Trust One Mortgage – 300B VA Series
Product Type & Program Numbers:
• 300B – 30-year Fixed Rate VA 315B – 15-year Fixed Rate VA
• 300BS – 30-year Fixed /VA IRRRL 315BS – 15-year Fixed /VA IRRRL
VA IRRRL transactions, existing loan must be Chase/WaMu serviced.
UNDERWRITING CRITERIA: All loans must be run through DU with Approve/Eligible results. If the loan is not approved thru
DU, the loan must be submitted to management for review to determine if the company wants to do a manual underwrite
Minimum/Maximum Loan Amount: No minimum loan amount. Maximum loan amount $1,000,000 plus funding fee ($1,033,000
maximum). For loan amounts that exceed the conforming loan limits, the amount of the VA entitlement or the entitlement plus the
down payment must equal 25% of the property’s reasonable value. The following factors may also impact the maximum loan amount
and maximum LTV CLTVs permitted: co-applicant that is not the veteran’s spouse; Amount of entitlement available for use by the
Veteran.
Transaction Maximum LTV/CLTV
Purchase VA base loan amount cannot exceed 100% LTV/CLTV
• The maximum LTV is 90%.
Regular Refinance • The maximum CLTV for a conforming loan amount for a veteran (and
spouse) with full entitlement is 97.50%.
All loans must conform to GNMA secondary market guidelines including the minimum 25% coverage requirement. Coverage is the
combination of VA provided entitlement plus cash down payment/equity. Maximum LTV/CLTVs listed are the maximums permitted
by Chase VA policy, however, not all Veterans will be eligible for maximum financing . LTV and CLTV limits are calculated using
base loan amount and do not include VA funding fee. To confirm maximum county loan limits go to:
http://www.benefits.va.gov/HOMELOANS/loan_limits.asp. Any loan amount > $417,000 with 100% LTV requires a second Trust
One Underwriter signature.
APPRAISAL: Standard VA appraisal guidelines apply. Age of appraisal must be 6 months or less. The March 2009 version of the
Fannie Mae/Freddie Mac form 1004MC, “Market Conditions Addendum to the Appraisal Report” must be included with all VA
(including rural housing) appraisals.
AIR: AIR compliant appraisals are required for all VA IRRRL transactions. This is an Investor overlay. VA IRRRL transactions
that require a conventional appraisal must be in compliance with the Appraiser Independence Requirements. VA IRRRL transactions
require an interior/exterior conventional appraisal when the new total loan amount exceeds the original total loan amount of the loan
being refinanced. Trust One must represent and warrant that any appraisal used in originating a conventional loan conforms to the
requirements of FNMA and complies with Appraiser Independence Requirements. Please review the additional details and/or
guidance found in Chapter 28 of the Trust One Program Summary Guide, or on the Trust One website. All appraisals must be ordered
on-line through an Appraisal Management Company. A listing of eligible Appraisal Management Companies can be found in the AIR
guidelines in Chapter 28 of the Trust One Program Summary Guide or on the Trust One website.
Disaster Policy: Trust One should follow the policies and procedures established by the government agencies and/or local FHA/VA
offices. It is Trust One’s sole responsibility to be aware of disasters and the implication to the mortgage loan within their lending area.
Trust One should contact the appropriate source (FEMA offices, FEMA Web site (FEMA Declared Disasters), news agencies) to
determine whether properties located in its origination regions are included in the disaster areas. The Investor reserves the right to
require a written certification from Trust One or Appraiser that indicates the value of the property has not been affected by any damage
arising out of the disaster.
Streamline loan without an appraisal: An interior/exterior conventional appraisal is required on VA IRRRLs if the new total loan
amount exceeds the original total loan amount of the loan being refinanced. No other valuation method or tool is permitted. VA total
loan amount is defined as base loan amount plus VA funding fee. Hazard Insurance coverage requirements are as follows: Loan
Amount, OR Coverage for ‘cost to rebuild’ based on information on appraisal, OR Letter from insurance company that coverage
provided will completely rebuild structure.
Two-to-Four Units: Small Residential Income Property Appraisal Report Form 1025. After evaluating the appraisal, Form 216
may be required by underwriter to support the value.
ASSETS/FUNDS TO CLOSE/DOCUMENTS:
Alimony: Follow AUS recommendations. For manual underwriting, if used as income, borrower must provide a copy of the divorce
decree, legal separation agreement, or voluntary payment agreement; document that the payments have been received during last
twelve months and will continue for at least three years from the date of closing. If being considered as a recurring liability, borrower
must provide a copy of the divorce decree or legal separation agreement to document the amount of the liability; document the
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Trust One Mortgage – 300B VA Series
borrower has been satisfactorily making the payments; as an alternative qualifying method, the monthly alimony amount can be
deducted from the borrower’s gross income in lieu of being included as a debt.
Alternate documentation: Follow AUS recommendations. For manual underwriting, original or certified true copy paystubs(s)
covering the most recent thirty days. Original or certified true copy W-2 forms for the past two years. Telephone certification of
employment listing name, title, and telephone number of person with whom employment was verified. Original or certified bank
statement(s) covering the most recent 2-month period.
Application: Chase requires the use of the Uniform Residential Loan Application (Form 1003) (revised 6/09) for all loan
applications taken on or after January 28, 2011. The revised 1003 provides fields for mortgage loan originator information, including
the Mortgage Loan Originator (“MLO”) unique identifier of the MLO who took the application. Application date is Trust One’s
application date as defined by RESPA. This date is required to be provided on the HOEPA/HMDA Required Information form. This is
not the date the loan is registered, locked or delivered to Chase.
Assets to Close: Down payment not required in most instances but veteran must have assets to pay any down payment, closing costs,
etc. which the veteran may be obligated to pay.
Cash on Hand: Although VA does not mandate that veteran borrowers have a savings or checking account (or saved money at
home), the VA does require the underwriter to review the veteran’s savings/checking history to access how a veteran would be able to
make a housing payment that is greater than his/her present rental payment.
