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Wells Wholesale Cuts LTVs, Increases Doc Requirements

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Wells Fargo Home Mortgage’s broker unit recently scaled back on loan-to-values as a result of changes by mortgage insurance companies. In addition, documentation requirements have increased.

On loans with non-occupant co-borrowers, Wells Fargo Wholesale Lending is cutting the maximum loan-to-value to 80 percent, according to a Dec. 2 bulletin to wholesale clients. The updates, which apply to all registrations received on or after Dec. 14, were the result of changes made by mortgage insurance companies.

In addition, non-occupant co-borrowers will no longer be allowed on high-balance conforming loans at any LTV. Non-occupant co-borrowers loans already in the pipeline under the old requirements must fund by April 2, 2010.

The Des Moines, Idaho-based lender also cut the LTV from 95 percent to 80 percent on conforming loans that either utilize a property inspection waiver or a property inspection alternative.

Conforming loans on properties with more than 10 acres will no longer be accepted if the LTV exceeds 80 percent.

Owner occupancy on established condominiums needs to be at least 70 percent of total units when LTVs are above 80 percent, while new construction requires 70 percent of the units be sold. But a 51 percent owner-occupancy level is acceptable on established projects if the LTV doesn’t exceed 80 percent and the combined LTV doesn’t exceed 90 percent on owner-occupied properties, or the LTV and CLTV don’t exceed 75 percent on second and vacation homes.

LTVs above 80 percent on condominium projects with presales under 70 percent require at least 51 percent of the project or phase to be sold to owner-occupied or second-home purchasers.

In declining markets where the LTVs exceed 80 percent, single-family CLTVs will be capped at 90 percent. Attached properties, condominiums and co-ops will be limited to 85 percent.

Wells is imposing document requirements on income from bonuses, dividends-interest and military as well as from public assistance, foster care and seasonal employment. Also impacted is income from workforce re-entry, rental properties and unemployment compensation associated with seasonal employment.

Only 70 percent of verified investments will be required to be cash assets from now on. On retirement accounts, only 60 percent can be used as reserves.

Wells will require proof of ownership, value and any conditions to withdrawal on liquidated assets in addition to proof of liquidation. Impacted loans must fund by Jan. 29, 2010.

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