Caps
Product Max First Adjustment
Max Subsequent Adjustment
Max Life Adjustment
5/1 Libor Jumbo 2% 2% 5%
7/1 Libor Jumbo 5% 2% 5%
Disclosures Appropriate ARM Disclosure is required.
Index One Year WSJ Libor
Lookback Most recently available 1 Year LIBOR 45 days prior to the interest rate change date
Margin 2.25%
Topic Guidelines
Program Type & Loan Term
Primary Residence & Second Home
Term Program Code
3/1 ARM (30 Year Am) FSTPO31
5/1 ARM (30 Year Am) FSTPO51
7/1 ARM (30 Year Am) FSTPO71
10/1ARM (30 Year Am) FSTPO101
Minimum/Maximum Loan
Min Loan Amount Max Loan Amount
$417,001 $1,500,000 Maximum
LTV/CLTV &
Loan Amount Primary Residence
Purchase/No Cash-Out Refinance 1-2 Unit, PUD, Condo
Max Loan Amount Max LTV/CLTV Min Credit Score
$1,000,000 80/80% 720
$1,500,000 70/70% 720
$1,000,000 65/65% 700
$2,000,000 65/65% 720
3-4 Unit
Max Loan Amount Max LTV/CLTV Min Credit Score
$1,000,000 65/65% 740
$1,500,000 60/60% 740
Cash-Out Refinance 1-2 Unit, PUD, Condo
$1,000,000 70/70% 740
$1,500,000 65/65% 740
Max Cash Back in hand $250,000
3-4 Unit not eligible for cash-out refinance Maximum LTV/CLTV
Secondary Residence Purchase/No-Cash Out Refinance
1 Unit, PUD, Condo
Max Loan Amount Max LTV/CLTV Min Credit Score
$1,000,000 80/80% 740
Second Home not eligible for cash-out refinance Maximum LTV/CLTV
Non-Owner Occupied
Ineligible
Topic Guidelines
(NC/SC Flagship Jumbo ARMs) Eligible States of
Origination
NC & SC
Escrow Waiver Available with fee
Assumable No
Convertible No
Buy-downs Not Available
Subordinate Financing Must meet LTV/CLTV Restrictions stated above
Must comply with Fannie Mae Selling Guide for Acceptable Subordinate Financing Types
If the subordinate lien is an equity line of credit, use the line limit to calculate the CLTV
Credit History Minimum two years established credit history is required
3 active trade lines (activity dates less than or equal to 12 months from current date) with 12 months satisfactory history on each trade.
A minimum credit risk score is required. See the LTV/CLTV & Loan Amount topic for minimum score requirements.
Borrower(s) must have a minimum of two credit scores.
Follow any additional automated underwriting guidance Bankruptcy &
Foreclosure
Eligible under specific conditions.
Bankruptcy
48 months from discharge or dismissal date with re-establishment of acceptable credit
Foreclosure
84 months must have passed with re-establishment of acceptable credit Deed-in-Lieu of Foreclosure & Short Sale/Modification
48 months must have passed with re-establishment of acceptable credit
Topic Guidelines
(NC/SC Flagship Jumbo ARMs) Refinance
(Cash-Out)
Primary Residence only
Loan amount limited to:
Current unpaid principal balance, plus
Pay off of any junior liens, plus
Closing costs and prepaid items, plus
Maximum cash-out limit
If the existing first mortgage was originated within 6 months of the application date and was a cash-out transaction, loan must be treated as cash-out
Max cash back in hand to borrower is $250,000
6 month ownership of subject property required for cash-out refinance.
Properties listed for sale within 6 months prior to application are ineligible
Refinance (No Cash-Out) Proceeds used to pay off current first mortgage.
If the existing first mortgage was originated within 6 months of the application date and was a cash-out transaction, loan must be treated as cash-out
Proceeds may be used to pay off junior liens with 12 months seasoning, no draws on home equity lines of credit, unless documentation can be provided to show it was incurred as part of acquisition of home.
The lesser of one percent (1%) or $5,000 incidental cash may be received back by the borrower.
If owned less than 6 months, LTV is based on lesser of the current appraised value or the original purchase price plus the cost of any documented improvements.
Property may not be listed for sale at time of application
Documentation Full Documentation Required – AUS Recommendation Not Applicable
2 months asset statements required
For Self-Employed Borrowers a minimum of 2 years personal and business returns (if applicable), signed by the borrower, including all schedules, K-1s, and statements
A year-to-date profit and loss statement may be required for any self-employed borrower whose application date is more than 120 days after the end of the business’ tax year.
