Saxon Mortgage Guidelines

Saxon / Indymac

Mortgage Guidelines

Increasing Your Sales Volume

Through Diversified Loan Products

Overview of Program Descriptions

• Borrower Benefit

– All loans must provide a benefit to the borrower

• Credit Reports & Credit Scores

– Primary borrower has the greatest monthly income

– Borrowers with same income, higher of the two scores

used for qualification

– When uploading to the Saxon AU system, if credit is

accidentally ordered, new report becomes the report for

qualification

Saxon Indymac

60 days to Funding 120 days to Note Date


• Mortgage / Rental History– History for previous 12 months required for all

programs

– No 30-day lates allowed for 12 month period for Indymac Alt-A

• Saxon & Indymac NP: Refer to rate sheet for 30 day lates

– Six (6) rolling equates to 1x30

• Collections, Charge-offs & Judgments– If any affects title, must be paid at closing

regardless of amount

– IRS or state / local tax judgment or settlement < $5K does not need to be paid at closing

• Only if not yet a recorded lien against property


• Collections, Charge-offs & Judgments

– If not a recorded lien against property…

• Payment evidenced by payment plan from IRS

Or…

• Estimated payment calculated at 2% of reported

balance included in the DTI

– IRS or state / local tax judgments > $5K must

be paid or evidenced to be in debt repayment

plan

– Judgments requiring payment must be verified

as paid and dismissed or paid at closing

– Past due child support must be paid current

• Exception: Child support wage garnished by Court


• Collections, Charge-offs & Judgments– Alt-A Loans

• Primary and Second Homes

– Collections and Charge-offs up to $5,000 aggregate do not have to be satisfied

• Investment Properties

– Collections and Charge-offs up to $250 per account and $1,000 aggregate do not have to be satisfied

– NonPrime Loans• Medical accounts, regardless of amount, need not

be paid

• Judgments, collections and charge-offs older than12 months that do not affect title and no wage garnishments, do not have to be satisfied

• Collections and charge-offs dated within 12 months up to $5,000 aggregate do not have to be satisfied


– Twelve Months measured as follows:

• Charge-offs: The date account became a charge-off

• Collections: Opening date of the original collection

account

– If sent to collection agency, opening date with agency

is used

• Judgments: Either the date the judgment was

granted by the court or the date judgment was filed


• Foreclosure & Foreclosure Events

– Term ‘foreclosure’ used to define a reporting on

credit report and includes:

• Foreclosure filed

• Foreclosure redeemed

• Foreclosure started

• Notice of default

• Real estate mortgage settled for less than full balance

• Deed in Lieu of Foreclosure

• Any delinquency reported 120 days late or more on

credit


• Mortgage Foreclosure

– Must be greater than 2 years if…

• Credit score greater than or equal to 600

• LTV does not exceed 90%

– All other scenarios, foreclosure must be

greater than 3 years

• Mortgage Delinquencies

– A+ & A programs do not allow rolling lates,

each late counted individually

– A- allows rolling 30 day lates

• Maximum of 6 counted as 1 delinquency

• Lates greater than 30 days are counted individually


• Income Documentation Requirements

– Saxon & Indymac NP

• Last 2 consecutive pay stubs

• Previous 1 years’ W2s

– Indymac Alt-A

• Last 2 consecutive pay stubs

• Previous 2 years’ W2s

– Self-Employed, Full Documentation (S/I)

• Previous 2 years’ tax returns signed and filed by

borrower, and…

• Year to Date profit and loss for the current year if

self-employed


• Twelve Months Bank Statements

– Personal (W2 Borrower) or Business (Self-

Employed) bank statements from a checking

account allowed

• 100% of normal gross deposits

– No NSF activity allowed for loans in excess of

80% LTV

• NSF activity requires tax returns and a current P&L

or pay stub

– Borrower may use two accounts to qualify

• Accounts must be of the same bank account type

– 2 personal or 2 business, not 1 personal and 1

business


• Twelve Months Bank Statements continued

– All pages of each statement are required

– All parties on bank statements must be on the

loan application

– Proof & Verification of 2 years employment or

business is required

– Fixed income sources must be documented

through awards letter and evidence of current

receipt

• Twenty Four Months Bank Statements

– Same as twelve months except…

– Borrower may not use 2 accounts to qualify


• Indymac Bank Statement Program– Only available for NonPrime Loans

– Not available if employed by relative or in a family business

– Must have 1 year employment with same employer (self-employed, in the same business)

