It is very important to MAM that Click N Close title be used as often as possible for the Bridge Loan product. While we can’t always dictate the title company used on a purchase, we do want all offers that our buyer’s agents submit on transactions that are using the Bridge Loan product be written with CnC as the title company. If the seller pushes to use a different company, we don’t need to press the issue, but please make sure your buyers agents are aware that CnC title needs to be on the initial offer.
The permanent financing refinance MUST always go with CnC title without exception.
Updated 8.4.2021
General Description
The Bridge Loan program will provide homeowners with short-term financing to purchase a new home prior to the sale of their current residence. The Bridge Loan allows borrower to be pre-approved and make offers without contingency to sell their current residence. The borrower will qualify with both mortgage payments (the bridge loan payment and their current residence payment) with a more lenient debt to income ratio. As soon as their current residence sells, the Bridge Loan will be required to be refinanced into Permanent Financing.
Qualifying Guidelines
Eligible Markets
New Home being purchase VIA the bridge loan: Texas
Current Residence/Departing Residence being sold: US states (no territories)
Eligible Channels
Retail Originators only
Bridge Loan: MAX LTV & Credit Score Requirements
- 102% LTV (>=750 Credit Score and 15% Equity in Departing Residence)
- 100% LTV (>=700 Credit Score and 15% Equity in Departing Residence)
- 90% LTV (680-699 Credit Score and 15% Equity in Departing Residence)
- 90% LTV (Any Credit Score 680 or above, and and 10% Equity in Departing Residence determined by an Appraisal)
Permanent Loan: MAX LTV & Credit Score Requirements
The permanent loan is qualified as a conventional r/t refinance. The Minimum Credit Score is 680 and the Maximum LTV is 90%. The borrower must qualify for a conventional r/t refinance per agency guidelines and the refinance must obtain AUS approval. The borrower must have enough reserves or proof of equity from the departing residence to pay the refinance down to a 90% LTV.
Maximum Debt-to-Income Ratio
Bridge Loan: 75% DTI (This includes the Bridge Loan I/O Mortgage Payment and the Departing Residence Payment; and all other debt on the credit report and REO’s owned)
Permanent Financing: Agency guidelines per AUS
Appraisal
Bridge Loan: Full Interior/Exterior Appraisal
Permanent Financing: Full Interior/Exterior Appraisal
Borrower Eligibility
US residents Only; Individuals Only; NO trusts or POA’s
Borrower cannot own any other real estate besides departing residence
Eligible Properties
1-unit, Single Family, Detached/Attached
Occupancy Type
Owner-Occupied
Ineligible Properties
2+ Units, Condo, All Manufactured Homes, Unique Homes i.e. Barndominiums, Berm Homes, Log Homes
Transaction Type
Bridge Loan: Purchase Only
Permanent Financing: R/T Refinance Only
Escrows
Bridge Loan: Not allowed: Borrower must self pay
Permanent Financing: Based off LTV Requirements and Borrower choice
Ineligible: Repair escrows are not allowed on the Bridge Loan or the Permanent Financing
Title Package
Bridge Loan: Full Standard Purchase title Package Required at initial underwriting
Permanent Financing: Full Standard Refinance Title Package required when the refinance becomes an actual deal
Departing Residence:Provide clear title for the departing residence. This title report is required to be approved for the Bridge Loan. CNC Title can order this title report.
Homeowners Insurance
Standard Agency Requirements for each transaction
Mortgage Insurance
Bridge Loan: None (Regardless of LTV)
Permanent Financing: Specific to Agency Requirements and AUS
AUS
Bridge Loan: Please run AUS. If LTV and DTI exceeds agency guidelines, it is OK if AUS does not give an approval
Permanent Financing: Requires AUS approval. No manual underwrites.
Determining New Equity in Departing Residence
- A Full Interior/Exterior BPO Report (Broker Price Opinion = A form of a desk review) is required for the current residence/departing residence being sold. This BPO Report must be ordered and completed to obtain approval for the Bridge Loan. The BPO Report must demonstrate that the current residence/departing residence has 20% or more net equity after the payoff of any liens and realtor commission. The % of equity required could be higher if the borrower needs the funds to pay down the permanent financing/refinance loan to the lesser of 90% LTV or conforming loan limits. The average days on market for other recent sales will also be analyzed. The average marketing time must be less then 60 days for the geographic area of the departing residence. If the average marketing times is greater then 60 days the Bridge Loan will be approved on a case by case bases by the corporate Bridge Loan team.
