Full income documentation is required for all borrowers. All borrowers must be qualified using current, verifiable, not projected, income. Wage-earners: o Most recent paystub showing YTD earnings (covering at least 30 days), two years W2s, and a written Verification Of Employment (WVOE). Paystubs must be computer-generated and clearly show the borrower as the employee. If issued via e-mail or downloaded from the Internet, stubs must show the URL address, date and time printed, and verify place of origin and/or author of the documentation. o IRS form 4506-T, signed and executed at both origination and closing, is required. All transcript documentation obtained for the most recent two years must be provided in the closed loan file for review. Income
Self-employed borrowers: o Two years personal returns, with all schedules, and business tax returns for the business(es) used for qualification where the borrower has at least 25% ownership interest. Businesses used for selfemployed income qualification must be in existence at least 4 years. o IRS form 4506-T, signed and executed at both origination and closing, is required. All transcript documentation obtained for the most recent two years must be provided in the closed loan file for review. This is required for both personal and business returns for all business(es) used for qualification where the borrower has at least 25% ownership interest.
A Verbal Verification of Employment (VVOE), completed within 10 days prior to the Note date, is required for ALL borrowers. Wage-earners: o VVOE must include company name, address and phone number, method and source used to obtain the phone number, name and title of contact, name and title of the party completing the VVOE , borrower’s title/description, and hire date
Self-employed borrowers o VVOE must include verification of an address and phone listing for the business AND verification through a third-party such as a CPA, regulatory agency, or applicable licensing bureau. If contact is made verbally, the loan file must be documented with both the source of the information obtained and the name and title of the party completing the VVOE. A borrower’s website is not acceptable.
Full asset documentation is required for both funds to close and reserves. For most asset types, this is satisfied by providing the most recent two months bank statements or the most recent quarterly statement. All pages to all statements are required and all assets from the borrower must be disclosed and verified by the lender. Large or atypical deposits must be documented. Earnest Money Deposit must be sourced/verified on all loans. Business accounts may be not used to meet reserve requirements unless the borrower(s) is 100% owner of the business. A letter from the CPA, or equivalent, confirming that the use of business funds will not negatively impact the business must be obtained.
Assets
Stocks, Bonds, Mutual Funds: 70% may be used for reserves Vested Retirement Accounts: 60% may be considered for reserves (certain eligible plans may use 100% if the borrower is >59 ½, i.e. 401K plan) *If needed for closing, verification that funds have been liquidated is required Unacceptable Funds: Cash on Hand Grant Funds Pooled Funds Builder Profits Employer Assistance Assets being used for income (Asset Depletion) may not be used to meet reserve requirements
©2014 Cherry Creek Mortgage NMLS ID 3001. THIS INFORMATION IS SOLELY FOR MORTGAGE PROFESSIONALS AND SHOULD NOT BE PROVIDED TO CONSUMERS OR THIRD-PARTIES. INFORMATION IS ACCURATE AS OF 04/01/2014 AND IS SUBJECT TO CHANGE WITHOUT NOTICE.