Child Support: Follow AUS recommendations. For manual underwriting, if used as income, follow same documentation
procedures as noted in “Alimony.” If used as debt, the debt must be counted as a recurring obligation and may not be deducted from
income; obtain copy of document mandating child support and verify that the applicant has satisfactorily been making payments.
Closing Costs: VA permits veterans to borrow these funds with resulting payment(s) considered in debt ratio. Certain fees are
limited by either payment of a 1% origination fee or combination of fees not exceeding 1% of the sales price.
Commissioned Income: Must be averaged during the past two years and year to date. Subtract unreimbursed expenses from the
gross. If received less than two years, it can be considered if the underwriter can provide logic/rationale and can document that it will
continue. Less than 1 year receipt generally not allowed. Two years tax returns and signed IRS 4506-T required.
Compensating Factors: Include, but not limited to low debt-to-income ratio, excellent credit history, sizable down payment,
conservative use of credit, small increase in housing expense, significant liquid assets, military benefits, high residual income, long-
term employment, and previous satisfactory home ownership experience. Note: A compensating factor does not automatically
overcome any negative aspects of the application. Careful scrutiny must be applied.
Concessions: Must be deducted dollar for dollar from the lower of sale price or value when computing the mortgage basis.
Contributions by Others: 4%. NOTE: This excludes closing costs and reasonable discount points, but includes prepaids and seller
concessions (i.e., payment of veteran’s debts to qualify, TV set, lawnmower, etc).
Depreciation: May be added to net income or loss shown on Schedule E of tax return.
Documents: Per Ginnie Mae requirement, case numbers must be evidenced on all Security Instruments (SI), collateral documents,
and applicable riders. Ginnie Mae requires the fixed-length case number be stated on the first page of the Security Instrument (SI),
any collateral document, or applicable Rider. If the Note includes the case number or a place for the case number, the number must be
entered as a complete and accurate fixed-length number as applicable by loan type. Trust One should not include the Section of the
Act (SOA) number (most notably 203(b)) as part of the case number on the Note and SI. The leading zeros in each case number are not
required. Case numbers for VA loans can be obtained from The Appraisal System (TAS).
Down Payment: Not required unless:
• The purchase price exceeds the reasonable value established for the property; or, the veteran does not have sufficient entitlement;
or, the purchase price exceeds the Agency conforming loan limit. .
• Trust One may also require a down payment if necessary to meet secondary market requirements.
Earnest Money Deposit: VA does impose limits on EMD. If funds are considered as part of Veteran’s overall assets, then EMD
must be verified.
Employer Assistance Programs: If used as income (i.e., differential pay) must continue for three years. Do not deduct from
mortgage payment; instead, treat it as income. If used as assets (i.e., employer gift) provide gift letter.
Entitlement: For Chase qualifying purposes the maximum entitlement allowed is $104,250.
Excessive Real Estate Commissions: Any aggregate real estate sales commission greater than 8% of the sales price of the subject
property is considered an excessive real estate commission. The portion of the aggregate commission greater than 8% must be
deducted from the sales price for underwriting purposes.
Fraud Detection: Use the MERS-Link system to check for undisclosed debt from borrowers not disclosing all the properties they
own. Address every red flag on credit or automated (DU) underwriting system. Use 4506-T to get tax transcripts to look for
undisclosed debt (such as rental properties they lose money on) or variances in their actual income. Appraisals should have 3 ‘current’
comps plus current listing. If there are not enough current comps, do an AVM. AVM’s are available through United National. Pay
attention to the following red flags: Credit report contains mortgage inquiries in the last 90 days (need borrower explanation of
inquiries, and supplemental credit report to confirm no new accounts opened as a result of inquiries; if a supplemental credit report
cannot be obtained to confirm whether or not new mortgage accounts were established, you are required to fully document the file, and
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Trust One Mortgage – 300B VA Series
if there are mortgage inquiries on the credit report, you must use whatever documentation processes are available to you to ensure that
all debts are captured on the 1003 and documented); Borrower is purchasing a home as an owner-occupied property and distance to
employment is not reasonable; Borrower is involved in real estate speculation as evidenced by multiple mortgages appearing on the
credit report for a short duration of time; Borrower owns rental properties; Borrower is employed in the mortgage or real estate
industry and the mortgage application is a non arms length transaction; The borrower is financing distressed property. Fully processed
4506-T with transcripts required for all borrowers on the loan in the following instances: Borrower who is Self-employed, or Owns
rental properties, or Financing a distressed property; Borrower who is a real estate or mortgage professional and is also an interested
party in the subject transaction (e.g., buyer, seller, real estate agent, loan officer, loan processor, underwriter, etc.); Borrower whose
credit report reflects multiple mortgages appearing for a short duration of time.
Gift Funds: VA loans should follow VA Policy and documentation requirements. Gift funds are acceptable from any source.
However, any gifts provided by the seller, real estate agents, builders, or developers, must be considered in the 4% contribution
calculation. Money must be verified as having been deposited in veteran’s account or given directly to closing agent. Provide gift
letter as proof of source.
HUD1: FNMA is now requiring that there is a fully executed HUD1 for each loan file. For a purchase transaction it must be signed
by both buyer and seller. This can be accomplished in one of two ways: 1. The Estimated HUD1 (or HUD1a) can be fully executed
and included in the file along with a FINAL HUD1 that is not executed; OR, 2. The FINAL HUD1 (or HUD1a) can be fully executed.
In either case, the FINAL HUD1 must be stamped FINAL or say at the top that it is a Final HUD1.
IRS Form 4506-T: 4506-T not required for Non-Credit qualifying VA IRRRLs.
• Initial Application 4506-T: Chase will NOT require a copy of the initial 4506-T signed at application to be included in the file
delivered to Chase for funding. Trust One must obtain the signed initial 4506-T and use that document to obtain tax
transcripts/documentation from the IRS. Note: In rare instances, a loan may be selected for a pre-purchase due diligence review,
and Chase may request a copy of the initial 4506-T signed at application to verify additional tax information.
