Pennymac is updating our AUS Jumbo program. The following guidance is effective immediately:
Rental Income Requirements Update
For loans where the LPA is the AUS utilized:
- When a rental agreement is used to document rental income, a minimum original term of one year is no longer required
- For newly executed leases, the first rental payment due date must be no later than the first payment due date of the mortgage
- When a lease agreement is used, documentation requirements evidencing two months receipt of rental income have been expanded to include:
- In lieu of documenting two months rental payment receipt, verification of receipt of the security deposit and the first month’s rental payment is now eligible
- For security deposits, evidence of deposit into an escrow or business account established for this purpose, or evidence payment was cashed and deposited into the borrower’s personal account is required.
- Payments transferred into a third-party money transfer application account owned by the borrower
- In lieu of documenting two months rental payment receipt, verification of receipt of the security deposit and the first month’s rental payment is now eligible
- Refer to the Freddie Mac Selling Guide for complete requirements.
The following changes apply to all loans regardless of AUS utilized:
Non-Taxable Income Gross Up
Social Security Income
15% of Social Security Income may be treated as nontaxable income without having to provide documentation evidencing the nontaxable status. That amount may then be grossed-up by 25% and added to the qualifying income.
Example:
Social Security Benefit amount: $1,500
Non-taxable amount: $1,500 x 15% = $225
Gross-up amount: $225 x 25% = $56 (rounded to the nearest dollar)
Qualifying income: $1,500 + $56 = $1,556 (does not require additional documentation)
Please note: If more than 15% of income is grossed up, documentation to verify the income is nontaxable is required
Child Support
Child support may be grossed up 25% without having to provide documentation of its nontaxable status. The following income documentation standards still apply:
- Copy of divorce decree, legal separation agreement, or legal agreement / court decree describing the payment and terms
- No less than the most recent 6 months documented receipt required (payments must be timely and regular)
Attorney Opinion Letters
The use of an attorney opinion letter in lieu of a title report is ineligible.
Please contact your Sales Representative with any questions.