Juneteenth National Independence Day Holiday – Lock Desk Hours and Key Compliance Dates
Overview
The offices of Carrington Mortgage Services, LLC (CMS) including the Lock Desk will be closed on Monday, June 20, 2022 for Juneteenth National Independence Day, which is a Federal Holiday. Normal lock hours will resume on Tuesday, June 21, 2022.
Rate locks that expire on the holiday will automatically roll to the next business day. In addition there are some important disclosure considerations associated with the holiday:
- Monday, June 20, 2022 cannot be included in the rescission period for refinance transactions.
- Monday, June 20, 2022 cannot be included in the seven (7) business day waiting period between the date the initial Loan Estimate (LE) was provided to the borrower and the consummation of the loan.
- When re-disclosure of the LE is required, Monday, June 20, 2022 cannot be included in the three (3) business day waiting period between the date the revised LE was provided to the borrower and the consummation of the loan.
- When re-disclosure of the Closing Disclosure (CD) is required, Monday, June 20, 2022 cannot be included in the three (3) business day waiting period between the date the revised CD was provided to the borrower and the consummation of the loan.
Issues related to locks should be sent via email to lockdesk@carringtonms.com.
Contacts
Please contact your Account Executive or Account Manager with any questions.
Carrington thanks you for your business.
FEMA Disaster Declaration for New Mexico Wildfires and Straight-Line Winds
Overview
Due to wildfires and straight-line winds in New Mexico, FEMA has declared the following counties a disaster.
Incident Period: April 5, 2022 and continuing
State | FEMA Disaster Declaration | Counties |
New Mexico | May 4, 2022 | Colfax, Lincoln, Mora, San Miguel and Valencia |
Re-Inspection by Product Type
If your loan is … | A re-inspection is required … | Under these circumstances … |
FHA Full Doc | Yes | If the original appraisal inspection date was prior to the Incident Period End Date – Continuing**. |
FHA Streamline | No | Not applicable |
VA Full Doc and IRRRL | Yes | If the loan was not closed (signed) prior to the Declaration Date of 05/04/22. |
USDA Full Doc and Streamline Assist | Yes | If the original appraisal inspection date was prior to the Incident Period End Date – Continuing**. |
Conventional* and Non-Agency | Yes | If the original appraisal inspection date was prior to the Incident Period End Date – Continuing**. |
*If an appraisal was not required due to a property inspection waiver (PIW), an inspection report will still be required.
**In cases where FEMA has not yet issued an Incident End Date and the disaster is “Continuing”, the earliest CMS will permit a re-inspection is a minimum of 14 calendar days from the Incident Period Start Date.
Contacts
Please contact your Account Executive or Account Manager with any questions.
Carrington thanks you for your business.
Non-QM 1099 and Profit & Loss Product Enhancements
Overview
Carrington Mortgage Services, LLC (CMS) is pleased to introduce new 1099 and P&L products for the Non-QM (Carrington Prime Advantage and Carrington Flexible Advantage Plus) programs. The underwriting guideline updates are highlighted in red below and please note these are an abbreviated summary of the guideline changes. All updates should be viewed within the context of the full guidelines available on CarringtonWholesale.com.
Non-QM Underwriting Guidelines | |
Old Requirements | Updated Requirements |
1-Year Alternative Income Documentation
In lieu of the standard 2-year documentation requirement for wage-earners and self-employed borrowers, the following will be accepted:
|
1-Year Alternative Income Documentation
In lieu of the standard 2-year documentation requirement for wage-earners and self-employed borrowers, the following will be accepted:
|
Non-QM Underwriting Guidelines | |
Old Requirements | Updated Requirements |
1099 Income Documentation
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:
Borrowers whose primary source of income is derived solely from the ownership of rental properties, including short-term rentals, as declared on personal or business tax returns must be calculated using Full Documentation of Income. See Rental Income. |
Non-QM Underwriting Guidelines | |
Old Requirements | Updated Requirements |
Calculating Qualifying Income
To calculate qualifying income using 1099 Income Documentation, choose one of the options below to account for business expenses: Option 1: Default Expense Factor Default Expense Factors will be applied as follows:
Multiply gross 1099 earnings by the default expense factor to determine estimated business expenses. Subtract the expense estimate from gross earnings and divide the result by 12 months for 1 year 1099 form or by 24 months for 2 years 1099 forms. Option 2: Third-Party Prepared Expense Statement If the borrower’s business operates more efficiently, or typically has a materially different expense factor than the default expense factors above, then a reduced expense factor is acceptable subject to the following requirements:
Net expenses from the Expense Statement is calculated by multiplying gross 1099 earnings by the expense percentage provided by the CPA or tax preparer. Net Income = Total Deposits * (1 – Expense Statement Percentage) |
Non-QM Underwriting Guidelines | |
Old Requirements | Updated Requirements |
