Shared Flashcard Set

Details

Week 2
Credit/Income/Assets/Gifts/Property
119
Real Estate & Planning
Professional
02/01/2013

Additional Real Estate & Planning Flashcards

 


 

Cards

Term
credit
Definition
Customers willingness to pay. Credit report good for 90 days.
Term
Condition on every loan
Definition
Inquiries;
Credit reports good for 90 days
Any trade line not included in ratios - credit supplement need to be ordered
Term
Repositories
Definition
A storehouse of credit information. Credco taps into Equifax, Experian and Trans Union.
Term
Inquiries
Definition
Any credit inquires done within last 90 will need a letter of explanation. We need to be sure that we are counting all new debts in ratios. Looking for new debt.
Term
Debits - types
Definition
Open-paid in full end of month (amex); Installment (set loan; car, mortgage, and Revolving (credit card)
Term
Customer's Name & Social Security Number
Definition
Any incorrect spelling of names, a different middle intial or a change in the SS can cause incorrect info to be reported.
Term
Credit Scores
Definition
A minimum of 2 credit scores must be obtained. If 2 scores are obtained, you go with the lower of the 2. If only 1 score is obtained, need alternative credit. If 2 people are on loan, the middle of both scores and the lowest of the 2. If 3 score are obtained, the middle score.
Term
Trade lines
Definition
Name of each credit account on credit report.
Term
Less an 10
Definition
ONLY ON INSTALLMENT: If 10 payments left keep in, if LESS than 10 payments remain, exclude.
Term
Open Accounts
Definition
Have to paid in full each month. Not counted on ratios, if the borrower sufficient funds to pay off the outstanding account balance.
Term
Present Address
Definition
Verify the present address on the 1003 against the credit report. Brings up red flags if don't match.
Term
Derogatory credit
Definition
Refers to anything that "is not paid as agreed" (If you make a deal with a credit company re: payments, if will show up as derogatory because you are not doing as agreed.
Term
Documentation
Definition
A written explanation for any derogatory credit is required. Based on what you say, additional docs might be needed.
Term
Forbearance
Definition
Student loans - That is not being paid as agreed, the loan payback is delayed. Even if agreement is made "not paid as agreed" If monthly payment amount not showing use 3%.
Term
4 Most serious forms of derogatory credit
Definition
1) Bankruptcy
7 (wiped) and 11 (corp) - 4 years
13 - 2 years
2) Foreclosure (take house) 7 years
3) Deed in Lieu - 7 years
4) Short Sale - 7 years
Term
Re-established Credit
Definition
4 new pieces of credit references, 1 of which must be housing related. Credit references must be 24 months old.

No lates with the exception of 2 30 days late.
Term
Judgments, Liens, Charge-Offs and Collections
Definition
charge off collections - haven't gotten to judgment yet.

