Open Lending, LLC FAQs

This is sample content to show you the capabilities of Desk.com's dynamic articles. The articles and questions are driven from the multi-channel knowledge base to ensure that your customer's receive a consistent response. To find out more, visit our website. To make the Portal look like your website, read the Desk.com Customizing Portal Themes Article To change the content to be your own, read the Desk.com Managing Knowledge Base Articles. The Articles can contain rich content such as pictures or videos.

Standard paystub requirement: ? At least one recent paycheck stub or electronic direct deposit (ACH) confirmation document issued within 30 days prior to loan funding. The document should show, at a minimum: (1) the pay period date range, (2) gross pay amount for that pay period, (3) employer name, (4) year-to-date gross compensation, and (5) payee name. If year-to-date totals are missing from the paycheck stub, the lender must obtain 2 recent paystubs from the previous 60 days. If the year-to-date amounts, when divided out over the elapsed number of pay periods, do not validate the current monthly gross pay amounts, the lender should obtain an explanation of why this has occurred. Notes may then be retained with the loan record to indicate why there is a discrepancy. Special requirement effective in January and February of each year: obtain paycheck stub from final pay period of previous year showing year-to-date earnings for previous year. Confirmation of year-to-date earnings is an important aspect of proof-of-income documentation. Handwritten paystub: ? These require an accompanying letter of employment and one of the following: (1) most recent two months bank statements showing deposits and (2) most recent two months cancelled checks (copies front and back). If checks were not deposited to any account, then copies of the most recent 3 paychecks are required (cancelled or not cancelled). Length of employment less than 60 days: ? At least one paycheck stub must be provided. A letter of employment may be provided in lieu of the second paycheck stub that must (1) be typed on company letterhead, (2) include an employer contact name, title and phone number, (3) be signed by the contact listed and (4) indicate the amount of gross pay per pay period and (5) the length of each pay period (i.e. weekly, bi-weekly, semi-monthly, monthly). In general, overtime pay should not be included in the gross monthly income amount for applicants employed less than 60 days Temporary Employment and Employment by Temporary Agencies: ? In general, income from temporary employment is not considered stable enough to be used to qualify for an application approval. However, if the borrower can demonstrate extended and regular employment at a temporary agency or temporary position over a period of 6 months or more, and can provide adequate verification of regular income from that source, it is permissible to include that income in the application. The applicant must provide at least 3 paychecks stubs and the verifiable amount will be considered the lowest monthly amount of the three.

(When borrower has voluntarily chosen to disclose this source of income) Obtain copies of court-related or government-related documents (include state attorney general’s office documents or payment statements, where available) showing the amount, frequency and duration of payments to be made to the borrower, AND recent documentation, no more than 60 days old, that shows that those court awarded payments have been made for the past 6 months. Acceptable documents to verify receipt of these payments are copies of payment checks or copies of financial institution statements that clearly show payments have been made to the borrower’s account(s). In those cases where these payments are facilitated by a state agency, a payment summary from the agency meets these requirements. It is permissible to “gross up” net payment amounts from alimony, child support and similar payments where no taxes are withheld. The lender may take the net payment amount and multiply it by 120% in order to generate an estimated gross income amount. This gross amount can then be entered for applicant income in Lend Pro.

Indirect auto loan – A contracted loan obligation that is created when a borrower submits initial credit application information directly to an auto dealer, either in person, online or through similar method, and, upon approval, the loan documents are signed at the dealership generally on a retail installment contract that is chosen and completed by the dealer. Indirect loans are usually contracted between the dealer (seller) and buyer and the contract is subsequently sold and assigned to a particular lender. Direct auto loan – A contracted loan obligation where the borrower submits an initial credit application directly to the lender or to a contracted agent or representative of the lender that is not an auto dealership or broker (such as a call center, online application site or loan processing firm that is an outsourced provider for one or more lenders) either in person, online or via other method. Underwriting and gathering of required documents (proof of income, for example) are performed by the lender or its designated representative (such as a call center, online application site or loan processing firm), except that the designated representative cannot be an auto dealership or broker. Upon approval the loan may be closed by the lender or its representative, in person, by mail, electronically, at a dealership or other location.

Copies of last two years filed federal tax returns, including all attachments and schedules. As an alternative, a copy of the most recently filed federal tax return plus a professionally prepared profit/loss financial statement that includes year-to-date totals and displays the name, address and contact information for the professional preparer of the financial statement. The gross income amount from the two tax returns or financial statement is averaged for underwriting purposes. Tax return information provided must support and verify the gross income amount(s) presented on the loan application. The following general formula may be used to derive gross income from an individual or joint 1040 tax return and the associated schedules: 1) Begin with applicant’s adjusted gross income 2) The following may be added to the adjusted gross income figure: ? Tax-exempt interest income ? Schedule C, Business Income or Loss - Depletion and Depreciation ? Non-taxable IRA, Pension, Annuity, Social Security distributions ? Schedule E and F - Depreciation ? IRA Deductions ? Self-Employed Health Insurance costs ? Keogh Retirement Plan withdrawals ? Penalties For Early Withdrawal ? Form 4562 Amortization and Form 8582 Carryovers 3) Subtract from this figure: ? Meals and entertainment exclusion on Schedule C ? Any unemployment compensation ? Form 2106 unreimbursed expenses (not fully deductible) ? Form 8582 un-allowed Losses 4) The resulting figure may be used as the gross income amount for that tax year or period of time covered by the tax return.

