500+Bad Credit Texas Mortgage Lenders – Texas Mortgage Lenders For Bad Credit
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BAD CREDIT TEXAS MORTGAGE LENDERS Archive Include:
500+ Texas Bad Credit Mortgage Lenders- The following document describes the responsibilities and requirements of the
Texas Bad Credit Mortgage Lenders Mortgage Lending Division Underwriter
(Underwriter) when reviewing and underwriting mortgage loan applications. The
purpose of credit and property underwriting is to ensure that each loan meets high
quality standards that make the loans acceptable to Texas Bad Credit Mortgage Lenders.
Exceptions – Exceptions to published guidelines are considered on a case-by-case basis.
Loans with exception requests should exhibit strong compensating factors. All
exception requests must be submitted to the Underwriting Manager along with
any supporting documentation according to Texas Bad Credit Mortgage Lenders Exception policy.
Bad Credit Texas Mortgage Lenders Employment / Income Documentation
Documentation of income is required using Full Documentation, Bank Statement
Documentation, and 1-Year Alternative Income Documentation.
Primary Residence Texas Bad Credit Mortgage Lenders
A primary residence (or owner-occupied property) is a dwelling occupied by the
Texas Bad Credit Mortgage Applicants as his or her principle residence.
To qualify as a primary residence, the transaction must meet each of the
following criteria:
Property is located in the same general area as the Texas Bad Credit Mortgage Applicants
employment
Texas Bad Credit Mortgage Applicants intends to occupy the subject property for the majority of the
year
Property possesses physical characteristics that accommodate the
Texas Bad Credit Mortgage Applicants family
Texas Bad Credit Mortgage Applicants shall occupy the property as a principal residence within 60
days after closing and continue to occupy the property as a principal
residence for at least one year after the date of occupancy
Second Home Texas Bad Credit Mortgage Lenders
A second home is a dwelling occupied by the Texas Bad Credit Mortgage Applicants in addition to their
primary residence (may also be referred to as a vacation home). Second homesare restricted to 1-unit dwellings.
Typical second homes should meet the following criteria:
Be located a reasonable distance away from the Texas Bad Credit Mortgage Applicantsprimary
residence
Must be occupied by the Texas Bad Credit Mortgage Applicants for some portion of the year
Suitable for year-round occupancy
Texas Bad Credit Mortgage Applicants must have exclusive control over the property
Must not be subject to any timeshare arrangements, rental pools orother agreements which require the Texas Bad Credit Mortgage Applicants to rent the subject property or otherwise give control of the subject property to a management firm
Investment Property Texas Bad Credit Mortgage Lenders
An investment property (or non-owner occupied property) is an income producing
Property that the Texas Bad Credit Mortgage Applicants does not occupy. Investment properties are permitted on the Texas Bad Credit Mortgage Lenders Flexible Advantage Plus program only. Purchase A purchase transaction is one which allows a buyer to acquire a property from a seller. A copy of the fully executed purchase contract and all attachments or addenda is required. Assignment of the sales contract is not permitted.
The lesser of the purchase price or appraised value of the subject property is used to calculate the loan-to-value.
General Refinance Requirements
Rate/term refinance and cash-out refinance transactions are allowed.
All investment property refinances require an appraisal review product. See
Appraisal Review Process for detailed requirements.
Determining Loan-to-Value
If the subject property was acquired ˃ 12 months from application date, the
appraised value must be used to determine loan-to-value.
If the property was acquired ≤ 12 months from application date, the lesser of
the current appraisal value or previous purchase price plus documented
improvements (if any) must be used. The purchase settlement statement and
any invoices for materials/labor will be required.
Benefit to Texas Bad Credit Mortgage Applicants
In keeping with the commitment of responsible lending, all primary residence
and second home refinance transactions must have a measurable benefit to
the Texas Bad Credit Mortgage Applicants. When determining the benefit on a refinance transaction, one or more of the
following must exist to support the benefit to the Texas Bad Credit Mortgage Applicants
- P&I reduction
- Debt reduction
- Uncontrolled cash-out
- Balloon payoff
- Title transfer
- Property retention
State-specific and/or federal benefit to Texas Bad Credit Mortgage Applicants compliance requirements
must be adhered to. Underwriters are to complete the Texas Bad Credit Mortgage Lenders Benefit for
Texas Bad Credit Mortgage Applicants Worksheet to ensure compliance with the Texas Bad Credit Mortgage Lenders benefit to Texas Bad Credit Mortgage Applicants
policy. Files must contain documentation supporting the acceptable benefit.
Additional restrictions apply if the new loan refinances an existing loan
considered to be a special mortgage.
A special mortgage is originated, subsidized, or guaranteed by or through a
state, tribal, or local government, or nonprofit organization that either bears a
below-market interest rate at the time the loan was originated or has
nonstandard payment terms beneficial to the Texas Bad Credit Mortgage Applicants such as payments that
vary with income, are limited to a percentage of income, or where no
payments are required under specified conditions.
