| Amtrust Mortgage Banking | Credit | Non-traditional Credit Report | 8.6.1 Overview of Non-Traditional Credit History: If a borrower does not have the types of credit that would appear on traditional credit reports, or if the borrower does not have a sufficient number of credit references to develop a traditional credit report, a Non-Traditional mortgage credit report may be used. The borrower must be informed that a Non-Traditional mortgage credit report may be developed if information obtained through the standard credit report is not used to make an underwriting decision.
* Non-Traditional mortgage credit reports must be evaluated under the same standards as those used to assess traditional credit history.
Non-Traditional Credit mortgages are limited to 95% LTV.
If all borrowers on the loan are relying solely on non-traditional credit, at least one of the borrower(s) must complete Pre-Purchase Homebuyer Counseling. See Education Partners for approved Education providers.
** 8.6.2 Unacceptable Uses of Non-Traditional Credit
Non-Traditional mortgage credit reports are not acceptable in the following situations: When the lender is able to obtain a credit score for the borrower despite limited use of credit, and that score is acceptable given the overall risk of the mortgage. When the borrower's traditional credit history indicates derogatory references, such as late payments, collection accounts, or judgments, a Non-Traditional mortgage credit report cannot be used as a means to offset derogatory references or enhance a poor credit history with the traditional providers of credit. |
| CitiMortgage | Credit | Non-traditional Credit Report | When nontraditional credit is used to assess credit risk, the borrower’s credit history needs to consist of a
minimum of 4 different reference sources (or three sources, if the borrower’s rent covers utility payments) each of which have at least a 12-month history. The borrower’s credit history may be documented by a
nontraditional mortgage credit report or one of the other acceptable nontraditional credit sources listed in the seller guide. |
| Bank Of America | Credit | Non-traditional Credit Report | A non-traditional mortgage credit report serves as a method for developing a credit history
for borrowers who do not have the types of credit that would appear on a traditional credit
report.
A non-traditional mortgage credit report may be:
• Used as a substitute for a traditional credit report or
• A supplement to a traditional credit report that has an insufficient number of credit
references.
A non-traditional credit report may not be used:
• If a credit score can be obtained for the borrower despite limited use of credit.
• To artificially create a report for a borrower who has no credit history.
• To enhance poor credit history reflected on a traditional credit report.
The non-traditional credit report must be developed by a credit reporting agency after
ensuring that all three of the major credit repositories were checked in the initial attempt to
verify the borrower’s credit history.
A non-traditional credit report should include a 12-month credit history with a minimum of
four different credit sources. Three credit sources are acceptable provided that the
borrower’s utilities are included in the verified rent payment. The report should be evaluated
following the same standards as a traditional credit history, and should not be used to offset
derogatory traditional credit references. Refer to Developing a Non-Traditional Credit Report
for more information.
Non-traditional credit reports are acceptable for:
• Conforming loan programs
• Non-Conforming loans originated under non-permanent resident alien guidelines
with Full/Alternative and Reduced documentation only (Fast & EasySM and No Ratio
are not allowed). Refer to the applicable loan program for eligibility. |
| Franklin American | Credit | Non-traditional Credit Report | Ineligible - Loans for borrowers using non-traditional credit. |
| M AND T Mortgage | Credit | Non-traditional Credit Report | Non-Traditional Credit: M&T Bank will not accept non-traditional credit as a basis for an underwriting decision on the M&T product line.
* The applicant must have a minimum of two (2), preferably three (3), valid credit scores
* Non-Traditional Credit may not be utilized as a substitute for the lack of a traditional credit profile.
* A valid credit score must meet the Minimum Required Credit Depth guideline * Non-Traditional credit may not be utilized to supplement a credit profile that does not meet the Minimum Require Credit Depth guideline, regardless of the existence of the required credit scores. |
| SunTrust | Credit | Non-traditional Credit Report | AUS LOANS NOT ELIGIBLE.
• If a non-traditional credit
history is necessary, credit
information from four (4)
different sources is required
(three [3] sources if rent
includes utilities).
• In all cases, each account
must have a current 12 month
payment history.
