August 30, 2016
CUA 2016-03 Underwriting Requirement Changes and Clarifications
Effective immediately, we are expanding our Age of Documentation underwriting requirements and clarifying several other requirements. These changes apply to both full-file and delegated submissions. Our Credit Union Underwriting Guide (the Guide) and all supporting documents have been updated.
Age of Documentation:
All of our "Age of Documentation" requirements in section 3.05.01 of the Guide have been changed to reflect that the age of the document will be based on the Note date instead of the mortgage insurance effective date. This includes single-close construction-to-permanent loans.
For single-close construction-to-permanent loans, the lender will not have to update documents as long as they are no more than 120 days old on the Note date and the insurance is activated within the 12 month Commitment term.
This change applies to both CU SwiftClose® and Standard underwriting requirements.
Verbal Verification of Employment (VVOE) for Self-Employed Income:
The age of documentation for a VVOE in section 3.05.03 of the Guide has also been changed to reflect that the age of the document will be based on the Note date instead of the mortgage insurance effective date. In addition, the time frame for a VVOE for self-employed income has been changed from 30 days to 120 days prior to the Note date.This change applies to both CU SwiftClose and Standard underwriting requirements.
Delegated Lender's Responsibility when Reviewing the Appraisal:
We have added the following paragraph within section 2.02 and section 3.16 to clarify a delegated lender's responsibility when reviewing an appraisal:
Lenders exercising their delegated authority are responsible for assessing the validity and accuracy of the appraisal report and ensuring the value is supported prior to delegation, including but not limited to, adequacy of the comparables, property condition, market value, and appraised value. This is regardless of any AUS response on the transaction. Numerous tools are available to lenders in the marketplace to assist in this assessment and United Guaranty encourages their use. This is particularly important during times of market volatility or fluctuations, especially if there are any indications the subject property and/or comparable properties are located in an area of soft and/or declining property values.
This applies to both CU SwiftClose and Standard underwriting requirements.
Freddie Mac Loan Prospector®, LP® and Loan Product Advisor℠:
A note has been added in section 2 of the Guide to clarify that any reference to Loan Prospector or LP within the Guide now refers to Loan Product Advisor as a result of Freddie Mac's name change effective July 11.
General Underwriting Requirements for a Standard Underwrite
We have clarified within the General Underwriting Requirements for a Standard underwrite (section 3.01) that in the event a United Guaranty Standard underwriting requirement is more liberal than an Agency's requirement, a lender may choose to use the Agency's more conservative requirement in lieu of United Guaranty's.
We have clarified for a Standard underwrite that a gift from a relative or domestic partner who has lived with the borrower for the last 12 months, or from a fiancé or fiancée, is considered the borrower's own funds and may be used to satisfy the minimum borrower contribution requirement, as long as both individuals will use the home being purchased as their primary residence. The additional requirements for all other gifts in section 3.11.01.02.01 and 3.11.03.02 do not apply to these gifts.
Please contact your United Guaranty Account Representative if you have questions concerning this announcement.
© United Guaranty Corporation 2016. All rights reserved. United Guaranty is a marketing term for United Guaranty Residential Insurance Company and United Guaranty Mortgage Indemnity Company. United Guaranty and CU SwiftClose are registered marks. Coverage is available through admitted company only. Loan Prospector, LP, and Loan Product Advisor are marks of Freddie Mac.