Mortgage Loan Programs With No Overlays & 30 Days Closings

This BLOG On Mortgage Loan Programs With No Overlays Was UPDATED On September 24, 2017

Majority of mortgage lenders have their own overlays. There are not too many lenders who have Mortgage Loan Programs With No Overlays.

  • There are a few lenders that claim they have zero overlays.
  • However, completely zero overlays are non existent. 
  • Here is a complete list I have of overlays that mortgage lenders who claim they have zero overlays still question. 
  • I have had some success getting around things like maximum debt to income rations, DTI,  and some of the rental verification stuff with supporting documentation such as letters of explanations.

Mortgage Lender Overlays & Mortgage Loan Programs With No Overlays

DU approval must reflect a maximum debt to income ratio, DTI,  of 56.9% back end and 46.9% front end DTI for a FHA Borrower to get an approve/eligible per AUS.

  • Exceptions to exceed will be reviewed and made on case-by-case basis (I haven’t seen an approve eligible over 56.9% DTI denied yet due to debt to income ratios). 
  • FHA and Fannie Mae can approve maximum debt to income ratios of up to 56.9%.  
  • Mortgage lenders that claim no internal overlays need to honor their own lending guideline rate sheets  of 56.9%.
  • However, most high debt to income ratios gets kicked back by underwriting requesting a letter of explanation on how they intend on paying their mortgage and monthly payments with no hardship.
  • Submission package must provide evidence of documented strengths to offset any of borrowers deficiencies (This helps me give me ammo to potentially get around any hurdles).
  • Verification of rent by providing 12 months canceled checks or management VOR. 
  • If borrower has lived with a family member rent free or paid cash for rent, borrower to provide a signed budget letter. (I have had some success when documenting less than 12 months on this provided we have strong LOE’s budget letter etc).
  • Follow DU for acceptable credit documentation.
  • Collections/Chargeoffs less than 24 months and greater than $5000 will be reviewed on case-by-case basis and requirement for payoff is at underwriter’s discretion with lenders who have overlays.
  • Non occupant co-borrowers or co-signers are permitted as long as they are immediate family members; proof of relationship required. 
  • Other blood relatives (aunts, uncles, cousins, etc) will be permitted and the occupant borrower DTI cannot exceed 50%.
  • Borrower income derived solely from commissions must have 3 months PITI reserves over and above the required investment.
  • Borrowers that are currently in payment arrangement with IRS have an established payment arrangement in place for 3 months and provide evidence of payments made.

Mortgage Loan Programs Change All The Time With Very Little Notice

There are many mortgage lenders that change their overlays mortgage loan programs guidelines with little notice.

  • I know of mortgage lender who stated that they had no overlays and as long as the borrower had an approved eligible from Fannie Mae’s Automated Underwriting System, the deal will get done. 
  • During the underwriting process, the mortgage application got suspended because all of a sudden the mortgage lender implemented rental verification overlays even though it is not conditioned on the Automated Underwriting System Findings. 
  • There are times when borrowers can not provide rental verification because the home they were currently living is under foreclosure. 
  • The home can be under the wife’s name and not the husband. 
  • Ultimately, the underwriting department can approve the mortgage loan without requiring rental verification or give a pass to their lender overlays.

Clear To Close

If the mortgage loan originator offers special mortgage loan programs with no overlays where it benefits such as not having to pay off open collections, 580 credit scores, high debt to income ratios, I strongly recommend that borrowers aggressively work in getting a clear to close and not procrastinate in submitting required documents. The Gustan Cho Team at USA Mortgage has mortgage loan programs with no overlays. We just go off AUS Findings.

Gustan Cho NMLS ID # 873293

Related> Automated Underwriting System

Related> Overlays With FHA Loans

Related> FHA Loans With No Lender Overlays

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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