INDUSTRYILLUSTRATED
DS News tracks the latest and most relevant industry surveys and data to keep you in the know. This month, we take a closer look at the underwriting
requirements for a nonconforming prime mortgage, 2007 versus 2012, courtesy of the structured finance team at the ratings agency DBRS. The
researchers contend that unless there is a loosening of underwriting criteria by major lenders, the housing recovery will continue to lag for years to come.
Despite a strong pent-up demand, they argue, many would-be borrowers can't qualify for financing because of today's minimum FICO score, maximum
loan-to-value (LTV) ratio, and the requirement that a foreclosure, short sale, or deed-in-lieu be at least seven years old when millions have lost their homes.
Maximum Loan–to–Value (LTV)
Maximum Combined LTV
Maximum Loan Amount
Debt–to–Income Ratio (DTI)
Minimum FICO Score
Bonus/Commission Income
Primary Residence
Second Home
Investment Property
Cash-Out Refinance
Borrower Without FICO Score
IRS Form 4506
Required Reserves
Gift as Source of Funds
Paystub
W2s
Verification of Employment
Escrow (tax and insurance)
Chapter 7 Bankruptcy
Chapter 13 Bankruptcy
Foreclosure
Short Sale
Deed–in–Lieu
Judgments
Charge-Offs
80%
80%
$1 million
33/38
680-720
Not allowed
Allowed
Allowed
Not allowed
Up to 70% LTV
Not allowed
Required
6-12 Months
Not allowed
Most recent 30 days
2 years
Within 10 days of closing
Required
Discharged in last 7 years
Discharged in last 7 years
None in last 7 years
None in last 7 years
None in last 7 years
Must be paid in full
Must be paid in full
100%
125%
$2 million
38/45
620
Allowed
Allowed
Allowed
Allowed
Up to 100% LTV
Allowed
Optional
2 months
Allowed
Most recent
1 year
Within 30 days of closing
Not required
Discharged in last 7 years
Discharged in last 7 years
None in last 7 years
None in last 7 years
None in last 7 years
Must be paid in full
Must be paid in full
Source: DBRS
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