Hide Notes 

Slide 1: Indymac Lending Guide Guideline Overview
Slide 2: General Information • Secondary Review – Approval by e-MITS of loans >$650,000 – Senior Indymac management approval of loans >$1,500,000 • Exceptions to Guidelines – Loans must be submitted to manual underwriting first
Slide 3: Income • History of receiving stable work income or other sources • Reasonable expectation of continuance in the foreseeable future • May come from multiple sources • Source of income must be adequately verified • Nontaxable income may be grossed up 25%
Slide 4: Nontaxable Income • Sources of income that are nontaxable: – Child Support Payments – Social Security Payments – Disability Retirement Payments (SSI) – Workers‟ Compensation Benefits • Verification needed to confirm nontaxable status • Verification needed to confirm likelihood of continuance for 3 years
Slide 5: Unacceptable Income • • • • • VA education payments Rent received from a boarder Income tax declared on tax returns Income derived from illegal activities Any source that cannot be adequately verified
Slide 6: Assets • Reserve Calculation is composed of the following costs associated with subject property – Principal & Interest of 1st mortgage loan – Hazard and flood insurance premiums – Real Estate taxes – Mortgage insurance premiums – HOA / Condo Association Dues
Slide 7: Assets continued • Unacceptable Assets – Pooled Funds: Funds “pooled” with the funds of other members of an organization which can not be verified – Cash-on-hand – Sweat Equity (value of labor contributed by borrower) – Assets from illegal activities
Slide 8: Assets continued – Unsecured Borrowed Funds: Signature loans, unsecured lines of credit, overdraft protection, credit card lines of credit – Any assets that cannot be verified as required by guidelines
Slide 9: Verification Documents • Written Verification – Page 2200-6 • Pay Stubs, Payroll Statements & W-2 Forms – Page 2200-6 • Tax Returns – Copies of individual and business tax returns must include the Borrower‟s signature(s)
Slide 10: Verification Documents continued • Account Statements – Page 2200-7 • Retirement Accounts – Must identify Borrower‟s vested amount – Must include Terms & Conditions for funds withdrawals or Loans • Age of Documentation – Within 120 days of Note
Slide 11: Full Documentation • For Alt-A Loans – Written Verification(s) of Employment; or – Copies of W-2(s) for 2 most recent tax years; and – Last 2 consecutive pay stubs reflecting year-to-date earnings • The most recent and one no older than 60 days from the date of Note
Slide 12: Full Documentation continued • NonPrime Loans – Written Verification(s) of Employment; or – Copy of W-2(s) for the most recent tax year; and – Last 2 consecutive pay stubs reflecting year-to-date earnings
Slide 13: Full Documentation continued • Commission Income – Last 2 consecutive pay stubs – Previous 2 years W2 forms – If commission income exceeds 25% of total employment: • Copies of signed tax returns, including all schedules, for last two years required • At least 6 months of commission income must be reported on latest tax return
Slide 14: Full Documentation continued • Overtime & Bonus Income – Verified for last 2 years and probable continuance • Part-Time or Second Job Income – Verify income has been Uninterrupted for last 2 years; likelihood for continuance • Seasonal Income – Page 2200-11
Slide 15: Full Documentation continued • Self-Employment Income – Copies of signed personal tax returns for the last 2 tax years, including all schedules, and (if applicable) – Copies of signed business tax returns for the last 2 tax years, including all schedules (if LLC, Partnership or Corporation): • General Partner: Form 1065 and K1 Form • Limited Partner: K1 Form • Corporation: Form 1120 and K1 Form
Slide 16: Full Documentation continued • Sub-Chapter S Corporation: 1120S and K1 Form; and • Year-To-Date Profit & Loss Statement • Rental Income – Copy of signed tax return, including Schedule E, for most recent tax year – If property not listed on Schedule E tax return, copy of current signed lease(s) must be provided – 75% of the gross rental income used for qualifying purposes