• 4506-T Signed at Closing: A 4506-T must be fully completed to IRS/Chase requirements, signed and dated by the borrower(s) at
closing and provided in the closed loan file. Note: The Form 4506-T will be validated with the IRS at Chase’s discretion.
• Years of Income Tax: Transcripts/ Documentation are required only for the year(s) of income used to qualify the borrower(s).
• Business Return Tax Transcript: Any business returns required by the AUS and/or Investor require the applicable tax transcript
validation.
• Tax Transcript Documentation:
Underwriting Year Options to Validate Salaried Income
2011 • 2010 1040 Tax Transcript, or
• 2010 W-2 Tax Transcript, or
• If neither are available, obtain
− 2009 W2 form(s), and
− Comply with “Current Tax Transcripts Are Not Available” documentation below.
• Other than as noted below, the absence of a W-2 on record with the IRS is a red flag, requiring
additional research and explanation to the file.
Income
Current Year Tax
Underwriting Date Documentation Transcript Required
Filing Status
Required
01/01/2011 to 2010 Taxes Filed Per AUS but typically If available -2010 Tax Return Transcript. If not
12/31/2011 2010 tax return available, see section on “Current Tax Are
Transcripts Not Available”
01/01/2011 to 2010 Taxes NOT Filed Per AUS but typically 2009 Tax Return Transcript, and
04/15/2011 2009 tax return Comply with “Current Tax Transcripts Are Not
Available”
04/16/2011 to 2010 Taxes NOT Filed Per AUS but typically 2009 Tax Return Transcript, and
10/15/2011 2009 Tax Return, and Comply with “Current Tax Transcripts Are Not
2011 YTD P&L Available”
10/16/2011 to 2010 Tax Extension NOT Not Eligible For Purchase
12/31/2011 Filed
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Trust One Mortgage – 300B VA Series
Current Tax Transcripts Are Not Available
Has the borrower filed taxes for the prior year’s income? THEN…..
No, but the underwriting date is prior to tax filing date cut-off Provide Tax Returns and Tax Transcripts for the 2 prior years
No, and the underwriting date is after the tax filing date cut-off the income for the prior year cannot be validated or included as
qualifying income.
Yes, but the Tax Transcript is not yet available, Provide the Filed Tax Return officially stamped by the IRS as
Note: this option is only acceptable during the period between received or evidence that the return was electronically received
filing and the availability of the transcript. If four weeks have AND
passed since the taxes were filed, Chase will not accept this Provide the previous year’s Tax Transcript.
option. Note: This option is only acceptable during the period between
filing and the availability of the transcript. Prior to utilizing
income from non-validated transcripts, the underwriter must
apply appropriate due diligence to ensure the:
• File is an otherwise strong file with no other risk factors,
and
• Income is consistent year over year.
IF the Income Documentation THEN the minimum documentation requested on the 4506T form is the most
requirement is… recent filing of…
1040 1120 or 1065 1099 W-2
YTD Pay Stub 1 year
YTD Pay Stub and one W-2 1 year
YTD Pay Stub and two W-2s 2 years
YTD Income Information and one 1 year 1 year
1099/1040
YTD Income Information and two 2 years 2 years
1099s/1040s
One Year Personal Returns 1 year
One Year Personal Return and One Year 1 year 1 year
Business Return
Two Years Personal Returns 2 years
Two Years Personal Returns and Two 2 years 2 years
Years Business Returns
Non-Taxable Income: Investor uses a 1.15% factor. Any non-taxable income which is grossed up cannot apply to residual income.
Any increase above 1.15% must have the documented calculation method as part of file.
Overtime: Generally, this is not considered “effective” income unless verified as having been received for two years and the
employer states this income is likely to continue.
Prepaid Settlement Charges: Veteran or seller can pay prepaid settlement charges. If seller pays, it must be considered part of
VA’s 4% seller concession.
Projected Income: Generally, not acceptable. Exceptions are available for: COLA adjustments, performance raises, bonuses, etc.
verified by the employer and scheduled to begin within 60 days of closing. (If it is to begin more than 60 days, it is ineligible).
Rental Income:
• Subject Property: Eligible for 2-4 unit properties only. Income only used when: veteran has a minimum six months PITI
reserves and; documentation shows the veteran has past property management experience. Use 75% of proposed rental income off
lesser of lease or appraiser’s estimated rent projection. Boarder income not allowed.
• Investment Property: Obtain individual income tax returns, signed and dated, plus all applicable schedules for the previous two
years, which show rental income generated by the property. Must have a minimum three months PITI reserves for transaction
subject property.
• Previous Primary Residence: Acceptable, provided lease is obtained, minus the applicable VA vacancy factor (VA vacancy
factor is 75%). Can be used to offset mortgage payment (of the previous principal residence). Cannot be used as income.
Reserves are not required.
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Trust One Mortgage – 300B VA Series
Residual Income: Active duty veterans may reduce residual income requirements by 5%. Non-qualifying spouse may be discounted
from family size if income can be verified to show spouse can be self-supporting.
Loan amounts of $79,999 and below
Family Size Northeast Midwest South West
1 390 382 382 425
2 654 641 641 713
3 788 772 772 859
4 888 868 868 967
5 921 902 902 1,004
Each additional family member, add $75 per person.
Loan amounts of $80,000 or more
Family Size Northeast Midwest South West
1 450 441 441 491
2 755 738 738 823
3 909 899 899 990
4 1,025 1,003 1,003 1,117
5 1,062 1,039 1,039 1,158
Each additional family member, add $80 per person.
Retirement Account: As income acceptable. As asset, VA does not provide qualifying percentage. Chase will qualify at 60% of
actual value. As debt, not included in ratio calculation.