– Borrower(s) must be only person(s) shown as account holders

• Statements showing other individuals can not be used for qualifying purposes

• Unusual deposits must be explained

• 100% of deposits from personal accounts

• 50% of deposits from business accounts

Overview of Program Guidelines

• Limited Documentation

– Six (6) months personal / business bank

statements required

– Corporate bank statements generally not

accepted at any LTV

• Stated Income

– Income must be reasonable for profession

– Fixed income borrowers not eligible

• Debt Ratios

– Maximum debt ratio is 55% or less

– Affordability & Disposable income guidelines

applied to each loan

Overview of Program Description

• Private Mortgage Insurance

– Borrower-paid mortgage insurance not

required on any Saxon loan

– IM Alt-A: Required for 80.01% or greater LTV

• Escrows for Taxes & Insurance

– Escrow required when property taxes are

currently delinquent

• Property Valuation

– Property valuations required on all loans

• i.e. Full appraisals, No AVMs allowed


• Ineligible Properties

– Manufactured Homes

– Attached dwellings without HOAs

– Square Footage Restrictions

• Properties less than 700 square feet

– Multi-family dwellings: All units

• IM Alt-A: Reasonable for area

• IM NP: less than 600 square feet

– Mixed-use properties regardless of zoning

classification


• Saxon State Restrictions

– Alaska

• > 90% LTV, minimum credit score of 620

• Single family within city limits of Fairbanks,

Anchorage or Juneau

• Limited doc: max 90% LTV

• Stated doc: max 85% LTV

– Ohio

• No Stated Income

• No Interest Only

Collateral Overview

• Saxon Rural Properties

– Limited to 80% LTV

– Maximum loan amount is $600K

– Acreage

• Parcels up to 15 acres will be considered

• No loans on working farms, orchards, or ranches

Collateral Overview – IM Rural

Indymac Alt-A

Number of Acres Max LTV & CLTV

20.01 - 30 75%

30.01 - 40 70%

40.01 - 50 65%

> 50 Not Permitted

Indymac NonPrime Loans

Number of Acres Max LTV & CLTV

10.01 - 20 70%

> 20 Not Permitted

Collateral Overview

• Condominiums

– Minimum number of units is 5

• 2-unit Condos accepted if prevalent for the market

– 60% of units must be owner-occupied

– No single entity may own more than 10%

– HOA has no pending litigation

– All common areas must be completed

– HOA certifications required for all loans

– Saxon does not allow single-unit condos

– HOA in control of property or have

FNMA/FHLMC approval confirmed

• www.efannymae.com

• State-by-State listing of approved Condo projects

Collateral Overview

• Two-to-Four Family Units– 75% of rental income allowed with current

rental agreements in file (S/I)

– Lesser of economic rent or actual rent will be used

• Investor & Second Homes– Number of Loans

• Three per individual

• Borrower may only have one loan with an LTV >80%

– Second Home Definition:• Property with no long-term lease, rental income not

used to qualify borrower, property not rental for more than three months of the year, not in the same area as the primary residence

Collateral Overview

• Land Value Ratios

– Typically, land should not exceed 35% of the

appraised value of the property

California, Connecticut,

New York

Up to 80%, providing it is

typical and customary for

the area

Florida



the area

All other states



the area

Collateral Overview

• Leaseholds

– Currently accepted in areas of Maryland,

Mississippi and California

• Maximum Loans Per Person

– Maximum of three loans and / or an aggregate

exposure of $2M will be allowed per individual

borrower

– Only one loan can be considered owner-

occupied

– Borrower may only have one property

considered as a second home

Collateral Overview

• Maximum Loans Per Person

– Alt-A & Conforming

• 10 total properties

• Total aggregate of $2M for second and investment

homes

• Total aggregate of all properties, including primary

residence, is $5M

– NP

• 4 total properties

• Total aggregate of $1M

– NINA

• No more than 2 total properties

– Total Ownership: No more than 20 properties

Appraisals

• Approved Appraisers

– Required to be licensed as required by state law

– Refer to web site QMR listing for appraisers who

have been suspended prior to full loan submission

• Maximum Loan Amounts / Appraisals

– Up to $500K: 1 Full Appraisal

• > $500K for IM NP, > $650K for IM Alt-A

– Total of five (5) comparables will be needed

– > $500K: 2 Full Appraisals

• > $650K: AZ, CA, CT, FL, MA, MD, OR, RI, VA, WA

– Second appraisals must be ordered from a

National / Regional Approved Appraiser

• Saxon maintains listing for second appraisals

Appraisals

• Age of Subject Property

– Appraiser expected to support the effective

age of the property through narrative

description and / or interior photos

– Interior photos may be required on properties

in excess of 75 years of age

• Permanent Heat Source

– All homes must be livable year-round

– Permanent Heat Source is defined as:

