Real Estate Powers of Attorney

 

It’s a reality of life that there may come a time when your spouse, partner or loved one either becomes incapacitated or unable to act for themselves.  If the individual has financial matters involving real estate, it’s very important to have a Power of Attorney filed in order to protect their interests.  Below are the different types of POA’s available for real estate transactions:

Special Power of Attorney for a Sale – Good for six months or less in most cases, this POA is used for selling  property.  A legal description of it, notarized and recorded*, is also needed to finalize the transaction.  It’s also good for only one specific piece of property.  Another sale would need another POA.

Special Power of Attorney for a Purchase/Encumber – Covers a property purchase. With lender approval, you can also use this POA to financially encumber property with a security instrument.  This POA is also only good for six months or less, and a legal description of the property must be notarized and recorded*.  In addition, this POA only covers one specific property purchase.  If the individual wants to do another buy, they’d need to do another POA.

Durable Power of Attorney – This is the most common POA, where an individual may give power to cover a wide array of matters from health care, to buying or selling, to managing business or financial matters.  A POA can even be set up to file a lawsuit. The length of a POA can be set for a specific or indefinite period, but can also be cancelled at any time. It can also take effect immediately or in the future.  There is language one can put in to cover everything but for real estate transactions, the POA needs to specifically include the right to sell and/or purchase property, make property gifts, or change community property agreements.  Filing* this document also ensures that real estate transactions are valid for title insurance purposes.

Other Power of Attorney Information – The POA ends in the event of the individual’s death.  And, a POA does not substitute for a will by either creating or altering one.

How to Create a Power of Attorney – A Durable POA is typically set up and filed by an attorney.  A Special POA can either be done by an attorney, or by using approved generic forms which you can download from the Washington State Bar Association forms website.  If you go this route, don’t forget to get it recorded!

For More Information – The University of Washington’s Marion Gould Gallagher Law Library website is an excellent source on all sorts of legal matters. Their Power of Attorney link also includes information on Guardianships.  Legal advice via email and phone is also available, just check out the links on top of their webpage.

*For King County residents, ”Recorded” and “Filing” refers to registering POA’s with the King County Recorder’s office.  POA’s are considered confidential and in King County, are not accessible to the public.

A Look at Title Insurance

 

Title insurance refers to indemnity insurance for your property. First established in the U.S. in 1853, it is meant to protect an owner’s or a lender’s financial interest in real property against loss due to title defects, liens, or other surprises involving your property purchase. This insurance defends you against a lawsuit attacking your title, or will reimburse you for actual monetary loss incurred up to the dollar amount of insurance the policy provided.

Real property interests insured are either fee simple (full outright ownership) or a mortgage (loan secured by a lender).  However, title insurance can be purchased to insure any interest in real property, including easements, leases, or life estates.  Just as lenders require that you hold fire and other types of insurance to protect their investment, nearly all lenders (save for some non-institutional ones) also require title insurance to protect their interest in a loan secured by real estate. Buyers purchasing properties for cash often go for title insurance to protect their purchase. All in all, for a little money, you can save yourself a lot of headaches.

There are three types of policies for buyers to choose from. Standard is the cheapest, followed by ALTA® Homeowner’s (American Land Title Association), and finally, Extended.  Costs vary depending on the property value.

Standard Coverage insures only items found by searching public records.

ALTA® Homeowner’s Coverage has the same coverage as Standard, plus items which may pop up post-policy.

Extended Coverage involves having a survey done, and is probably the best choice if you’re purchasing land and you want to verify your property boundaries and outbuilding encroachments.

The chart below outlines the types of policies in more detail.

There’s some famous examples of people who lost their homes due to no title insurance. When Abraham Lincoln was three years old, his family was forced to move from his birthplace because of title errors, and the same thing nearly cost them their second home four years later. Frontiersman Daniel Boone lost tens of thousands of acres of land he speculated in, also due to errors in his title documents.  Title insurance was established to ensure that what you buy is truly yours, with no worries about forgery, deceptive surveys, hidden liens, conveyances by minors or mentally incompetent persons, and other title errors.

