Catalina

Underwriting Guidelines

 

As of 01/07/03

 

 

 

Link to Underwriting Options

 

 

Borrower Eligibility

 

 

title requirements

Inter Vivos Trusts

 

 

residency

Permanent Resident Aliens

Non-U.S. citizens who are lawful, permanent residents of the United States are eligible under the same terms available to U.S. citizens. Permanent resident aliens must have any of the following:

Non-Permanent Resident Aliens

 

Restrictions

Non-Conforming and

Non-Conforming Expanded Criteria

Eligible Property Types

Single unit owner-occupied primary residence.

Eligible Finance Type

Purchase or Rate and Term refinance only.

Maximum LTV

Refer to the individual loan program.

Credit/Employment 1

1 )LTV >75% and all reduced documentation loans, borrower (s) must have established 2-year credit and employment history in the U.S.  Borrowers must also be able to verify the probability of maintaining employment in the U.S. for an additional 2 years.

2) LTV < 75%, borrowers must have established a 2-year credit and employment history in the U.S. or a foreign country. A foreign or international credit report is required to document a credit history outside the U.S.

Residency 1

1) LTV >75% and all reduced documentation loans require minimum 2 year U.S. residency.

2) LTV < 75% requires minimum 2-year

residency history in U.S. or a foreign country.

Funds

For LTV >75% and all reduced documentation loans, funds must be in U.S. institutions. If funds are transferred from a foreign country, borrower must provide proof of ownership.

(1) Loans for non-permanent resident aliens who do not have the required 2-year credit, employment or residency history must be originated and closed under the Foreign National programs.

 

 

Foreign Nationals

Non-United States citizens, who are not permanent or non-permanent resident aliens, and do not have full or partial diplomatic immunity must meet the standard requirements of an eligible borrower.  Foreign Nationals must provide:

 

 

ineligible borrowers

 

 

multiple loans to one borrower

The number of loans the investor will extend to one borrower is limited to no more than four (4).  For example:

Exception

The number of loans Investor will extend to one borrower may be increased up to eight (8) provided the transaction meets the following criteria:

 

Property Type

Loan Type

Transaction

Maximum LTV

One Unit

Fixed Rate

Purchase or Rate/Term

60%

 

 

number of properties owned

Note: Some loan programs may be more restrictive. Refer to the individual loan program guidelines.

 

Occupancy

Conforming

Non Conforming

Non Conforming Expanded Criteria and Non-Conforming Expanded Criteria Conforming Loan Balance

Owner-Occupied

No restrictions

No restrictions

No restrictions

Second Home

10 1

4

  • Full and Alt Doc: Unlimited 1

  • Reduced, No Ratio or NINA: 4

Investment Property

10 1

No restrictions

No restrictions

1) Borrower may not be affiliated with the builder, developer, or seller of the subject property.

 

 

non-occupant co-borrowers

 

 

non-arm's length transaction

Non-arm’s length transactions with non-family members will only be considered if it is a bona fide sales transaction and the borrowers will occupy the property as their primary residence.

 

 

occupancy

Primary Residence

Second Home

Investment Property

Exception (Conforming loans only): The two-year history managing rental properties and six- months' rent loss insurance coverage requirements may be waived if the borrower qualifies for the mortgage based on the full payment (PITI) for the subject property without having to rely on the rental income.

 

 

 

non-purchasing spouse

 

 

 

purchasing from builder

If borrowers are purchasing a property from a builder who is purchasing the borrower's existing residence, it is considered a non-arm's length transaction and is not permitted

 

 

Credit Requirements

 

 

credit history

When evaluating the borrower's credit history, the following factors should be considered to determine if the borrower's Credit is acceptable:

 

A borrower whose income or assets are used for qualification must have at least the following for:

 

 

minimum credit score

See Product Matrices

 

 

age of report

 

 

 

Representative credit score

A single, representative credit score can be selected for each borrower. A representative score is then designated for the borrower and the loan, as follows:

Borrower Representative Score:

Loan Representative Score:

Equity Loans

Note: If the borrowers' incomes are equal, the lowest score, or lowest middle score of all the borrowers should be used.

Note: Some non-conforming loan programs may have more restrictive guidelines for determination of the credit score. Refer to the appropriate loan program for information.

 

Usable Credit Scores

For a credit score to be considered valid and usable, it must be based on a minimum amount of information. Generally, a usable credit score is based partially upon a minimum number of trade lines that have been open for a minimum length of time. The following standard guidelines should be used when reviewing the borrowers credit history. Refer to the appropriate loan program guidelines for specific credit score requirements.

