Underwriting Guidelines, What are they anyway?

Okay we know that just having a pulse doesn't work any more. And we know that the programs are no longer tailor made to meet evey applicants individual needs. BUT;

What are the guidelines now, anyway?

Conventional;

We still have Fannie Mae and Freddie Mac guidelines as a basis, and we still use automated approvals as an approval basis, but they don't stand alone as approval criteria anymore. Now we also have guidelines which are established by and enforced by the individual lenders. Company policies, so to speak. A Loan Officer or Underwriter may state that, that's a Fannie Mae guideline, but that may often not be the case.

Also, in many cases we have guidelines/requirements attached to our warehouse lines. A warehouse line is used to fund a loan, while it is waiting to be sold. Because some companies failed, and still had millions on their warehouse lines, the warehouse lenders put on additional restrictions, so they would be could be sold, in the event that the warehouse lender was stuck with the loan.

The adding of guidelines is often referred to as layering and varies from one entity to another. In my opinion, this practice of, and by itself supports the need for more sources, such as mortgage brokers, to sift through the layering and identify a lending source that fits, or feels comfortable with a buyers needs.

Government;

FHA, VA, USDA/RD are all govern(mental) lending systems and as such you would think that they would be more consistent. You would be thinking wrong.

They do all offer a low and/or no downpayment option, which is greatly needed in todays market.

They do have different ways of looking at the property, which in my market specifically, has played an important role. We've had a lot of foreclosures, so on an FHA loan look out for;

Flipping

There will be no FHA loan in most cases unless the property has been held for 90 days. Then we need two appraisals up to 120 days.

For whatever reason VA and USDA/RD do not have that guideline. Why not? You figure it out, because I don't know.

What about their other guidelines? Let me sum it up as nicely and as simply as possible.

The govern(mental) guidelines are whatever the underwriter says they are!

That's it in a nutshell!

Is it consistent? No. Fair? No. Insane? Maybe (yes came close as an answer).

So when I'm asked;

What are the guidelines, anyway?

Sometimes the proper answer is;

I'm not sure!