Genworth, the mortgage insurance company, recently sent out this update. Much of the information is valuable information for consumers and real estate professionals. The informed Realtor will be advised to know this information and/or to have a great mortgage associate at your disposal. Here is Genworths update:
Commonly Asked Underwriting Questions Answered:
Rent to Own - Genworth asks that the "rent to own" agreement was signed prior or same time as lease. We only apply the dollar amount that exceeds the fair market rent towards the down payment
Agricultural property - Zoning must allow for residential development; property must meet guidelines as per Acreage Property requirements; confirm applicant(s) income is not derived in any way from the land; the land will not be used by the applicant(s) or any other entity, for farming; maximum acreage to be included in property value has been increased from 10 to15 acres
Square Footage Minimum - Genworth does NOT have square footage minimum but property size has to be the "norm" for the area. For example; there is a lot of very small condos in downtown Toronto so that is normal for area
NOA Verification - If you go to CRA website www.cra.gc.ca. and request Quick Access, follow the prompts and have available SIN, DOB, TAX YEAR and AMOUNT ON on LINE 150, when you hit continue and if Line 150 is correct, you will get the Name of filer, and statement "your 2007 was assessed on (date on return) " and then you can also confirm the RRSP limit by clicking on that box. If you do not get this information, the NOA presented to you has discrepancies. This is currently good for 2006 and 2007.
If you have further questions attached is the link to Genworth's Underwriting Guidelines for your reference: http://www.genworth.ca/mi/eng/industry_professionals/underwriting_guide.html
***Please Note: Lender's internal underwriting guidelines continue to take precedence***
Genworth General Observations of High Ratio (Cutback/Decline) Submissions:
- Alt A BFS documentation not in line with T1’s/NOA’s (reasonability)
- Excessive debts remain after consolidations/refi’s in past year-no improvements
- Overextended applicants (credit bureau available debts over $400k)
- Co-signor applications requesting to offset poor credit
- Step father non- occupying; gifted down payments, average credit 589, $171k in consumer debts
- Instability of income/employment; stated income exceeds $100k-more than gross business income
- Weak employment stability/limited established credit
- Covenant salaried-does not meet BFS program guidelines/maxed ratios
- Current I9's with other weak/excessive credit
- Excessive obligations remain after refinance request
- Recent refinance approved in past 12 months/limited or no improvements
- Business for self as daycare provider, maxed ratios, income high and required to support, commercial aspects to home
- Limited assets/net worth, Business for Self tenure not met, excessive ratios
- Real estate declined-post tension cable construction
- Limited ability to verify income, requested decline, also property on negative property database
- Outstanding mortgage balance is higher than appraised value can be supported
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Robert May is the broker and owner of Rainbow Realty of Lethbridge Alberta. He is also a licensed mortgage associate and financing expert with
Canada First Mortgage of Calgary Alberta. He has been in the real estate industry since 1993 and offers full MLS real estate services to Lethbridge and surrounding area, as well as mortgage financing, refinancing/renewals, preapprovals, and home equity financing to Lethbridge and Southern Alberta. He can be found online at
www.LethbridgeLoans.com
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