www.mcflending.net | INVESTOR EXPRESS Update: 7/13/2015 1 INVESTOR EXPRESS (IE30) FIXED Investor Reserves Occupancy # of Months PITI Investment property 6 months Additional Reserves for Each Financed Property 6 months Investor- Fixed and ARM PURCHASE AND RATE TERM REFINANCE 1,2 Occupancy Fico LTV Loan Amount Investment Property 620 80% $1,500,000 Investment Property 620 75% $1,750,000 Investment Property 620 70% $2,000,000 CASH OUT REFINANCE 3 Investment Property 620 75% $1,000,000 Program Matrix Notes: 1. Delayed Financing may be underwritten and priced as a rate term refinance. Maximum LTV per Matrix. Maximum loan amount per Matrix. Rate term cash back amount restriction does not apply. 2. For Rate term transactions, maximum cash back amount is $2,000. 3. For Cash Put transactions, maximum cash back amount is $350,000. *available for CA, CO, WA & OR properties REQUIRES INVESTOR APPROVAL
Refinance Transactions Generally o Unless stated otherwise in the following sections, all refinance
transactions must meet Continuity of Obligation requirements as described in the Fannie Mae Single Family Selling Guide.
Rate/Term Refinances o The new loan amount is limited to
The payoff of the present first lien mortgage; The payoff of any seasoned non-first lien mortgages. A
seasoned non-first lien mortgage is either a:
Purchase money mortgage, or
A mortgage that has been in place for a minimum of 12 months. A seasoned equity line is defined as not having any draws greater than $2,000 in the past 12 months. Withdrawal activity must be documented with a transaction history for the Line of Credit.
Closing costs and prepaid items. o Cash to the borrower(s) is limited to the lesser of 1% of the
principal amount of the new loan or $2,000. o The property cannot be listed for sale at the time of the date
of the loan application. o Inherited properties are eligible may not be refinanced prior to
12 months ownership.
Cash Out Refinance: o Cash proceeds: no limit. o Proceeds may be disbursed directly to the Mortgagor or any
other payee and may be used to pay related closing costs, financing costs, and prepaid items.
o Properties that have been listed for sale within six (6) twelve (12) months of the loan application are not eligible.
o Property must have been owned by the Borrower(s) for at least six (6) months prior to the application date.
o Inherited properties may not be refinanced prior to 12 months ownership.
Multiple Properties Financed/Owned
MCFI will finance up to 10 investment properties
No limit on the number of financed properties the borrower may own
Total amount will be limited to no more than $5,000,000 original UPB for any borrower
Borrower is financing the properties solely for investment purposes, including, but not limited to, for (i) retaining the properties as a stabilized rental, and (ii) monetizing the investment for capital gains purposes. Borrower is required to sign a certification at closing that the properties are not owner occupied and are owned solely for non-owner occupied investment purposes.
Age of Documents 90 days: Credit Report, Assets, Title Commitment 120 days: Appraisal, Power of Attorney
Assets
Funds to Close All borrower funds must be documented with 2 most recent months’ asset statements or VOD covering a minimum of 60 consecutive days.
A written VOD may only be used as supporting documentation and cannot be used in lieu of asset statements. Business funds may be used for down payment and/or closing costs, not for purposes of calculating reserves. Cash flow analysis required using 3 months business bank statements to determine no negative impact to business based on withdrawal of funds.
Borrower must have access to funds
The borrower must be the sole proprietor or 100% owner of the business (or all borrowers combined own 100%)
CPA letter must be included in the file confirming that the withdrawal will not harm the financial strength of the business
Gift funds Not permitted
Reserves
Minimum of six (6) months reserves required for each financed residential property. Reserve amount includes principal, interest, real estate taxes, property insurance, and HOA dues, if applicable.
Eligible Borrowers
U.S. citizens
Permanent resident aliens
Inter-Vivos Revocable Trusts
All individual borrowers must have a valid social security number
Landlord Experience (required)
Borrowers with < 12 months history of managing multiple investment properties are limited to 4 acquired properties in the last 12 months.
Each borrower must have a minimum of 3 open tradelines that have been active within the last 12 months and reporting for a minimum of 12 months.
o One of the three must be open and active within the last24 months and reporting for a minimum of 24 months,
o And at least 1 trade line must be an installment or mortgage account.
Authorized user accounts and non-traditional credit are not considered as acceptable trade lines.
The following credit standards apply:
0x30 in most recent 12 months on all mortgages/rentals.;
No bankruptcies or foreclosures, short sales or deed in lieu within the last 2 years.
Modifications due to adverse circumstances are not permitted within the last 2 years. Modifications that are not the result of adverse
circumstances are permitted, including: o Modification due to a principal pay down with recast may be considered on a case by case basis,
o Modification as part of a previous single-close construction-to-permanent financing transaction.
Only 1 housing/credit event is allowed.
DTI
Max DTI is 43%. For properties designated as stable/leased, a property debt-to-income ratio is calculated for the subject property as follows: ℎ ( )/ ℎ
The monthly payment includes principal, interest, taxes, insurance, and homeowners association dues (as applicable).
