
must supply additional documentation to
support estimated value
• Appraisal must be dated within 90 days of
loan submission date; 120 days for IM
Credit Evaluation
• Consumer Credit Counseling (CCC)
– CCC must be paid and ‘discharged’ either
prior to or with the proceeds of the loan for all
cash-out loans
• Deferred Student Loans
– Student loan payments must be included in
the DTI regardless of status
• 3% of total outstanding balance
– IM ALT-A: Included at $14 per $1,000
– IM NP: Can be excluded if…
• Borrower is currently enrolled in school, and…
• Loan has been deferred for at least 6 months from
the date of the loan application
Job / Income Stability
• Full Documentation
– Hand written pay stubs
• Certified statement from employer’s CPA
Or…
• Six months bank statements showing earnings
deposits
– Employment Gaps
• Gaps in excess of 30 days must be explained in
writing
– Employment by a Relative
• VOE
• Previous 1 year’s signed federal income tax returns
and W2s
Job / Income Stability
– Overtime & Commission
• History of receipt
• Averaged from the previous year and current year-
to-date to determine appropriate amount
– Bonus Income
• One year history of receipt and VOE from current
employer indicating probability of receipt continuing
• Other Income
– Child Support
• Evidence that amount has been received for last 12
months and currently being received
• Must have continuance for three (3) years
Job / Income Stability
– Interest / Dividend Income
• Income that has been received for last 24 months
and is properly documented may be used
– Part-time or Seasonal Income / Second Job
• 1 year history and likelihood of continuance
– Retirement / Pension Income
• Letters from organization or copies of award letters
• Tax returns
• Must have continuance for three (3) years
– Social Security Income
• Gross up 25%
– Unemployment Benefits
• Previous one year’s tax returns to prove history
Job / Income Stability– Foster Care
• Generally not acceptable as an income source
• Adult foster care never allowed as income source
• IM: Verify two (2) years of receipt
– Trust Income• Trust Agreement or trustee’s statement confirming
the amount and frequency of payments
• Trust must be irrevocable
– VA Benefits• Acceptable income if verified by letter or distribution
form from VA
• Gross up of 25% if verified VA benefits are tax-free
– Disability Income• Verified by agency award letter or company
acknowledgement
• Must have continuance for three (3) years
Job / Income Stability
• Statement must identify benefit amount, payment term and probability that benefits will continue for a least a three (3) year period
• Gross up of 25% if verified that the disability income is tax-free
– Raises• Anticipated raises can be included if…
– Raise is documented in the VOE
– Amount is reasonable for occupation
– Effective date will be no later than three months from the date of the loan approval
– Rental Income – Stated Documentation• Where the primary residence is the subject property
and borrower owns investment properties, stated rental income is allowed when the mortgage for the investment property is rated on credit report
Job / Income Stability
– Temporary Services
• Two-year history of such employment
• Current earnings supported by 24-month average
Debt-to-Income Analysis
• Affordability Guidelines
Gross Monthly Income
Per Household
Maximum Debt To
Income Ratio
Up to $1,000 40%
$1,000 to $1,500 45%
$1,501 to $5,559 50%
$5,560 and above 55%*
*Not available on all products. Refer to matrices for maximums allowed
Debt-to-Income Analysis
• Disposable Income
LTV DTIMinimum
Disposable Income
0-70 0-50 $1,000
0-70 50.01-55 $1,500
70.01-90 0-45 $1,000
70.01-90 45.01-50 $1,500
70.01-90 50.01-55 $2,000
90.01-100 0-45 $1,000
90.01-100 45.01-50 $1,500
90.01-100 50.01-55 $2,500
Debt-to-Income Analysis
• Financial Obligations
– Revolving Accounts
• Payments calculated on 5% of outstanding balance,
or stated monthly payment on credit report (S/I)
– Installment Debts
• 10 payments or less may be excluded
– Co-Signature Debts (to exclude from DTI)
• 3 months cancelled checks proving payment
– Alimony & Child Support (to exclude from DTI)
• Evidence of payments lasting less than 10 months
• Delinquent child support must be paid current
Debt-to-Income Analysis
• Financial Obligations
– 401K / TSP or other loans secured by financial
assets
• Payments may be excluded from the monthly DTI
– Business Debt in Borrower’s Name
• 12 months cancelled checks showing payments
being made by business
Miscellaneous Guidelines
• Ownership Seasoning– Borrower must be on title to the subject
property for at least 12 months• IM: 90 Days
• Properties Previously or Currently Listed For Sale– Current listing of property is unacceptable
– Properties listed during previous six months:• Borrower provides explanation of why property was
removed from the market
• Copy of the cancelled listing agreement or confirmation from Realtor and MLS
• DTI not to exceed 45%
• Reduce LTV 5% over grade
General Calusa Information
• By the 25th of each month, proof of mortgage
payment needed
• Indymac E-Mits: 1st borrower must have income
listed in Integra
• ID must be in file, even if DND’ing for better copy
• Child Support: Must have a court decree
• Sign 1003 within 3 Days of Loan Origination
• South Carolina:
– Use Fidelity Global for attorney
• Ohio:
– Closing Protection Disclosure
• Select ‘No’
Calusa Loan Qualifying Matrix
FULL DOC STATED DOC700+
FICO
IM Nina
To 90%
IMALTA
To 95%-
reserves
IMConform
To 95%-no
Cash Out
Saxon
To 94%
IMConform
To 85% w/
CO
700+
FICO
IMALTA
To 95%-
reserves
Saxon
to
85%
IM NP
To 90%
IM Nina
to 90%
680-
699
FICO
IM Nina
To 80%
IMALTA
To 95%-
reserves
IMConform
To 95%- No
Cash Out
Saxon
To 94%
IMConform
To 85% w/
CO
680-
699
FICO
IMALTA
To 95%-
reserves
Saxon
to
85%
IM NP
to 90%
IM Nina
to 80%
660-
679
FICO
IM Nina
to 80%
IMALTA to
95%-
reserves
IMConform
To 95%-No
Cash OUT
Saxon to
94%
IMConform
to 85% w/
Cash Out
660-
679
FICO
IMALTA
to 90%-
reserves
Saxon
to
85%
IM NP
to 90%
IM Nina
to 80%
640-
659
FICO
IM Nina
to80%
IMALTA to
95%-
reserves
IMConform
to 95% No
Cash
Saxon to
94%
IMConform
to 85% w/
Cash Out
640-
659
FICO
IMALTA
to 80%-
reserves
Saxon
to
85%
IM NP
to 90%
IM Nina
to 80%
620-
639
FICO
IM Nina
to 80%
IMALTA to
95%-
reserves
IMConform
To 95%-NO
CASH
Saxon to
94%
IMConform
to 85% w/
Cash
620-
639
FICO
IMALTA
to 80%-
reserves
Saxon
to
85%
IM NP
to 90%
IM
NINA to
80%
600-
619
FICO
IM NP to
90%
IMConform
To 95% No
Cash
Saxon to
94%
IMConform
to 85% w/
Cash
600-
619
FICO
Saxon
to
85%
IM NP
to 90%
580-
599
FICO
IM NP to
90%
IMConform-
case by case
Saxon to
90%
IMConform
to 85% case
by case
580-
599
FICO
IM NP
to 85%
550-
579
FICO
IM NP to
80%
IMConform
case by case
Saxon to
90%
IMConform
to 85% case
by case
550-
579
FICO
IM NP
to 80%
*Below 550 IM NP to 80% Full Doc Only