If the Texas Bad Credit Mortgage Applicants will lose one or more of the benefits of the special mortgage,
then both of the following apply:
Underwriter must check that the loan complies with all applicable state
and local laws as well as laws associated with the subject special loan
program for compliance; and
Underwriter must take special care to ensure a net tangible benefit to
the Texas Bad Credit Mortgage Applicants.
Stipulations For Texas Payoff in Less Than 12 Months
Texas Bad Credit Mortgage Lenders may refrain from making a loan if it obtains any information that indicates
that the Texas Bad Credit Mortgage Applicants may pay off the loan in fewer than 12 months, whether such
payoff is anticipated by refinance, sale of the property or otherwise.
Stipulations For Texas Properties Listed for Sale
To be eligible for either a rate/term or a cash-out refinance, the subject
property must be taken off the market on or before the application/submission
date. Texas Bad Credit Mortgage Applicants must also confirm in writing the reason for the prior MLS
listing and statement of intent to retain the subject property for 12 months after
Closing. For cash-out transactions, if the subject property was listed for sale in the 6
months prior to the application/submission date, a 10% LTV reduction from
the maximum available for the specific transaction is required.
The lesser of the most recent list price or the current appraised value should be
used to determine loan- to-value for both rate/term or cash-out transactions.
Refinances of Texas Bad Credit Mortgage Short Payoffs
Refinances of Short Payoffs are only acceptable for Texas Bad Credit Mortgage Lenders (Stanwich
Portfolio) transactions.
Rate / Term Texas Bad Credit Mortgage Refinance
A rate/term refinance is the refinancing of an existing mortgage for the
purpose of changing the interest and/or term of a mortgage without advancing
new money on the loan.
The mortgage amount for a rate/term refinance is limited to the sum of the
following:
Existing first mortgage payoff
Closing costs and prepaid items (interest, taxes, insurance) on the new
mortgage (Note: property taxes must be pre-paid. Payment of
delinquent property taxes is not permitted for rate/term refinances)
The amount of any subordinate mortgage liens used in their entirety to
acquire the subject property (regardless of seasoning)
The amount of a home equity line of credit in first or subordinate lien
position that was used in its entirety to acquire the subject property
(regardless of seasoning)
Any subordinate financing that was not used to purchase the subject
property provided:
o For closed end seconds, the loan is at least one year
seasoned as determined by the time between the note date of
the subordinate lien and the application date of the new
mortgage
o For HELOCs and other open-ended lines of credit, the loan is
at least one year seasoned and there have been less than
$2,000 in total draws over the past 12 months
If the most recent first mortgage transaction on the property was a cash-out
refinance within the last 6 months, the new mortgage is not eligible as a
rate/term and must proceed as a cash-out refinance. Note date to note date is
used to calculate the 6 months.
On rate/term transactions, the Texas Bad Credit Mortgage Applicants may only receive cash back in an
amount that is the lesser of 2% of the new mortgage balance or $2000.
Texas
Conversion
(Refinance)
Transactions
The state of Texas permits conversion of Texas Home Equity cash-out
transactions to rate/term refinance transactions under Tex. Const. Art. 16
50(f)(2). Refer to Refinancing an Existing Home Equity Loan – Texas
Conversion Transactions for detailed requirements to convert (refinance) a
Texas 50(a)(6) loan to a non-home equity rate/term loan.
Cash Out
Refinance
A cash-out refinance is a refinance that does not meet the rate/term refinance
definition. Cash-out would include a refinance where the Texas Bad Credit Mortgage Applicants receives
cash from the transaction or when an open-ended subordinate lien (that does
not meet the rate/term seasoning requirements) is refinanced into the new
transaction. A mortgage taken out on a property previously owned free and clear is always
considered a cash-out refinance.
The mortgage amount for a cash-out refinance transaction may include any of
the following:
Existing first mortgage payoff
Closing costs and prepaid items (interest, taxes, insurance) on the new
mortgage (Note: Payment of delinquent property taxes is permitted for
cash out refinances and must be paid with Texas Bad Credit Mortgage Applicants funds or cash out
proceeds)
The amount of any subordinate mortgage liens being paid off that do
not meet seasoning and draw history requirements as described in
Rate/Term Refinance
The amount of any non-mortgage related debt paid off through closing
Additional cash in hand reflected on the settlement statement
Cash-Out Letter of Explanation Required
A signed letter from the Texas Bad Credit Mortgage Applicants disclosing the purpose of the cash-out must
be obtained on all cash-out transactions.
The Underwriter should ensure the purpose of the cash-out is also reflected
on the loan application. The application alone is not sufficient to explain the
purpose of the cash-out.
