07.16.2014 | NEWREZ, LLC | DELAYED FINANCING | Pg. 1
NewRez
Delayed Financing Job Aid
Delayed financing is a special type of cash-out refinance
where borrowers are exempt from the 6 month waiting
period typically required to enter into a cash-out refinance
transaction.
TABLE OF CONTENTS
What Is Delayed Financing?
Conventional DU or LP
Portfolio- Jumbo Advantage
What Is Delayed Financing?
Delayed financing is a special type of cash-out refinance where borrowers are exempt from the 6 month
waiting period typically required to enter into a cash-out refinance transaction. What’s the catch? The
borrower must have purchased the home with their own funds; there may not be any liens secured against
the property.
This is particularly common in competitive real estate markets where borrowers need to act fast. All-cash
buyers have a better chance of standing out from competing bids and getting the home at a lower price since
their offer isn't contingent on financing.
Another example where delayed financing can be applied is an “un-lendable” foreclosure property. Homes
without running water, for example, are un-lendable because no person could reasonably live there and
property standards are not met. The same is true for homes with broken windows, lead paint, or a busted
roof. Via a Delayed Financing transaction, a buyer can purchase a home with cash, make the necessary home
repairs, and then re-coup their initial cash investment.
There are specific underwriting requirements that must be met when looking to complete a delayed financing
transaction. They vary by loan program and are summarized below:
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Conventional DU or LP
Loans are qualified and priced as cash-out refinances
Purpose of Refinance must be input as “Cash-out”
No longer than 6 months has elapsed since the original cash acquisition of the property (measured
from the date on which the property was purchased to the disbursement date of the new mortgage
loan)
The original purchase transaction must have been an arm’s length transaction documented by an
executed HUD-1 Settlement statement confirming that no mortgage financing was used to obtain the
subject property.
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NewRez
Delayed Financing Job Aid
The preliminary title search/report must reflect the Borrower as the owner of the subject property and
must reflect that there are no liens on the property
The source of funds for the purchase transaction must be fully documented (examples: bank
statements, personal loan documents, or a HELOC on another property).
The new loan amount can be no more than the actual documented amount of the borrower's initial
investment in purchasing the property plus the financing of closing costs, prepaid fees, and points on
the new mortgage loan (subject to the maximum LTV/CLTV/HCLTV ratios for the cash-out transaction
based on the current appraised value).
For additional details and requirements, visit Section B2-1.2-03 of the FNMA Selling Guide or Chapter
24.6 of the FHLMC Selling Guide.
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Portfolio: Jumbo Advantage
Loans are qualified as Rate & Term Refinances (Maximum Loan Amount, FICO, LTV, DTI), allowing for
maximum financing.
Loans are priced in Marksman under the Jumbo Advantage Delayed Financing Programs
The Purpose of Refinance in the system must be input as “Shellpoint Delayed Financing” – this allows
the loan to be underwritten as a rate & term refinance, but moved through the system as a cash-out
No longer than 6 months has elapsed since the original cash acquisition of the property
The new loan amount can be no more than the actual documented amount of the borrower's initial
investment in purchasing the property plus the financing of closing costs, prepaid fees, and points on
the new mortgage loan (subject to the maximum LTV/CLTV/HCLTV ratios for a rate and term refinance
based on the lessor of the purchase price or the current appraised value).
The maximum cash back to the borrower may exceed the standard $400,000 maximum cash back for
a cash-out transaction
Property must have been purchased using the borrower(s) own funds
An executed HUD-1 from the original purchase and documentation to show the down payment and
closing costs used for the purchase were from the borrower’s own funds (no borrowed, gift, or
shared funds)
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All loans are subject to credit and property approval. Programs,
rates, terms and conditions are subject to change without notice.
Other restrictions apply. New Penn Financial NMLS# 3013. Equal
Housing Lender.