New vehicle - A program-eligible motor vehicle that is of the most recent available model year or previous model year, has never been titled, and has less than 5,000 miles on the odometer. When new models are released, Lenders Protection will consider them “new” through August 31 of the following year, provided they have not been titled and have fewer than 5,000 miles. When the new models are released, they are considered “new” as are the prior year models, provided they have never been titled and have no more than 5,000 miles. (Example: 2011 models may be considered “new” through August 31, 2012 if they have never been titled and have fewer than 5,000 miles.) Used vehicle - Any program-eligible vehicle that has been titled, regardless of age or mileage, is considered used. Any vehicle with greater than 5,000 miles use is considered used. Lenders Protection currently accepts used vehicles up to 9 model years old. The effective date for measuring the 9 model years is January 1 of each year. However, any applications approved by Lenders Protection prior to January 1 will continue to be eligible for coverage through the expiration of the approval. (Example: During all of 2013 vehicles from model year 2004 and newer are eligible for the Program (subject to a limit of 150,000 miles). On January 1, 2014, 2004 vehicles will no longer be eligible for the Program, but any loans that were approved prior to January 1 that involve 2004 vehicles may still be certified through the date that the approval expires.) Commercial vehicle – The default insurance policy states that commercial vehicles are not eligible for coverage under the program. In terms of vehicle size and type, the policy allows for vehicles used for personal, non-commercial purposes, including cars, light pick-up trucks, vans and utility vehicles. In terms of weight and capacity, these insurable light-trucks, vans and utility vehicles can be better defined as those with Gross Vehicle Weight Rating (GVWR) of 14,000 pounds or less and cargo capacity of 1 ton or less, provided they are used for personal purposes. Vehicles that have more than a 1 ton cargo capacity or GVWR above 14,000 pounds are considered commercial vehicles. In general terms, domestic pick-up trucks with model numbers in the 350/3500 categories and smaller, along with their foreign equivalents, are considered light trucks provided they do not have a cargo capacity exceeding 1 ton. “Commercial vehicle” is also any vehicle that is used for commercial purposes.

FICO: - 680+ = $45,000 before back ends, All In: $49,000 - 620-679 = $40,000 before back ends, All in: $44,000 - 560-619 = $35,000 before back ends, All in: $39,000

? The Lenders Protection Program online system will clearly indicate on a per loan basis when proof of income (POI) is required for either a direct or indirect loan. ? The Lenders Protection Program online system will clearly indicate on a per loan basis the PTI and DTI financial ratio guidelines for either a direct or indirect loan. ? The Lenders Protection system calculates a debt-to-income ratio and payment-to-income ratio based on the borrower’s gross income. Use of net income in Lend Pro will result in ratios that are higher which could result in an application being denied or counter-offered due to high DTI or PTI ratios (see information below on “grossing up” net income). ? When proof of income is required, it must be provided for each borrower shown on the application. As stated above, the best business practice is to obtain proof of income based on the applicant’s gross monthly income. ? If only net income is available and POI can be obtained to verify net income, it is permissible to “gross up” the net income number by taking the monthly net income and multiplying that by 120%. The resulting estimated gross income may be used in Lend Pro applications (except as noted for certain types of income as outlined below). ? The borrower’s name must appear on all documentation submitted as proof of income. ? Documentation must be unaltered, complete and legible. Proof of income must be retained in the loan file throughout the life of the loan. It can be stored in electronic format provided that it can be reproduced and delivered as a legible paper copy when needed. ? Proof of income documentation must be provided when filing a default insurance claim ? It is acceptable to include overtime pay in the gross income amount for an applicant provided that (1) the applicant typically earns overtime pay each pay period as reflected in the year-todate income totals, and (2) the applicant has been employed at least 60 days. ? In some cases, sources of income may be limited in term and duration. For example, income that is derived from a contractual arrangement or government payment may have a specific time limit or end date. In general, the lender should not consider such temporary income valid for Lenders Protection purposes unless it can be shown that the income period is at least as long as the requested and approved term of the loan. ? Income from unemployment benefits is not considered a valid source of income for repayment of debts since it is always temporary in nature. ? Pay amounts stated as bi-weekly, semi-monthly, annual or weekly amounts should be converted to monthly amounts for use in Lend Pro. ? The following conversions may be used: o Weekly amounts are multiplied by 52 and the result divided by 12 o Bi-weekly amounts are multiplied by 26 and the result divided by 12 o Semi-monthly amounts are multiplied by 2 o Annual amounts are divided by 12 ? Employer payments for auto allowance (mileage) are generally not accepted as verifiable income sources since they may be variable over time.