Loan Purpose:
- Purchase
- Rate and Term Refinance
- Cash-out refinance
IRS 1031 Exchange for any borrower.
Tax and insurance impounds required
12 Month Mortgage Credit
Subject property and the borrower's primary residence. The rest of the properties on the schedule of real estate will be checked via 3rd party sources to ensure there are no Notices of Default (NOD).
Mortgages not rated on the credit report require canceled checks. The following is our delinquency tolerance on mortgages:
- No delinquencies in the past 90 days
- All must be current
- One 30-day late maximum in the past 12 months
- Two 30-day lates maximum in the past 24 months
Bankruptcy - Must be seasoned 24 months from discharge or Sale.
Foreclosure- Must be seasoned 24 months from discharge or Sale.
Loan Submission Requirements
1003 Application
Full and complete only
Credit Report
650 middle score or lower of two. A one score report is a decline.
600 case-by-case. LTV reduced to 50%
Preliminary
Title Report
Refinance transactions only
Appraisal
1-4 unit properties are ordered through a 3rd party. Commercial appraisals require a Good Faith Deposit of $995. Our real estate department bids out the order and selects the appraiser weighing cost, estimated time of completion, and appraiser's credentials.
Lease Agreements
Rent roll and P&L for the property. These reflect the income the property generates. Rent rolls and operating income statements are not required on the investor 1-4 program. On our Traditional program, they are required and we will not order the appraisal unless we have these items.
Executed Purchase Contract
- Required for any submission of a purchase transaction.
Funds to Close
90 days sourced and seasoned for purchases or refinances that are short to close. Funds from outside of the United States must be deposited into a bank within the United States before close. Funds can be seasoned in a foreign account.
Environmental
3rd party environmental insurer is utilized.
Eligible Vesting
- Natural persons
- Trusts
- Limited liability companies
- Partnerships
- Corporations
The mortgagor must sign Mortgage/Deed of Trust and any related Riders. The guarantor is the natural person whose social security number, employment, assets, and credit are used to guarantee the loan. The mortgagor will sign the Note and any related Addenda, HUD1, and all other closing documents.
Entity Review
Entity docs will be reviewed immediately upon receiving all the necessary forms.
- Trusts should only require the trust certification. We do not want to see the trust documents
- LLCs, partnerships, and corporations must submit an Operating Agreement, making sure it breaks down the percentages of ownership, the EIN, and the Certificate of Good Standing.
- Not for Profits are doable but very tricky and difficult. My suggestion is to do the loan to one of their members as an individual, where they can grant deed it back to the entity after the close.
When vesting as a corporation or partnership we have a 3rd party review the entity docs to ensure we are allowing a valid vesting. It is a good practice to include entity docs with the initial loan submission to get the borrower's signature block sooner rather than later.
All Eligible Loans must have a natural person as the guarantor.
Closing costs must be 90 days source and seasoned
Gift Funds
Purchase transactions OK. Gift letter signed and dated by the donor is required and must include the amount of the gift funds, and that no repayment is expected or implied. Bank deposit must be documented.
No first-time homebuyer
- 3rd party Contributions- Contributions from interested parties such as the Seller, Builder, Realtor, etc., are allowed for purchase transactions and may be used for closing costs and/or prepaid items only. These contributions are not to exceed 3% of the purchase price or lender value.
- Business Accounts are an acceptable source of funds.
- Acceptable Assets- Additional acceptable sources of funds if properly verified, include, but are not limited to: U.S. Savings Bonds, Stocks/bonds/mutual funds, Repayment of a loan, Sale of Property or Real Property, IRA/Keogh Accounts, trade equity
- Minimum of 10% must be borrower's own funds for purchase transactions.
- The escape hatch- If you are 5% below program max, the seasoning of the funds can be waived. For example, you submit a 70% LTV purchase where either the seasoning of the funds does not meet the 90-day requirement. OR you have a donor that refuses to let us run credit. Drop the LTV to 65%, and just show that the required down is currently in the borrower's bank statement.
First Time Investor
- 5% LTV reduction
- First Time Buyer is a borrower who does not own a property
- 12 month rental verification required with canceled checks for the first time buyer. If missing checks, and ADDITIONAL 5% LTV reduction.
