Posted by Michael Morrongiello on April 08, 2000 at 11:17:28:
The main thing to remember is that “Guidelines” are just that “GUIDELINES” - they are not carved in stone. There are other variables that can also create offsetting positives or negatives when underwriting a note purchase deal.
Here are some general guidlines to consider when dealing with a “seasoned” note (1month or more of payments), on an owner occupied Single family home sold with a minimum 5% cash down payment from the buyer:
FICO SCORE = Range of ITV Exposure
650 + = 85%-90%
600-649 = 80%-85%
551-599 = 80%-85%
525-550 = 75%-80%
A 10% cash down payment is perferable to making exceptions
Strong employment stability is another offsetting factor to consider
The note interest rate should be in the 10% -11% range on the higher credit score customers and in the 11% -12% range for the lower credit score customers.
Simultaneous closings of notes with NO payment history on them may result in a sligntly lower ITV exposure level because of the increased risk.
These are Gross pricing guidelines where a fully processed package is delivered for underwriting
NOTE: These are the guidelines that my company uses to look at files. I cannot speak as to what other funders offer.
To your success,