Provident funding is getting tough on stated!

Provident Funding is amending its Conforming and Non-Conforming Guidelines for reduced documentation loans.

Guideline Changes

- Minimum 730 Loan Fico score for Conforming, Loan Prospector approved loans utilizing the Stated Income /Stated Asset Documentation type. This was the previous "free SISA" threshold. Loans below this level may be able to go SIVA (min 680 fico) or will be required to go Full Documentation.

- Removal of the Stated Income / Verified Asset Documentation type for Jumbo A and Expanded loans approved through the Assetwise.

These changes are effective for all loans locked after October 17th, 2007. All loans currently locked will be honored, but must fund prior to their original lock expiration date.

Stated Income Updates

The determination of income reasonableness is a critical element in the underwriting and qualification of reduced documentation loans. As a result, Provident has made a few changes to the reasonableness testing for Stated Income loans.

- The use of an online salary calculator when determining reasonableness is now required. The Reasonableness Test in the UW Details section of PFnet now includes links to three different salary calculators and the Underwriter is required to utilize a minimum of two. The lowest median found must be within 10% of the stated income. The results of the calculator must be uploaded into the income section of Proviscan. For an example as well as step-by-step procedures for each site, please click here.

- When completing the Verbal VOE, the verifier must confirm the employment details of the Loan Application (1003). Any discrepancies must be reviewed by the underwriter for the loan. Additional attention must be paid the to borrowers title, since a change could impact the results of the surveys done above. 

- The importance of obtaining and documenting evidence of sufficient assets to support the income stated. A complete Asset section of the Loan Application (1003) is required for all loans utilizing the Stated Income / Stated Asset or Stated Income / Verified Asset documentation types.

Please remember that Stated Income is a tool available for highly qualified Borrowers and allows them to simplify their income documentation. If the income stated does not appear to be reasonable, then the loan must be made Full Documentation.