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Announcement 2020-059 - Conventional Conforming and Government Guideline Updates

Updated May 7, 2020

The following changes are effective with all new locks or registrations on or after May 7, 2020. 

 

Conventional Conforming Agency Transactions

  • A minimum 660 credit score is required for all transactions
  • Cash-out refinance transactions are not permitted
  • Investment Property Transactions
    • Rental income from the subject investment property cannot be used for loan qualification
    • Three (3) months reserves are required in addition to standard reserve requirements per the product
  • Short-term rental income from the borrower’s primary residence is no longer eligible
  • Age of documents – income and asset documents must be within 60 days prior to the note date

 

VA Transactions

  • Debt-to-income ratio greater than 45% requires an additional two (2) months reserves
  • Maximum $1,000,000 loan amount

 

FHA, VA, and USDA Transactions

  • The higher of 660 credit score or the product requirement is required for all transactions
  • Maximum $1,000,000 loan amount
  • Age of documents – income and asset documents must be within 60 days prior to the note date

 

Conventional Conforming, FHA, VA, and USDA Transactions

  • When rental income from other real estate owned is being used to qualify, the following is required:
    • Evidence of the most recent two (2) months receipt of rental income for each rental property owned, and
    • Six (6) months’ reserves required for each rental property owned in addition to standard reserves required per product, and
  • When rental income is being used to qualify when converting a primary residence to a second home or investment property, the following is required:
    • Six (6) months’ reserves required for each rental property owned in addition to standard reserves required per product, and
    • Evidence of proof of receipt of the security deposit and, if required by the lease, first month’s rent.
  • Self-employed borrowers are required to provide a year-to-date profit and loss statement and balance sheet dated no more than 30 days prior to the note date
  • The borrower(s) cannot have had any mortgage in forbearance in the past 30 days as of application date

 

Temporary Guidance Announcements

The product profiles will not be updated with the below temporary guidelines related to COVID-19 (with the exception of credit score and financing type updates). Refer to all previously issued announcements.

 

For additional information, below are links to Fannie Mae and Freddie Mac Frequently Asked Questions

 

As a reminder, NewRez is not adopting all flexibilities in the Fannie Mae and Freddie Mac announcements, therefore some guidelines in their announcements and FAQ may not apply.

 

Please reference the NewRez Product Profiles located in the Lending Library or on NewRezWholesale.com for the changes outlined in this announcement.