Requirements

Conforming Loan Programs (except Fast & Easy)

Conforming  Fast & Easy, Non-Conforming, Non-Conforming Expanded Criteria, and Non-Conforming Expanded Criteria Conforming Loan Balance

Minimum Credit History

2 years

2 years

Minimum Number of Tradelines*

N/A

(as long as there is a credit score and the required minimum credit history)

3

(At least one trade  line must be currently open and not be a collection or charge-off)  

Note: All 3 trade lines need not have been open for 2 years

Recent Activity

N/A

(as long as there is a credit score and the required minimum credit history)

At least one trade line must have had activity in the last 6 months

 

Credit Score Not Available

If a credit score is not available or if the credit score is not usable, the borrower may not be eligible, depending on the loan program.

 

Conforming Loan Programs

Non-Conforming,

 Non-Conforming Expanded Criteria, and Non-Conforming Expanded Criteria Conforming Loan Balance

If the borrower does not have a credit score, a non-traditional Mortgage credit report is required

If the borrower does not have a credit score, they are ineligible under these loan programs (Exception: Foreign Nationals)

 

Non-traditional MCR

Exception: The Foreign National Program allows the use of a non-traditional mortgage credit report.

Credit Score Review

Credit scores should be used to assist in determining the borrower's willingness to repay a mortgage. During the underwriting process, the following chart should be used to determine the level of review required for the loan:

 

Credit Score

Property Type

Level of Review Required

Over 660

1 unit

BASIC

Over 680

2 units

Over 700

3-4 units

620 to 660

1 unit

COMPREHENSIVE

640 to 680

2 units

660 to 700

3-4 units

Less than 620

1 unit

CAUTIOUS

less than 640

2 units

less than 660

3-4 units

 

Basic

The loan should be underwritten to confirm the borrower's willingness to repay the mortgage as agreed.

Comprehensive

All aspects of the borrower's credit history should be underwritten to establish the borrower's willingness to repay the mortgage as agreed

Cautious

 

 

 

business credit reports

 

 

bankruptcy

 

 

foreclosure

 

 

judgments/collection/tax liens/adverse credit

When reviewing derogatory credit, the following general guidelines apply.

Conforming and Non-Conforming Loans:

Any outstanding judgments and/or tax liens, as well as any other derogatory items appearing in the title policy (e.g., delinquent taxes, tax liens, mechanics’ liens, and collections) must be paid/released to the satisfaction of the title company.

Conforming Loans Only:

Refer to the individual loan program for more restrictive requirements.

 

 

 

Financial Mismanagement

 

 

payoff debt to qualify

Revolving Debt

If any portions of the loan proceeds are being used to pay off debts for qualification purposes, the underwriter must count a minimum $10 per month payment for revolving debts and include these debts in the total debt ratio.

Installment Debt

Note: Student loans with more than three (3) years' deferment do not have to be included in the calculation of the borrower’s liabilities.

 

 

 

divorce

See "Financial Mismanagement" section above

 

 

credit counseling

Active Participant

Only sub-prime loans with an LTV less than or equal to 90% are eligible for purchase by Investor when borrowers are currently participating in a credit counseling program. All other loan programs are not eligible.

Previous Participant

When a borrower's credit report reflects they have been in credit counseling, there must be a minimum of 12 months' seasoning on credit re-established since the credit counseling was terminated. The re-established credit may not include accounts paid through credit counseling.

Note: Credit bureaus generally do not actively track credit counseling history in the borrower's credit file. If a completion date is not shown on the credit report, the borrower must submit verification from the counseling agency establishing the date of completion.

 

 

 

upgrading credit

Not available

 

 

 

Alternative credit

When verifying non-credit payment references, sufficient information must be obtained to establish:

 

 

Income Requirements

 

 

acceptable income

 

 

unacceptable income

Any income or compensation for qualifying borrowers whose source of income cannot be verified by the Seller is not allowed.

 

 

 

Employed by relatives

 

 

employment history

 

 

documentation type

Full Doc

Note: Documents must be legible and free of any alterations, erasures, white-outs, or similar indications that changes have been made.

Alt Doc

Alternative Documentation is available for owner-occupied primary residences, second homes and investment properties. Refer to the individual loan program guidelines for eligibility.  General requirements are:

Reduced Doc

Non Conforming Loan Programs

Non Conforming Expanded Criteria and Expanded Criteria Conforming Balance Loan Programs

Passive or Unearned Income

If the primary source of income is unearned or passive income, then the source must be verified. An income amount must be stated and the file must contain reasonable documentation that the income exists. Verification may be obtained verbally and should be obtained from a third party source, such as a CPA, attorney, or trust administrator. Examples of passive or unearned income include:

Verification of Assets

Assets must be disclosed and verified through Full or Alternative documentation subject to the following requirements:

 

 

Stated Income

Income is disclosed on 1003