Dream Big Product Updates
In these challenging times, NewRez remains committed to the health, safety and prosperity of our clients, customers and employees. Like many participants in the mortgage industry, NewRez continues to take measures to adapt to the market disruption brought about by the spread of the COVID-19 virus.
Effective with Note dates after April 15, 2020, the following NewRez guidelines will apply to Dream Big.
Age of Documents
- Income: Paystubs must be dated within 30 days of the note date for W2 wages used for qualifying
- Assets: All asset documents must be dated within 30 days of the note date. If the statements are provided quarterly, the most recent statement as of the end of the 1st quarter 2020 (3/31/20) must be provided
- Verification of Employment
- Wage Earners: A verbal verification of employment must be obtained 5 days prior to the note date
- When a borrower is using self-employment income to qualify, the existence of the borrower’s business must be verified within 10 calendar days prior to the note date.
Use of business assets is not permitted.
Stocks, Bonds or Mutual Funds
Accounts that contain stocks, bonds or mutual funds/ETFs require the following:
- When used for down-payment and/or closing costs – proof of liquidation and receipt of funds must be provided
- When used for reserves, proof of liquidation is not required
- A reduction of 30% must be applied to the value of those assets
- If the accounts are 401k/retirement and the borrower is not 59 ½ or older, an additional 10% reduction must be applied
No future income or employment contracts can be used to qualify. Borrowers must have started their new employment.
- When the subject property is an investment property, use of subject rental income is not permitted
- When the borrower owns additional investment properties and rental income is used by the borrower(s), an additional 6 months of liquid (non-retirement) reserves for each investment property owned is required
For Self-employed borrowers, if 2019 tax returns have not been filed, a signed profit and loss statement and balance sheet through 3/31/2020 must be provided.
Tax transcripts must be provided. If tax returns are unable to be obtained due to the IRS shutdown, borrower obtained transcripts may be provided unless a product specific requirement is noted.
- Must be the full tax transcripts and not an abbreviated version of the document. The IRS website offers multiple options for individual borrowers to select from. Only the transcripts which contain information from both the 1040 and all applicable schedules will be permitted
- Signed 4506-T is still required
- All self-employment income must be reduced by 25% OR document that the borrower has an additional 12 months of liquid (non-retirement) reserves to use the full income
- Borrowers must also provide the following in writing, signed and dated by the borrower(s):
- Provide a detailed write-up of all businesses owned explaining what the business does, how it operates in a normal environment, how it generates its income, where it operates - remotely or within a business office / building (and if so, how many locations), and how many people it employs.
- Explain how your business has been impacted by the pandemic, including impact to staffing levels.
- What are you doing to mitigate the pandemic impact?
- How is your business currently operating? How have you modified your business as a result of the pandemic?
- What are your current income streams as a result of the pandemic impact?
- What is your current capital position and what access do you have to capital (e.g. Business Line of Credit or personal assets / loans from shareholders)?
- Have you applied for relief under the CARES ACT such as the Paycheck Protection Program, Emergency Economic Injury Grant or Small Business Debt Relief Program?
- For what duration can you continue under current market conditions and have you done any forecasting for 30, 60, 90 or longer periods given the variability of the situation?
- In addition, current documentation to confirm that the borrower’s business is open and operating must be provided. The following are acceptable to confirm the borrower’s business is currently operating:
- evidence of current work (executed contracts or signed invoices that indicate the business is operating on the day of verification; or
- evidence of current business receipts within 10 days of the note date (payment for services performed); or
- certification the business is open and operating confirmed through a phone call or other means.
The product profile will be updated and posted with applicable changes as soon as possible.
Please reference the NewRez Lending Library for the changes outlined in this announcement.