Riders:
Transaction Type Required Rider
All ARM loans ARM Rider
All PUD loans PUD Rider
All Condo loans Condo Rider
Secured Debt: Permitted.
Self-Employed: 25% or greater ownership interest in a business. Must be self-employed for two years. Income is averaged unless
tax returns disclose questionable stability of income.
Seller Concessions: Seller’s payment of buyer’s closing costs and up to 2 discount points is not considered in seller concessions.
Maximum Seller concessions are 4%. Allowable concessions include: payment of the buyer’s VA funding fee; prepayment of the
buyer’s property taxes and insurance; gifts such as a television set or microwave oven; payment of extra points to provide permanent
interest rate buydowns; provision of escrowed funds to provide temporary interest rate buydowns, and payoff of credit balances or
judgments on behalf of the buyer. Dollar for dollar reduction of qualifying sales price required for all concessions over 4% of value.
Settlement Costs: Paid in cash (buyer or seller) except can be financed in a streamline refinance. Pest Inspection fee may not be
paid by the veteran except for refinance.
Short Sale:
• Underwriter Required Actions: When the buyer is purchasing a loan through a short sale transaction, the underwriter must: 1.
Obtain documentation from the current mortgage holder to evidence their authorization of the short sale. This documentation
cannot be obtained through a third party; 2. Verify with the current mortgage holder that the short sale was negotiated directly with
the Seller and that there were no third party negotiations (refer to Short Sale Fee Documentation); 3. Review HUD-1 Settlement
Statement for unusual fees and payouts that might indicate possible red flags (refer to Short Sales Fees and payments).
• Short Sale Fees and Payments: The borrower may pay additional fees or payments in connection with acquiring a short sale
property that are typically the responsibility of the seller or another party. Examples of these fees include, but are not limited to:
Short sale processing fee (aka short sale negotiation fees, buyer discount fees, short sale buyer fees); Payment to a subordinate lien
holder; Payment of delinquent taxes or delinquent HOA fees. Note: The short sale processing fee is not a common and customary
charge and must be treated as a sales concession if any portion is reimbursed by an interested party to the transaction.
• Short Sale Fee Documentation: The following documentation is required in the loan file submitted to Chase: Written details
provided to the borrower outlining the additional fees or payments and the additional necessary funds to complete the transaction;
The servicer who is agreeing to the short sale should provide written details of the fees or payments and confirmation that they
have the option of renegotiating the payoff amount to release its lien; All parties (buyer, seller and servicer) must provide their
written agreement to the final details of the transaction including the additional fees or payments. This can be accomplished by
using the “Request for Approval of Short Sale” or “Alternative Request for the Approval of Short Sale” form published by the
U.S. Treasury Supplemental Directive 09-09 (www.hmpadmin.com/portal/docs/hamp_servicer/sd0909.pdf) or any alternative
form or addendum; The HUD-1 Settlement Statement must include all fees and payment included in the transaction.
• Borrower, broker/lender or agent may pay the difference on the seller’s 2nd Trust Deed in the case of a short sale, as long as the
amount of the short sale is not included in the sales price or the loan amount.
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Trust One Mortgage – 300B VA Series
Tax Abatements: Under no circumstances may a tax abatement be used as a source of qualifying income.
Tax Returns: VA guidelines require signed tax returns regardless of the validating documentation in the file.
Title Vesting: Title may be in the name of: Veteran only, or; Veteran and qualifying co-borrower(s), or; Veteran and non-qualifying
spouse, or; Living trust. Non-qualifying non-spouse cannot be on the title.
Trade Equity: Trade equity is acceptable. The value of the property/asset being traded must be supported by a current appraisal.
Any transfer costs must be taken into consideration in determining the trade value. Borrower must provide copy of bill of sale.
Undisclosed Debt: Below is outlined scenarios requiring additional documentation to validate debt. It is strongly recommended that
any Underwriter suspecting undisclosed debt should require the appropriate level of documentation to ensure a complete credit profile
is being reviewed.
• If a credit report contains mortgage inquiries in the last 90 days, then document the file with a borrower explanation of
inquiries, and a supplemental credit report to confirm no new accounts opened as a result of inquiries.
• If the borrower is purchasing a home as owner-occupied and the employment commuting distance is not reasonable, then
document the file with an explanation (transfer, alternative work arrangement) from the borrower, and supporting evidence
from employer validating the explanation.
• If a borrower is Self employed, or owns rental properties, or is financing a distressed property, then document the file with a
fully processed 4506-T with transcripts attached for all borrowers on the loan.
• If a borrower is a real estate or mortgage professional and is also an interested party in the subject transaction (e.g., buyer,
seller, real estate agent, loan officer, loan processor, underwriter, etc.), then document the file with a fully processed 4506-T
with transcripts attached for all borrowers on the loan.
• If a borrower’s credit report reflects multiple mortgages appearing for a short duration of time, the document the file with a
fully processed 4506-T with transcripts attached for all borrowers on the loan.
• Not all scenarios involving undisclosed debt are listed. Use appropriate caution when reviewing loan files. The following
documentation options provide an additional level of review for the detection of undisclosed debts: Underwriter review of the
HUD-1 and Title Report just prior to closing can be an effective method of discovering undisclosed debt on the subject
property; Performing a Borrower Social Security Number Search on MERS Fraud Tools just prior to closing can help confirm
no undisclosed liabilities.
Verbal VOE: Verbal verification of employment must be obtained within 10 business days of the Note for salaried borrowers and
within 30 calendar days of the Note for self employed borrowers. If the borrower is in the military, a military Leave and Earnings
Statement (LES) dated within 30 days of closing is acceptable in lieu of a verbal VOE.