This information is based on rules and regulations issued by federal agencies, but please check with your bank or loan adviser to discuss your title options in more detail.  Or, just contact us at this Stroupe Group link for more info.

The Danielle: A Walker’s Dream in Ballard

The Danielle, a boutique community of 31 one and two-bedroom homes, got off to a roaring start this past weekend.   Not only did their Open House bring in over 150 attendees, but 40 percent of the community is now sold!

There’s a lot going for The Danielle.  Located a block west of Ballard Avenue and two blocks north of Market Street, you can easily walk to a new QFC plus cafés, restaurants, boutiques and services.  And speaking of walking, walkscore.com gives The Danielle a score of 98 out of 100. Need more than that to keep in shape?  Three fitness centers are also within walking distance.

Homes range in size from approximately 646 to more than 1,250 square feet. You can barbecue on the 2,000 square foot rooftop deck, sporting great views of the Ballard Locks plus Puget Sound and the Olympic Mountains.  Want more privacy?  You also get your own large deck, patio or  terrace. Hardwood floors are featured throughout, with large kitchens and four different styles of wood cabinetry.  Some homes include dens and gas fireplaces, and even heated tile floors in the bathrooms. There’s also no problem with parking. The Danielle’s garage is access-controlled, with one parking space per bedroom.

Premium finishing touches on The Danielle should be completed by the end of November.  Prices start at $229,950, and they are FHA-approved.  If you’d like more information or to check out this special place, just contact us at this link and let’s talk!

Bankruptcy or Foreclosure? You may now be Loan-Worthy!

We’ve been keeping in touch about the record-low interest rates of late… but if you’ve experienced some bumps in the road with bankruptcy or foreclosure, aka a “derogatory event”, you may not think you can take advantage of loan rates at this time.

What you may not realize is that while there are waiting periods for bankruptcy, foreclosures and such, an extenuating circumstance can cut your waiting periods for a new loan up to less than half the time. A job loss, major medical bills, or an accident serious enough to affect your earning power at the time of your derogatory event are all such instances. You’ll need to bring documentation proving financial difficulties beyond your control, but don’t you think you deserve a GOOD break for a change?

Below is a list of Derogatory Events and their waiting periods. See if these start some rethinking.

 

Bankruptcy – Chapter 7 or 11

Waiting Period:  4 years

with Extenuating Circumstances:  2 years

 

Bankruptcy – Chapter 13

Waiting Period:  2 years from discharge date or 4 years from dismissal date

with Extenuating Circumstances:  2 years from discharge date or 2 years from dismissal date

 

Multiple Bankruptcy Filings

Waiting Period:  5 years if you had more than one filing within the past 7 years

with Extenuating Circumstances:  3 years from the most recent discharge or dismissal date

 

Foreclosure

Waiting Period:  7 years

with Extenuating Circumstances:  3 years but there are additional requirements from 3-7 years.  You’ll need to have a 90% maximum Loan to Value (LTV) ratio; the purchase has to be a principal residence, and there is a limited cash-out refi on any type of occupancy.

 

Deed-in-Lieu of Foreclosure, Pre-Foreclosure or Short Sale

Waiting Period, 2 years – 80% maximum LTV ratios

Waiting Period, 4 years – 90% maximum LTV ratios

Waiting Period, 7 years – LTV ratios per the Eligibility Matrix

with Extenuating Circumstances:  2 years, 90% maximum LTV ratios

 

It’s a buyer’s market out there. Let’s see if we can help you get back into the game. Contact us at this link and let’s get you started!

NOTE:  Please keep in mind that the maximum LTV ratios permitted are the lesser of the LTV ratios presented here, or the maximum LTV ratios for the transaction per the Eligibility Matrix. This information is based on rules and regulations issued by federal agencies, but please check with your bank or loan adviser to ensure you meet all requirements and disclosures.

