PDF CMG VA Loan Matrix & Guidelines Wholesale Lending

[Pages:102]CMG Financial, a Division of CMG Mortgage Inc. NMLS#1820 Corporate Headquarters: 3160 Crow Canyon Rd. Ste. 400, San Ramon, CA 94583

CMG VA Loan Matrix & Guidelines ? Wholesale Lending

Loan Matrix ? LTV/CLTV & Minimum Credit Score ? Purchase & Cashout ..........................................................................................2 Loan Matrix ? LTV/CLTV & Minimum Credit Score ? IRRRL..................................................................................................................3 Part A ? Borrower Eligibility ....................................................................................................................................................................8 Part B ? Property Ownership Restrictions............................................................................................................................................16 Part C ? Occupancy................................................................................................................................................................................17 Part D ? Underwriting Documentation ..................................................................................................................................................18 Part E ? Application................................................................................................................................................................................21 Part F ? Credit Analysis .........................................................................................................................................................................23 Part G ? Evaluating Income ...................................................................................................................................................................26 Part H ? Asset Assessment ...................................................................................................................................................................48 Part I ? Liability Analysis .......................................................................................................................................................................55 Part J ? Property Eligibility ....................................................................................................................................................................61 Part K ? Geographic Restrictions..........................................................................................................................................................67 Part L ? Disaster Policy..........................................................................................................................................................................68 Part M ? VA Residual Income ................................................................................................................................................................69 Part N ? Property Insurance...................................................................................................................................................................72 Part O ? Title Insurance..........................................................................................................................................................................79 Part P ? Departing Residence Policy ....................................................................................................................................................81 Part Q ? Refinance Transactions...........................................................................................................................................................82 Part R ? Secondary / Subordinate Financing........................................................................................................................................93 Part S ? Interested Party Contributions (IPCs) / Financing Concessions / Sales Concessions .......................................................95 Part T ? Funding Fee ..............................................................................................................................................................................96 Part X - Links to CMG Policies, Agency Resources, Etc. ....................................................................................................................99 Part Y ? Product Codes / Terms / ARM Information ...........................................................................................................................100 Part Z - Recent Updates / 90 Day Lookback .......................................................................................................................................101

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CMG VA Guidelines ? Wholesale/Select Partner Updated 7/22/2021

Loan Matrix ? LTV/CLTV & Minimum Credit Score ? Purchase & Cashout

Loan Amount Loan Amounts $510,400

Loan Amounts > $510,400 to $1,200,000 Loan Amounts > $1,200,000 to $2,000,000 (3) Loan Amounts > $2,000,000 to $3,000,000 (3) Loan Amounts > $3,000,000 to $5,000,000 (3)

Purchase and Regular Refinance (Cash out ? Type I & II)

Minimum Credit Score Transaction Type & Maximum LTV (1)

600 (4)

620 680 720

Purchase 100% Regular (Cashout) Refinance 90% (5)

760

Maximum CLTV See below (2)

1. LTV may exceed maximum (100%) by the amount of the financed funding fee on purchase transactions only (not cash out ? cash out max is 90%, including financed funding fee).

2. Simultaneous 2nd: the second mortgage loan (in conjunction with the first mortgage) may not exceed the NOV. In all cases, must have 25% guaranty/equity of the lower of Certificate of Reasonable Value/Purchase price. Refer to Part R ? Secondary Financing.

3. Loan amounts greater than $1,200,000 require the following in addition to meeting all VA requirements:

? Minimum six months reserves PITIA ? First time homebuyers not permitted ? Each applicant must have a minimum of 3 trade lines with at least 2 active trade lines (active is defined as last activity date less than or equal to 12

months from the current date) with 12 months satisfactory history on each trade line and a minimum 24 month credit file history. 4. Credit scores from 600-619 permitted subject to meeting all the following requirements:

? Underwriting: AUS approval required (except for IRRRLs). Manual downgrades are allowed with Approve/Eligible findings. "Refer" findings not permitted ? Nontraditional credit is not permitted except as outlined in Part F-3: Credit History & Credit Depth ? SFR/Condo/PUD only (no multi units) ? Gifts are allowed however: Max 31/43 ratios ? Cash out transactions require the following: Second signature, Max DTI 43%, No open collections/judgments, housing payment history required 0x30x24 ? Borrowers must have a verifiable housing history or must demonstrate a regular savings pattern which demonstrates their financial maturity ? All loans/borrower must meet VA residual income requirements and current requirements for DTI restrictions ? Max loan amount $510,400 (closed on/after Jan 1, 2020) ? See ratesheet for pricing adjustments. 5. Principal balance of new loan cannot exceed the amount on loan being refinanced for Type I Cash out Refinance & VA Recoupment requirements apply

See next page for LTV matrix for IRRRL transactions.



