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COVID-19 Temporary Overlays Jumbo Underwriting
Guideline—Updated July 30, 2020

This document is an update and consolidation of multiple announcements beginning in late March 2020 and relates to temporary amendments to the AIG Jumbo Underwriting Guidelines. Additional updates will be provided when applicable. This announcement applies to all loans not yet purchased.  Please contact Shane Larscheid, Vice President of Sales, with any questions.

All other documentation requirements detailed in our Jumbo Underwriting Guidelines must be met in order to ensure compliance.

Verification of Income and Employment (VOE) Requirements (effective 3/25/2020)

Per current guidelines, verbal verifications of employment dated within 10 business days of the Note date will continue to be required; however, in order to temporarily assist Sellers during this challenging time, the verbal VOE (VVOE) may be substituted by a written VOE or Email VOE dated within the same time frame. An email VOE 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 reviewed carefully to ensure that the income will continue at the same or similar levels when qualifying the borrower.

Prior to Purchase Re-verification of Employment (effective 3/25/2020-updated 7/28/2020)

An additional VOE must be completed by the Seller within 10 business days prior to AIG’s loan purchase.

  • The condition for re-verification of employment will be added to the Loan File Suspense Items in the Clean Room. The re-verification of employment condition must not be remedied/verified until all other loan conditions have been satisfied.
  • The re-verification of employment will not be acceptable if the employment information verified is more than 10 business days prior to loan purchase.           
    • The updated VOE is acceptable in the form of a VVOE, a written VOE, or an email VOE.
      • An email VOE must come directly from the employer’s work email address that identifies the name and title of the verifier and the borrower’s name and current employment status.
      • All gaps in employment must be addressed.
  • When the final re-verification of employment has been cleared, the loan will be sent for pre-purchase review.

Income Documentation Age (effective 4/15/2020)

Paystubs and the written VOE must be dated within 60 days of the Note date until further notice.

Verification of Self-Employment Income (effective 3/25/2020 and updated 7/28/2020)

Self-employment income must continue to be documented in accordance with the Appendix Q Ability-to-Repay requirements. In addition to meeting AIG overlays in the Jumbo Underwriting Guidelines and requirements specified in the Appendix Q, the following must be provided:

  • 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 that 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);
    • lender certification the business is open and operating (lender confirmed through a phone call or other means). The certification must be provided by a third-party source, must include contact information and is ineligible when provided by the borrower(s); or
    • business website demonstrating activity supporting current business operations (timely appointments for estimates or service can be scheduled).

The Seller must ensure the borrower is currently employed at the time of loan closing. All income sources should be reviewed carefully to ensure that the income will continue at the same or similar levels when qualifying the borrower.

Year-to-date Profit & Loss Statement and Balance Sheet (effective 7/28/2020)

Sellers should refer to Fannie Mae guidance as provided in LL-2020-03 updated July 9, 2020 related to year-to-date Profit & Loss and Balance Sheet for temporary requirements.

  • The year-to-date Profit & Loss and Balance Sheet may not be aged more than 60 days prior to the Note date.

All other documentation requirements as detailed in our Jumbo Underwriting Guidelines related to self-employment, Profit & Loss Statements, and Balance Sheets must be met in order to ensure compliance with the Ability-to-Repay/QM requirements.

Small Business Loans (effective 7/28/2020)

Proceeds from the Small Business Administration Paycheck Protection Program (PPP) or any other similar COVID-19 related loans or grants are not considered business assets. Refer to the “CARES Act” for additional information. If it is determined that any portion of the PPP loan must be repaid, borrowers will need to qualify with the payment.

IRS Tax Filing Extension (effective 3/25/2020)

AIG recognizes the IRS tax deadline extension for filing 2019 returns.

Tax Transcripts/4506T (effective 4/1/2020 and updated 7/28/2020)

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 4506T(s) signed at loan closing by all borrowers.

  • 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.

Mortgage & Rental Payment Histories-All Transactions (effective 4/29/2020-updated 7/28/2020)

AIG is providing overlays to Fannie Mae’s temporary Purchase and Refinance eligibility requirements, announced in LL- 2020-03 and updated July 9th;

  • All rent payment histories must be documented with a Verification of Rent (VOR) from the landlord or a third-party payment history.
  • 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.

Asset Documentation Age (effective 4/15/2020)

Bank statements and verification of deposits must be dated within 60 days of the Note date until further notice.

Cash-out Refinance Transactions (effective 7/7/2020)

Cash-out refinance transactions are currently ineligible for purchase.

3-4 Unit Property Types (effective 7/7/2020)

Properties with three to four units are currently ineligible for purchase.

Establishing Equity in a Departing Residence (effective 7/28/2020)

An exterior-only appraisal may be used to establish equity to determine the eligibility for the use of rental income for qualifying purposes.

Appraisal Requirements for Jumbo Mortgage Loans (effective 3/25/2020-updated 7/28/2020

  • 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.
  • Multi-Unit Properties (maximum 2 units) and Investment Property
    • Full 1004 appraisal report.
    • Desk review (in accordance with AIG’s Jumbo Underwriting Guidelines).
  • Two-Time-Close-Construction-to-Permanent Mortgages
    • Full appraisal.
    • Final inspection (no exceptions).
    • Desk Review (in accordance with AIG’s Jumbo Underwriting Guidelines).

Electronic Notarizations (effective 3/25/2020 and updated 7/28/2020)

Electronic notarizations (including remote notarizations) may be used with ink-signed Jumbo transactions only. All of the following requirements must be 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:
        1. an affirmative endorsement to the title insurance policy is obtained regarding Exclusion 3(b) in the standard ALTA terms and conditions; or
        2. 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 (effective 3/25/2020)

AIG will not currently purchase loans with waived waiting periods related to TRID.

Note Endorsements/Allonges (effective 3/25/2020)

All Note endorsements or allonges must include a wet signature.

e-Recording (effective 3/25/2020)

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 (effective 3/25/2020)

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.

Powers of Attorney (effective 4/1/2020)

AIG will follow Fannie Mae© LL-2020-03, updated July 9, 2020, related to powers of attorney; however, AIG is unable to allow e-Notes