The monthly rental income is the gross rental income realized from the property, as evidenced by the current lease. Rental income must be supported by documentation defined in the “Rental Income Documentation” section of the Seller Guide and by the market rent as noted on Form 1007 (1-unit properties) or Form 1025 (2-4 unit properties).
Qualifying rent is the lesser of the original monthly rental amount reflected on the lease and the market rent documented on the appraisal.
Although borrower income (except rental income) is not verified, employment must be disclosed on the 1003. Any gaps in employment spanning > 1 month must be explained and documented by the Borrower in writing. Verification of employment or self-employment confirmation which confirms the borrower’s employment status is required for all borrowers
For wage earners, a verbal verification of employment (VVOE) must be completed within 10 business days before the Note date (or funding date for escrow states);
For self-employed income, verification of self-employed businesses by third-party sources must be obtained within 30 calendar days from the Note or funding date.
Escrows Taxes & insurance escrows required for all loans Escrow holdback are not allowed
Occupancy
Eligible Non-owner occupied (investment) properties with 1 to 4 units
Ineligible Primary residence
Second home residences
Financing & Sales Concessions
Interested party contributions may not exceed 6% of the loan amount. Amounts contributed may only be used for closing costs or for prepaid items. For any financing and sales concessions beyond the 6% limit, both the appraised value and sales price must be reduced by the concession amount for purposes of calculating the LTV.
Rental Income All borrowers: Signed and dated personal tax returns, including Schedule E, for most recent tax year Subject rental property(ies) owned by borrower
Copy of current lease o Leases are required to be for a term of not less than 12
months, though such leases may convert to month-to-month tenancies upon expiration.
3 months rental payment verification
Evidence of security deposit from tenant (if leased) All financed investor properties:
All properties must be listed on the 1003 Schedule of Real Estate Owned
Tax Transcripts A completed, signed, and dated IRS form 4506-T must be completed for all borrowers at closing;
The 4506-T must be processed and tax transcripts obtained for each year requested;
Tax transcripts must match documentation in the file;
In the case where taxes have been filed and the tax transcripts are not available from the IRS, the IRS response to the request must reflect “No Record Found.”
Insurance
Rent loss insurance with coverage equal to at least six months of gross monthly rent must be obtained and maintained on each investment property financed thru Mega Capital Funding. All other insurance per Fannie Mae guidelines.
Non-Arms Length Transactions
Not eligible, except in limited circumstances. With appropriate documentation, following may be considered:
Renter buying from landlord, with at least 24 months cancelled checks evidencing satisfactory pay history;
Sellers or Buyers representing themselves as agent in the real estate transaction.
Appraisal Requirements
Purchases: o One appraisal required for all loans ≤ $1,500,000. o Two appraisals required for all loans > $1,500,000.
2Refinances: o One appraisal required for all loans ≤ $1,000,000. o Two appraisal required for all loans > $1,000,000.
The types of assets that can be used for down payment, cash to close and reserves and the value of those funds are as follows, all of which must be verified with documentation:
Checking/Savings/Money Market accounts – 100%
Publicly traded stocks, bonds and mutual funds – 65% of value may be used
o Non-vested or restricted stock accounts are not eligible for use as down payment or reserve
Individual Retirement Accounts (IRAs), SEP or Keogh accounts – 65% of vested value may be used. (100% of the account value may be used for borrowers aged ≥ 59½).
Annuities – 65% of the vested amount may be used. (100% of the account value may be used for borrowers aged over 59 ½).
401(K) plans – 65% of the vested amount, after reduction of any outstanding loans. The terms and conditions under which funds may be withdrawn or borrowed must be verified.
Trust Assets – borrower/co-borrower must have full access to consider; Copy of complete trust or trustee letter is required.
Business funds may be used for down payment, closing costs and , reserves. Cash flow analysis required using 3 months business bank statements to determine no negative impact to business based on withdrawal of funds.
o Borrower must have access to funds o The borrower must be the sole proprietor or 100% owner of
the business (or all borrowers combined own 100%). o CPA letter must be included in the file confirming that the
withdrawal will not harm the financial strength of the business
Sale of Assets – 100% of the net proceeds from the sale of a residence or other personal assets.
Cash Value of Life Insurance – 100% of the cash value.
Property
Eligible Property Types
Single Family (Detached, Semi Detached, Attached)
2-4 units
PUD (Detached, Attached)Townhomes
Warrantable condominiums (Attached and Detached) Warranty must meet FNMA’s project review guidance.
Working farms, ranches, orchards, and/or commercial operations
Property used for commercial purposes
Unimproved land
Residences lacking kitchen and full bathroom facilities
Hotel Condominiums
Properties in less than average condition as documented by the appraisal
Properties sold at auction by the builder, developer, or construction lender are not eligible
Land Contracts
Factory built housing
Projects in current or pending litigation
Any property not zoned residential
Recent Listings
Rate/Term Refinances: Listing agreement must be cancelled at least six months prior to the application date. Cash Out Refinances: Listing agreement must be cancelled at least six months prior to the application date.