Information in these guidelines is for credit policy guidance only and is not a complete representation of CMG Financial (NMLS #1820) Lending Policies. Information is accurate as of the date of publishing and is subject to change without notice. The Guidelines outlined apply to VA loans submitted to DU/LP. In addition to applying these CMG-specific overlays, all loans submitted to DU/LP must comply with the AUS Findings and VA requirements. To verify our state licenses, please log onto the following website: and

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CMG VA Guidelines ? Wholesale/Select Partner Updated 7/22/2021

Loan Matrix ? LTV/CLTV & Minimum Credit Score ? IRRRL

IRRRL Transactions 1, 4

FICO

Maximum LTV/CLTV

Occupancy

Maximum Loan Amount

640 +

No Limit / No Limit 1, 2

Primary& NOO

$1,200,000

620 - 639

110% / No Limit 1, 2, 3

Primary & NOO

$1,200,000

600 - 619

110% / No Limit 1, 2, 3

Primary Only

$510,400 (closed on/after Jan 1, 2020)

1. An appraisal valuation product not required unless discount points are charged on a Fixed-to-ARM IRRRL If discount points are charged, additional requirements may apply. Refer to section Q-4 IRRRL Transactions > QM - NTB - Recoupment - Seasoning section. NOTE: When eligible without a valuation product the "value" for LTV purposes is based on the total loan amount as calculated by the VA Form 26-8923 IRRRL Worksheet. If a valuation product is obtained that value is to be used as a current market value.

2. All IRRRLS require VVOE. Refer to VVOE section.

3. When a valuation product is obtained for any reason, LTV is calculated by dividing the base loan amount (Line 16 on the IRRRL worksheet) by the appraised/AVM value.

4. Refer to Part Q ? Transaction Types ? IRRRL Transactions



Information in these guidelines is for credit policy guidance only and is not a complete representation of CMG Financial (NMLS #1820) Lending Policies. Information is accurate as of the date of publishing and is subject to change without notice. The Guidelines outlined apply to VA loans submitted to DU/LP. In addition to applying these CMG-specific overlays, all loans submitted to DU/LP must comply with the AUS Findings and VA requirements. To verify our state licenses, please log onto the following website: and

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CMG VA Guidelines ? Wholesale/Select Partner Updated 7/22/2021

Category Eligible Transactions

Ineligible Transactions

VA IRRRL Valuation Requirements

Program Details, Highlights & CMG Minimum Credit Standards

Purchase and Refinance. Note: With the exception of VA-to-VA Streamlines (IRRRLs), the VA defines all refinances to be cash-out. Each cash-out transaction will be classified as a Type I or Type II Cash-out Refinance. ? Energy Efficient Mortgages (EEMs) are not eligible. ? Texas 50(a)(6) loans ? VA Regular Refinance loans not meeting GNMA seasoning requirements are ineligible. Exceptions to seasoning requirements for either Regular Refinances or IRRRLs are not permitted. ? Mortgage Credit Certificates (MCCs) are not eligible. If discount points are charged on a Fixed-to-ARM IRRRL, additional VA requirements apply. Refer to section Q-4 IRRRL Transactions > QM - NTB - Recoupment - Seasoning section.

NOTE: When eligible without a valuation product the "value" for LTV purposes is based on the total loan amount as calculated by the VA Form 26-8923 IRRRL Worksheet. If a valuation product is obtained that value is to be used as a current market value and LTV restrictions noted in the matrix apply.

Minimum Loan Amount: $50,000. Maximum Loan Amount: $5,000,000 (including any Financed Funding Fee). All loans with a base loan amount exceeding conventional conforming standard loan amounts must utilize a high balance product code.