• Non-traditional credit may be
built through a credit vendor in
the form of a credit report or
through direct verification from
each creditor.
• If written credit verification is
provided, payment history
must be in “number of times
past due” format (i.e., 0x30).
Vague statements such as
“current,” “satisfactory,” or
“paid as agreed” are not
acceptable.
• For a borrower with
disabilities, it is acceptable to
obtain documentation
presented by a courtappointed
guardian or Social
Security Administration (SSA)
representative payee to either
request from a consumer
reporting agency a
nontraditional credit report or
to establish a nontraditional
credit history for the borrower
in accordance with the
guidelines outlined above. |
| Merrimack Mortgage | Credit | Non-traditional Credit Report | FHA Jumbo - Non-traditional credit is not allowed. Massachusetts Housing Finance Agency - 30 Year Fixed Rate: Non-traditional credit is allowed - 12 months cancelled rent checks, utility bills, insurance receipts. |
| PHH | Credit | Non-traditional Credit Report | When reviewing loans with non-traditional credit, the rest of the loan must meet standard underwriting guidelines. NON-TRADITIONAL CREDIT IS NEVER A SUBSTITUTE FOR DELINQUENT TRADITIONAL CREDIT.
Homebuyer education is required for at least one borrower when all borrowers are utilizing Non-traditional credit for any conventional Conforming product. Documenting Non-Traditional Credit References -
Customer must provide 4 alternative references. Conforming loans may be considered with 3 non-traditional credit references, provided the housing reference includes utility payments. Each credit reference must reflect a satisfactory payment history for the previous 12 months.
The customer can provide a written reference from the creditor (which must be on the creditor's company letterhead) or provide copies of cancelled checks (front and back) for the previous 12 months.
Customers with disabilities may have a court-appointed guardian or Social Security Administration (SSA) representative payee. Accounts held jointly in the name of the customer and the court-appointed guardian or SSA representative may be used to establish a non-traditional credit history, provided the customer has individual credit references.
Examples of Non-Traditional Credit References
Rental payments.
Utility bills (gas, electric, telephone, cable TV, etc.).
If any of the above are not available, other sources with a 12-month history may include:
Insurance premiums (health, life, auto, rental).
Medical bills.
Payments for child care and school tuition. |
| Flagstar | Credit | Non-traditional Credit Report | If a borrower does not have the types of credit that would appear on traditional credit reports, or if the borrower does not have a sufficient number of credit references to develop a traditional credit report, nontraditional mortgage credit report may be used. Nontraditional mortgage credit reports must be evaluated under the same standards as those used to assess traditional credit history. However, if the credit history for all borrowers consists only of nontraditional credit sources, the credit history must be defined as “high primary risk” in the lender's comprehensive risk assessment of the mortgage loan. A consumer reporting agency must meet the following requirements when preparing a nontraditional mortgage credit report:
• It must check all three major credit repositories in the initial attempt to verify the borrower’s credit history. • It must conduct an informational interview with the borrower to identify all of the different sources from which the borrower obtained credit in one form or another over the most recent past 12 months. If the lender obtained a listing of the borrower’s nontraditional credit sources when the mortgage application was completed, the consumer reporting agency does not need to conduct the interview. Instead, the lender must immediately contact the individual credit providers to verify the borrower’s payment histories. • It must consider only the types of credit that require borrowers to make periodic payments on a regular basis (intervals must be no longer than every three months). • It must pass on all information collected after contacting all credit references provided by the borrower.
• It must specify whether or not the reports meet Fannie Mae criteria for nontraditional mortgage credit reports. |
| Mortgage Services III | Credit | Non-traditional Credit Report | Non-Traditional Credit Reports are not permitted under any circumstances. |
| Sydion Financial | Credit | Non-traditional Credit Report | When a lender uses a non-traditional credit history to assess credit risk, the borrower’s established credit history needs to
consist of a minimum of four different reference sources (or three sources, if the borrower’s rent covers utility payments) that
have at least a 12-month history. The borrower’s credit history may be documented by a nontraditional mortgage credit report
or one of the other acceptable alternative credit verifications. Sydion Financial is not presently utilizing the Non-Traditional
Credit History Analysis method. |