19-31

Enhancements to the Simple Access Program

Homebridge is pleased to announce enhancements to the Simple Access program, including the addition of the Asset Qualifier option.

Asset Qualifier

Asset Qualifier (AQ) borrowers are qualified based solely on the borrower’s liquid assets or assets that may be liquidated without restriction.

Highlights of the new Asset Qualifier option include:

  • Loan amounts up to $3,500,000
  • Cash-out up to $3,500,000
  • LTV up to 90% 1-unit primary residence only with 720 credit score and $1,000,000 loan amount
  • LTV up to 85% 1-4 unit primary residence and 1-unit second home with 720 credit score and $1,000,000 loan amount
  • LTV up to 85% investment property with 720 credit score, with $1,000,000 loan amount
  • Minimum 620 credit score; see guidelines for derogatory credit requirements
  • 1-4 unit owner-occupied and investment properties, and 1-unit second home eligible
  • SFR, PUD, condos (both Fannie Mae warrantable and non-warrantable), site/detached condos and mixed use properties eligible
  • Purchase, rate/term and cash-out available; cash-out cannot be used to meet reserve requirements
  • Employment and income are not verified
  • Residual income required
  • Reserves determined by loan amount; cash-out proceeds may not be used to satisfy reserve requirements
  • DTI not calculated
  • Eligible assets include cash, cash equivalents, marketable securities, cash value of vested life insurance, retirement funds, and business funds (eligible for funds to close only). Refer to guides for complete requirements
  • Gift funds from an immediate family member eligible for down payment and closing costs (purchase transactions). Gift funds may not be used to satisfy reserve or asset qualification requirements
  • Non-occupant co-borrowers allowed (specific requirements apply; refer to guides).
  • Borrower is qualified as follows:
  • Total post-closing assets must cover the sum of 100% of the loan amount plus required reserves, plus 60 months of total debt service plus 60 months of net loss on rental properties (PITIA for subject or rental properties not included in total debt service)
  • Additional financed properties eligible (no limit on owner-occupied transactions; maximum 15 for second home and investment); 3 months PITIA additional reserves required for each financed property
  • 5/1, 7/1, and 10/1 LIBOR ARM available and 15 or 30 year fixed rate. Interest-only available for ARM products. See the General Enhancements topic for product details and guidelines for qualifying information
  • An Asset Qualifier Borrower Affirmation signed by the borrower(s) is required. The Affidavit is completed by Homebridge and sent for borrower signature with closing documents.

Primary/Second Home LTV/CLTV Enhancements: Full Doc/Bank Statement/Asset Qualifier

  • Maximum 90% LTV/CLTV now available for purchase and rate/term transactions (current maximum 85%). 80.01% to 90% LTV/CLTV subject to the following:
    • 1-unit primary residence
    • Minimum 720 credit score
    • Maximum loan amount $1,000,000
    • Maximum DTI 43%
    • 5% borrower own funds required (purchase transactions)
    • 0x30 in previous 12 months mortgage/housing history
    • Additional 6 months reserves required
    • A minimum of 4 years have passed from any derogatory credit event (Bank Statement and Asset Qualifier require 7 years from a foreclosure)
  • 85% LTV now available for 1-4 unit primary residence and 1-unit second home (previously 1-unit primary only). 01% to 85% all previous requirements continue to apply; additionally, the following applies:
    • 0x30 in previous 12 months mortgage/housing history
  • Maximum 80% LTV/CLTV now available for cash-out transactions (current maximum 75%)
    • 1-4 unit primary residence only
    • Minimum credit score 720
    • Maximum loan amount $2,000,000
    • Maximum cash-out $500,000
  • Maximum 80% LTV/CLTV now available for cash-out 1-unit second home (current maximum 75%)
    • Minimum credit score 720
    • Maximum loan amount $1,000,000
    • Maximum cash-out $500,000

Investment Property LTV/CLTV Enhancements: Full Doc/Bank Statement/Asset Qualifier

  • 85% LTV/CLTV (current maximum 80%) purchase and rate/term. 01% to 85% subject to:
    • 1-4 unit investment property
    • Maximum loan amount $1,000,000
    • Minimum credit score 720
    • 0x30 in previous 24 months mortgage/housing required
    • Gift funds ineligible
    • Maximum DTI 35%
    • Additional 12 months reserves required
    • 12 months owning and managing rental property required
    • Rental income from subject ineligible for qualifying
    • Interest-only eligible (see guides for requirements)
  • 80% LTV/CLTV purchase and rate/term:
    • Maximum $1,500,000 loan amount (current $1,000,000 max)
    • 720 credit score
  • 80% LTV/CLTV cash-out (current maximum 75% LTV):
    • 720 credit score
    • Maximum $1,000,000 loan
    • Max $500,000 cash-out

Investor Cash Flow (ICF) Option Enhancements (Investment Properties)