Self-Employed 1099 Miscellaneous Income
Payments to sole proprietors or contract individuals will also be reported on IRS Form 1099 form and included in the borrower’s Schedule C. If a borrower receives 1099 income, federal income tax returns for the most recent 2 years (IRS Form 1040) are required to determine the income and related expenses. When a borrower is qualified solely on W-2 wages and secondary 1099 income is discovered during the underwriting process, tax returns are not required unless the borrower requests the secondary business income to be considered. 1099 forms covering a full 2-year period are not required when a borrower changes from being paid W-2s to 1099s while working for the same employer in the same position. Documentation from the employer should be obtained to verify the borrower is not responsible for additional expenses. |
Self-Employed 1099 Miscellaneous Income
Payments to sole proprietors or contract individuals will also be reported on IRS Form 1099 form and included in the borrower’s Schedule C. Borrowers who receive self-employed 1099 earnings may be qualified under the Sole Proprietorship guidelines by providing IRS Form 1040 tax returns for the most recent 1 or 2 years, or under the 1099 Income Documentation guidelines by providing IRS Form 1099 for the most recent 1 or 2 years. When a borrower is qualified solely on W-2 wages and secondary 1099 income is discovered during the underwriting process, tax returns are not required unless the borrower requests the secondary business income to be considered. 1099 forms covering a full 2-year period are not required when a borrower changes from being paid W-2s to 1099s while working for the same employer in the same position. Documentation from the employer should be obtained to verify the borrower is not responsible for additional expenses. |
Profit & Loss Income Documentation
Self-employed borrowers may submit Profit and Loss (P&L) statements covering 12 or 24 months, subject to the following requirements. Documenting Business Ownership
|
Non-QM Underwriting Guidelines | |
Old Requirements | Updated Requirements |
Requirements for P&L Documentation
Borrowers whose primary source of income is derived solely from the ownership of rental properties, including short-term rentals, as declared on personal or business tax returns must be calculated using Full Documentation of Income. See Rental Income. |
Non-QM Underwriting Guidelines | |
Old Requirements | Updated Requirements |
Calculating Qualifying Income
To calculate qualifying income using Profit and Loss Income Documentation:
|
Contacts
Please contact your Account Executive or Account Manager with any questions.
Carrington thanks you for your business.
Updated First Time Investor LTV Requirements – CMS Non-QM Investor Advantage Program
Overview
Effective April 18, 2022, Carrington Mortgage Services, LLC (CMS) is pleased to announce an Investor Advantage program enhancement to increase the maximum LTV to 75% for First Time Investors with higher FICO scores. The maximum LTV requirements for First Time Investors are outlined below:
- Maximum LTV = 75% with FICO ≥ 680 and DSCR ≥ 1.00, or
- Maximum LTV = 65% with FICO < 680 or DSCR < 1.00
Please Note: This change is effective for all new loan submissions and loans in the pipeline.
Contacts
Please contact CorrespondentRM@carringtonms.com with any questions.
Lock Desk Hours in Observance of Good Friday
Overview
In observance of Good Friday, the Carrington Mortgage Services, LLC (CMS) Lock Desk will be closed Friday, April 15, 2022. Normal Lock Desk hours will resume on Monday, April 18, 2022.
As a reminder, pursuant to the Lock Policy all lock extensions must be requested prior to expiration. If a lock expires on Friday, April 15th, 2022 it will need to be extended no later than Thursday, April 14th, 2022.
Carrington Investor Advantage Program Enhancements
Overview
Effective March 21, 2022, Carrington Mortgage Services, LLC (CMS) is pleased to announce the following enhancements for the Investor Advantage loan program:
- Increased Maximum LTV from 82.50% to 85% for the 700 FICO band with loan amounts up to $1,000,000.
- Increased the permitted interested party Seller Contributions from 2% to 4% toward closing.
- Gift Funds are now acceptable for down payment provided minimum borrower investment requirements are met. Must be from relative and a signed Gift Letter is required. Sources of funds used for the minimum required investment and reserves must be owned by the borrower.
- Reduced the required Borrower Contribution to 5% of borrower’s own funds.
Resources
Refer to the Carrington Investor Advantage Program Guidelines and Matrix available on CarringtonWholesale.com for additional information.
Contacts
Please contact your Account Executive or Account Manager with any questions.
Carrington thanks you for your business.
Presidents Day Holiday – Lock Desk Hours and Key Compliance Dates
Overview
The offices of Carrington Mortgage Services, LLC (CMS) including the Lock Desk will be closed on Monday, February 21, 2022 for Presidents Day, which is a Federal Holiday. Normal lock hours will resume on Tuesday, February 22, 2022.
Rate Locks that expire on the holiday will automatically roll to the next business day. In addition there are some important disclosure considerations associated with the holiday:
- Monday February 21, 2022 cannot be included in the rescission period for refinance transactions.