Judgments - must be paid in FULL prior to closing.
Liens - must be paid in FULL prior to closing.
Primary Residence - ignore as long as it doesn't effect lien position.
Second Home - collection & charge offs under $5,000 total does not have to be satisfied.
Investment - up to $250 per account (not to exceed $1,000 combined) do not have to be satisfied.
Term
Garnishment
Definition
Court ordered. Wage attachments are court ordered deductions from payroll. This is considered a judgement.
Term
Accounts with No Report Monthly Payments
Definition
If no monthly payment shown on credit report. Use 5% of outstanding balance. If student loan use 3% of outstanding balance.
Term
Accounts with No Reported Balance
Definition
If qualifies,use it, if not order a credit supplement
Term
Deferred Student Loan
Definition
Haven't had to start paying yet. Still have to include in debt.
Term
401 K
Definition
Do Not include as debt because they are paying themselves back.
Term
Alimony/Child Support/Separate Maintenance
Definition
Count as debt unless going to end in less than 10 payments.
Term
Co-Signed loans/Loans paid by business
Definition
Can exclude but have to show 12 months of cancelled checks front and back from original loaner accounts. Borrower cannot be on check. If Business, has to come from business account. If 12 months has not gone by, debt will be included.
Term
Paying Off/Paying Down Debts to Quality
Definition
Paid down less than 10: Revolving: Cannot on Revolving. Installment: Proof they used own funds; statement reflecting new balance.
Paid off prior to closing: Revoling: Proof used own funds; Proof $0 balance; proof account closed. Install: Proof used own funds; Proof the account is closed.
Paid of at closing with proceeds from a cash out refi: Revolving: proof account closed; proof $0 balance; payoff must be refleced on HUD sheet. Install: On the HUD; proof of balance.
Term
Credit Supplement
Definition
Ordered by STARS to update an account or resolve an dispute. You can question up to 6 trade lines. After 6 a full factual is needed.
Term
Authorization Form
Definition
Authorization to Obtain Credit and Financial Information before they will release information. Has to be attached to credit supplement information.
Term
Verification of Rent/Mortgage
Definition
Existing debt not on credit report - need to order an VOM, that's it! As soon as we hear there is a debt, but we need proof, order a VOM.
Term
Documenting gaps of employment
Definition
More than 30 days is a gap. Need letter of explanation.
Term
Job stability
Definition
2year history of receiving income and at least the next 3 years of continued.
Term
Salary/Hourly
Definition
30 days paystubs
2 years W-2s
4506T
VVOE within 10 days of closing
Term
Gratuity/Tips
Definition
2 years W-2's
Tax return
WVOE
30 day paystubs
4506T
Term
Retirement/SS
Definition
2 months bank statements Award letter Assumed continuous if over 6 - usually on award letter.
Term
Pension/ Annuity
Definition
12 months bank statements Award letter
Term
Foster Care