Seasoning
For all cash-out refinance transactions:
At least one Texas Bad Credit Mortgage Applicants must have been on title a minimum of six (6)
months prior to the new note date, and
A minimum of six (6) months must have elapsed since the most
recent mortgage transaction (either the original purchase transaction
or subsequent refinance) on the subject property. Note date to note
date is used to calculate the six (6) months.
See also Determining Loan-to- Value for calculating LTV.
For cash-out refinance transactions where the property is currently vested in a
Trust or LLC, the Texas Bad Credit Mortgage Applicants must have owned the property in the name of the
Trust or LLC for at least six (6) months prior to closing.
Note: The six (6) months seasoning requirement may include a recent vesting
change from a Trust or LLC to the Texas Bad Credit Mortgage Applicants however, loans may not close
vested in the name of a Trust or LLC. Properties removed from a Trust/LLC
are not required to meet the seasoning requirements if the property moves
from the Trust to the owner of the Trust or the LLC to the owner of the LLC.
Minimum fifty-percent (50%) ownership of the LLC is required.
There is no waiting period if the Texas Bad Credit Mortgage Applicants was legally awarded the property
through divorce, separation, or dissolution of a domestic partnership. See also
Inherited Properties and Property Buyouts.
Bad Credit Texas Cash out Mortgage For Delayed Financing
Cash-out on properties purchased by the Texas Bad Credit Mortgage Applicants with cash and owned less
than 6 months is allowed. The following requirements apply:
Original transaction was an arm’s-length transaction
Settlement statement from purchase confirms no mortgage financing
used to acquire subject
Source of funds used for purchase documented (gift funds may not be
included)
New loan amount can be no more than the actual documented amount
of the Texas Bad Credit Mortgage Applicants initial investment in purchasing the property plus the
financing of closing costs, prepaid fees, and points on the new
mortgage loan
All other cash-out refinance eligibility requirements must be met Cash-Out Limits
Higher Priced Mortgage Loans
(HPML)
A higher-priced mortgage loan (HPML) is a closed-end consumer credit
transaction secured by the consumer’s principal dwelling (owner-occupied,
primary residence, 1- 4 units, 1 stor 2nd lien purchase and refinance
transactions).
Exemptions: These requirements do not apply to the following:
Second homes
Investment properties
HELOCs
The loan will be considered a HPML if the APR exceeds the average prime offer
rate (APOR) for a comparable transaction as of the date the interest rate is set
by:
1st Lien: 1.5% or more
1st Lien (Jumbo Loans): 2.5% or more
2nd Lien: 3.5% or more
As described above, some types of loan transactions are exempt from the
HPML requirements. Refer to the Truth in Lending Act (Regulation Z) Policy for
additional information on HPML requirements and exemptions.
Texas Bad Credit Mortgage Lenders must comply with the following requirements on all HPML:
Escrow Accounts Required
Texas Bad Credit Mortgage Lenders may not extend a higher-priced mortgage loan secured by a first lien on a
consumer’s principal dwelling unless an escrow account is established before
consummation for payment of property taxes and premiums for mortgage related
The seller acquired the property 90 or fewer days prior to the date of the
consumer’s agreement to acquire the property and the price in the
consumer’s agreement to acquire the property exceeds the seller’s
acquisition price by more than 10%, or
The seller acquired the property 91 to 180 days prior to the date of the
consumer’s agreement to acquire the property and the price in the
consumer’s agreement to acquire the property exceeds the seller’s
acquisition price by more than 20%.
The second appraisal must be obtained by a different certified or licensed
appraiser than the one who prepared the first appraisal.
A transaction will be considered a flip transactions when:
The seller acquired the property 90 or fewer days prior to the sales
contract date, and the new contract price exceeds the seller’s
acquisition price by more than 10 percent; or
The seller acquired the property 91 to 180 days prior to the sales
contract date, and the new contract price exceeds the seller’s
acquisition price by more than 20 percent.
The chain of title and appraisal report must be reviewed for prior sale and
transfer history. Flip transactions are subject to the following requirements:
All transactions must be arm’s length, with no identity of interest between
the buyer and property seller or other parties participating in the sales
transaction
No pattern of previous flipping activity may exist in the last 12 months.
Exceptions to ownership transfers may include sales by government
agencies, properties inherited or acquired through divorce, and sales by
the holder of a defaulted loan
The property was marketed openly and fairly, through a multiple listing
service, auction, for sale by owner offering (documented) or developer
marketing
If the property is being purchased for more than 5% above the
appraised value, a signed letter of acknowledgement from the Texas Bad Credit Mortgage Applicants
must be obtained
An additional appraisal product is required:
o Non-HPML flip transactions follow the Appraisal Review Process
o Higher Priced Mortgage Loans (HPML) require a Second Full
Appraisal. See Second Full Appraisal.
HPML New Construction Properties with any title transfer within 180
days prior to the sales contract date, or any title transfer after the sales
contract date, including land-only and zero value title transfers, require a
Second Full Appraisal. See Second Full Appraisal.
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