Fixed Mortgage Rates Lowest Level In Nearly 60 Years

 

So what was happening in April 1951, the last time that 30-year, fixed-rate mortgages were this low?  Harry Truman was in office — 12 presidents ago!  All in all, it took nearly 60 years for rock-bottom mortgage rates to come full circle, but here we are.

The Freddie Mac Primary Mortgage Market Survey reported the average rate for a 30-year, fixed-rate mortgage was 4.19% with an average 0.8 origination point for the week ending Oct. 14, down from last week’s average of 4.27%. A year ago the average was 4.92%. This is the lowest rate the survey has recorded since its inception in 1971. Mortgage rates were last at this level in April 1951, according to Freddie Mac. 

Rates for 15-year, FRMs are falling steeply, setting a new low for Freddie Mac. The GSE said the rate was down to 3.62% with an average origination point of 0.8. The rate for a 15-year FRM was 4.37% a year earlier.  Further, Freddie Mac commented that the September employment report held no big surprises to the financial market, allowing long-term bond yields and fixed mortgage rates to continue easing.

Bankrate reported the average rate for a 5-year, ARM fell last week to 3.62% from 3.64% previously. The one-year Treasury-indexed ARM averaged 3.43% with an average 0.7 point up slightly from 3.4%. At this time last year, the one-year ARM averaged 4.6%.

Coincidentally, Seattle-based Dupre + Scott Apartment Advisors’ latest report predicts that based on historic rents and incomes over the last 30 years, Puget Sound-area rents could climb almost 25 percent by 2015 and 50 percent by 2020.  They also discovered that while rent rates fell during the last two recessions, it wasn’t by that much.  AND, when the economy rebounded, so did rent rates.  Add historically low interest rates to low apartment construction levels forecasted for 2011 and 2012 and  we’re telling you, the time is ripe for buying!  Contact us at this Stroupe Group link and let’s talk some more.

FHA-Approved Condos

 

With the tightened requirements conventional mortgages bring, more people are turning to FHA loans. Qualifications are a little more lenient, and in most cases only require a minimum 3.5% down payment.

Here’s a list of condos and townhomes with FHA approval (as of 10/04/10). They are sorted by area and in order: Downtown, Belltown, Eastlake, Queen Anne, West Queen Anne, Capitol Hill, Ballard and Magnolia.

For more information on government programs, click on this FHA link. Then fill out our contact form at this Stroupe Group link.  Let’s help you do some happy shopping!

DOWNTOWN

1300 University

5^th and Madison – 909 5^th Ave

98 Union

Bolero – 1323 Boren Ave

Cosmopolitan – 819 Virginia St

Decatur – 1105 Spring St

Escala – 1920 4^th Ave

Florentine – 526 1^st Ave S

Meridien – 1420 Terry Ave

Talisman – 1000 Union St

Waterfront Landings – 1900/1950/2000 Alaskan Way

 

BELLTOWN

Alexandria – 3028 Western Ave

Arbor Place Tower – 121 Vine St

Bellora – 2716 Elliot Ave

Ellington – 2801 1^st Ave

Gallery Belltown – 2911 2^nd Ave

Harbour Heights – 2621 2^nd Ave

Klee – 2701 Western Ave

Market Court – 2030 Western Ave

Matae Belltown – 159 Denny Way

Montreaux – 425 Vine St

Mosler Lofts – 2720 3^rd Ave

Parc-Belltown – 76 Cedar St

Royal Crest – 2100 3^rd Ave

Seattle Heights – 2600 2^nd Ave

Trio – 3104 Western Ave

Vine – 2607 Western Ave

 

