I hope everyone is staying safe and keeping peace of mind. During this time, I am receiving a lot of requests for clarification on how lenders are we dealing with applications where clients income has unfortunately been interrupted. While most lenders will likely follow this for insured files its important you confirm directly with your mortgage broker.
Below is an update with a little more clarity on income guidelines we received through one of you lender partners MCAP.
The good news is that all 3 insurers have unified and issued a position on the pipeline for deals submitted and approved as of today.
Therefore on those transactions we can be confident to say we are following insurers guidelines for deals up until March 25th.
INSURED/INSURABLE & UNISURABLE PURCHASE (30yr/$1M+) DEALS – unified strategy from insurers:
In light of the current environment related to COVID-19, we understand that certain borrowers may have had income temporarily interrupted that may be in the midst of the home-buying process. The Mortgage Insurers have collaborated to provide further guidance on the treatment of applications for these situations currently in the pipeline as noted below.
Where a Lender has been advised that a borrower with a previously approved application is experiencing income disruption due to COVID-19 and the borrower still wants to move ahead with the application, the Mortgage Insurer will maintain its previous approval provided all the following conditions are met:
- The application was approved as of March 25, 2020
- The borrower has entered into a legal binding purchase and sale agreement and waived financing conditions as of March 25, 2020
- The closing date is on or before September 30, 2020
In such cases, the Lender will maintain the previously provided income that was originally used to qualify the mortgage insurance application. The Lender must continue to complete appropriate income/employment confirmation (based on the income/employment prior to the interruption) and document their file accordingly.
If the situation does not fall into the criteria above, Lenders should adjudicate the file based on the current income situation. Exceptions may be considered on a case-by-case basis, the Lender should refer the application to the Mortgage Insurer for further assessment.
If you have any further questions, we are here to help guide and assist you.
Angela Calla is a 16 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from all sales will be donated to Access Youth Outreach Services. Angela can be reached at firstname.lastname@example.org or 604-802-3983.