- To order the BPO send an email to: spectrum@midamericamortgage.com with both the Bridge Loan and Permanent Financing Loan Numbers. Please include the estimate value/proposed purchase price/proposed list price of the current residence/departing residence that the borrower will be selling after the Bridge Loan closes. Once the departing residence is qualified the corporate Bridge Loan team will issue a certificate of approval with a detailed breakdown of the qualifying data on the departing residence.
- IF the BPO reveals less then 20% equity in the departing residence a full appraisal will be required on the departing residence.
- Both the cost of the BPO and the appraisal of the departing residence if applicable will be a borrower charge. Typically the BPO will cost $215 and the appraisal cost will be specific to that market.
- IF the DEPARTING RESIDENCE has more than 5 acres, the Bridge Loan Team may require a full appraisal to qualify the property. To be determined once the BPO is received.
Other Factors
- DataVerify DRIVE Report: Required for Bridge Loan & Permanent Financing
- SS Card or SS Verification from Approved Vendor: Required for bridge Loan & Permanent Financing
- Fraud Alerts on Credit Reports: Verification is required for Bridge Loans & Permanent Financing
- LQI: Required on Bridge Loan when DTI is about 50%
- LQI: Required on Permanent Financing when DTI is above 36%
- Closing: Minimum 2 business days for Closing Disclosure preparation for bridge loan
Setting up a Bridge Loan In Mortgage Machine
Qualifying
Both the Bridge Loan and Permanent Financing Loan need to be setup in Mortgage Machine. Both the Bridge Loan and the Permanent Financing Loan will be submitted to underwriting simultaneously to be underwritten. Both loans need a complete 1003 setup in Mortgage Machine.
Setting Up the Bridge Loan
The Bridge Loan will be setup as a traditional purchase in Mortgage Machine. This is the purchase transaction of the new house. A full initial disclosure package, credit, income, asset, REO’s, and property documents need to be collected, and uploaded to XDocs. All traditional agency documentation is required for credit, income, assets, REO’s, and the subject property. The remaining sections of this policy will explain the qualifying structure and variables for the Bridge Loan.
Setting up the Permanent Financing
The Permanent Financing will be setup as a CONVENTIONAL TBD refinance in Mortgage Machine. To clarify this is a refinance of the property being purchased VIA the Bridge Loan. Since in theory the borrower does NOT own this property yet, the refinance file in Mortgage Machine is setup as a TBD refinance. Disclosures are not required for this file, and property documents are not required because it is TBD. A full credit, income, asset and REO’s package is required. The refinance application assumes the borrower’s current residence HAS sold, and now the Bridge Loan is being refinanced, likely with a principal reduction, into Permanent Financing. All other features of the Permanent Financing are traditional. The customary branch fees are charged. Compliance requirements for QM and TRID are followed. Agency requirements for documentation are required. Loan must receive AUS approval; NO manual underwrites and NO PIW’s. No FHA, USDA, VA, ALT, or Jumbo Financing is allowed on the refinance/permanent financing.
Compensation
Bridge Loan: The loan will need to be assigned to an LO with ZERO comp from the originating branch. The referring LO will receive a 30 BPS referral fee paid from corporate. The branch team will be responsible for fully originating and processing the Bridge Loan.
Permanent Financing: The Originating LO makes standard comp. The branch team will be responsible for fully originating and processing the Permanent Financing.
Max Loan Amount
Bridge Loan: $1 Million subject to ability to refinance the takeout loan within agency loan limits.
Permanent Financing: The Bridge Loan amount can max out at $1 million, BUT the borrower must have enough equity and reserves to pay down the Permanent Financing refinance loan to conforming loan limits.
Bridge Loan: Term & Compliance
Amortization: CURRENT: 30 Year Fixed Rate at 6%. COMING SOON: 30 Year Fixed Rate at 6% with a Balloon Payment after 12 Months = 11 Fixed Rate Payments of P&I and the 12th Month is the Balloon Payment. The penalty for exceeding the 12 months is foreclosure.
Non-QM: Not held to QM regulation
TRID: Held to TRID regulation
Pricing and Fees
Bridge Loan Upfront Fee: An origination fee equal to 00.50% of the Bridge Loan Amount must be paid upfront out of pocket by the borrower, and it is non-refundable. This can be paid by check or wire.
Bridge Loan Origination Fee: 1.50% of Loan Amount, paid at Closing. Collected along with standard branch fess and traditional purchase closing costs. (A credit of 0.50% will be given to the borrower on the Permanent Financing closing if the Bridge and Permanent Financing Loan closes both close Click N Close Title.)
Bridge Loan Other Fees: All traditional Branch Fees, Credit, Appraisal, Title, and Property Fees should be quoted to the borrower and collected at closing.
Permanent Financing: All customary fees related to a refinance will be collected.