MPF Direct Product Origination and Underwriting Updates
Effective Date: October 7th, 2019
The Investor for the MPF Direct Product, Redwood Residential Acquisition Corporation, has recently made the following Loan Level Pricing Adjustment (LLPA) updates which affect the Select 90 QM, Choice QM and Choice Non-QM options.
Loan Level Pricing Adjustments
Effective for loans locked on or after 10/07/2019.
The following updates to LLPAs have been made:
- Select 90 – Purchases and rate/term refinance transactions have updated FICO/CLTV adjustments.
- Choice QM and Choice Non-QM – Purchase and rate/term refinance transactions have updated FICO/CLTV adjustments for loans > 80% CLTV
The LLPA Grid has been attached for reference with all updates bolded and highlighted in green.
Please note the following guidelines have not been updated but are being included as a reminder to PFIs originating mortgage loans under the MPF Direct product.
- Loans must be locked prior to closing with the borrower.
See MPF Direct Selling Guide section 1.6.2.
- Appraisals must be submitted for a value validation prior to closing with the borrower.
- Appraisals are to be submitted via the MPF Direct portal as soon as possible.
- Value validations may take up to five to seven business days.
See MPF Direct Selling Guide section 1.7.1.
Documentation Requirements for Self Employment Income/Employment
- Self-employed borrowers are defined as having 25% or greater ownership or receive 1099 statements to document income.
- Year–to-date financials (profit and loss statement and balance sheets) are required to support the income used for qualifying or, if a business has declining income or reflects a loss:
- Must be provided on or before the closing date.
- YTD balance sheet is always required for Schedule C. A tax return is not a substitute for a balance sheet since Schedule C does not reflect a balance sheet.
The policy described above is incorporated into the following exhibits:
- MPF Direct Exhibit Q-D: Select QM Program Eligibility Guide
- MPF Direct Exhibit R-D: Select 90 QM Program Eligibility Guide
- MPF Direct Exhibit S-D: Choice QM Program Eligibility Guide
- MPF Direct Exhibit V-D: Select Non- QM Program Eligibility Guide
- MPF Direct Exhibit W-D: Choice Non- QM Program Eligibility Guide