Category: Portfolio Mortgages

What is RSU Income?

Many borrowers in technology and a growing number of other industries are compensated with restricted stock (RSU) income.
RSU’s are shares in their company earned as compensation. The restricted stock units are assigned fair market value when they vest, upon vesting it is considered taxable income. This incentive-based income has become a popular draw for many employees seeking to increase their earning power.

Did you know most jumbo lenders require a 2 year vesting history and a 3 year continuance guarantee in order to use RSU for qualifying income?

Many borrowers have a history of RSU income just not with the same employer for the past 2 years. Some borrowers do have a history of RSU income but they only have current grants extending less than 3 years and most need their RSU income accepted to reach their maximum qualifying potential.

How can you help your RSU-income borrowers who don’t fit these narrow guidelines?

Portfolio lenders are more reasonable! Portfolio enders use common sense underwriting.

Our general guideline requires a 12 mo vesting history with a 2 year continuance however we will consider exceptions case-by-case. In some circumstances we have allowed the income to be used just after the first vesting as long as there is a 2 year continuance.

How should you calculate RSU income?

For current RSU income, you can find the YTD earnings on a current paystub or WVOE.. You may need to obtain the last paystub of the previous year to determine the total 12 month vesting history to determine continuance, provide vesting schedule

Example:

Bank Statement Jumbo to 90% LTV Financing Guidelines

We still have 90% LTV bank statement loan programs. 15 day turn time, application to close.

Alternative Bank Statement Income Documentation

• 12 Months Bank Statements or One Year 1099 “1099 Only Program”

• Business Account – 15% (service industry) – 50% Maximum Expense Factor

• Personal Account – 0% Expense Factor (100% deposit utilization)

• Form 4506-T and 4505-C Not Required *

Eligible Employment Types:

• Self Employed including 1099 and Real Estate Investors

Verification of Employment | VOE

• Business Organization Paperwork ex: Articles of Incorporation

• CPA/Tax Professional Letter stating Percentage of Ownership and number of years business existence

• Business License

• Sellers License

• Internet Business Listings

Eligible Transactions:

• Purchase – 10% Down Payment

• Rate & Term Refinance – 90% LTV

• Cash Out Refinance – 80% LTV: $1,500,000 Maximum Cash Out

• Super Jumbo Loan Amounts to $4,000,000

Reserves Requirements:

• 6 Months (PITI/PITIA). Note: cash out does qualify as reserves

Credit Criteria:

“Life Event” Credit Seasoning:

• Bankruptcy – 12 Months

• Foreclosure – 24 Months

• Short Sale – 12 (unless included in bankruptcy counts as one event years required)

• Deed in Lieu – 2 Years Required

Credit Scores

• 600 Minimum

• 680 to 80% LTV – $1,000,000 Maximum Cash Out

• 720 to 90% LTV – $1,500,000

Eligible Property Types:

• SFR Single Family Residence

• Condos – Warrantable Only

Eligible Occupancies:

• Owner-Occupied / Primary Residence

• Non-Owner Occupied / Investment Property

• Second Home / Vacation Home

Available Terms:

ARM 5/1 & 7/1

30-Year Fixed; 40-Year Fixed. Interest Only (I/O) available for both the 30-year as well as the 40-year term (lowest payment possible).

Notes:

First Time Homer-Buyer – 80% LTV

Multiple Foreclosures and Short Sales – OK with >3 years seasoning.

5% of Gift Funds must come from borrowers’ own funds. Source required.

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