Slide 17: Full Documentation continued • Retirement / Pension Income – If from a company or the government, proof of continuance not required – If disbursements are from annuity payments, 401(k) or IRA monthly distributions, evidence of continuance for at least 3 years • Social Security / Disability – Award Letter and 1 recent bank statement
Slide 18: Full Documentation continued – Disability income: • Award Letter • Indications of the date or event that will cause income to end • Must have at least 3 years continuance • VA Benefits – Must have 3 years of continuance
Slide 19: Full Documentation continued • Alimony or Child Support Income – Copy of divorce decree, separation agreement, or court decree that describes payment terms evidencing 3 years continuance – One of the following to evidence receipt of payments for the last 3 months: • Bank statements reflecting payment deposit to Borrower‟s account; or • Cancelled checks from obligor; or • Correspondence from court indicating payments through court system
Slide 20: Full Documentation continued • Other Income – Dividend / Interest – Note Receivable – Capital Gains – Trust Income – Unemployment or Welfare Benefits – Foster Care – Military
Slide 21: Bank Statements • 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) • Copies of most recent 6 months statements • An average of deposits for the 6 months used to qualify income
Slide 22: Bank Statements continued • All pages of each statement • 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 23: Bank Statements continued – If using business accounts, Borrower must be 100% owner – Evidence of business ownership required • Verbal verification of employment – Salaried Borrowers: Page 2200-17 – Non-Salaried Borrowers • Letter of documentation from neutral thirdparty such as: – Certified Public Account – Regulatory Agency
Slide 24: Bank Statements continued • Letter must state Borrower has been selfemployed or has earned income from other sources for at least 1 year
Slide 25: Stated Income • 2 continuous years of employment (self-employed, in same business) • Reasonable for Borrower‟s type of employment, line of work, assets • If not 2 years continuous employment, Borrower not eligible for Stated Income program • Letter stating source of additional income needed • Alt-A Stated Program: – Must use lower of the two credit scores
Slide 26: Stated Income continued • Salaried & Non-Salaried Borrowers: Page 2200-18 • Borrowers employed by a relative or in a family business must go with Full Doc Loan • Assets used for qualification (if necessary): – Depository accounts (checking, savings, certificate of deposit, money market funds)
Slide 27: Stated Income continued – Stocks, bonds, mutual funds and/or trust funds – Retirement accounts (IRA, 401(k), Keogh) • Vested value entered into e-MITS – e-MITS will use 70% of entered amount • Assets must meet or exceed: – ALT-A loan amount >$650,000 • 2 times the amount of the stated monthly income
Slide 28: Asset Verification • NonPrime Loans – PITI of 2 months for >90% LTV
Slide 29: Asset Documentation • Checking Account, Savings Account, Certificate of Deposit, Money Market Funds, Stocks, Bonds, Mutual Funds • Documentation Requirements – Written Verification of Deposit (VOD) for each account – Current and average balance for 2 months – Copies of statements for 2 most recent months
Slide 30: Asset Documentation continued • When one spouse on loan, only their assets may be used – Joint assets: 50% of the total value used • Verification must be completed when joint assets are used by one Borrower – Notarized statement by other individual on account indicating Borrower‟s access – A VOD or bank statement indicating joint account and Borrower‟s access to funds without consent from other party
Slide 31: Asset Documentation continued • Stock Options: Page 2200-25 • Tax Deferred Retirement Accounts (IRA, 401(k), Keogh) – Copies of statements for most recent 2 months – Documentation regarding the conditions under which funds can be withdrawn – Place 100% vested amount into Integra; e-MITS will automatically use 70% – Loans from account(s) must be subtracted from account total
Slide 32: Asset Documentation continued • Trust Funds – Copy of trust agreement or letter from trustee indicating amount available – VOD for each account with current and average balance for last 2 months – Proof of liquidity is required • Life Insurance Net Cash Value – Documents to verify cash value of policy – Proof Borrower is the policy owner – Show period covered
