• for panels owned outright by the borrower, and
• further guidance concerning the calculation of the DTI ratio and CLTV ratio when solar panels are subject to financing in the form of a power purchase agreement or lease agreement.

• For Mortgages with a non-occupying Borrower and secured by a second homes or investment property, the monthly rental housing payment (if the principal domicile is not owned) must be included in the housing-to-expense ratio, and must be documented as follows:
  • Direct verification of rent from a management company, or
  • Direct verification of rent from an individual landlord (supported by two months of canceled checks or other evidence of two months’ payments), or
  • A copy of the current, fully-executed lease agreement (supported by two months of canceled checks or other
  • evidence of two months’ payments), or
  • Six months of canceled checks or bank statements supporting consistent payments in the amount used in qualifying
• If excluding installment loans, child support, alimony and separate maintenance, documentation is required to show that 10 or fewer months of payments remain.
• For loans secured by assets other than real property, the terms of the loan no longer need to be verified, however documentation which supports the loan being secured by the asset must be provided.  Note: The ownership and value of the asset continues to be required.
  • LPA messaging will be updated by 11/05/2020.
• Clarification has been added that the use of estimated real estate taxes based on the value of the improvements plus the value of the land to calculate the monthly housing expense ratio applies only to newly constructed properties and the actual real estate tax amount is not yet available.
• Effective on and after 08/05/2020:
  • Building Sketches: For atypical or functionally obsolete properties, the building sketch must include interior walls with dimensions.
  • Opinion of Market Value Clarification: Freddie Mac permits the use of Form 10333 under specific conditions. If an appraisal or field review is used to underwrite the Mortgage, it must be retained in the Mortgage file.

Register Today! Knowledge Owl Training Opportunities 8/18
As a reminder, Fairway Wholesale Lending is excited to be offering live Knowledge Owl Training opportunities scheduled for the 3rd Tuesday of the every month for our valued clients.

Knowledge Owl (KO) is the system in which Fairway's program guidelines are housed and are accessible by logging into DRIVER. 

The training will provide the ins & outs of KO's functionalities and assist you with various tips for accessing guidelines in a quick and efficient manner, as well as allow the opportunity for you to ask any questions you may have. 

Register below for this month's opportunity! You don't want to miss out!

Q: For Borrowers who have self-reporting debts on the credit report such as, cell phone bills, utility bills, etc., are these debts included in the DTI calculation?

A:  No. Cell phone bills, utility bills, etc., are never included regardless if they are self-reported or not.

Q: If I am aware of a disaster in my area, but FEMA has not yet declared an official disaster, should I follow FWL's Disaster Policy and obtain a re-inspection or full appraisal for the property?

A: Yes.  Fairway has to rep and warrant the property for every loan we deliver; therefore, we cannot ignore conditions that we know have the potential to negatively affect the subject property's value.

We rely on our clients' personnel to be knowledgeable and proactive regarding disasters in their areas, as the periodic FEMA updates and the official FEMA declarations for individual state assistance eligibility can be delayed by days, weeks or even months. 

As we receive information, the Disaster Declaration List in Knowledge Owl is immediately updated; however, Brokers/Correspondents should proceed with the process of ordering a re-inspection or full appraisal once they become aware of an affected area the subject property is located in. 

Note:  A Change of Circumstance is sufficient to disclose the re-inspection fee to the Borrower.   

Rental Income 

• When qualifying utilizing rental income, for each property generating rental income the following is required:
  • Reduce the effective income associated with the calculation of rental income by 25%, or
  • Verify 6 months PITI reserves, or
  • Verify the borrower has received the previous 2 months rental payments as evidenced by borrower’s bank statements showing the deposit. (This option is applicable only for borrowers with a history of rental income from the property). 

Self Employment Income 

• Self employment income must be stable with a reasonable expectation that it will continue. Verification of the existence of the borrower’s business within 10 calendar days prior to the date of the Note to confirm that the Borrower’s business is open and operating.  One (1) of the following to verify and confirm that the business is open and operating: 
  • Evidence of current work (executed contracts or signed invoices that indicate the business is operating on the day the lender verifies self-employment); 
  • Evidence of current business receipts within 10 days (Note Fairway Policy) of the note date (payment for services performed); 
  • Lender certification that the business is open and operating (lender confirmed through a phone call or other means) (Note Fairway Policy); or 
  • Business website demonstrating activity supporting current business operations (timely appointments for estimates or service can be scheduled).