HGF Solutions FAQ

REO Section of the 1003 Explained

  1. Subject Property – this box will only need to be checked in the case that you are doing a refinance of the listed property.
  1. Property is used as – this needs to reflect the occupancy of the property after closing. If the home is currently a primary, but the borrower is purchasing a new primary and this will not be sold prior to closing, it needs to be listed as an Investment Property.
  1. Attach/Show Liens – anytime there is a mortgage on the property, it must be attached to the property, using this button.
  1. Present Market Value – the present market value of the property
  1. The Mortgage Balance and Mortgage Payment will both be automatically populated once the mortgage is tied to the property via step 3.
  1. Property Status – S = Sold, PS = Pending Sale, R = Rental Property If the property doesn’t fall into any of these categories, i.e. a primary residence that is remaining a primary residence, nothing needs to be selected.
  1. Type of Property – Single Family, Condo, etc.
  1. Purchase Price – The original purchase price of the property
  1. Date Acquired – The original purchase date of the property
  1. Gross Rental Income – this should be the amount of the rental income with all expenses removed, EXCEPT for the mortgage payment, taxes and insurance, if calculated from the tax returns. If the rental income is not on the tax returns and your are using a lease, this should be the full amount of the lease payment.
  1. Taxes, Ins, Expenses – all of the expenses on the property that are not included in the mortgage payment. Taxes, Insurance, HOA
  1. Percentage of Rental - When using the gross rent from a lease agreement or rent schedule, this number should be 75%, as it will calculate based on potential expenses that the borrower may file on their tax returns. If you are calculating the rental income from the tax returns, this should be 100%, as the expenses have already been deducted.
  1. Participation % - this is used when the borrower is a co-owner of an investment property with the 2nd borrower on a loan. This is rarely ever used.
  1. Net Income/Loss – the system will calculate this based on the information previously entered.

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