EASTLAKE

1100 Harrison

1111 East John

1926 Fairview

2228 Yale

2727 Franklin

535 Summit Ave E

954 Broadway

Arcadian Court – 511 E Roy St

ArtHaus – 735 Federal Ave E

Bamberg – 416 E Roy St

Bellevue Place – 1000 Bellevue Pl E

Belmont Place – 721 Boylston Ave E

Brix – 530 Broadway E

Broadway Plaza – 116 E 11th Ave

Camellia Manor – 501 E Harrison St

Castlewood – 2717 Franklin Ave E

Chancery – 2328 10^th Ave E

Consulate – 2320 10^th Ave E

Corniche – 131 Bellevue Ave E

De Lorge – 325 Harvard Ave E

Eastlake – 3217 Eastlake Ave E

Embassy – 2350 10^th Ave E

Fairfax – 1508 10^th Ave E

Franklin Court – 2827 Franklin Ave E

Garden Court on Belmont – 232 Belmont Ave E

Glen Ray – 411 Boylston Ave E

Gleneagles Townhomes – 603 13^th Ave E

Harbor Pointe – 2611 Eastlake Ave E

Highlander – 525 Belmont Ave E

Ives – 3121 Franklin Ave E

Jackson Court – 530 Melrose Ave E

La Pergola – 730 Bellevue Ave E

Lakeside Terrace – 2012 Eastlake Ave E

Lakeview – 1114 Lakeview Blvd E

Maison D’Or – 75 E Lynn St

Melrose East – 150 Melrose Ave E

Mode – 752 Bellevue Ave E

Nob Hill – 521 Summit Ave E

Park Lane Place – 400 Boylston Ave E

Park Summit – 211 Summit Ave E

Plaza Del Sol – 1711 E Olive Way

Roanoke Place – 2309 10^th Ave

Ruby – 2960 Eastlake Ave E

Sahali – 400 Melrose Ave E

Seacrest – 2703 Boylston Ave E

Sentinel – 320 Melrose Ave E

Shannon – 601 Belmont Ave E

Summit Place – 435 Summit Ave E

Summit Tower – 900 Summit Ave E

Toltec – 630 13^th Ave E

Union Harbor – 2301 Fairview Ave E

 

QUEEN ANNE

1234 Taylor  – 1234 Taylor Ave N

160 Lee St

1629 Condominiums – 1629 Queen Anne Ave N

2001 Westlake – 2001 Westlake Ave N

57 Etruria 

Alterra – 1000 Aurora Ave

Ashbury – 18 Dravus St

Barclay Court – 701 1^st Ave N

Borealis – 2628 4th Ave N

Citiscape – 1504 Aurora Ave N

City View Place – 1312 6^th Ave N

Cornerstone of Queen Anne – 500 Aloha St

Courtyard at Queen Anne Square – 275 W Roy St

Essex House  -1808 Bigelow Ave N

Hayes Court – 769 Hayes St

Highland House East – 564 Highland Dr

Kinnear Park – 410 W Roy St

Marselle – 699 John St

Mercer Place – 522 W Mercer Pl

Nautica – 701 Galer St

Queen Anne Park – 29 Etruria St

Queen’s Court – 124 Warren Ave N

Regency – 612 Prospect St

Renaissance on Queen Anne – 810 Taylor Ave N

Seaview/Seaview West – 519 W Roy St

Serana – 621 5^th Ave N

Signature Place – 801 2^nd Ave N

Skyline Place – 920 5^th Ave N

Taylor – 1525 Taylor Ave N

Taylor Lee – 120 Taylor Ave N

Towne Terrace – 550 Aloha St

Union Bay – 762 Hayes St

Veer Lofts – 401 9^th Ave N

Waverly Place – 2040 Waverly Pl

Willis – 720 Queen Anne Ave N

Wilson Court – 420 Valley St

 

