Essex to allow Cosigners in conjunction with FHA & CalHFA loans
Cosigners are non-occupying loan guarantors only. Cosigners do not hold ownership interest in the property. Cosigners do not sign the deed of trust, but will be required to sign both the 1st & 2nd TD notes and all other closing documents. Cosigners may not be on title. The cosigners are not required to comply with CalHFA eligibility requirements including the tax law requirements as to first time homebuyer rule, income eligibility and owner occupancy.
**The cosigners must not otherwise be ineligible for participation in the FHA program.
**Cosigners may not have a financial interest in the transaction (seller, builder, real estate agent, MLO, etc. are ineligible.)
**Cosigners must be closely related to the occupying borrowers. Allowable relatives are: parents-children, siblings, stepchildren, aunts/uncles, nieces/nephews ONLY. Lexis-Nexis to show family relationship and/or additional documentation may be required by underwriting.
**Cosigners must have a principal residence in the US unless exempted due to military service or as US citizens living abroad.
**Occupant borrowers debt to income ratio's cannot exceed 46.99%/56.99%.
**Total DTI including cosigner's income is 43%.
Full credit packages will be required for Cosigners for both the FHA loan and the CalHFA 2nd loan submission (credit reports, full income documentation and asset documentation, full disclosures in accordance with FHA and total scorecard requirements)
*Broker must notify registration that the submission includes a co-signer.
*Cosigners should never sign ANY CalHFA specific documents (with the exception of the note at closing). If the cosigners are included on the Homebuyers education counseling cert, tax return affidavit or Borrower affidavit of Household size, they will be considered OWNER occupants and the loan must comply with all CalHFA requirements for income, ratio, etc.
Should you have any questions, please contact your department manager