Documentation Requirements
Take Advantage of Loan Prospector's Low Documentation Requirements

In today's quickly changing mortgage market, saving time and money are important considerations for any business. Loan Prospector® provides you with quick and easy services by offering three easy-to-learn documentation levels, which means you collect only the information needed from your borrowers, saving time and money. Your borrowers will appreciate knowing exactly what they need to gather, and you'll find it easier to process more loans with less work.

It's easy to streamline your processes when you have three convenient levels to define your borrowers' documentation needs:

• Accept Plus. This level is available for loans with strong credit. You can use stated income and debt, expanded ratios and a verbal verification of employment.
• Streamlined Accept – "Rule of One." For this level, follow the "Rule of One," collect, for example, just one pay stub showing year-to-date earnings for the most recent thirty days, one W-2, and one recent bank statement from your borrowers.
• Standard – "Rule of Two." Follow the "Rule of Two," and collect, for example, two bank statements and two W-2s. Note, however, you still need one pay stub covering thirty days, and verbal verification of employment.

Helpful Hints for Using Loan Prospector's Low Documentation Requirements

The Loan Prospector Documentation Matrix provides you with guidance and a quick reference tool to help streamline the document gathering process for your borrowers. Here are some helpful examples to keep in mind when determining your borrower's documentation needs:

• Employment verification. For a loan that receives an Accept Plus documentation level and the borrower is currently employed, you only need to obtain one of the following:
  • Verbal verification of employment.
  • Most recent pay stub or salary voucher.
  • Written verification of employment.
  If your self-employed borrowers receive an Accept Plus documentation rating, you can offer them the ease of these low documentation requirements, regardless of how long they have been self-employed.
• Business tax returns. If a borrower is self-employed, business tax returns are not required, unless the loan receives a Standard documentation level.
• Gift letters. For borrowers using gift funds they've received from a family member, or other donor, you only need to capture the following gift information on the loan application or in a gift letter:
  • Donor's name and relationship to the borrower.
  • Donor's mailing address.
  • Address of the property being purchased.
  • Amount of the gift.
  If provided in a letter, the donor must sign it. If the gift is from an agency, you'll need to:
  • Establish funds were provided by the employer, municipality, nonprofit religious organization or nonprofit community organization.
  • Establish the organization has a formal gift program.
  • Provide evidence the funds were received by the borrower or by the Seller on the borrower's behalf.
  • Identify the donor's mailing address.
• Gaps in employment. If a borrower has a gap in their employment history, no explanation is required for Accept Plus and Streamlined Accept documentation levels. If the loan receives a Standard documentation level, you'll need to provide an explanation from the borrower for gaps greater than 60 days.
• Alimony and child support. If you need to document alimony and child support, simply show three months' proof of receipts and the appropriate pages of your borrower's applicable agreement with evidence it will continue for the next three years.
• Credit explanation letters. If your borrowers have late payments, you don't have to include credit explanation letters for Accept loans that receive Accept Plus, Streamlined Accept or Standard documentation levels.
• Funds for refinances. With our low documentation requirements, there is no need to document assets on refinances.

As always, if you have any questions about the amount of documents you need to collect from your borrower for a loan, be sure to use the Loan Prospector Documentation Matrix [PDF 452K]. To make it even easier to identify what documents are needed, you'll also receive a Documentation Checklist with your automated underwriting results.