• Verbal VOE Requirements for Hourly, Salary and Commissioned Income: Trust One must independently obtain a telephone
number and, if possible, an address for the borrower’s employer. This can be accomplished by using a telephone book, the
internet, or directory assistance, or by contacting the applicable licensing bureau. Trust One must contact the employer, verbally
or in writing, and confirm the borrower’s current employment status within 10 business days prior to the Note date. If the contact
is made verbally, the conversation must be documented. It should include the name and title of the person who confirmed the
employment, the date of the call, and the source of the telephone number. The written documentation should also include the name
and title of the person who performed the verification for Trust One.
• Verbal VOE Requirements for Self-Employed Income: Trust One must verify the existence of the borrower’s business within 30
calendar days prior to the Note date: From a third party, such as a CPA, regulatory agency, or the applicable licensing bureau (if
possible), and By verifying a telephone listing and address for the borrower’s business using a telephone book, the internet, or
directory assistance. If the contact is made verbally, Trust One must document the source of the information obtained and the
name and title of the Trust One employee who obtained the information.
ASSUMPTIONS: Simple assumptions on loans closed prior to 3/1/88; all others must be credit qualifying reviewed. For release of
liability (which would restore the selling veteran’s entitlement), the assumptor must be a veteran who has sufficient entitlement to
substitute for the loan.
BORROWER ELIGIBILITY: Must be a veteran who has received a Certificate of Entitlement. (Determination for unremarried
surviving spouses will be made by the local VA office). Must occupy property (except Interest Rate Reduction Refinance Loans).
Must have sufficient entitlement. See also “Non Purchasing Spouse.”
Arm’s Length Transaction: VA has no definitions or requirements. Attention should be paid to these transactions to determine if
VA should be requested to determine impact, if any, on LTV or VA program requirements. Family sales and transfers are ineligible.
Builder model-home leasebacks do not comply with the Chase Non-Arms Length policy and are not eligible for delivery to Chase.
Citizenship: Applicant must be a veteran. There are no citizenship requirements for a Veteran’s legal spouse.
Co-Borrower: Eligible spouse who is obligated on Note. If non-spouse, loan guaranty will be reduced and application may require
down payment. All borrowers must occupy the property (except if veteran stationed elsewhere, not within reasonable distance). Only
a spouse may meet the occupancy requirement if the veteran can not occupy the property within 60 days of closing (e.g. a parent or
child purchasing with a veteran would require the veteran to occupy the property within 60 days). “Joint Loan” - Vet/Non-Vet
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Trust One Mortgage – 300B VA Series
applications: two married veterans both using entitlement or two unmarried veterans. File must be approved by Trust One underwriter
and subsequently submitted to local VA office with cover letter advising loan must be reviewed by the VA as a prior approval loan.
Loan may not close until VA issues a prior commitment. NOTE: IRRRLs are exempt from Joint Loan processing.
Co-Signer: If a co-signer exists, Veteran’s income must be sufficient to repay that portion of the loan allocated to the veteran’s
interest in the property.
Identity of Interest: VA has no definitions or requirements. Attention should be paid to these transactions to determine if VA
should be requested to determine impact, if any, on LTV or VA program requirements
Loans to External Auditors and Bank Examiners: Chase will not purchase a loan made to an external auditor who may also be
authorized to examine JPMorgan Chase & Co., or any of its subsidies, and Chase Correspondent will purchase loans to bank examiners
on principal residences only. These loans must be made on the terms and conditions generally prevailing at the time. A No Conflict
Letter from the borrower’s employer will no longer satisfy specific requirements for these borrowers.
• Loans to Independent Auditing Firms Authorized to Audit Chase: Chase prohibits making (or purchasing) a loan to any employee
who conducts or is responsible in any way for audits of, or provides any kind of professional services to Chase, including his/her
immediate family members (parents, children, siblings) and any partner located in the firm’s engagement office (currently,
employees of (i) PricewaterhouseCoopers, (ii) Faw, Casson & Co., and (iii) Meaden & More). Other auditing firms are not
impacted by this restriction.
• Loans to Bank Examiners: Loans secured by principal residences and made on the terms and conditions generally prevailing at the
time may be made to bank examiners. Chase will purchase no other types of residential mortgage loans that may be made to bank
examiners. This applies to any bank examiner or assistant bank examiner in the United States, who examines or has authority to
examine Chase (currently, all those employed by the Federal Reserve System (“Fed”), the Office of the Comptroller of the
Currency (“OCC”), the Federal Deposit Insurance Corporation (“FDIC”), and the state of Michigan, and in any country where
Chase does business.
Non-Permanent Resident Alien: Permitted as long as primary occupying applicant is a Veteran.
Non-Purchasing Spouse: Proof of marriage 9e.g., marriage license) is required. Community Property States: Does not appear on
the mortgage, note, or deed (property conveyance), unless State law requires non-purchasing spouse to either sign security instruments
or present documentation evidencing that he/she is relinquishing all rights to the property. Credit report must be ordered for non-
purchasing spouse, but the credit history is not considered in the borrowet’s creditworthiness review. Debts of non-purchasing spouse
are considered in ratios unless evidence is presented that the debts are specifically excluded by state law.
Resident Alien: Permitted as long as primary occupying applicant is a Veteran.
Unmarried Surviving Spouse: Eligible for full VA benefits. Determination made by the VA, request Certificate of Eligibility using
VA 26-1817. Exempt from funding fee.
BUYDOWNS: Temporary buydowns have been temporarily suspended.
Temporary: Qualify at the Note rate unless there is evidence that income used to support the application will increase to cover the
increases in loan payments. Routine COLA raises cannot be used for this purpose. Maximum 3-2-1 buydown permitted. The
buydown must adjust in no earlier than 12-month increments and be no greater than 1% per 12 months. 15-Year Fixed product
ineligible.
Permanent: Acceptable provided borrower’s costs (to achieve the reduced interest rate) are reasonable. If these costs are paid by the
seller, they must be considered in the 4% seller contribution calculation. If used on IRRRL, then maximum amount to be financed will
be two points. Any excess above that amount must be paid in cash by veteran and the veteran must acknowledge in writing his or her
understanding that s/he is paying the additional points to reduce the permanent interest rate.