- First-time investor is someone who owns their primary residence but has not had an investment property in the past 2 years.
First Time Buyers
First-time investors are ineligible for out-of-state transactions.
Subordinate Financing OK
The Combined Loan-to-Value (CLTV) does not exceed 10% of the maximum LTV for Class type.
- Subordinate financing should be underwritten at market rates
- 80% CLTV maximum
Non-Permanent Resident Aliens and Foreign Nationals
Non-Permanent Resident Aliens and Foreign Nationals are eligible for this program
-
- Non-Permanent Resident Aliens are foreigners who reside in the on a temporary basis and have government-issued documentation work visa
- 650 minimum credit score
- Valid Identification
- Proof of physical address
- Work Visa or Green Card
Foreign Investors
These are investors that do NOT have a valid green card or work visa. We NOT do loans to these types of borrowers.
Compensating Factors
Compensating factors mean guideline exceptions
- LTV below 50% - credit, location, funds to close and any approval conditions are negotiable.
- Credit score over 720 with the depth of credit
- Great looking property in an improving market
- Properties in stable metro areas, New York City, Los Angeles, San Francisco, Houston, Dallas etc.
- 5+ unit properties are liquid in ALMOST any market.
- Seasoned funds to close on purchases where the LTV is below program max.
Collateral
Properties listed in the past 6 months are not eligible for cash out.
Occupancy
Owner Occupied properties
- 2 years profit and loss statements for the business
- Current Business license
- The property should be single tenant
- Office and/or Medical Office, Retail, Warehouse, Auto-Service, and other types of single tenant occupancy uses.
Property Types
Ineligible property types
- Gas stations
- Vacant commercial properties
- Raw land,
- Churches, where the sole or predominant use of the property is only as a church
- Leasehold estates
- Nightclubs
- Healthcare
- Funeral homes, campgrounds
- Educational (schools, etc.)
- Car wash
- Auto-dealerships- even small ones with a decent land to building ratio are a decline
- RV parks
- Marinas with lake access only
- Golf courses
- Any property where the business is regulated by the Perishable Agricultural Commodities Act (PACA)
Property Classifications
1 - 4 unit, Owner Occupied SFR, town-houses, 2-4 units, and condos- 70% maximum LTV
- 70% LTV to $1,000,000
- 65% LTV to $2,000,000
5+ units & mixed-use properties- 75% MAX
Mixed-use properties must meet the following standards:
- Approximately 50% of the building, by either size or rental income, should be residential.
- The percentage of square footage allowed for commercial use is as follows:Commercial use is generally confined to the ground floor;
- Approximately one-half for commercial use in a one or 2-story building or two-building property.
- Approximately one-third for commercial use in a 3-story building;
- Commercial use must not affect the health, safety or comfort of residential occupants.
- Acceptable commercial uses are general office and retail.
Traditional II- 70% MAX
Traditional loan program includes office, retail, warehouse, mobile home parks (with a recreational vehicle component of 25% or less), certain mixed-use properties, auto-service, and self-storage.
In the case of mobile home parks, special rules apply. For "park-owned" mobile home units – as distinguished from the pads - the value, as determined in the "disposition value," shall not exceed $2,000 per (unit). At a minimum, mobile home units must be separately and distinguishably taxed by the local taxing authority to be considered in the determination of market value
Owner user properties require a business license for the subject property, and preferably, located in a commercially zoned area.
Process
We can close loans only as quickly as your broker/borrower return the stipulations requested. If we ask for something, we need it. It is our money to lend, so we ask for what we need. We will take a common sense approach and allow alternative documentation to what was requested if it makes sense.
Once the file has been cleared to close by underwriting, it moves to the funding department.
Funding
We have a 48 turn time on getting loan docs prepared. Be sure your broker has not set up a closing as our funding department will contact the closer and set the time. Our funding department will coordinate with the closers to ensure the loan docs are correct, and there is enough time for the closer to review the docs.
This is one individual commercial lender within our lender network
Reference# 554062015 22-5-12
Mortgage brokers/lenders perform acts for which a real estate license is required.
