Basic Guidelines

Ltv< 83%
DTI<43%
AUS
DO/du- Fannie- findings
Lp- Fred- feedback certificate
Total scorecard - FHA
Form 1003- Uniform Residential Loan Application Form
W2 Form- Tax data/ employer to IRS
If ltv>83%, mortgage insurance is necessary
Upfront mi vs monthly mi
1-4 unit property: single, duplex, triplex, quadplex
Detached
On single lot, single dwelling
Least risky
Up to 95% ltv
Attached
Shared wall(s)
At most 90% ltv
Condos
<80% ltv
No more than 4 stories
Ownership is with HOA
Occupancy type
Primary: >6 months, 5%DP
Secondary: <less than 6 months
Rent/investment; 25% DP
Credit bureaus: credit info for consumers
Transunion, Experian, Equifax
FCRA (fair credit reporting act)
Consumer can challenge reports
Regulations for loan docs
-TILA: Truth in lending act: TIL Form; initial disclosures; discloses APR, manages
advertising;
-RESPA: Real Estate Procedures Settlement Act: GFE form (Good faith Estimate)
-ECOA: Equal Credit Opps Act
FLA; Fair lending ACT
-Safe ACT; safeguards borrowers

-TILA enforced by HUD (housing and urban development)

-DAUD FRANK Bill regulates banking/lending industry
-CFPB regulates Respa
-National Mort licensing system
-Transfer Taxes and Property taxes are in Escrow
Escrow
-Daily interest charges in Escrow
-Escrow Account is held by the lender for PITI from borrower
-Title companies also provide escrow services.
-Prepaid: items borrower pays in advance to pursue transaction. Prepayments
go to escrow.
-All loans are due on the first of each month.
-All conventional loans with ltv>80% require Escrow a/c
-State of California requires Escrow a/c wit ltv>90%
-County/Govt has first lien on property: hence tax payments are ensured by
lender
-Initial Escrow Account Disclosures.
-Aggregate Adjustment
Three Major categories of Loan Docs
-Loan Application (L B): acceptable if borrower provides property address, credit
info, SSN, Name etc.
-Initial Disclosure (L B): generated after sign. TIL, GFE, Form 4506-T (authority to
retrieve tax data from IRS) 4506T at initiation and closing; SSA Form for
conventional loans, Intend to continue,
-Credit Docs (L) : <90 days old
-Income info (B): <60 days old
-Asset info (B): <60 days old: Checking a/c, CD
-Appraisal Report (Appraisal/L) : <120 days old
-Title Report (Title agency/L)
-Home owners Insurance (B):
-Title commitment report: vesting (ownership) and seasoning (duration of
ownership)
-Title insurance (B): against potential past title claims
Closing Documents:
HUD 1 Settlement Statement
Prepared by the closing agent, this form lists all the important details regarding the sale/purchase of your new
home: price, amount of financing, loan fees and charges, prorated real estate taxes and amounts paid between
you and the seller. It must be signed by both you and the seller. Your lender will keep the original.
Truth in Lending Act (TILA)
Shortly after you applied for your mortgage, you received a truth-in-lending statement from your lender, including
your estimated monthly payment and the total cost of all finance charges involved in your mortgage. Youll get a
final TILA statement at the closing if these amounts have changed.
Mortgage note
the mortgage note is legal evidence of your mortgage and includes your formal promise to repay the debt. It also
spells out the amount and terms of the loan, along with the penalties the lender can impose if you do not make
your payments on time as well as any prepayment penalties that may be required.
Deed of trust
this document gives your lender a claim against the house if you dont live up to the terms of the mortgage. It lists

the legal rights and obligations of you and the lender, including the lenders right to foreclose on the home if you
default on the loan.

Types of income
-Earned income: W2 Forms, Paycheck stubs, VOE directly from employer.
Salary
Bonus
Commission
Stock Options: Requires history of receipt and stock performance.
Overtime.
-Business income: if>25% stake, then business tax returns, at least 2 years of
history.
-Interest/Dividend income: 2 years and likely to continue
-Trust
-Retirement: post 55 years; social security income, 401K/403B(teachers)
-Rent
-Income has to be consistent, reliable and stable to be qualified; 2years in the past,
3 in future.
-If income has decreased, then use the latest amount for qualifying purposes.
-If income has increased, then average out. Seek continuation.
-Income can be paid weekly, biweekly, monthly and semimonthly.
-Sole Proprietorship: Schedule C (Form 1040)
-From rental real estate, royalties, partnerships, S corporations, estates, trusts,
REMICs: Schedule E (Form 1040)
- Itemize Deductions: Schedule A (Form 1040)
-Contractual employee: Form 1099