- Monday February 21, 2022 cannot be included in the seven (7) business day waiting period between the between the date the initial Loan Estimate (LE) was provided to the borrower and the consummation of the loan.
- When re-disclosure of the LE is required, Monday February 21, 2022 cannot be included in the three (3) day business waiting period between the date the revised LE was provided to the borrower and the consummation of the loan.
- When re-disclosure of the CD is required, Monday February 21, 2022 cannot be included in the three (3) business day waiting period between the date the revised CD was provided to the borrower and the consummation of the loan.
Issues related to locks should be sent via email to lockdesk@carringtonms.com.
Contacts
Please contact your Account Executive or Account Manager with any questions.
Carrington thanks you for your business.
VA Cash-Out Refinance 100% LTV Option
Overview
Carrington Mortgage Services, LLC (CMS) is pleased to announce a new VA Cash-Out Refinance option up to 100% LTV. The increased VA Cash-Out LTV option is subject to the following requirements:
- Effective for new submissions or Change of Circumstance (COC) requests on existing submissions beginning January 31, 2022,
- Maximum 100% LTV/CLTV, inclusive of any financed VA funding fee,
- Minimum 641 FICO,
- Fixed Rate 30 Year Term only,
- Conforming Loan Amounts only (No High Balance programs),
- Available with AUS Accept findings or as a manual underwrite,
- Loan Level Pricing Adjustment (LLPA) for LTVs over 90% up to 100% of 200-basis points (2%)
As a reminder, when calculating the LTV for a VA Cash-Out Refinance Transaction, divide the total loan amount (including VA funding fee, if applicable) by the reasonable value on the Notice of Value of the property determined by the appraiser. VA Cash-Out Refinance transactions with LTVs of 90% and less remain unchanged.
Starting Monday, January 31, 2022, CMS will update our pricing to add the 200-basis point LLPA for VA cash-out refinance transactions as described above. Please refer to the CMS Rate Sheets for additional pricing information.
Please note: The LLPA is in ADDITION to any other price adjustments that are otherwise applicable. For loans that are already locked, the pricing will remain unchanged and any rate changes requested will use the rate sheet pricing in effect at the time of lock.
Contacts
Please contact your Account Executive or Account Manager with any questions.
Carrington thanks you for your business.
FEMA Disaster Declaration for Tennessee Severe Storms, Straight-line Winds, and Tornadoes
Overview
Due to severe storms, straight-line winds, and tornadoes in Tennessee, FEMA has declared the following counties a disaster.
Incident Period: December 10, 2021 – December 11, 2021
State | FEMA Disaster Declaration | Counties |
Tennessee | January 14, 2022 | Cheatham, Davidson, Dickson, Gibson, Henderson, Henry, Lake, Obion, Stewart, Sumner, Weakley and Wilson |
Re-Inspection by Product Type
If your loan is … | A re-inspection is required … | Under these circumstances … |
FHA Full Doc | Yes | If the original appraisal inspection date was prior to the Incident Period End Date – 12/11/21. |
FHA Streamline | No | Not applicable |
VA Full Doc and IRRRL | Yes | If the loan was not closed (signed) prior to the Declaration Date of 01/14/22. |
USDA Full Doc and Streamline Assist | Yes | If the original appraisal inspection date was prior to the Incident Period End Date – 12/11/21. |
Conventional* and Non-Agency | Yes | If the original appraisal inspection date was prior to the Incident Period End Date – 12/11/21. |
*If an appraisal was not required due to a property inspection waiver (PIW), an inspection report will still be required.
Contacts
Please contact your Account Executive or Account Manager with any questions.
Carrington thanks you for your business.
Loan Level Pricing Adjustments for Conventional High Balance Loans and Second Homes
Overview
The Federal Housing Finance Agency (FHFA) recently announced targeted increases to Fannie Mae and Freddie Mac’s Loan Level Pricing Adjustments (LLPA/upfront fees) for certain high balance/super-conforming loans and second home loans. The updated LLPAs are effective for all whole loans purchased on or after April 1, 2022 and for loans delivered into MBS pools with issue dates on or after April 1, 2022. These pricing adjustments for high balance/super-conforming loans will increase between 0.25 percent and 0.75 percent, tiered by loan-to-value ratio. For second home loans, upfront fees will increase between 1.125 percent and 3.375 percent, tiered by loan-to-value ratio.
Carrington Mortgage Services, LLC (CMS) will transition to the new LLPA’s effective January 18, 2022 for conventional high balance/super-conforming and second home loans. Any existing loans in the pipeline locked with the “old” LLPA’s must close and fund by March 1, 2022. Please view our CMS Rate Sheets for full details.
Contacts
Please contact your Account Executive or Account Manager with any questions.
Carrington thanks you for your business.