COVID-19 Temporary Overlays Jumbo
Underwriting Guideline Update—January 20, 2021
This announcement extends the temporary COVID overlays currently in place. Dates have been included where updates have been provided. Please contact Shane Larscheid, Vice President of Sales with any questions.
All other documentation requirements detailed in our Jumbo Underwriting Guidelines must also be met in order to ensure compliance.
Overlay to Chapters Six, Eight and Ten—Age of Documentation
Temporary Requirement: Paystubs, written VOEs, P&Ls, Balance Sheets, Bank Statements (including quarterly statements) and Verification of Deposits must be dated within 60 days of the Note date.
Overlay to Chapter Six and Ten—Verbal VOE (Non-Self-Employment Income)
Temporary Requirement: Until further notice, Verbal VOEs may be substituted by a written VOE or an email VOE provided the documentation is obtained within 10 days of the Note date:
- Email VOEs must come directly from the employer’s work email address that identifies the name and title of the verifier, the borrower’s name and the current employment status.
The Seller must ensure that the borrower is currently employed at the time of loan closing, and all income sources should be carefully reviewed to ensure that the income will continue at the same or similar levels when qualifying the borrower.
Overlay to Chapters Six and Ten—VOE (Self-Employed Borrowers)
Temporary Requirement: A third-party verification of self-employment must be completed within 10 business days of the Note date. Below are examples of methods the Seller may use 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 the lender verifies self-employment)
- Evidence of current business receipts within 10 days of the Note date (payment for services performed);
- Business website demonstrating activity supporting current business operations (timely appointments for estimates or service can be scheduled) or
- Lender certification the business is open and operating. If the lender opts to provide a lender certification (lender confirmed through a phone call or other means); the certification must be provided by an arm’s length third-party source, must include contact information and is ineligible when provided by the borrower(s).
The Seller must ensure that the borrower is currently employed at the time of the loan closing, and all income sources must be reviewed carefully to ensure that the income will continue at the same or similar levels when qualifying the borrower.
Overlay to Chapters Six and Ten—Self-Employment Income, Year-to-date Profit & Loss—Updated 1/20/21
Temporary Requirement: Sellers should refer to Fannie Mae guidance as provided in LL-2021-03 (formerly LL-2020-03); “Requirements for Borrowers Using Self-employment Income to Qualify”, as it relates to year-to-date Profit & Loss, and additional documentation requirements*.
*Two months of business bank statements are acceptable for a jumbo mortgage.
All other documentation requirements as detailed in Chapters Six and Ten of the Jumbo Underwriting Guidelines related to self-employment, must also be met in order to ensure compliance with the Ability-to-Repay/QM requirements.
Overlay to Chapter Six and Ten—Tax Transcripts Form 4506C previously 4506T(Updated 1/20/21--New Form Required for loans received on or after 2/15/2021)
Temporary Requirement: Due to the continued delayed response for tax transcripts from the IRS; AIG will continue to accept files without tax transcripts when the file contains a 4506C(s), signed at loan closing by all borrower(s).
- AIG will require that the transcripts be provided at such time that the IRS has provided the tax transcripts to the Seller. A post-purchase condition will be added to each loan and will need to be satisfied at a later time.
- If a borrower is qualified exclusively with base employment income, and no additional income reported on the tax returns is used for qualification, the transcripts will not be required.
Reminder: To comply with Appendix Q, all tax returns must be signed and dated prior to the date of consummation.
Overlay to Chapter Seven—Mortgage & Rental Payment Histories
Temporary Requirement: In addition to the specifications outlined in Fannie Mae’s temporary Purchase and Refinance eligibility requirements found in LL 2021-03 (formerly LL-2020-03), AIG requires the following;
- No mortgage loans or rental agreements for which the borrower is obligated may be in forbearance, including co-signed mortgage loans and rental agreements
- Loans to Borrowers who have exited forbearance on a mortgage or rental agreement which is current*, must document the following:
- Borrower has exited forbearance.
- The mortgage/rent is not in a repayment plan or loss mitigation program and the mortgage/rent is current*.
*For the purposes of these requirements, “current” means the borrower has made all mortgage payments due in the month prior to the note date of the new loan transaction, according to the terms of the original note, by no later than the last business day of that month.
Overlay to Chapter One and Two—Cash-out Refinance Transactions
Temporary Policy: Cash-out refinance transactions are currently ineligible for purchase.
Overlay to Chapter One and Three—3-4 Unit Property Types
Temporary Policy: Properties with three to four units are currently ineligible for purchase.
Overlay to Chapter Four—Appraisal Requirements
Temporary Requirement: Purchase and Rate & Term Refinance (1-unit primary and second homes)
- Full 1004 Appraisal or Exterior-only Appraisal Report (2055/1075).
- Desk Review (in accordance with AIG’s Jumbo Underwriting Guidelines).
- Exterior-only Appraisal Reports (2055/1075) are ineligible when the subject property is new construction.
Overlay to Chapter One—Electronic Notarizations
Temporary Policy: Electronic notarizations may be used with ink-signed Jumbo transaction only and are acceptable provided the following requirements are met:
- The notarization is performed in accordance with and is legally valid under the laws and regulations of the state in which the notarization is performed, at the time it was performed; and
- If the electronic notarization is a remote notarization, the following additional requirements must be met:
- the notary public is licensed and physically located in the state where the notarial act occurred and, where required by law or regulation, is specifically licensed to perform electronic notarizations;
- the laws and regulations of the state in which the mortgaged property is located either expressly permit the use of remote notarization (such as Virginia and Montana) or expressly accept remote notarizations performed out-of-state in accordance with the laws of the state in which the notarial act is performed;
- loan must meet all eligibility requirements in the AIG Jumbo Underwriting Guidelines;
- if the notarized document is a security instrument or an amendment to a security instrument, the remote notarization must be disclosed to the title company providing title insurance coverage and either:
- an affirmative endorsement to the title insurance policy is obtained regarding Exclusion 3(b) in the standard ALTA terms and conditions; or
- the title insurer has not taken an exception for the remote notarization in the title insurance policy and all related communications with the title insurer are kept in the mortgage loan file.
Waiting Period Waivers
AIG will not purchase loans with waived waiting periods related to TRID.
All Note endorsements or allonges must include a wet signature. e-Notes are ineligible for purchase by AIG.
AIG will continue to accept electronically recorded (e-recorded) security instruments, where allowed within state and county guidelines. A copy of the e-recorded instrument with recording information, and the original security instrument, should be forwarded to our custodian, Bank of New York Mellon, as a trailing document.
Gap Insurance Related to Recording Delays
Gap coverage is acceptable for matters arising between the loan closing and the mortgage recording. All loans must contain the Preliminary Title commitment at the time of receipt of the closed loan package, with no exception under Schedule B for the gap coverage.
AIG will follow Fannie Mae LL-2021-03 (formerly LL-2020-03), related to powers-of-attorney