PCF Wholesale COVID-19 Update for 9/10/20

September 10, 2020

Suspended Products

  • Non-QM
  • Jumbo Loans
  • Odd Terms
  • Manufactured Homes
  • VA Cash-Out over 90%

Guideline Updates

Highlights

  • Removal of Mortgage Insurance Suspension Overlay on investment property transactions
  • Removal of requirement for mortgage statements on all properties owned by borrowers, credit supplements are now acceptable to confirm if the loan was in forbearance
  • Updates to requirements for use of rental income from investment properties see below for changes
  • Update to requirements for use of departing residence rental income, see below for changes

COVID-19 Requirements

  • Two months bank statements are required within 60 days of the note date – no exceptions
  • Pay stubs must be dated within 60 days of the note date – no exceptions
  • Student loans in forbearance will follow standard agency guidelines for payment calculations
  • Tax transcripts are waived at this time – Self-Employed borrowers must provide a P&L dated within 60 days of the note date along with corresponding bank statements. 2019 and 2018 tax returns are required. An attempt to order transcripts must be documented, and borrowers are encouraged to attempt to create an account online with the IRS to obtain transcripts
  • Self-employed borrower income calculation is subject to a review of the bank statements to validate income is stable and continuing. Additional requirements may be necessary such as invoices, contracts, and explanations/business plans regarding business continuity.
  • SBA loan inquiries require a letter of explanation from the borrower stating whether funds were received. Funds cannot be counted in the P&L calculation, funds cannot be used for qualification or closing costs, and business must be in good standing and viable without consideration of the funds.
  • If using rental income to qualify, borrower must provide:
    • Proof of the most recent two months rental receipt for each property using income to qualify
      • Loans may be reviewed by Credit Risk for exceptions, dependent upon but not limited to loan characteristics, rental property locations, borrower profile, etc.
  • If using rental income from a departing residence, a 1007 alone is insufficient. A copy of a signed lease agreement and proof of security deposit is required in addition to proof of 3 months PITIA reserves for the subject property and the departing residence.
  • All streamline/IRRRL transactions must have employment listed on the initial and final 1003. 
  • PCF Wholesale will adhere to all agency announcements regarding appraisal flexibilities. 
  • A PCF Wholesale COVID-19 attestation form is required to be signed prior to funding
  • If using an employer email for verification of employment, the email must reflect all information for the employer as required on the COVID-19 PCF verbal verification form
  • GAP coverage is not accepted, nor are title indemnification letters. The county recorder’s office must be open at the time of funding, or e-recording/e-filing must be allowed
  • No COVID-19 indemnification clauses allowed on preliminary/final title reports
  • Minimum Credit Scores:
    • 640 FHA, VA; 620 Conventional
  • Installment accounts in forbearance do not need to be brought current, however the regular monthly payment MUST be included in the debt ratio calculation. If the credit report reflects $0 payment, verification of standard monthly payment amount is required.

Eligibility for Borrowers in Forbearance:

VA:

  • PCF Wholesale will require verification from the servicer (no credit supplements) that the forbearance is CANCELLED and verification they are current on their payments at the time of closing.
  • **If the loan is an IRRRL, the loan is not eligible until the required 6 consecutive payments have been made, unless the seasoning requirement was met PRIOR to forbearance.
  • Missed payments during forbearance cannot be counted toward the seasoning requirements.

FHA:

Payments will not be considered as past due/late if ALL of the following are met:

  • The borrower has cancelled the forbearance and the servicer has confirmed cancellation (no credit supplements)
  • They are presently current and have caught up all payments that were unpaid because of the forbearance
  • They have had NO late payments prior to the forbearance start date and within the last 12 months
  • The mortgage payoff does not reflect any delinquent amounts of interest, payments, etc.
  • **If the loan is a streamline, the loan is not eligible until the required 6 consecutive payments have been made, unless the seasoning requirement was met PRIOR to forbearance.
  • Missed payments during forbearance cannot be counted toward the seasoning requirements.

Fannie Mae/Freddie Mac **UPDATED**:

  • PCF Wholesale will require verification from the servicer (no credit supplements) that the forbearance is CANCELLED and verification they are current on their payments at the time of closing.
  • Lenders must continue to review the borrower’ s credit report to determine the status of all mortgage loans. In addition to reviewing the credit report, the lender must also apply due diligence for each mortgage loan on which the borrower is obligated, including co-signed mortgage loans and mortgage loans not related to the subject transaction, to determine whether the payments are current as of the note date of the new transaction. For the purposes of these requirements, “current” means the borrower has made all mortgage payments due in the month prior to the note date of the new loan transaction by no later than the last business day of that month.
  • A borrower who is not current and has missed payments on any mortgage loan is eligible for a new mortgage loan if those missed payments were resolved in accordance with the requirements in the table below:

*Under resolution method ONE, there is no requirement for the borrower to have made 3 payments before continuing. The loan is eligible if the borrower brought the loan current in one lump sum, provided the source of funds are documented.

**If any type of loss mitigation resolution occurred, the borrower must make 3 monthly payments on time after the loss mitigation solution before becoming eligible for a new loan.

***Payments missed during the time of a COVID-19-related forbearance that have been resolved are not considered to be historical delinquencies for purposes of our excessive mortgage delinquency policies.

Flexibility does not apply to high LTV refinance loans, which must continue to meet the payment history requirements.

Have questions? Contact your AE or have an AE contact you: Marketing@pcfwholesale.com

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