A. Second Home Requirements

Definition

A second home is a dwelling that the Borrower occupies in addition to his primary residence. AmMAC allows financing of a one-unit dwelling as a second home.
Generally, the Borrower will own only one-second home. However it is conceivable that the Borrower may own two or more second homes, e.g., a second home at the beach and a second home in the mountains. Common sense should be used when underwriting these loans to ascertain that one of the second homes is not actually an investment property.

Requirements

Generally, the borrower will not own other second homes or investment properties in the same area as the subject. Caution must be exercised when the borrower has investment properties or another second home in the subject's area, in order to be certain that the subject transaction involves a true second home.
Second homes must meet the following criteria:


• Property cannot be used to generate any rental income, as reflected on the Borrower’s tax returns, or the property is considered an investment property and is not eligible for second home financing.
• Property may not be subject to any agreements restricting the Borrower's occupancy such as mandatory rental pools, timesharing arrangement, etc.
• Borrower may not own another second home or investment property in the same area or locale (defined as the same MSA).
• Hazard insurance policy may not contain any coverage for loss of rent insurance.
• Property must be suitable for year round occupancy.
• Non-arm's length transactions are not allowed; the Borrower may not be affiliated in any way with the builder, developer, or seller of the subject property.
• Refer to individual product descriptions in LTV Matrices for LTV and TLTV restrictions.

B. Investment Properties

Definition

An investment property is a 1- to 4-unit residential property, other than a primary residence or a second home, which is owned by an individual and is suitable for year round use. An investment property is a residential dwelling from which the Borrower derives income.
AmMAC does not provide mortgage financing for investment properties.

C. Leaseholds

AmMAC does not provide mortgage financing for leasehold properties.

D. Unique Amenities

The proper selection of comparable properties minimizes both the need for and the size of any dollar adjustments for unique amenities. Examples of unique amenities are elaborately finished basements, in-home theaters, indoor gymnasiums, marble tile, etc.

Occasionally, there may be no similar or truly comparable sales for a particular property because of the uniqueness of the property or other conditions. In such cases, the appraiser must use his knowledge and judgment to select comparable sales that represent the best indicators of value for the subject property and to make adjustments to reflect the actions of typical purchasers in the market. Dollar adjustments must reflect the market's reaction to the difference in the properties, not necessarily the cost of the difference. Generally unique amenities do not affect value to the extent of their cost.

Multiple Dwellings on One Lot — Properties consisting of two or more detached single family homes on a single lot are only eligible for AmMAC mortgage financing under the following terms:
For single family properties containing additional residential dwellings (guest house, carriage house, etc.) the underwriter must determine whether the multiple dwellings comply with zoning regulations and are common for the neighborhood. Typically, the additional dwellings(s) are smaller than the main dwelling and will not be rented. The property should be appraised as a single family residence. Any value for the additional dwelling should be supported by the comparable sales.
When the mortgaged premises consist of more than one parcel of real estate, the parcels must be adjoining and the Mortgage must be a valid first lien on each parcel. In addition, only one parcel may contain a residence. For example, the Mortgage may be secured by one parcel of real estate with a residence and an adjoining parcel which contains vacant land or a garage; but the adjoining parcel may not contain another residence.

Over-improvement — When the subject property has a sales price or value that exceeds the upper price range of the neighborhood as defined in the appraisal, the property is considered an "over-improvement" for the neighborhood. If the subject property is an over-improvement, it is not eligible for financing by AmMAC.

E. Mixed Use Properties

A mixed use property is one where some portion of the property is used for purposes other than residential, such as commercial or agricultural. Examples may include a property with a professional office or a property where some portion of the land is generating income from crops.
AmMAC does not provide mortgage financing for mixed use properties.

F. Energy Efficient Properties

The subject property may be considered energy efficient if it:
• Uses cost-effective design, materials, equipment, and site orientation to conserve non-renewable fuels.
• Has proper design, installation materials, and equipment consistent with the area climate.

AmMAC currently does not provide any additional underwriting benefit for energy efficient properties.

G. Properties Located on Islands

Standard property underwriting guidelines apply to mortgages secured by properties located on islands. The following are considerations when making lending decisions on island properties:

Year-Round Use

Regardless of where a property is located, it must be suitable for residential use and occupancy year-round. This is the area of greatest concern and the one most critical in determining acceptability. On some islands, public and private utilities such as water and electricity are not available year round, and the properties have no central heat source. These properties are ineligible for AmMAC financing.
Accessibility

The island should be accessible via public transportation. If a boat or ferry is the only means of access, it should be public, not private transportation. Public transportation is defined as that which is owned or controlled by local or state governing agencies or has been established for generations and is now considered public with assurance of public ownership should the business close.

Marketable

Due to location, access, and availability of utilities, the property may suffer limited marketability. Marketability must be demonstrated by sales of comparable properties.

H. Auction Transactions

Auction House Validation

AmMAC does not provide financing for houses being purchased at auction, nor will we provide a cash out refinance for properties purchased at auction for cash. If there has been a lien on the property for at least 6 months, the property is eligible for either a rate and term or cash out refinance under our normal guidelines.