  • 85% LTV/CLTV (current maximum 80%) purchase and rate/term 80.01% to 85% subject to:
    • 1-4 unit investment property
    • Minimum DSCR 1.250
    • Maximum loan amount $1,000,000
    • Minimum credit score 720
    • 0x30 in previous 24 months mortgage/housing required
    • Gift funds ineligible
    • Additional 12 months reserves required
    • 12 months owning and managing rental property required
    • Purchase transactions must be arm’s length
    • Interest-only ineligible
  • Borrowers without investment property ownership and landlord experience are now eligible (previously investment ownership/landlord experience required) subject to the following:
    • The borrower must currently own and occupy a primary residence, and
    • Minimum 680 credit score, and
    • A 0x30 in previous 24 months mortgage/housing history, and
    • The borrower(s) must provide a motivation letter, and
    • The DSCR must be 1.250 or higher
  • A DSCR of .800 to < 1.000 is now eligible (previously minimum 1.000 required) subject to the following requirements:
    • A 10% LTV reduction required, and
    • 0x30 in previous 24 months mortgage/housing history, and
    • Minimum 720 credit score, and
    • Additional 6 months reserves, and
    • If the lease(s) exceeds the market rent, the lower actual market rent is used in the DSCR calculation, and
    • The DSCR must be calculated using the fully amortizing payment; the interest-only payment calculation option is not eligible
  • A new option is now available when using the interest-only payment to calculate the DSCR. An LTV reduction is not required when using this option (currently only option is LTV reduction) subject to the following:
    • Minimum 720 credit score required, and
    • 0x30 in previous 24 months mortgage/housing history required, and
    • Additional 15 months reserves, and
    • The borrower must have a minimum of 5 years property ownership (property may be primary, investment, commercial, etc. as long as owned minimum 5 years. Ownership does not have to be current or in the most recent 5 years but must be/have been continuous for 5 years and the property ownership did not end in loss event), and
    • A minimum of 4 years has elapsed since any derogatory credit event (7 years from a foreclosure) and,
    • The DSCR calculated using the 30 year amortized payment cannot be < .900, and
    • The DSCR calculated using the IO payment must be ≥ 1.100

General Enhancements

  • The interest-only period is now 10 years for 5/1 and 7/1 ARMs using the IO feature (currently IO period is the same as the ARM term)
  • Interest-only option is now eligible for LTVs > 80% subject to the following:
  • Eligible on Full Doc, Bank Statement, and Asset Qualifier only; not allowed on ICF option
    • Bank Statement option may not use Option One, Uniform Expense Ratio, for qualifying
    • Minimum 740 credit score
    • Maximum DTI 30%
    • Additional 12 months reserves required,
    • 0x30 in previous 24 months mortgage/housing history
    • A minimum of 4 years has passed since any derogatory credit event (Bank Statement and Asset Qualifier require 7 years from a foreclosure)
  • 100% of the retirement account balance (previously 70% may now be used when qualifying borrowers of retirement age (59½ +) on Full Doc option
  • Alimony may now be grossed up by 125% (currently not allowed)
  • The requirement for a Collateral Desktop Analysis (CDA) may be waived on transactions that only require one appraisal (transferred appraisals ineligible for waiver) and the appraisal receives a Fannie Mae Collateral Underwriter (CU) Risk Score of ≤ 2.5.

NOTE:  The CU score is identified on page 2 of the Submission Summary Report (SSR) under the “Fannie Mae Proprietary Edit Findings” section. A sample SSR, with a Risk Score highlighted, is attached for reference.  In cases where the Risk Score is > 2.5 or the SSR indicates “999” (no Risk Score available) a CDA will be required.

  • A Trust Certificate is now acceptable in lieu of a copy of the trust for transactions vesting in the name of a trust and to document trust assets
  • Foreign funds used to satisfy reserve requirements may now remain outside the U.S. in a foreign financial institution subject to Homebridge management review and approval
  • ICF Option:
    • The accessory unit refinance transaction topic was updated regarding determining rental income used for qualifying as follows:
      • If the property is vacant the appraiser’s opinion of market rent may be used, OR
      • If the property is leased, the lesser of the lease or the appraiser’s opinion of market rent is used
    • Clarified that ownership of commercial property is acceptable to satisfy the 12-month history requirement (currently guides only state “management”)
    • Clarified that first time home buyers living rent free are ineligible
    • Clarified the DSCR cannot be rounded up to qualify
  • Full Doc and Bank Statement Options:
    • Clarified the DTI cannot be rounded down to qualify
    • Transactions involving non-occupant co-borrower Method One is ineligible for LTVs > 80%; maximum LTV for non-occupant co-borrower transactions utilizing Method One is 75%
  • All Options:
    • Clarified that non-warrantable condos are limited to maximum 80% LTV

Effective Date: Asset Qualifier

The Asset Qualifier option will be available for loans submitted on or after June 14, 2019.

Asset Qualifier pricing will be reflected on the Homebridge rate sheet on June 14, 2019

Effective Date:  Full Doc, Bank Statement, and Investor Cash Flow Enhancements

The Full Doc, Bank Statement and ICF enhancements may be applied to new submissions and loans currently in the pipeline excluding the new 10 year IO period for 5/1 and 7/1 ARMs:

  • The 10 year IO period for 5/1 and 7/1 ARMs is available for loans submitted on or after June 14, 2019 only; it may not be applied to pipeline loans.
  • Pipeline loans must use the current IO period which is the same as the ARM term (i.e. 5/1 ARM with 5 year IO period and 7/1 ARM with 7 year IO period)

Documentation

The Simple Access guidelines, Submission form, and Overview have been updated and posted on the Homebridge website at www.homebridgewholesale.com.

The new 5/1 and 7/1 IO ARM Disclosures with the 10 year IO period have been posted on the Homebridge website under “Simple Access Specific” on the Forms page.

NOTE:   IO ARM Disclosures will be broken out by loan submission date to ensure the ARM disclosure for the applicable IO period is used.

As a reminder, Simple Access is not available for non-delegated correspondents/EBs and a commitment fee buyout option is not eligible.

If you have any questions, please contact your Account Executive