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Slide 1: Saxon / Indymac Mortgage Guidelines Increasing Your Sales Volume Through Diversified Loan Products
Slide 2: Overview of Program Descriptions • Borrower Benefit – All loans must provide a benefit to the borrower • Credit Reports & Credit Scores Saxon 60 days to Funding Indymac 120 days to Note Date – 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
Slide 3: 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
Slide 4: 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
Slide 5: 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 than 12 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
Slide 6: 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
Slide 7: 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
Slide 8: 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
Slide 9: 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
Slide 10: Overview of Program Descriptions • Twelve Months Bank Statements – Personal (W2 Borrower) or Business (SelfEmployed) 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
Slide 11: 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
Slide 12: 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
Slide 13: 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
Slide 14: 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
Slide 15: 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
Slide 16: 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
Slide 17: 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
Slide 18: Collateral Overview – IM Rural Indymac Alt-A Number of Acres 20.01 - 30 30.01 - 40 40.01 - 50 > 50 Max LTV & CLTV 75% 70% 65% Not Permitted Indymac NonPrime Loans Number of Acres 10.01 - 20 > 20 Max LTV & CLTV 70% Not Permitted
Slide 19: 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
Slide 20: 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
Slide 21: Collateral Overview • Land Value Ratios – Typically, land should not exceed 35% of the appraised value of the property California, Connecticut, New York Florida Up to 80%, providing it is typical and customary for the area Up to 50%, providing it is typical and customary for the area Up to 35%, providing it is typical and customary for the area All other states
Slide 22: 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 owneroccupied – Borrower may only have one property considered as a second home
Slide 23: 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
Slide 24: 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
Slide 25: 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
Slide 26: 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
Slide 27: 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
Slide 28: 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
Slide 29: 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
Slide 30: Job / Income Stability – Overtime & Commission • History of receipt • Averaged from the previous year and current yearto-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
Slide 31: 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
Slide 32: 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
Slide 33: 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
Slide 34: Job / Income Stability – Temporary Services • Two-year history of such employment • Current earnings supported by 24-month average
Slide 35: Debt-to-Income Analysis • Affordability Guidelines Gross Monthly Income Per Household Up to $1,000 $1,000 to $1,500 $1,501 to $5,559 Maximum Debt To Income Ratio 40% 45% 50% $5,560 and above 55%* *Not available on all products. Refer to matrices for maximums allowed
Slide 36: Debt-to-Income Analysis • Disposable Income LTV 0-70 0-70 70.01-90 70.01-90 70.01-90 90.01-100 90.01-100 90.01-100 DTI 0-50 50.01-55 0-45 45.01-50 50.01-55 0-45 45.01-50 50.01-55 Minimum Disposable Income $1,000 $1,500 $1,000 $1,500 $2,000 $1,000 $1,500 $2,500
Slide 37: 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
Slide 38: 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
Slide 39: 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
Slide 40: 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’
Slide 41: Calusa Loan Qualifying Matrix FULL DOC 700+ FICO 680699 FICO 660679 FICO 640659 FICO 620639 FICO 600619 FICO 580599 FICO 550579 FICO IM Nina To 90% IM Nina To 80% IM Nina to 80% IM Nina to80% IM Nina to 80% IMALTA To 95%reserves IMALTA To 95%reserves IMALTA to 95%reserves IMALTA to 95%reserves IMALTA to 95%reserves IM NP to 90% IM NP to 90% IM NP to 80% IMConform To 95%-no Cash Out IMConform To 95%- No Cash Out IMConform To 95%-No Cash OUT IMConform to 95% No Cash IMConform To 95%-NO CASH IMConform To 95% No Cash IMConformcase by case IMConform case by case Saxon To 94% Saxon To 94% Saxon to 94% Saxon to 94% Saxon to 94% Saxon to 94% Saxon to 90% Saxon to 90% IMConform To 85% w/ CO IMConform To 85% w/ CO IMConform to 85% w/ Cash Out IMConform to 85% w/ Cash Out IMConform to 85% w/ Cash IMConform to 85% w/ Cash IMConform to 85% case by case IMConform to 85% case by case 700+ FICO 680699 FICO 660679 FICO 640659 FICO 620639 FICO 600619 FICO 580599 FICO 550579 FICO STATED DOC IMALTA To 95%reserves IMALTA To 95%reserves IMALTA to 90%reserves IMALTA to 80%reserves IMALTA to 80%reserves Saxon to 85% Saxon to 85% Saxon to 85% Saxon to 85% Saxon to 85% Saxon to 85% IM NP To 90% IM NP to 90% IM NP to 90% IM NP to 90% IM NP to 90% IM NP to 90% IM NP to 85% IM NP to 80% IM Nina to 90% IM Nina to 80% IM Nina to 80% IM Nina to 80% IM NINA to 80% *Below 550 IM NP to 80% Full Doc Only