All VA loans require a 25% guaranty/equity: VA does not impose maximum statutory loan limits however, VA does publish county loans limits () to determine how much the VA will insure on certain loans. The 25% guaranty may come from the VA or Down payment or both. If VA's Insuring participation is less than 25% of the purchase price / appraisal then the borrower must bring a down payment for the difference. When LGC will not cover 25% Guaranty, a loan amount calculation worksheet must be in the file documenting that the 25% Guaranty/Equity requirement is met.

Loan Amount

For loans closed on and after January 1, 2020, the VA guaranty will be as follows:

a. Full entitlement. For loans above $144,000, the maximum amount of guaranty may not exceed 25 percent of the loan amount. b. Partial entitlement. For loans above $144,000, the maximum amount of guaranty may not exceed the lesser of 25 percent of the loan amount OR 25 percent of the Freddie Mac CLL. c. Married Veterans. When a Veteran and the Veteran's spouse, who is also a Veteran, use dual entitlement to guaranty a loan above $144,000, the maximum amount of guaranty shall be 25 percent of the loan amount so long as one of the Veterans has full entitlement. VA will charge entitlement for married Veterans according to their preference. If both Veterans have partial entitlement, the maximum amount of guaranty may not exceed the lesser of 25 percent of the loan amount OR 25 percent of the Freddie Mac CLL. d. Joint Loans. When more than one Veteran (Vet-Vet) seeks to use their entitlement on a loan above $144,000, if at least one Veteran3 has partial entitlement, the maximum amount of guaranty may not exceed the lesser of 25 percent of the loan amount OR 25 percent of the Freddie Mac CLL. VA will charge entitlement to each Veteran equally. However, unequal charge of



Information in these guidelines is for credit policy guidance only and is not a complete representation of CMG Financial (NMLS #1820) Lending Policies. Information is accurate as of the date of publishing and is subject to change without notice. The Guidelines outlined apply to VA loans submitted to DU/LP. In addition to applying these CMG-specific overlays, all loans submitted to DU/LP must comply with the AUS Findings and VA requirements. To verify our state licenses, please log onto the following website: and

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CMG VA Guidelines ? Wholesale/Select Partner Updated 7/22/2021

Category

VA Funding Fee

Eligible Borrowers

Program Details, Highlights & CMG Minimum Credit Standards

entitlement may be made with a signed written agreement from the Veterans if provided to VA prior to the issuance of the VA guaranty. If all Veterans seeking to use their entitlement on a loan above $144,000 have full entitlement, then the maximum amount of guaranty shall be 25 percent of the loan amount. All other existing VA policies regarding joint loans, such as Veteran/NonVeteran joint loans, remain the same. See VA Pamphlet M26-7, Lenders Handbook, Chapter 7, Section 1, Joint Loans.

All VA loans require a VA funding fee. All or part of the fee may be paid in cash at loan closing or may be included in the loan. Refer to Part T ? Funding Fee for additional details. NOTE: Veterans in receipt of Service Connected Disability Income are exempt from the funding fee.

An eligible veteran is a person who served on active duty in the Army, Navy, Air Force, Marines, or Coast Guard, cadets at service academies, and Public Health Service Officers, and who, (except for a service member on active duty) was discharged or released from active duty under conditions other than dishonorable; or Members of the Reserves and National Guard are eligible upon completion of 6 years of service; or surviving spouses of certain Veterans who are in receipt of Dependency Indemnity Compensation (DIC) from VA. If under age 57 cannot be remarried. VA Circular 26-21-8 outlines Expanded Home Loan Eligibility Based on National Guard Service.

Eligible Terms Occupancy Property Types Condos

Underwriting Method

The Certificate of Eligibility will indicate the amount of available basic entitlement and is required for all transactions, including IRRRLs..

Fixed: 10, 15, 20, 25 and 30 year ARM: 5/1 Arm, Margin 2%, Caps 1/1/5, Lifetime Floor is 5% below start, Index based 1 Yr T-Bill (per WSJ)

Owner Occupied Primary Residence only with the exception that non-owner occupied IRRRL transactions are permitted.