• Not portable

• Hard-wired or piped

• Externally vented

Appraisals

• Comparables

– Appraiser must report a minimum of three

closed sales

– May be required: Information pertaining to a

minimum of one current listing and one

pending sale

• Information may be needed to ensure most current

data regarding market trends is taken into

consideration

• Age of Comparables

– Within six months from date of appraisal

• Sales within 12 months acceptable if appraiser

explains necessity of using older sales

Appraisals

• Adjustments

– Net adjustments for each comparable should

not exceed 10% of that comparable’s price

– Gross adjustments for each comparable

should not exceed 20% of that comparable’s

sales price

• Appreciation

– > 10% during the last 12 months, appraiser

must supply additional documentation to

support estimated value

• Appraisal must be dated within 90 days of

loan submission date; 120 days for IM

Credit Evaluation

• Consumer Credit Counseling (CCC)

– CCC must be paid and ‘discharged’ either

prior to or with the proceeds of the loan for all

cash-out loans

• Deferred Student Loans

– Student loan payments must be included in

the DTI regardless of status

• 3% of total outstanding balance

– IM ALT-A: Included at $14 per $1,000

– IM NP: Can be excluded if…

• Borrower is currently enrolled in school, and…

• Loan has been deferred for at least 6 months from

the date of the loan application

Job / Income Stability

• Full Documentation

– Hand written pay stubs

• Certified statement from employer’s CPA

Or…

• Six months bank statements showing earnings

deposits

– Employment Gaps

• Gaps in excess of 30 days must be explained in

writing

– Employment by a Relative

• VOE

• Previous 1 year’s signed federal income tax returns

and W2s


– Overtime & Commission

• History of receipt

• Averaged from the previous year and current year-

to-date to determine appropriate amount

– Bonus Income

• One year history of receipt and VOE from current

employer indicating probability of receipt continuing

• Other Income

– Child Support

• Evidence that amount has been received for last 12

months and currently being received

• Must have continuance for three (3) years


– Interest / Dividend Income

• Income that has been received for last 24 months

and is properly documented may be used

– Part-time or Seasonal Income / Second Job

• 1 year history and likelihood of continuance

– Retirement / Pension Income

• Letters from organization or copies of award letters

• Tax returns


– Social Security Income

• Gross up 25%

– Unemployment Benefits

• Previous one year’s tax returns to prove history

Job / Income Stability– Foster Care

• Generally not acceptable as an income source

• Adult foster care never allowed as income source

• IM: Verify two (2) years of receipt

– Trust Income• Trust Agreement or trustee’s statement confirming

the amount and frequency of payments

• Trust must be irrevocable

– VA Benefits• Acceptable income if verified by letter or distribution

form from VA

• Gross up of 25% if verified VA benefits are tax-free

– Disability Income• Verified by agency award letter or company

acknowledgement



• Statement must identify benefit amount, payment term and probability that benefits will continue for a least a three (3) year period

• Gross up of 25% if verified that the disability income is tax-free

– Raises• Anticipated raises can be included if…

– Raise is documented in the VOE

– Amount is reasonable for occupation

– Effective date will be no later than three months from the date of the loan approval

– Rental Income – Stated Documentation• Where the primary residence is the subject property

and borrower owns investment properties, stated rental income is allowed when the mortgage for the investment property is rated on credit report