2

Definition
2 year tax returns
2 year history (W-2')
3 year continuous (WVOE)4506T
Term
IRA
Definition
2 months statements
award letter
3 year continuous - WVOE
Term
Child Support
Definition
Court ordered only
12 months cancelled checks
3 year continuous - WVOE
Term
Social Security
Definition
Gross up by 25%. If do gross up could trigger tax return.
Copy of Award letter
2 months bank statement
WVOE - usually on award letter
Term
Notes Receivable
Definition
Copy of Note
3 years continues (WVOE)
12 months on time
Term
Employed by Family
Definition
2 years return
W-2's
30 days paystub
3 years continuous (WVOE) done by a 3rd party (bookkeeper)
4506T
Term
Auto Allowance
Definition
30 day paystubs
2 years W-2's
2 year tax return (to prove unreimbursed expenses)
4506T
WVOE
Term
Divident/Interest
Definition
2 years tax return
statement showing account
WVOE - 3 years continuing
Term
Trust Income
Definition
Trust agreement
Trust letter
2 years tax returns
Term
Overtime/Bonus
Definition
2 years history (W-2)
2 year tax returns
WVOE
Don't need tax returns because we are not assuming there are unreimbursed expenses
Term
Tax return
Definition
Anything not guaranteed needs a tax return! Self employed; commission; family employed; 109; family owned; union (you will get multiply W-2)
Term
Commission
Definition
2 years history (W-2)
30 day paystub (YTD), figure out see if close
WVOE for continuous
2 year tax return - looking for unreimbursed, if they have unreimbursed (deduct)
2 year average
2 year commission - if stable increased take average and divide by 24. If decreasing take lower and divide by 12.
Term
Reviewing bank statements
Definition
- Not older than 90 DAYS
- Verify 2 months (60 full days) are covered
- Ensure customers name and SS are on it.
- Recognize "AND" both have to sign off whether on loan or not. AND/OR either can sign. If no AND/OR we assume AND (need both)
- Any large deposits need to be verified
- Abnormal or inconsistent
Term
I/T/F
Definition
In trust for:
Need trust agreement
Proof borrower is beneficiary
Term
Self employed
Definition
25% or greater of ownership.
2 years business tax returns
1099
Term
Part time
Definition
WVOE
2 years history W-2 (take average)
Has to be uninterrupted. Unemployment can be used as income.
Term
Temp Service
Definition
2 year history
WVOE
2 years contract with temp agency
Term
WVOE
Definition
Written Verification of Employment. Good for 30 days. If WVOE is rec'd within 10 days before closing a VOE is not required.
Term
VOE
Definition
Needed 10 days before closing.
Term
The Worknumber.com
Definition
We use it, accept it and good for WVOE and VVOE's.
Term
VVOE
Definition
Verbal Verification of Employment. Cannot do our own, Conflict of Interest. Must match CASH.
Independently get phone number..internet, phone book. Must be made 30 days prior to closing. Take screen shot if from internet
Term
LES
Definition
Leave and Earnings Statement within 30 days of closing. In lieu of VOE/WVOE.
Term
Unemployment Income
Definition
Regularly consistent; part of someone's income for at least 2 years. (pool guy)
30 day pay stub
VVOE from unemployment
w-2's
Has to be back to work
Term
Welfare/Public Assistant
Definition
It is possible.
Term
Disability Benefits
Definition
Short Term: Return to work date, if cannot be determined cannot be used.
Long Term: identify it is stable predictable and continuing.
Acceptable form of income
Non-taxable
Need return to work date.
Term
Extended Leave of Absence
Definition
Need to be back to work.
Term
Rental Income
Definition
Existing: 2 years tax returns (take average.
Future: Use 75% of net rental income; Need copy of lease.
Term
Unacceptable Income
Definition
Babysitting, dog walking, room or board from family,tips...any income you don't claim.
Term
Reviewing a paystub
Definition
Date of the Stub
Name of Customer
SS number
Name of the Company
Pay Period
Amount of Pay
Y-T-D figure
Any deductions
Any addition income
Term
Loans/Deducations
Definition
401K does not count as debt
Term
Calculating gross income
Definition
Weekly x 52 / 12
Bi-Weekly x 26 /12
Semi-Monthly x 24 /12
Yearly amount /12
Actual amount x 12 /12
Term
Figure out gross monthly on pay check
Definition
6/5/12
Months been completely paid thru: 5
Days been paid thru: 5/30 (days in months). = .16. 11.567.00 / 5/16 = Grossly monthly paid to date.
Term
W-2
Definition
Proves history, income consistency.
Term
Capital =
Definition
Assets
Term
$ that needs to be brought to closing
Definition
Purchase: down payment; closing costs; pre-pad
Re-fi: Closing costs; pre-paid
Term
Liquid Assets
Definition
Checking Account; savings; money market
Term
Non Liquid
Definition
Investment Accounts; Stocks/bonds/401K acounts; IRA accounts
Term
Stocks/Bonds Mutual Funds
Definition
70% because their value changes every day
Term
401K/IRA/
Definition
Retirement Funds - 60%. IF loan on 401K, subtract amount and use 60%.
Term
On line bank statement
Definition
Must show HTTPS
Term
Acceptable Alternative Docs
Definition
If don't have bank statements - VOD (verification of Deposit). Bank printouts that are stamped and signed by bank officials are acceptable.
Term
Earnest Money
Definition
Good Faith Deposit.
Copy of borrower's cancelled check (front/Back)
Escrow letter from holder
Statement showing where money came from (make sure own funds)
YOu break contract, you lose money
Term
Non traditional funds
Definition
Possible
Term
3 Types of Equity:
Definition
Real Estate Equity-When selling real estate, the cash from the sale is acceptable. 90%
Trade Equity.
