FHA/VA- FULL DOCUMENTATION FOR MANUAL UNDERWRITING

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

One of the well-known advantages to an FHA or VA file is that even if you receive refer AUS findings, you still have the option to submit qualifying files for manual underwriting approval with most investors. However, when submitting files for manual underwriting evaluation and approval, it’s extremely important that you provide the proper documentation for a full documentation file and do a thorough job packaging and presenting the case. This allows the underwriter to come to a swift and efficient underwriting decision that is hopefully to be in your and your borrowers favor.

Here is what is required for a full doc manual underwriting submission for an FHA or VA loan file:

EMPLOYMENT/INCOME

OPTION ONE

· Full VOE(s) for all employers covering most recent two years
· Most recent YTD paystub

OPTION TWO

· Verbal VOEs for all current employers
· Most recent 30 days consecutive paystubs for current employers
· W2s for all employers covering most recent two years
· IRS form 4506 or 4506-T

ASSETS

OPTION ONE

· Full VOD for each account
· Most recent 30-day account statement for each account
· Verify all assets and reserves

OPTION TWO

· Two months consecutive account statements for each account reflecting start and end balances. (If statements do not reflect start and end balances for each statement period, three month’s consecutive statements are required).
· Verify all assets and reserves

CREDIT

· Tri-merge credit report or RMCR
· Provide letter of explanation for all derogatory accounts
· Provide letter of explanation for all inquiries
· VOR(s) covering most recent 12 month residence history
· Provide non-traditional letters of credit or alternative tradelines for borrowers who have no credit history, no ficos scores OR for those borrowers who need their credit profiles strengthened

Always use a cover letter to outline any file you submit for manual underwriting. Make sure the credit report is cleaned up - meaning have all duplicated accounts removed, have all outdated accounts rated current, old tax liens and judgments should reflect satisfaction dates.

The goal of every file submitted for manual underwriting should be to present the most accurate picture of the borrowers CURRENT financial status and to reflect it in the most positive manner possible. When you submit a well-packaged file, your chances of obtaining approval are much stronger because the underwriter will be much more inclined to work with you and the borrower situation. The less time an underwriter has to spend sorting through the file to make sense of it, the more positive reaction they are likely to give and that will lead to a higher rate of approval for you and your borrowers!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.