CREDIT:
Any loan where the borrower currently has a loan with the Investor (whether or not it is being paid off), requires an exception from
the Trust One Underwriting Manager, as well as a QC review. Loans with this situation may or may not be granted an exception. In
order for an exception to be granted, at least 3 of the following compensating factors must be present: Established history for the past
12-24 months of housing expense greater than or equal to the proposed housing payment; Significant cash down payment (10% or
more) on purchase of the property; Demonstrated ability to accumulate savings and a conservative attitude toward the use of credit;
Previous credit history showing an ability to devote a greater portion of income to housing expenses; The borrower receives
documented compensation or income not reflected in effective income, but directly affecting the ability to pay the mortgage; There is
only a minimal increase in housing expense; Substantial documented cash reserves (at least 3 months) after closing; Substantial non-
taxable income (if no adjustment was made previously in the ratio computations); Potential for increased earnings, as indicated by job
training or education in the borrower’s profession; Purchase transaction as a result of relocation of the primary wage-earner, and the
secondary wage-earner has an established history of employment, is expected to return to work, and the reasonable prospects exist for
securing employment in a similar occupation in the new area.
Age of Credit Documents: At time of closing, all documents in the mortgage loan application may be up to 120 days old, or 180
days old for new construction.
05/06/11 Page 7 of 11 Guidelines are subject to change without notice
Trust One Mortgage – 300B VA Series
Credit Scores: At least 1, and preferably 2 or 3, credit scores must be obtained for each borrower on every government loan
delivered for purchase. Each borrower on the loan must have a valid credit score. Non-traditional credit or 000 credit score are not
considered valid. The scores must be obtained from major repositories, such as Equifax, Experian®, and TransUnionSM. Because
these scores were developed by Fair Isaac Corporation, they are sometimes referred to as FICO® scores.
Product Transaction Type FICO Score
VA Purchase 660
Cash Out Refi (aka Non-
VA 660
IRRRL)
VA IRRRL 660
Credit Report: Traditional RMCR, or 3-file merged report required for all loans, including Non-Credit Qualifying VA IRRRLs.
Non-traditional credit is not acceptable.
Bankruptcy:
• Chapter 7: At least two years from discharge date; bankruptcy may be disregarded. Reason must be documented and not likely to
reoccur. Between one and two years from discharge date; credit has been reestablished for that period of time and was caused by
circumstances beyond the borrower’s control and evidence the borrowers have demonstrated their ability to handle their financial
affairs. Less than one year - not eligible.
• Chapter 13: Satisfactory performance for at least one year of pay out period and permission from court to enter into the mortgage
transaction.
Collection Account: Per VA Lender Handbook Section 4.7c: Isolated collection accounts do not necessarily have to be paid off as a
condition for loan approval. For example, a credit report may show numerous satisfactory accounts and one or two unpaid medical (or
other) collections. In such instances, while it would be preferable to have collections paid, it would not necessarily be a requirement for
loan approval. However, collection accounts must be considered part of the borrower’s overall credit history and unpaid collection
accounts should be considered open, recent credit. Borrowers with a history of collection accounts should have reestablished
satisfactory credit in order to be considered a satisfactory credit risk.
Consumer Credit Counseling: Permitted as long as borrower demonstrates 12 months of satisfactory repayments and administrator
signs letter allowing applicant to seek financing. If prior satisfactory credit, no minimum length of repayment or administrator
allowance necessary. Borrowers entering program for budgetary purposes (i.e., no previous credit problems) may have the 12-month
time period waived. Qualified on CCCS payment.
Foreclosure/Deed-in-Lieu:
• Foreclosure: If foreclosure is due to hardship then if seasoned > 36 months but 36 months but 48 months but 36 months but 84 months, standard down payment policies apply.
• Previous Short Sale NOT due to hardship must be seasoned at least 48 months. If seasoned > 48 months but 84 months, standard down payment policies apply.
• Principal Reduction Modification due to hardship must be seasoned at least 36 months. Standard down payment policies apply.
• Principal Reduction Modification NOT due to hardship must be seasoned at least 48 months. Standard down payment policies
apply.
DISASTER POLICY: Follow the policies and procedures established by the government agencies and/or local VA offices.
ESCROW (IMPOUNDS): Escrow waivers are not permitted.
FUNDING FEE: See MORTGAGE INSURANCE.
GEOGRAPHIC RESTRICTIONS: Eligible states AK, AZ, CA, CO, CT, GA, HI (a lava zone map is required as an additional
appraisal documentation for all loan transactions with properties located on the Island of Hawaii; Properties located in Lava Zones 1
and 2 of Hawaii are ineligible), ID, IN, MD, MI, MO, NV, NM, OK, OR, TX (Texas 50(a)(6) transactions are not permitted) , UT,
VA, WA, WY.
05/06/11 Page 8 of 11 Guidelines are subject to change without notice
Trust One Mortgage – 300B VA Series
Disaster Policy: Correspondents should follow the policies and procedures established by the government agencies and/or local
FHA/VA offices. It is the Correspondent’s sole responsibility to be aware of disasters and the implication to the mortgage loan within
their lending area. The Correspondent should contact the appropriate source (FEMA offices, FEMA Web site (FEMA Declared
Disasters), news agencies) to determine whether properties located in its origination regions are included in the disaster areas. The
Investor reserves the right to require a written certification from the Correspondent or Appraiser that indicates the value of the property
has not been affected by any damage arising out of the disaster.
MAINTENANCE AND UTILITY FACTORS: $0.14 times square footage of home.
MORTGAGE INSURANCE: Referred to as the “Funding Fee.” May be paid in cash or financed as part of the mortgage. Veterans
receiving VA disability pay (file must have a VA issued award letter or a form VA 26-8937) are exempt from paying the fee. If the
COE indicates the borrower is an unmarried surviving spouse, the spouse is exempt from paying the fee. Amount charged based on
LTV, Veteran status, transaction type, and prior use. Refer to the VA Lender’s Handbook for guidance.