Land Equity on New Construction - You own land, construction company builds home, sells you both and credits back to you the price of land. Land/House on 1 deed
Term
Foreign Currency
Definition
2 months statements from original bank account.
Money converted and deposited into US Bank Account prior to closing.
Term
Acceptable contributions - settlement costs only
Definition
Investor - 2%
Jumbo - 2nd home - 3%
Primary - Conforming - 90 + - 3%
2nd - conforming - 6%
Jumbo - primary - 9%
Term
Lender Contribution
Definition
Z pricing - PHH contributes to closing costs in exchange for high interest rate.
Lender Credit - PHH contributes $ toward transaction
Term
Lease Purchase
Definition
Rent to Own. Part of rent is being saved towards down payment.
Term
Reserves
Definition
The PITI in bank account. How many monmths of payments I have in bank after closing. Do Not have to be liquid.
Term
3 key factors that determines reserves that AUS will look at
Definition
LTV
Units
Occupany
Term
Loans
Definition
(stamp collection)
must show proof of ownership; sale (proof of deposit); Appraisal; bill of sale.
Term
Unacceptable Assets
Definition
Anything unverifiable:
$ in wallet
Sweat Equitey
Cash on hand
Assets from repayment of loan
Term
Bridge Loan
Definition
Buying/Selling home: Side loan that represents equity because not going to sell in time. Paid back as soon as loan goes through. Has to approve with the Bridge loan included.
Term
Gift is not acceptable
Definition
to pay down or pay off existing debt
The payoff of derogatory debt
Provided in cash (cannot be verified)
Term
Gifts from Relatives
Definition
Blood relative, marriage fiancess and domestic partner
Term
Gift from Relatives Rules
Definition
1) The gift letter
2) Donors ability
3) transfer of funds into account
4) proof of receipt of deposit
Term
When relative resides with a Customer
Definition
If relative who provided gift lives with borrower, the gift counts as the 5%.
Term
Wedding gifts
Definition
Affidavit must be signed.
Proof funds were deposited into account of customer
A marriage certificate
Term
Gift of Equity
Definition
Has to be agreement of sale.
Term
Gifts from churches, municipalities or non profit organizations
Definition
They exist and are possible.
Term
Collaterial =
Definition
Property
Term
2 major factors about appraisal acceptance:
Definition
3 Comps
condition - safe, sound, secure
Term
Appraisal Value
Definition
What someone is willing to pay - what the house would sell for now.
Term
Appraisal Procedures
Definition
Appraisser Independance Requirements (AIR)
Loan is registered, appraisal ordered by STARS.
If new value effects our loan - rescore
Term
Appraisal must provide customer a copy:
Definition
at least 3 business days prior to closing date. Can also be e-mailed.
Term
Appraisal comes in low:
Definition
Increase loan amount
Reconsideration of value (borrower has to get additional comps!)
Could renegotiate price on purchase
Bring more $ to table
Cancel - have to pay cancellation fee
Term
Types of Appraisals:
Definition
Full; drive-by; A property inspection waived. Using full appraisals. Good for 120 Days!
Disaster inspection - storm happens before closing
Final Inspection (new construction). Done right before closing
As is - means we are good
Subject to - means: repairs are needed, before closing.
Term
recertification:
Definition
Appraisal is expiring - contact appraiser to get extension.
Term
Loans over $1,000,000
Definition
Need 2 appraisals
Term
USPAP
Definition
Uniform Standards of Professional Appraiser Practice.
Term
Addendum to Appraisal
Definition
Something simple wrong (wrong spelling of name, street instead of ave
reconsideration of value
recertification of value (close to expiring)
Term
General definition of COmps:
Definition
Similar in style to the subject property; within a mile; sold in last 6 months.
Comps.
Market value
Condition: Safe, sound, sanitary
Term
Escrow hold back
Definition
Money being held in escrow for repairs that have to be made. Escrow 1.5X of what still has to be completed. On Refi - all work has to be done before closing.
Term
Ineligible properties
Definition
5 or more units
commercial
Land only
Condotel
Working farms
Term
Flood Certifications
Definition
Good for 120 days
Term
Contract Review
Definition
Agreement of Sale (AOS), could be on a napkin. All parties must sign.
Term
Contingency/Commitment dates
Definition
Date approved for loan
Appraisal by a certain date
Closing
Term
Seller concession
Definition
Part of price credited toward closing costs.
Seller concession on Investor loan: 2%
Seller concession on jumbo loan: 3%
Term
Personal property
Definition
Can only be included in sales contract if permanently affixed to home: washer/dryer, dishwater, frig. Not acceptable: Live stock; curtains; tools, VCR's.
Term
What to look for on agreement of sale
Definition
Buyers name; sale price; loan price; property address; closing date; signatures; earnest money
Term
Manufactured home (formerly called mobile homes:
Definition
Has steel undercarriage. Has to be 1st put down. Do not loan to single wide. Cannot be in mobile park. Must be Fee simple. Min. 1200 square fee; Must include HUD cert.
Term
Modular home
Definition
Treated like single family home. Built in factory, Brought in in pieces.
Term
Appraisal on Manufactured home
Definition
2 comparable
1004 C is required.
Term
Internet Bank Statements
Definition
HTTPS
Customer listed as account holder
Name of depository, including log
Account number
Ending balance
Term
Documenting large deposits
Definition
Need to be explained and verified
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