1-4 Family Dwellings, Townhomes, Row homes, Modular, VA Approved Condominiums, Leasehold Estates. Manufactured Homes as outlined in the CMG Manufactured Home Guideline Addendum. With the exception of VA IRRRLs, Condominiums must be VA approved: All loans must be run through an AUS, with the exception of VA IRRRL's which must be manually underwritten. "Total" loan amounts > $510,400:

? With the exception of VA IRRRL transactions, all "total" loan amounts exceeding $510,400 require an AUS approval; ? AUS "Refers" and Manual underwriting not permitted. "Total" loan amounts less than $510,401: AUS Refers may be manually underwritten, but will require a 2nd signature from an UW Manager to be approved unless the loan meets all CMG overlays and has the following characteristics:

o 640 minimum FICO o DTI is 41% i.e., Manually underwritten loans with DTI >41% or credit score 41% will considered on a case by case exception basis with documented compensating factors. Maximum 60% DTI for AUS approved loans. Note: Manually underwritten loans with a backend ratio greater than 41% require a statement justifying the reasons for approval, signed by the underwriter's supervisor, unless residual income exceeds the guideline by at least 20 percent.

Minimum credit score requirements are describe in the LTV/CLTV Matrices above. All borrowers must meet minimum credit score. Refer to Credit depth section below for additional requirements.

Unless AUS approved, a minimum of two credit scores for each borrower is required. For AUS approved transactions a minimum of one credit score for each borrower is required. In order for credit score to be considered valid it must be generated based on sufficient credit. The definition of sufficient credit can vary by borrower. Generally, sufficient credit is defined as at least 3 valid tradelines showing a 24 month history and a debt account balance that demonstrates the borrower's ability to manage debt properly.

o It is not necessary that all 3 accounts are currently active/open but that the overall credit profile of the borrower demonstrates the borrower's ability to manage a reasonable debt load. Caution should be exercised when the borrower has no open accounts, however, when a borrower can demonstrate a history of managing reasonable debt load in the recent past, the credit depth requirement is met.

o Authorized user accounts, deferred student loans and secured credit card accounts are not applicable and should be disregarded.

Alternative credit by itself is not acceptable, however, if a borrower's situation is such that through either housing payment history (0x30x12 documented) or through an established regular savings pattern where the borrower is clearly managing his finances to save for a new home, it can be established that the borrower is demonstrating financial maturity, one alternative credit account may be utilized to meet the requirements above. Chapter 7 must be discharged 24 months preceding application date; Waiting period may be reduced to 12 months when borrower must show that bankruptcy was caused by an extenuating circumstance and exhibit documented ability to manage financial affairs in a responsible manner. Divorce is not generally considered an extenuating circumstance. Underwriting must document file as to why the events that led to bankruptcy aren't likely to recur.

Chapter 13: If borrower has finished making all payments to creditors, the lender may conclude that the applicant has reestablished credit. If borrower has made satisfactory payments for 12 months and the courts approve of the borrower getting new credit, underwriting will review and consider approval. When bankruptcy is still in repayment stage, the payments must be included in the ratio/residual calculation. Proceeds may not be used to payoff BK balance.

Must be completed a minimum of 24 months preceding application date. If foreclosure was on a VA loan the borrower may not have full entitlement. The COE must reflect the required entitlement for the new loan to be approved.



Information in these guidelines is for credit policy guidance only and is not a complete representation of CMG Financial (NMLS #1820) Lending Policies. Information is accurate as of the date of publishing and is subject to change without notice. The Guidelines outlined apply to VA loans submitted to DU/LP. In addition to applying these CMG-specific overlays, all loans submitted to DU/LP must comply with the AUS Findings and VA requirements. To verify our state licenses, please log onto the following website: and

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CMG VA Guidelines ? Wholesale/Select Partner Updated 7/22/2021

Category

Compliance

Texas Refinances Subordinate Financing

Collateral

Ineligible Properties

Escrows

Max. # of Financed Properties Multiple Mortgages to the Same Borrower

Program Details, Highlights & CMG Minimum Credit Standards

VA IRRRLs must meet all Qualified Mortgage requirements. VA requires a final borrower signed copy of the TRID-CD on all loans. Refer to Circular 26-16-11. A CD that materially changes the fee structure to the borrower will need to be signed by the borrower. The reason VA requires this is so that the borrower is fully aware if any material change has been made to the fees and charges being assessed. ? Texas Section 50(a)(6) Transactions not permitted. ? A copy of the original Note is required to verify the original loan balance and the loan is not TX A6 ? Texas transactions when converting a home equity loan (A6) to a non-home equity loan must meet additional requirements.

Subordinate financing is permitted as long as all VA requirements and GNMA Guaranty/Equity requirements are met.