First Time Use Subsequent Use
Veteran Reservist/NG Veteran Reservist/NG
*Cash Out Refinance 2.15% *2.40% 3.30% 3.30%
0% down payment 2.15% 2.40% 3.30% 3.30%
5% down payment 1.50% 1.75% 1.50% 1.75%
10% down payment 1.25% 1.50% 1.25% 1.50%
All IRRRLs .5%
*Cash Out factors apply regardless of LTV.
MULTIPLE INSURED MORTGAGE PROPERTIES:
Any loan where the borrower currently has a loan with the Investor (whether or not it is being paid off), requires an exception from
the Trust One Underwriting Manager, as well as a QC review. Loans with this situation may or may not be granted an exception. In
order for an exception to be granted, at least 3 of the following compensating factors must be present: Established history for the past
12-24 months of housing expense greater than or equal to the proposed housing payment; Significant cash down payment (10% or
more) on purchase of the property; Demonstrated ability to accumulate savings and a conservative attitude toward the use of credit;
Previous credit history showing an ability to devote a greater portion of income to housing expenses; The borrower receives
documented compensation or income not reflected in effective income, but directly affecting the ability to pay the mortgage; There is
only a minimal increase in housing expense; Substantial documented cash reserves (at least 3 months) after closing; Substantial non-
taxable income (if no adjustment was made previously in the ratio computations); Potential for increased earnings, as indicated by job
training or education in the borrower’s profession; Purchase transaction as a result of relocation of the primary wage-earner, and the
secondary wage-earner has an established history of employment, is expected to return to work, and the reasonable prospects exist for
securing employment in a similar occupation in the new area. A veteran is limited only by the amount of available entitlement. If
partial entitlement has previously been used, a veteran can obtain another VA guaranteed loan if there is sufficient remaining
entitlement and down payment to satisfy Investor and GNMA requirements. Entitlement can be restored and reused under certain
criteria. Property being purchased must be primary residence. Chase limits borrowers to a maximum of four financed residential
properties including the subject property.
OCCUPANCY: Veteran must be owner-occupant except on streamline refinance. If streamline refinance, the veteran must certify that
he or she previously occupied the property as his or her home. Active duty veterans may be able to meet this requirement if: Occupy
within 60 days of closing, or Occupy within 12 months with a satisfactory documented reason for delay, or current spouse will occupy
the Property at closing.
• Primary Residence: 1-4 unit.
• Second Homes: Not Permitted, except for IRRRL.
• Investment Properties: Not permitted, except on IRRRL.
• 3-4 unit Property: If rental income being used to qualify, veteran must have six months reserve. NOTE: Two unit properties
must also meet the reserve requirement.
PROPERTY REQUIREMENTS:
Eligible:
• 1-4 SFR, including PUDs.
• Condominiums: Evidence of VA condominium approval must be provided. http://condopudbuilder.vba.va.gov/2.2/frames.html.
• Investment or second home may be done as an IRRRL. On IRRRL, veteran must attest that he or she once occupied property as a
primary residence.
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Trust One Mortgage – 300B VA Series
• Rural properties eligible in California only.
Ineligible:
• Manufactured Homes/Mobile Homes/Modular Homes/Pre-fabricated Homes.
Converting Primary Residence into Investment Property: Underwriting analysis on VA Loans may not consider rental income
from the property vacated except under circumstances described under “Exceptions” below.
Exceptions: Rental income on the property vacated by the borrower, reduced by the appropriate VA vacancy factor, may be used
under the following circumstances:
• Relocations: The homebuyer is relocating with a new employer, or is transferred by the current employer to an area not within a
reasonable and locally recognized commuting distance. A properly executed lease agreement (such as a lease signed by the
homebuyer and the lessee) of at least one year’s duration is required from the date the loan closes. The Investor recommends
underwriters also obtain evidence of the security deposit and/or evidence the first month’s rent was paid to the homeowner.
• Sufficient Equity in Vacated Property: The homebuyer has a loan-to-value ratio of 75% or less, as determined by either a current
(no more than six months old) residential appraisal or by comparing the unpaid principal balance to the original sales price of the
property. The appraisal, in addition to using forms Fannie Mae® 1004/Freddie Mac® 70, may be an exterior-only appraisal using
form Fannie Mae/Freddie Mac 2055, and for condominium units, form Fannie Mae® 1075/Freddie Mac® 466. A properly
executed lease agreement (such as a lease signed by the homebuyer and the lessee) of at least one year’s duration is required from
the date the loan closes. The Investor recommends underwriters also obtain evidence of the security deposit and/or evidence the
first month’s rent was paid to the homeowner. The underwriter is responsible for determining eligibility of rental income in
accordance with VA specifications.
The above guidance applies solely to a primary residence vacated in favor of another primary residence and is not applicable to
existing rental properties disclosed on the loan application and confirmed by tax returns (Schedule E of form IRS 1040).
PREPAYMENT PENALTY: None.
QUALIFYING:
Any loan where the borrower currently has a loan with the Investor (whether or not it is being paid off), requires an exception from
the Trust One Underwriting Manager, as well as a QC review. Loans with this situation may or may not be granted an exception. In
order for an exception to be granted, at least 3 of the following compensating factors must be present: Established history for the past
12-24 months of housing expense greater than or equal to the proposed housing payment; Significant cash down payment (10% or
more) on purchase of the property; Demonstrated ability to accumulate savings and a conservative attitude toward the use of credit;
Previous credit history showing an ability to devote a greater portion of income to housing expenses; The borrower receives
documented compensation or income not reflected in effective income, but directly affecting the ability to pay the mortgage; There is
only a minimal increase in housing expense; Substantial documented cash reserves (at least 3 months) after closing; Substantial non-
taxable income (if no adjustment was made previously in the ratio computations); Potential for increased earnings, as indicated by job
training or education in the borrower’s profession; Purchase transaction as a result of relocation of the primary wage-earner, and the
secondary wage-earner has an established history of employment, is expected to return to work, and the reasonable prospects exist for
securing employment in a similar occupation in the new area.
