I recieved this e-mail this morning and thought that I would share...
Dear Valued Business Partner:
As you may be aware, federal regulatory agencies have issued joint guidance which impacts the qualifying methodology for non-traditional mortgage products. This guidance was designed to better address risks associated with non-traditional mortgage products that offer interest-only and/or negative amortization payment features and to better support the needs of those borrowers who might not understand these types of risks.
In an effort to further align our lending strategy with this guidance, effective Monday, November 19, 2007 Countrywide®, America's Wholesale Lender® began calculating borrower repayment capacity for non-traditional mortgage products using the following three criteria:
|The greater of the Note Rate or the Fully Indexed Rate|
|A full amortizing payment|
|A loan amount which includes the total potential negative amortization|
The resulting qualifying payment amount will be used to calculate both the Housing and the Debt-to-Income (DTI) Ratios for the loan transaction.
|New York - 110% of the original loan amount|
|All other states - 115% of the original loan amount|
Please note, for ARM loans with MTA or COFI indices, the qualifying interest rate will be calculated using the fully indexed rate (index + margin) plus an "adjuster." The adjuster is a variable which will be used to annualize the MTA or COFI indices due to the "lagging" nature of these two indices.
These new qualifying requirements apply to all loans with application dates on or after November 19, 2007. All loans locked and approved before November 19, 2007 will continue to be processed but must fund by January 18, 2008. Lock extensions will be allowed but are required to fund by January 18, 2008. Loans with long term locks taken before November 19, 2007 that have commitments that extend beyond January 18, 2008 will continue to be processed and allowed to fund up to their expiration date (no extensions allowed).
Please contact your Countrywide Account Executive if you have any questions regarding these new qualifying requirements for non-traditional mortgage products.