Slide 33: Asset Documentation continued – Ending cash value – Outstanding loans against policy – Evidence of liquidity
Slide 34: Credit Report • Must be three repository, tri-merged report • No erasures, alterations, or written corrections • Note date must be within 120 days of credit report date • e-MITS requires new report when… – Borrower added or deleted
Slide 35: Credit Report continued – Borrower‟s name or social security number is altered • Credit Report Corrections (Underwriting)
Slide 36: Credit History Alt-A Credit Requirements – 1st Mortgage Minimum Credit Score Minimum Tradelines Open >=12 by Document Type Max Mortgage/Rent Delinquencies in Last 12 Months 620 Full Doc: 3 Stated Income: 4 0 36 months 24 months from discharge / dismissal date Foreclosure – Completion Date Greater Than Bankruptcy – All Chapters – >= to Discharge / Dismissal Date
Slide 37: NonPrime Credit Requirements – 1st Mortgages Credit Level Minimum Credit Score Min. Tradelines Open >= 12 months Mortgage Rent / History Max. Mortgage / Rent Delinquent Payments in Last 12 Months 0x30 0x60 0x90 1x30 0x60 0x90 3x30 0x60 0x90 I++2 I+2 I2 500 II2 III IV Full & Bank Statements: 3 Stated Income: 4 12 Months Unlimited x30 1x60 0x90 Unlimited x30 x60 1x90 Unlimited X30 X60 x90 Discharged / dismissed prior to funding Discharged / dismissed prior to funding Filing 12 months prior to application Discharged / dismissed prior to funding Foreclosure – Completion Date Greater Than 36 months 36 months 36 months 24 months 12 months Chapter 7, 11 or 12 BK Discharged / dismissed prior to application Chapter 12 BK Discharged / dismissed prior to application Filing 24 months prior to application 3x30 0x60 0x90 Filing 18 months prior to application Open Chapter 13 BK, Max. Post Petition Delinquencies NA Unlimited x30 1x60 0x90 NA
Slide 38: Credit History continued Credit Requirements – 2nd Mortgages Minimum Credit Score Minimum Tradelines Open >= 12 Months Maximum Mortgage / Rent Payments Delinquent Last 12 Months 620 Full Doc: 3 Stated Income: 4 0x30, 0x60, 0x90 36 months 24 months from discharge / dismissal date Foreclosure – Completion Date Greater Than Bankruptcy – All Chapters – Greater Than
Slide 39: Credit History continued • Up to 6 consecutive “rolling” 30 day lates within the most recent 12 month period will be counted as 1x30 late • After 6 consecutive 30 day lates, each additional late payment is counted individually • A Delinquency of 120 days is considered a foreclosure, regardless of whether foreclosure action has been commenced
Slide 40: Credit History continued • Bankruptcies that are open at time of application must be satisfied, discharged or dismissed prior to closing • Open Chapter 13 considerations: Page 2200-44 • Mortgage & Rent Verification: Page 2200-45
Slide 41: Credit History continued • Age of Verifications – Date of Note may be no later than 120 days from date of any mortgage, rent or other liability verification • Delinquent Accounts – Must be either brought current or paid in full prior to or at closing – All mortgages must be current (Calusa)
Slide 42: Credit History continued • 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
Slide 43: Credit History continued • 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 44: Credit History continued • 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 • IRS, State Tax Lines: Page 2200-48
Slide 45: Income Ratios • Revolving Charge Accounts – If no minimum amount noted on credit report, 5% of outstanding balance used as monthly payment amount • Installment Debt – Pay down to 10 payments permissible – Alt-A Program • Deferred or Forbearance payment accounts, such as student loans, can not be excluded for DTI purposes
Slide 46: Income Ratios continued – NonPrime Loans • Deferred or Forbearance accounts may be excluded if evidence is provided: – Borrower is currently enrolled in school – Student loan has been deferred for at least 6 months from the date of the loan application • Lease Payments – Regardless of the number of months remaining, lease payments must always be considered a recurring monthly debt
