HomeBridge Bulletin 14-30 originally issued June 25, 2014 has been revised to update the Business Assets topic. Refer to the yellow highlight below.
HomeBridge is providing a highlight of the changes and clarifications announced by Fannie Mae in Selling Guide Announcement SEL-2014-06 issued May 27, 2014.
HomeBridge will follow the new guidance provided by Fannie Mae and has updated the Agency Conforming, Agency High Balance and DU Refi Plus matrices with this information.
To read the Fannie Mae Announcement in its entirety: Fannie Mae Announcement 2014-06
• Business assets are eligible for down payment, closing costs, and reserves when the borrower is listed as an owner on the account.
NOTE: If the borrower’s name is not listed on the business account bank statement Fannie Mae requires documentation that the borrower is an authorized signer on the account. This requirement applies to all businesses, including sole proprietorships when business assets are being used for down payment, closing costs, and/or reserves.
Documentation may include a letter from the bank or online documentation confirming borrower is an authorized signer on the business account. No additional documentation is required if the borrower’s name appears on the business bank statement (e.g. Smith Plumbing and John Smith are on the statement).
• If the account is held jointly, an access letter, stating the borrower has access to 100% of the account funds is required when business funds are being used for down payment and/or closing costs. An access letter is not required if business funds are only being used to satisfy reserve requirements however at underwriter discretion, may be requested.
NOTE: A CPA letter is no longer required to document withdrawal of funds will not have a negative impact on the business.
• HomeBridge will require 3 months most recent business bank statements, dated within 60 days of the loan closing date,
• The HomeBridge underwriter will complete a cash flow analysis to determine if the use of business funds will be allowed. Refer to the Assets topic of the Agency guidelines for more detailed requirements at HomeBridge Wholesale Products and Guidelines
Multiple Financed Properties
• Properties owned by an LLC or partnership are included in the maximum financed property calculation when:
– The borrower(s) individual or combined ownership is ≥ 25% regardless of the entity or borrower that is the obligor on the mortgage.
– The borrower(s) individual or combined ownership is ≤ 25% and the financing is in the name of the borrower.
• Properties owned by an LLC or partnership are not included in the maximum financed property calculation if the individual or combined ownership is ≤ 25% and the financing is in the name of the LLC or partnership.
As a reminder, when there is a non-borrowing spouse in a community property state the inclusion of financed properties is determined as follows:
• If the borrower has an ownership interest in the property or is obligated on the mortgage the property is included in the maximum financed property calculation.
• If the borrower does not have an ownership interest in the property and is not obligated on the mortgage the property is not included in the maximum financed property calculation.
• The definition of a large deposit was changed from 25% to 50% of the total monthly qualifying income.
• When a deposit includes “sourced