WEST QUEEN ANNE

202 W Olympic Pl

2048 Condominium – 2048 13^th Ave W

2811 Fourteenth Avenue West

Andiamo – 626 4^th Ave W

Apollo – 330 W Olympic Pl

Bostonian – 1300 W Boston St

Canal Place – 965 Nickerson

Citadel – 2040 13^th Ave W

Desiree – 3030 14^th Ave W

Dravus Place – 3216 14^th Ave W

Gilman’s Fairway – 2530 15th Ave W

Johnston Manor – 2552 14th Ave W

Kinnear Vista – 1001 2nd Ave W

Luxe – 500 5th Ave W

Newell Square – 3609 14th Ave W

Northern Lights – 1015 W Nickerson St

Olympic Plaza – 654 W Olympic Pl

Panorama West – 3622 14th Ave W

Pierre Marquis – 2253 Gilman Dr W

Queen Anne Condominiums – 2572 14th Ave W

Queen Anne II (or 02) – 3636 14th Ave W

Queen Anne North – 1324 W Emerson

Queen Anne Ocean View – 2244 13th Ave W

Shannon Place – 3646 14^th Ave W

Tarmigan – 2219 14^th Ave W

Urban Terrace – 3420 15^th Ave W

Vikur Heim – 1001 W Howe St

West Howe Park – 1110 W Howe St

Westview Manor – 2625 13^th Ave W

 

CAPITOL HILL

1111 East Pike

1515 E Union

16^th Avenue  –  102 16^th Ave

1800 Boylston

1819 17^th Avenue

21 Cherry  – 21 Cherry St

Alpine Villa – 308 Summit Ave

Ambassador  I  – 505 E Denny Way

Ambassador II  –  506 E Howell St

Belcourt Place – 1617 Summit Ave

Bungalow Court  –  341 16th Ave

Central Park East – 2001 E Yesler Way

Courtyard on Capitol Hill – 1600-1625 15^th Ave

East Madison Townhouse – 2593 E Madison St

Fir Street – 127 22^nd Ave

Fleur De Lis – 1114 17^th Ave

Fortune View  – 1818 18^th Ave E

Garden Court  – 1631 16^th Ave

Hill House  – 1725 24^th Ave

Ivory Coaste  – 923 15^th Ave

Madison View  – 1820 24^th Ave

Maison Jiselle  – 120 14^th Ave

Maison Ville  – 1740 Melrose Ave

Manhattan Plaza  – 701 17^th Ave

Monique Lofts – 1024 Pike St

Onyx – 1125 E Olive St

Parc  on Summit – 1616 Summit  Ave

Pike Lofts – 303 E Pike St

Pine Street Cottages – 2116 E Pine

Portofino – 417 E Pine St

Seventeen07 – 1707 Boylston Ave

Squire Park Place – 1814 E Jefferson St

Trace North – 1412 12^th Ave

Villa on Terrace – 1101 E Terrace St

Waterworks – 1828 11^th Ave

 

BALLARD

6210 14^th Avenue – 6210 14^th Ave NW

Bal Harbour – 1743 NW 57th St

Ballard Arms – 1733 NW 59th St

Ballard Breeze – 1519 NW 59th St

Ballard Four Seasons – 1738 NW 58th St

Ballard Park II – 2433 NW 59th St

Ballard, The – 1525 NW 57th St

Danielle – 5803 24th Ave NW

Gilman Park – 1512 NW 57th St

Hjarta – 1530 NW Market St

Kalie Karin – 1707 NW 59th St

Kasteel – 5701 20th Ave NW

Linnea – 2600 NW 56th StBottom of Form

NoMa – 5650 24th Ave NW

Sunset at the Locks – 2413 & 2417 NW 59th St

Xavier – 804 NW 52nd St

  

MAGNOLIA

Baywatch at Magnolia  –  2200 Thorndyke Ave W

Blue Heron  –  3150 W Government Way

Discovery Park  –  3505 W Government Way

El Dorado IV – 3630 26^th Pl W

Holly Terrace – 2550 Thorndyke Ave W

Magnolia Bay – 2310 Thorndyke Ave W

Magnolia View – 2562 Thorndyke Ave W

Quarterdeck  –  3700 26^th Pl W

Windy Hills – 3710 26^th Pl W

The ABC’s of Deeds

You may think a deed is a pretty standard document but in reality, there are seven types to choose from.  They are:

Bargain and Sale Deed:  A deed by which the grantor “bargains, sells and conveys” real property to the grantee.  A bargain and sale deed conveys fee simple title to the grantee and warrants against defects created by the grantor, except for those matters disclosed in the deed.