– Temporary Services

• Two-year history of such employment

• Current earnings supported by 24-month average

Debt-to-Income Analysis

• Affordability Guidelines

Gross Monthly Income

Per Household

Maximum Debt To

Income Ratio

Up to $1,000 40%

$1,000 to $1,500 45%

$1,501 to $5,559 50%

$5,560 and above 55%*

*Not available on all products. Refer to matrices for maximums allowed


• Disposable Income

LTV DTIMinimum

Disposable Income

0-70 0-50 $1,000

0-70 50.01-55 $1,500

70.01-90 0-45 $1,000

70.01-90 45.01-50 $1,500

70.01-90 50.01-55 $2,000

90.01-100 0-45 $1,000

90.01-100 45.01-50 $1,500

90.01-100 50.01-55 $2,500


• Financial Obligations

– Revolving Accounts

• Payments calculated on 5% of outstanding balance,

or stated monthly payment on credit report (S/I)

– Installment Debts

• 10 payments or less may be excluded

– Co-Signature Debts (to exclude from DTI)

• 3 months cancelled checks proving payment

– Alimony & Child Support (to exclude from DTI)

• Evidence of payments lasting less than 10 months

• Delinquent child support must be paid current


• Financial Obligations

– 401K / TSP or other loans secured by financial

assets

• Payments may be excluded from the monthly DTI

– Business Debt in Borrower’s Name

• 12 months cancelled checks showing payments

being made by business

Miscellaneous Guidelines

• Ownership Seasoning– Borrower must be on title to the subject

property for at least 12 months• IM: 90 Days

• Properties Previously or Currently Listed For Sale– Current listing of property is unacceptable

– Properties listed during previous six months:• Borrower provides explanation of why property was

removed from the market

• Copy of the cancelled listing agreement or confirmation from Realtor and MLS

• DTI not to exceed 45%

• Reduce LTV 5% over grade

General Calusa Information

• By the 25th of each month, proof of mortgage

payment needed

• Indymac E-Mits: 1st borrower must have income

listed in Integra

• ID must be in file, even if DND’ing for better copy

• Child Support: Must have a court decree

• Sign 1003 within 3 Days of Loan Origination

• South Carolina:

– Use Fidelity Global for attorney

• Ohio:

– Closing Protection Disclosure

• Select ‘No’

Calusa Loan Qualifying Matrix

FULL DOC STATED DOC700+

FICO

IM Nina

To 90%

IMALTA

To 95%-

reserves

IMConform

To 95%-no

Cash Out

Saxon

To 94%

IMConform

To 85% w/

CO

700+

FICO

IMALTA

To 95%-

reserves

Saxon

to

85%

IM NP

To 90%

IM Nina

to 90%

680-

699

FICO

IM Nina

To 80%

IMALTA

To 95%-

reserves

IMConform

To 95%- No

Cash Out

Saxon

To 94%

IMConform

To 85% w/

CO

680-

699

FICO

IMALTA

To 95%-

reserves

Saxon

to

85%

IM NP

to 90%

IM Nina

to 80%

660-

679

FICO

IM Nina

to 80%

IMALTA to

95%-

reserves

IMConform

To 95%-No

Cash OUT

Saxon to

94%

IMConform

to 85% w/

Cash Out

660-

679

FICO

IMALTA

to 90%-

reserves

Saxon

to

85%

IM NP

to 90%

IM Nina

to 80%

640-

659

FICO

IM Nina

to80%

IMALTA to

95%-

reserves

IMConform

to 95% No

Cash

Saxon to

94%

IMConform

to 85% w/

Cash Out

640-

659

FICO

IMALTA

to 80%-

reserves

Saxon

to

85%

IM NP

to 90%

IM Nina

to 80%

620-

639

FICO

IM Nina

to 80%

IMALTA to

95%-

reserves

IMConform

To 95%-NO

CASH

Saxon to

94%

IMConform

to 85% w/

Cash

620-

639

FICO

IMALTA

to 80%-

reserves

Saxon

to

85%

IM NP

to 90%

IM

NINA to

80%

600-

619

FICO

IM NP to

90%

IMConform

To 95% No

Cash

Saxon to

94%

IMConform

to 85% w/

Cash

600-

619

FICO

Saxon

to

85%

IM NP

to 90%

580-

599

FICO

IM NP to

90%

IMConform-

case by case

Saxon to

90%

IMConform

to 85% case

by case

580-

599

FICO

IM NP

to 85%

550-

579

FICO

IM NP to

80%

IMConform

case by case

Saxon to

90%

IMConform

to 85% case

by case

550-

579

FICO

IM NP

to 80%

*Below 550 IM NP to 80% Full Doc Only

Saxon Mortgage Guidelines

Economy & Finance

Transcript of Saxon Mortgage Guidelines