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Effective Date – Loan transactions closing on or after June 19, 2014 Fannie Mae and Freddie Mac (the “Agencies”) have aligned their large deposit policies; therefore, JMAC is now updating policy to align with the Agencies.

  • Large deposits are defined as a single deposit on an account statement that exceeds 50% of the total monthly qualifying income for the loan. This revises the current 25% threshold


Purchase Transactions: Large deposits made by borrowers to meet the requirements for down payment, closing cost and /or reserves for purchase transactions must be explained and documented as required by the Agencies and the Correspondent Manual. Funds that are not needed for down payment, closing cost and/or reserves for Loan underwriting qualification purposes must be deducted from the total assets and the reduced amount must be entered on LP or DU.

Refinance Transactions: Documentation or explanation for large deposits is not required; however, large deposits may be an indication of recently opened liabilities or funds that are from an unacceptable source. The underwriter must take this into consideration and exercise proper underwriting judgment when reviewing the assets and qualifying the borrower.

Imperial 5/1 ARM Update

Effective July 1, 2014, all loans will be require to be locked before file is sent to the investor for QC.

Effecitve July 2, 2014, there will be a hit to price of .250 for cash out transaction.


Clarification on Recent FNMA Changes-Continuity of Obligation

This is for FNMA loans only/loans approved thru DU, conforming and high balance.  Hopefully this make things clearer.  If you have any questions let me know.

Continuity of obligation: Occurs on a refinance when at least one of the borrower(s)on the existing mortgage is also a borrower on the new refinance transaction secured by the subject property.  Or, continuity of obligation is met when the borrower on the new refinance was added to title 24 months or more prior to the disbursement date of the new refinance mortgage- Disbursement date(date of note)for our purposes.

Primary Change:  Borrower on title does not have to also be living in the property, if they meet item 2 or 3 below.  So this opens up continuity of obligation on investment loans at standard LTV’s instead of the reduced LTV of 50% which was the requirement prior to this change.

 Permissible Exceptions not bound by limited eligibility parameters:

  •  A borrower that has been on title for the past 12 months but not obligated on the existing mortgage(s) meets continuity of obligation without a reduction in LTV as long as borrower meets at least one of the following requirements:
  1. Has been residing in the property for at least 12 months,
  2. Has paid the mortgage for at least 12 months, or
  3. Can demonstrate a relationship with current obligor(relative, domestic partner as an example)
  • Documentation reflects borrower was awarded property through an inheritance or was LEGALLY awarded the property(for example through divorce or legal separation)
  • The borrower on the new refinance has been added to title through a title transfer from a trust, LLC, or partnership(Refer to requirements pertaining to this exception on announcement)


All other refinances that do not meet either the continuity of obligation requirements or a permissible exception as noted above, must comply with the following LTV,CLTV,HCLTV ratio restrictions regardless of the occupancy of the property :

  • < 6 months on title———————-  ineligible
  • >6   months < 24 months—————- limited to 50% LTV/CLTV/HCLTV ratios
  • > 24 months——————————-no additional restrictions

Primary change
is that FNMA has clarified that 24 months of seasoning on title is now considered continuity of obligation regardless of whether borrower was on existing loan or not. Prior to this announcement the time frame was not limited and borrower was required to meet a permissible exception or ratio restriction.