Fully processed 4506-T with Tax Transcripts required for all borrowers, personal and business if applicable
Eligible Funds Down Payment may be from borrower’s own funds or gift
Gifts permitted for Primary Residence only
Required 5% minimum contribution from borrower’s own funds before gift may be used
Retirement accounts calculate at 70% of vested value for down payment/closing costs with proof of liquidation
Topic Guidelines
(NC/SC Flagship Jumbo ARMs) Reserves
Loan Amount Months of PITI
≤ $1, 000,000 6 Months Liquid
> $1,000,000 12 Months Liquid
Liquid assets are those that are readily available to a borrower after the mortgage closes
Exclusive of 401k/SEP accounts, cash out funds, business assets Eligible Borrowers US Citizens
Permanent Resident Aliens
Non-Permanent Aliens (max LTV of 75%)
Occupancy Primary Residence & Second Home
Eligible Property Types 1 – 4 Unit SFD, PUD, & Established Condominium
New condominium projects not eligible
Full Review Only Multiple Property
Ownership
Maximum of four mortgaged residential properties, regardless of occupancy.
4506-T Wholesale
A completed, signed, dated, and unexpired IRS form 4506-T for all borrowers whose income is used to qualify must be included in file submission authorizing South State to obtain income information for all borrowers.
A new 4506-T must be signed at closing.
Correspondent
A completed, signed, dated, and unexpired IRS form 4506-T for all borrowers whose income is used to qualify must be included in file submission.
4506-T is to have been executed by the Correspondent with the transcripts also included in file submission.
A new 4506-T must be signed at closing.
Topic Guidelines
(NC/SC Flagship Jumbo ARMs) Conversion of
Principal Residence
Second Home
Mortgage payment for current residence and new residence must be counted against borrower for qualifying.
6 months PITI for reserve requirements.
Investment Property
If less than 30% equity in current residence then six months PITI for existing primary and six months PITI for new property.
If equity in current residence is greater than or equal to 30% then up to 75% of rental income may be used to qualify. If less, no rental income may be used.
To include rental income, the following must be documented:
Fully executed lease agreement
Security deposit from tenant
Bank statement verifying funds of security deposit
Validation of home value Escrows for Completion Escrows for completion are not allowed
Appraisal Full Interior-Exterior 1004 / 1073 (Condo) required
Market Conditions Addendum 1004MC required
> $1,000,000 loan amount requires 2 appraisals Refinance – Permanent
Financing for an Existing Construction Loan
South State does not provide financing for initial construction loans. The refinance of a construction loan to permanent financing is allowed.
Limited Cash-Out Refinance
Standard Agency refinance guidelines apply.
Maximum LTV based on appraised value and subject to LTV/CLTV restrictions in Refinance Matrix above.
Cash-Out Refinance
Borrower(s) must have held legal title to the lot for at least six months prior to the closing of the permanent mortgage.
All other standard Agency cash-out refinance guidelines apply.
Maximum LTV based on appraised value and subject to LTV/CLTV restrictions in Refinance Matrix above.
Topic Guidelines
(NC/SC Flagship Jumbo ARMs) Caps
Product Max First Adjustment
Max Subsequent Adjustment
Max Life Adjustment
3/1 Libor Jumbo 2% 2% 6%
5/1 Libor Jumbo 5% 2% 5%
7/1 Libor Jumbo 5% 2% 5%
10/1 Libor Jumbo 5% 2% 5%
Margin 2.25%
Index One Year WSJ Libor
Disclosures Appropriate ARM Disclosure is required.
Qualifying Ratios Follow Desktop Underwriter (DU) Findings – Not to exceed 43%
Initial fixed rate period 3 years
Greater of the note rate plus 6% or the fully indexed rate Initial fixed rate period 5 years
Greater of the note rate plus 5% or the fully indexed rate Initial fixed rate period greater than 5 years
Note rate or fully indexed rate
Underwriting Loans must be evaluated by Fannie Mae Desktop Underwriter (DU)
South State Program Guideline supersedes DU findings
Accept/Ineligible required – Ineligible findings are acceptable for reasons in alliance with this guideline
For items not addressed in these guides, Fannie Mae Selling and DU Findings are to be utilized
Manually underwritten loans are not eligible