The Ins and Outs of Underwriting

1. The Ins and Outs of Underwriting

2. Gift Funds • Gift letter and evidence of receipt, transfer, and deposit of funds. • Documentation: Deposit slips, wire transfer, certified check validating the withdraw of funds from the donor’s account.

3. Gift Funds • The donor must be a family member parent, brother, sister, etc. OR someone with whom the borrower has established a long term relationship.

4. Other Assets • Savings, checking, money market, retirement account, stocks/bonds, etc. • Provide ALL pages to the asset. If cashing in stock or bonds, provide the latest statement and proof the asset was cashed and deposited.

5. Credit • Credit inquires need to be addressed and if new credit, add to debts. • Ensure that the data reflected on the credit report is consistent with what the borrower has provided in the application.

6. Income • Paystub should include employer’s name, borrower’s name, 30 days of income, and YTD income. • Watch deductions (can be an indicator of additional debts such as child support.

7. Tax returns • Three years tax returns are required or three years tax transcripts from a third party. Both the tax returns or transcripts need to be signed.

8. Employment • If using income from part-time, overtime, or commission, the employer needs to complete the VOE Form 1005 to validate a two year history and the likelihood the income will continue.

9. Seller Concessions • Seller contributions could require that the loan amount be reduced if the contributions exceed the threshold as set by each agency.

10. Appraisals • Repairs • Mold • Roof/snow covered • Foundation/ Settlement • Peeling Paint • Identity of Interest

11. Appraisal • Prohibitions to use of Appraisal Update Report In addition to the prohibitions provided in Mortgagee Letter 2009-51, the following prohibitions are applicable to the use of the Appraisal Update Report: One time use of Appraisal Update Report: An original appraisal report can only be updated one time via the Appraisal Update Report, limiting the use of the Appraisal Update Report to one time. Eligible Intended User of Report: The Appraisal Update Report may not be used when ordered by a lender who is not identified as an intended user in the original appraisal report unless the appraiser incorporates the original report being updated by attachment rather than by reference per Advisory Opinion 3 of the Uniform Standards of Professional Appraisal Practice (USPAP).

12. Resources • www.nifa.org • www.mrbp.usbank.com • www.fhaoutreach.gov/fhafaq • www.rurdev.usda.gov • www.vip.vba.va.gov • www.fanniemae.com

13. Thank you