Quit Claim Deed:  A deed by which the grantor “conveys and quit claims” to the grantee any interest the grantor might have, if any, in certain real property. A quit claim deed conveys no warranties or title. A quit claim deed conveys no after-acquired title, unless the deed contains words expressing the intent to do so.

Personal Representative Deed:  An attorney-prepared deed used when the seller of property is deceased. The Grantor on this type of deed has been authorized by the court to convey the property on behalf of the estate. The attorney preparing the deed may incorporate warrants similar to Bargain & Sale Deed, Special Warranty Deed or Quit Claim Deed.

Statutory Warranty Deed:  A deed by which the grantor “conveys and warrants” the real property to the grantee. A statutory warranty deed conveys fee simple title to the grantee and warrants against defects asserted by all persons, except for those matters disclosed in the deed.

Special Warranty Deed:  A special warranty deed is similar to a Washington form bargain and sale deed, which conveys fee simple title to the grantee and warrants against defects created by the grantor, except for those matters disclosed in the deed.

Tax Deed:  A deed issued by the county treasurer to the purchaser at a tax sale conducted due to nonpayment of taxes.  A tax deed should be recorded to give notice that title has passed to the purchaser at the sale.

Trustee’s Deed:  A deed issued by the trustee of a deed of trust following the non-judicial foreclosure of a deed of trust in default.  First, the trustee or beneficiary sends a Notice of Default.  Then, the trustee: 1) records a Notice of Trustee’s Sale; 2) holds the trustee’s sale; and 3) issues a Trustee’s Deed to the highest bidder at the sale.  The Trustee’s Deed should be recorded to give notice that title has passed to the purchaser at the sale.

If you need further explanation specific to your situation, please consult your attorney. We’d like to thank Michelle Barry, Senior Account Manager at Commonwealth Land Title Company of Puget Sound, LLC for allowing us to reprint this material. If you have further questions, please contact her at cwtitle.net.

The Value of the View by William Justen

A recent study has shown that condos with a view are of course more likely to sell, but by how much?  Unfortunately there is no magic formula to accurately pinpoint the value of downtown Seattle view.  However, it sure would make our jobs easier if it could be as easy as:

Former Planning Director and owner of 22 downtown Seattle properties, William Justen, has pointed out that buyers are attracted to views of Elliott Bay more so than amenities and/or finishes.

Today about 175 units remain unsold within four condominium buildings west of 2nd Avenue. This compares to 481 units remaining between 4th and 8th avenues to the east. These view premiums can range from 25% to more than 50% over a comparable home, especially if the view is protected. That’s why the West side of 2nd Avenue may soon look like Park Avenue – there are four permitted condominium towers planned between Pine and Lenora streets, and the City of Seattle recently extended all permit holders’ development rights for six years to maintain this trajectory.

A Value of View Flyer presented by William Justen’s project Fifteen Twenty-One, shows that many downtown addresses still have threatened views.  This in turn threatens your investment’s value, and should be a well thought- out precaution before making a decision that could potentially cost you $10,000’s from something as simple as an application for a building permit.  Although many of the proposed projects that have been postponed from 2006/07 may still not break ground for another couple of years, developers are still holding onto permits as Seattle continues to be one of the top cities people relocate to.

Over the past 18 months, 123 units have been sold within six condominium towers with an average purchase price of $2 million. The top property sale was more than $9 million. In 2009, the vast majority of King County’s condo sales valued at more than $1 million were located within a single address: Fifteen Twenty-One Second Avenue, just a half-block east and high above the Pike Place Market. What’s the secret to such success? Every home offers a protected view of Elliott Bay.