Slide 47: Income Ratios continued • Alimony and / or Child Support – If payments will be for more than 10 months, payment must be included for DTI purposes – If payment is less than 10 months, debt can be excluded from DTI – Copy of documentation required to verify amount and term of payments
Slide 48: Income Ratios continued • Cosigned Loans – 12 most recent months cancelled checks showing payment from primary obligor required – Primary obligor must have made at least 12 payments; if not, can not be excluded from DTI • 401K / TSP or other loans secured by financial assets – Payments may be excluded from the monthly DTI
Slide 49: Income Ratios continued • Business Debt in Borrower‟s Name – 12 months cancelled checks showing payments being made by business
Slide 50: Compensating Factors • Exceptions to guidelines can include, but are not limited to… – 12 or more months of verified PITI reserves – Debt to income ratio of 40% or below – LTV of 80% or below – Decrease in Borrower‟s housing payment 15% or more – Borrower has owned the subject property 4 or more years
Slide 51: Compensating Factors continued • Credit history reflecting: – No more than 1 30 day late on any consumer debt within the last 24 months – No unpaid liens, judgments, or collections within last 24 months – No late mortgage payments within the last 24 months – No foreclosure or bankruptcy action within the last 48 months
Slide 52: Compensating Factors continued • Borrower has been employed with the same employer or in the same field for 4 years or more
Slide 53: Property & Appraisal Standards • Exclusionary Appraiser List – Indymac B2B website • Tools & Resources – Appraisal Services • Appraisal must be dated within 120 days of the Note; if not, update needed • No appraisals accepted dated more than 1 year prior to date of Note
Slide 54: • All comparable sales must have closing dates within 6 months of appraisal date • If not: – Appraiser must provide explanation for lack of recent sales – For each comparable used > 6 months, an additional listing or pending sale must be included • Alt-A Loan >$650,000 and NonPrime >$500,000, 5 comparables needed
Slide 55: • At least 2 comparable sales must be within applicable distances: – Within 1 mile for urban & suburban – Within 3 miles for rural
Slide 56: Eligible Properties • Designed for 1 to 4 families • Accessible as appropriate and customary for the area – Must have comparable sales of similar properties • Must be heated by continuouslyfueled heat source permanently affixed to property
Slide 57: Mixed Use Properties • Must be a single family dwelling that borrower occupies as principal residence • Business must adhere to all local zoning requirements • Borrower must be both the owner and operator of business • Property primarily residential in nature – Business use may not exceed 25% of gross living area
Slide 58: Condominiums • High Rise: 4 or more stories • Low Rise: 3 or less stories • 50% of total units must be occupied as primary residences or second homes • One individual or entity may own no more than 10% of the units
Slide 59: Property with Acreage Alt-A Number of Acres 20.01 - 30 30.01 - 40 Max LTV & CLTV 75% 70% 40.01 - 50 > 50 65% Not Permitted NonPrime Loans Number of Acres 10.01 - 20 > 20 Max LTV & CLTV 70% Not Permitted
Slide 60: Multiple Parcels • Subject property consists of more than one parcel, parcels must be adjoining Property Condition • Properties with maintenance issues, a realistic cost to cure deficiencies: – Cost may not exceed lesser of $2,500 or 3% of the appraised value
Slide 61: Ineligible Properties • Properties not designed for year round use or are not accessible year round • Properties not common and typical for the area • Multifamily properties for more than 4 dwelling units • Time share properties • Manufactured housing
Slide 62: Ineligible Properties continued • Mobile homes • The following not permitted for NonPrime loans: – Properties listed for sale within the past 6 months – Properties < 600 square feet – Mixed use properties
Slide 63: • 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
Slide 64: • Indymac Hazard Information • Sign 1003 within 3 Days of Loan Origination • South Carolina: – Use Fidelity Global for attorney • Ohio: – Closing Protection Disclosure • Select „No‟ • Tuesday, February 06, 2007