Required appraisals must be ordered via VA webLGY. For IRRRL transactions refer to the VA IRRRL LTV/CLTV Grids & Valuation Requirements Sections. All repairs affecting safety, livability, or habitability must be completed prior to closing. Completion holdbacks must be prior approved by CMG Corporate Credit. In addition to ineligible properties noted in the VA Lender's Handbook, the following are ineligible: Deed Restricted Properties, Properties with Individual Water Purification Systems, New York CEMA Transactions. Note: 3 - 4 unit properties in New York & New Jersey are eligible subject to 100% prefunding QC audit. Tax and Insurance escrows are required on all VA loans. Effective on loans closed on or after January 1, 2016 that require flood insurance: the premiums related to the flood insurance must be escrowed - escrows for these premiums may not be waived, regardless of LTV. If flood insurance premiums are paid by a condominium association, homeowner's association or other group, no escrow is required. Note: CMG does not permit escrow for earthquake insurance.

VA does not limit the number of financed properties a borrower may own. Generally, borrowers with more than ten (10) properties are not eligible for VA financing with CMG.

? Borrowers are limited to three (3) loans or one million dollars ($1,000,000) total in loans funded/purchased by CMG, whichever is less. Jumbo loans are excluded from loan amount limit, but still count towards the aggregate total of loans with CMG. ? Maximum of 2 financed units for one borrower in a single condo project or PUD

Verbal Verification of Employment

For all transactions, including IRRRLs, a Verbal Verification of Employment (VVOE) must be completed within ten (10) days of funding date.

(VVOE)

4506T & Tax Transcripts

A fully complete and signed 4506T for each borrower is required. Refer to CMG's Income Validation Policy for details regarding tax transcript requirements.



Information in these guidelines is for credit policy guidance only and is not a complete representation of CMG Financial (NMLS #1820) Lending Policies. Information is accurate as of the date of publishing and is subject to change without notice. The Guidelines outlined apply to VA loans submitted to DU/LP. In addition to applying these CMG-specific overlays, all loans submitted to DU/LP must comply with the AUS Findings and VA requirements. To verify our state licenses, please log onto the following website: and

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Part A ? Borrower Eligibility

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CMG VA Guidelines ? Wholesale/Select Partner Updated 7/22/2021

A-1 ? Citizenship or Residency Status A-2 ? Eligible Borrowers A-3 ? Ineligible Borrowers A-4 ? VA Guaranty / Entitlement / Joint Loans / Special Handling / Prior Approval A-5 ? Power of Attorney A-6 ? Living Trust (Inter vivos Revocable Trust)

A-1 ? Citizenship or Residency Status

Borrowers must be US Citizens or document their non-US Citizen status using the following guidelines:

Required Identification

All borrowers are required to have a valid driver's license, state issued identification or passport on all transactions.

Permanent Resident Alien

Individuals granted permanent residence status in the U.S. also includes refugees and others seeking political asylum. Documentation is commonly referred to as a `Green Card'. Permanent Resident Aliens must provide any of the following documents to validate acceptable status:

? Permanent Resident Card (USCIC form I-551) o May be issued as a conditional right to reside for individuals seeking residency through marriage to a US Citizen/ Permanent Resident Alien or based on a financial investment in a US business. o These cards have an expiration date and are valid for two years o At the end of two years the individual must apply for an unconditional right to reside or risk losing their permanent resident status. o Cards due to expire within 90 days must be accompanied by a copy of the USCIS form I-751 (Petition to Remove Conditions on Residence) or USCIS form I-829 (Petition by Entrepreneur to Remove Conditions) filing receipt. o Cards may be issued without conditions and are valid for 10 years. o Cards that are due to expire within six months must be accompanied with a copy of the USCIS form I-90 (Application to Replace Permanent Resident Card) filing receipt.

? Unexpired Foreign Passport o Must contain an unexpired stamp reading "Processed for I-551 Temporary Evidence of Lawful Admission for Permanent Residence. Valid until mm-dd-yy.



Information in these guidelines is for credit policy guidance only and is not a complete representation of CMG Financial (NMLS #1820) Lending Policies. Information is accurate as of the date of publishing and is subject to change without notice. The Guidelines outlined apply to VA loans submitted to DU/LP. In addition to applying these CMG-specific overlays, all loans submitted to DU/LP must comply with the AUS Findings and VA requirements. To verify our state licenses, please log onto the following website: and

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