A. UNDERWRITING PHILOSOPHY

Lending Objectives

  • Select high investment quality loans into the AmMAC Portfolio
  • Offer parameters that generate superior loan performance because they are supported by a comprehensive underwriting risk assessment that ensures investment quality standards are applied. See next section for quality standards.
  • AmMAC takes risk in lending activities. We extend credit for appropriate purposes, to people with the capacity to repay their loans from verified income sources and with adequate reserves to account for the unexpected. The risks we take in extending credit must be understood, controlled, and priced to provide a reasonable return

Held for Investment Quality Standards

  • The AmMAC Portfolio has the same investment grade standards as an external investor. External investors typically have diversified portfolios and can sell assets in anticipation of changing market conditions. The Portfolio is not diversified (it invests only in nonconforming residential mortgages) and typically does not sell assets. For this reason, loans placed in the portfolio must be able to withstand economic cycles over time
  • Ensure superior loan performance with rare defaults other than unforeseen, catastrophic events
  • Investment quality non-conforming borrowers are expected to have the capacity and willingness to survive life events such as divorce, illness, or curtailment of income whether voluntary or involuntary
  • Knowledge of the customer may be obtained directly or indirectly to ascertain the borrower’s ability and willingness to repay, especially in difficult times
    • Acceptable sources of additional information are knowledge (including internet information) of the local marketplace and economic trends impacting income stability and property valuation trends
  • The loan file decision must be documented in the loan file in full support of the reason for approval and to address any risks and risk offsets of the transaction
  • Meeting policy alone does not make a loan investment quality. The combination of multiple minimum criteria (min FICO, min cash reserves, max DTI, and max LTV/CLTV) in a transaction creates risk that requires additional compensating factor(s):
    • Lower housing to income (front-end) ratios to ensure current housing is the most attractive and comfortable housing option for our borrower in the event of economic stress or life changes
    • Highly stable employment with a long history
    • Stable or increasing income
    • Property is located in a market with stable or increasing values

Absence of Layered Risk

  • Loans must not have multiple risk characteristics or layered risks.
  • Layered risk loan requests should have risk equivalent offsets. For example:
    • Cash-out will be less than maximum allowed
    • Two times minimum cash reserve requirements documented
    • Property is in a market with appreciating home values
    • Combined primary and secondary housing ratio to income is <30%

B. LOAN – GENERAL INFORMATION

Program Availability

Program availability is limited as follows:

  • Only select Brokers are eligible to participate.
  • Table Funding is not allowed (loans cannot be funded in broker company name).
  • Flow Correspondent purchases are permitted (AmMAC must process, but funding is provided by Correspondent; loan closes in Correspondent’s name and is purchased by AmMAC after closing.

Product Terms

This program is available with the following products:

  • 15 and 30-Year Fixed Rate products
  • 5/1, 7/1, and 10/1 LIBOR ARM products

Property Types

The following property types are permissible:

  • Single Family – Detached
  • Single Family Detached PUD

Note that Condominiums, Co-ops, attached PUDs, and Manufactured Housing are not eligible for financing.

Occupancy Types

The following Occupancy Types are eligible for financing:

  • Primary Residence
  • Second/Vacation Home – In order to qualify as a second/vacation home, the property/transaction must meet all of the following criteria:
  • Must be suitable for year-round occupancy.
  • Cannot be part of a rental pool.
  • No rental income can be derived from the property.

Note that investment properties of any kind are not eligible for financing.

Transaction Types

We offer the following types of financing:

Note that AmMAC does not fund loans that are not Safe Harbor, Qualified Mortgages under the definitions established by the CFPB in their Regulation Z – Ability to Repay/Qualified Mortgage Guidelines (ATR/QM Regs), as amended. Specifically this means:

  • APR must not exceed APOR by 1.5% or more (1st liens)
  • Points and fees may not exceed 3% of the “Loan Amount” (as that term is defined in the ATR/QM Regs)
  • DTI may not exceed 43%

Available LTV/CLTV

Refer to LTV Matrices for the available Non-conforming LTV/CLTV.

Flood Certification

Life of Loan Flood Certification required on all Loans. Refer to Flood Insurance for flood insurance requirements.

Tax Service Fee

The appropriate tax service fee for your state must be collected.