Have you seen our zoning map?  According to specifications presented by the City of Seattle, we created an interactive map that shows how high a residential/commercial lot is allowed to go.  You can find the map under the Search button, or click here to view it now.

By the way, William Justen and all those over at Fifteen Twenty-One would like you to know…

Open House This Weekend
March 27th & 28th
12:00pm to 4:00pm

Interest Rates of 5% May Never Be Seen Again! Here’s Why.

Interest rates are speculated to begin heading in the opposite direction come springtime.  As part of the economic plan to stimulate the market, the Federal Reserve has been purchasing mortgage-backed securities in order to manipulate demand.  Since early 2009, the Feds have bought an approximate $1.25 trillion in securities, and Fed spending is set to expire on March 31st.  Unlike the Tax Credit extension real estate professionals crossed their fingers for, the Feds have already slowed down on spending, suggesting they will in fact cease securities purchasing.  This should result in opening the market to investors demanding higher rates due to higher perceived risk.  With that being the case, it’s likely that rates will never be seen at 5% again.

Lenders (preferred) are advising people to take advantage of these low rates before spring when they are expected to begin climbing to an estimated 5.5%.  Spring is also the busiest season of the year for buying real estate, so getting in on a low rate and low price is certainly a wise idea.  Rates should continue to rise at a fairly slow rate after that, then cap around 5.75%.

Multiple Mortgages to One Borrower

Our buyer activity has picked up and we have also received more interest from investors who are looking to purchase blocks of condominiums. Therefore, we wanted to take a minute to explain some details on how multiple mortgages to one borrower works.

First off, in addition to a borrowers principal residence, a borrower may own up to nine additional properties on Fannie Mae loans if the mortgage is secured by a second home or investment. If a borrower currently owns five to ten  properties, then certain conditions must be met. Also, a borrower must not be affiliated with the builder, developer, or seller on the property.

Because owning multiple investment properties can affect the ability to repay mortgage debt if for some reason the property was to remain unrented for an extended period of time, Fannie Mae does require a borrower to be secured by investment properties that have a financial reserves.

The following guidelines must be met for investor and second home borrowers who are interested in owning five to ten financed properties:

Eligibility Requirements for Five to Ten Financed Properties

Transaction Type	Number of Units	Maximum LTV/CLTV/HCLTV	Minimum Credit Score
Second Home or Investment Property
Purchase	1 Unit	75/75/75	720
Limited Cash Out Refi	1 Unit	70/70/70	720
Investment Property
Purchase & Limited Out Refi	2-4 Unit	70/70/70	720

Additionally:

• No history of bankruptcy of foreclosure within past seven years
• No 30 day delinquencies within the past 12 months on mortgages
• Rental income must be documented with two years of tax returns, regardless of the DU condition
• Borrower must sign and IRS Form 4506 or 4506-T at application and those IRS transcripts must be obtained prior to closing the validate the accuracy of the tax returns (potential 30 to 60 day process)
• Reserve requirements must be met for the subject and all other properties currently owned
• Does not apply to Renovation or One Step loans which restricts borrower to four financed properties
• Must run through DU and then submit to underwriting for review with IRS transcripts

Reserve Requirements for Investment Properties and Second Homes

• Six months reserves are required for all investor transactions.
• When borrower owns one to four financed properties, requirements are:
  • 2 months reserves on subject property if 2nd home
  • 6 months reserves on subject property if investment property AND
  • 2 months reserves on each other financed second home or investment property

• When borrower owns five to ten financed properties, requirements are:
  • 2 months reserves on subject property if second home
  • 6 months reserves on subject property if investment property AND
  • 2 months reserves on each other financed second home or investment property

Reserves are defined as all components of the monthly housing expense. All of the following must be included when calculating the appropriate reserve requirement:

• Principal, interest, taxes, insurance
• Ground rent, special assessments or any owner’s association dues
• Any subordinate financing payments on mortgage secured by the subject property

Need additional information? Contact us.

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