IET Real Estate Los Angeles Blog

With the changes happening to the basic underwriting guidelines of Conventional loan programs so quickly I thought I'd create this blog post to highlight *_some_* of the potentially deal killing details that I've come across in the course of my own business...

• MI for conforming loans on Condo's is on the verge of being extinct (consider FHA as an alternative).  41% max backend DTI for all MI companies.  Doesn't matter what DTI Lender will allow.
• Reserve Requirements when purchasing Investment Properties. 
  Fannie Mae Announcement re: borrowers purchasing multiple investment properties

1. When the borrower will own one to four financed properties (including the subject property) the reserve requirements are:
   

   * two months of reserves on the subject property if it is a second home,
   * six months of reserves on the subject property if it is an investment property, and
   * two months of reserves on each other financed second home or investment property.

2. When the borrower will own five to ten financed properties (including the subject property) the reserve requirements are:

   * two months of reserves on the subject property if it is a second home,
   * six months of reserves on the subject property if it is an investment property, and
   * six months of reserves on each other financed second home or investment property.

3. 9/1/2009 Updates
   
   * Stock options are no longer eligible for “reserves”
   * Relocating families can’t use the “trailing” spouse’s projected income
   * ”Tip” income must be documented and verified
   * Lenders must call employers to verify employment
   * Lenders must verify tax transcripts against IRS records
   * Owners and buyers of 2-unit homes are subject to new minimum FICOs with larger downpayment and equity requirements.
   * Only 70% of stock, bond and mutual values may be used as reserves
   * Only 60% of retirement assets may be used as reserve

Have questions regarding Conforming Loans?  Our affiliate lending division, IET Capital has loan officers on call 7 days a week to assist you with any additional information you need.