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Updated Non-QM Product Underwriting Guidelines

September 21, 2023

Overview

Carrington Mortgage Services, LLC (CMS) is pleased to announce the following Non-QM program underwriting updates (highlighted in red). Please note this is an abbreviated summary of the guideline changes and all updates should be viewed within the context of the full guidelines.  These changes are effective immediately.

All Carrington Advantage Programs (Prime Advantage/Flexible Advantage Plus/Flexible Advantage and Investor Advantage)
Old Requirements Updated Requirements
Collections and Charge-Offs

The following accounts may remain open:

  • Collections and charge-offs < 24 months old with a maximum cumulative balance of $2,000
  • Collections and charge-offs ≥ 24 months old with a maximum of $2,500 per occurrence
  • Collections and charge-offs that have passed beyond the statute of limitation for that state (supporting documentation required)
  • All medical collections

Collection and charge-off balances exceeding the amounts listed above must be paid in full.

Collections and Charge-Offs

The following accounts may remain open:

  • Collections and unsecured charge-offs < 24 months old with a maximum cumulative balance of $2,000
  • Collections and charge-offs ≥ 24 months old with a maximum of $2,500 per occurrence
  • Unsecured charge offs ≥ 24 months old
  • Collections and charge-offs that have passed beyond the statute of limitation for that state (supporting documentation required)
  • All medical collections

Collection and charge-off balances exceeding the amounts listed above must be paid in full. Charge offs secured by real estate must be paid in full.

Carrington Prime and Flexible Advantage/Flexible Advantage Plus Programs
Old Requirements Updated Requirements
Income / Employment Requirements

Standard guidelines apply for verifying income and employment of Non-Permanent Resident Aliens.

Note: Non-Permanent Resident Aliens are not eligible for income qualification using bank statement documentation (personal or business).

Income / Employment Requirements

Standard guidelines apply for verifying income and employment of Non-Permanent Resident Aliens.

Carrington Prime and Flexible Advantage/Flexible Advantage Plus Programs (continued)
Old Requirements Updated Requirements
Bank Statement Documentation

Self-employed borrowers are eligible for either Personal Bank Statement Documentation or Business Bank Statement Documentation. The following restriction applies to both documentation types:

Non-Permanent Resident Aliens and Foreign Nationals are ineligible. Exceptions are not permitted.

Bank Statement Documentation

Self-employed borrowers are eligible for either Personal Bank Statement Documentation or Business Bank Statement Documentation. The following restriction applies to both documentation types:

Foreign Nationals are ineligible. Exceptions are not permitted.

1099 Income Documentation

1099 Income Documentation is permitted under the Carrington Flexible Advantage (CFA) and Carrington Flexible Advantage Plus (CFA+) program. Refer to matrix for FICO and reserve requirements.

Self-employed borrowers with earnings on IRS Form 1099, such as independent contractors and gig workers, may submit 1 or 2 years 1099 forms, subject to the following requirements:

Non-Permanent Resident Aliens and Foreign Nationals are ineligible. Exceptions are not permitted.

1099 Income Documentation

1099 Income Documentation is permitted under the Carrington Flexible Advantage (CFA) and Carrington Flexible Advantage Plus (CFA+) program. Refer to matrix for FICO and reserve requirements.

Self-employed borrowers with earnings on IRS Form 1099, such as independent contractors and gig workers, may submit 1 or 2 years 1099 forms, subject to the following requirements:

Foreign Nationals are ineligible. Exceptions are not permitted.

Profit & Loss Income Documentation

Profit and Loss Income Documentation is permitted under the Carrington Advantage programs. Refer to matrix for FICO and reserve requirements.

Self-employed borrowers may submit Profit and Loss (P&L) statements covering 12 or 24 months, subject to the following requirement.

Documenting Business Ownership

Non-Permanent Resident Aliens and Foreign Nationals are ineligible.  Exceptions are not permitted.

Profit & Loss Income Documentation

Profit and Loss Income Documentation is permitted under the Carrington Advantage programs. Refer to matrix for FICO and reserve requirements.

Self-employed borrowers may submit Profit and Loss (P&L) statements covering 12 or 24 months, subject to the following requirement.

Documenting Business Ownership

Foreign Nationals are ineligible.  Exceptions are not permitted.

 

Contacts

Please contact your Account Executive or Account Manager with any questions.

Carrington thanks you for your business.

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Equal Housing Opportunity An Equal Housing Opportunity Lender. Copyright 2007 - 2024 . Carrington Mortgage Services, LLC headquartered at 1600 South Douglass Road, Suites 110 & 200-A, Anaheim, CA 92806. NMLS ID # 2600. Toll Free # 800-561-4567. All rights reserved. Restrictions may apply. All loans are subject to credit, underwriting and property approval guidelines.  Nationwide Mortgage Licensing System (NMLS) Consumer Access Web Site: www.nmlsconsumeraccess.com.

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Government Agency Approval | FHA Non-Supervised Mortgage Approval #: 24751-0000-5 | VA Automatic Lender Approval #: 902324-00-00

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