Ratios: Follow AUS recommendations, with the max DTI 50%, no exceptions to exceed 50%.. For manual underwriting, the VA
uses a single ratio of total debt to gross income that should not exceed 41%. In addition, the VA publishes regional residual income
tables based on net income; see “Residual Income.” The veteran should have at least the minimum residual income remaining to
qualify. If the 41% ratio is exceeded and the residual income is less than 120%, then a second, supervisory U/W signature is required.
Liabilities:
• Child Care: Included in total obligations-to-income ratios. A childcare letter must be included in every file with a child under the
age of 13; an exception may be made if one spouse is listed as a homemaker. NOTE: The age of 13 is Investor’s policy based on
discussions with VA personnel and various underwriting critiques issued by VA. VA does not mandate a specific age.
• Contingent Liability: Any debt for which the borrower/co-borrower would be held responsible in the event of default by the
primary obligor. Underwriter can choose not to consider this debt if the borrower can provide evidence that the primary obligor
has been making payments on a regular basis and does not have a history of delinquent payments on the loan over the past 12
months.
• Installment Debt/Revolving Charge: Ten months or longer must be considered in ratios. If debt is 10 months or less but has an
impact on borrower’s ability to pay the mortgage during the first several months, it may be considered recurring (per underwriter' s
discretion).
• Recurring Obligations: Monthly debts extending more than 10 months must be included in the qualifying ratio and residual
income. Revolving accounts will be calculated on the greatest of: 5% of the balance; $10; or the actual payment. Any installment
debt with less than 10 months remaining, but with a payment likely to cause hardship to borrower (at the discretion of the
underwriter), must be included.
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Trust One Mortgage – 300B VA Series
Tax Abatements: Tax abatements are a temporary reduction in the actual amount of taxes required to be paid by the owner(s) of a
property. The abated (reduced) amount of taxes may be used in the qualifying DTI, provided that all of the following requirements are
met: The abatement must be offered by a government municipality and cannot be paid to the borrower by the seller or any other
interested party; the full amount of the abatement must remain in effect for a minimum of three (3) years from the loan closing date and
cannot terminate partially or fully within that period of time; documentation must be obtained supporting the amount and term of the
abatement. Under no circumstances may a tax abatement be used as a source of qualifying income.
Taxes and Insurance: The actual monthly amount of taxes, insurance, homeowners association (HOA) fees, and special assessment
fees should be included in the DTI.
REFINANCE TRANSACTIONS: VA IRRRL transactions, existing loan must be Chase/WaMu serviced.
Rate & Term: VA considers this the same as Cash Out.
Cash Out: May be referred to as a "regular" refinance. Requires credit and appraisal underwriting. 90% of value and must also
meet GNMA maximum calculation. Property must be encumbered by a valid first lien mortgage. Primary residence only. There is no
seasoning requirement, if purchased within one year, maximum mortgage be based on current value. Texas 50(a)(6) loans not
permitted on VA transactions.
IRRRL/Streamline: An AIR compliant interior/exterior conventional appraisal is required on VA IRRRLs if the new total loan
amount exceeds the original total loan amount of the loan being refinanced. No other valuation method or tool is permitted. Must be
same borrower(s) unless death or divorce of a borrower. Cannot remove currently separated spouse. Only person eligible to be added
to loan is new spouse (provide evidence). If Veteran is deceased, spouse on original loan is eligible for IRRRL. Incidental cash back
at closing cannot exceed $500. Credit qualifying required if PITI payment increasing by more than 20%. CAIVR check is required. If
Credit Qualifying: Chase to Chase refinance only; Tri-Merged Credit Report required; minimum FICO 660; Credit history must reflect
no more than 1X30 in past 12 months and 0X30 in most recent 3 months; Income must be verified and documented in accordance with
VA standard income documentation requirements; VA ratio and residual calculations are required. Current VA loan must be VA
guaranteed. Existing loan must be Chase/WaMu Serviced. Maximum term is lesser of 30 years or not more than original term plus 10
years. When an appraisal is obtained, LTV may not exceed 100% of the value including funding fee. The maximum LTV/CLTV is
100% if the new total loan amount will exceed the original total loan amount. There is no valuation required if the new total loan
amount will not exceed the original total loan amount and thus there is no maximum CLTV for an existing, previously secured second
lien that will remain subordinate to the first VA lien. No new secondary financing may be initiated in conjunction with a new VA first
lien. 660 minimum credit score. Each borrower must have a valid credit score; non-traditional credit or 000 credit score are not
considered valid. Mortgage must be current at time of closing (defined as not more than 30 days past due the last payment). Primary
Residence. Second home or investment properties are eligible provided the Veteran signs a letter verifying the property had previously
been their primary residence. 4506-T not required for Non-Credit qualifying VA IRRRLs.
Properties Listed For Sale:
• If the property was listed for sale within the prior 12 months but is not currently for sale, then: Is eligible for a No Cash Out
refinance if the listing has expired or been withdrawn prior to the application date. May be considered for a Cash out Refinance if
the listing has been expired or withdrawn 180 days prior to the application date.
• If an appraisal is required/obtained, the appraisal must confirm: That the home is not currently listed in the MLS, nor is it publicly
offered for sale by owner. The date the listing was withdrawn/expired. That the home is occupied. The appraised value should be
at least 10% less than the lowest listing price. The borrower must provide evidence that the property is no longer for sale (for
example: a copy of the canceled agreement).
RESERVES: If rental income not being used to qualify, reserves are not required.
SECONDARY FINANCING: Not Applicable. Down Payment assistance not allowed.
TRAILING SPOUSE INCOME: Not allowed.
05/06/11 Page 11 of 11 Guidelines are subject to change without notice