Loan impact
Summarized from the announcement · verifiedApplies to: Edge Alt Income loans utilizing CPA profit and loss statements, alongside DSCR and closed-end second mortgage offerings.
- Addressed to
- Arc Home wholesale brokersFrom the publisher, not quoted from the text
- Investor
- ArchomeFrom the publisher, not quoted from the text
- Affected areas
- Score; Self employed; Eligibility; Ltv; Products
- Affected documents
- Certified public accountant profit and loss statements; originator licensing documentation
- Effective
- Sep 3, 2026
- Applicability confidence
- Verified: every row taken from the source text is supported by it; rows marked "from the publisher" are not quoted
Summary by AWACS. Arc Home's guide is proprietary, so AWACS does not reproduce its text. Read the official announcement ↗ (opens in a new tab)
What changed
Summarized from the announcement| Requirement | Previously | Now |
|---|---|---|
| CPA prepared profit and loss documentation criteriaTightenedRequired | Previously: Loans without bank records previously allowed up to 2 million dollars with an 80 percent maximum loan-to-value, or 75 percent under certain credit score thresholds. | For files with bank records, maximum loan-to-value is 80 percent, falling to 75 percent when the credit score falls below 720. For files without bank statements, the loan amount is limited to 1 million dollars with a 75 percent maximum loan-to-value and a 700 minimum credit score. |
| Tennessee DSCR originations without a state broker or LO licenseRelaxed | Not stated | Brokers and their LOs may now originate Tennessee DSCR loans without a Tennessee broker or LO license when the loan term is greater than 180 months (same for correspondent sellers) |
| Geographic eligibility footprint for closed-end second mortgagesRelaxed | Not stated | Wholesale second lien eligibility is expanded to include Connecticut, Louisiana, and Minnesota. |
What to do
AWACS interpretation · not source languageWhat to review: Review the mandatory CPA profit and loss underwriting limits for Edge Alt Income loans effective 2026-09-03 first, followed by the expanded state eligibility guidelines for DSCR and closed-end second mortgages.
Effective 2026-09-03, enforce the updated Edge Alt Income CPA profit and loss requirements by limiting loan-to-value to 80 percent or 75 percent for credit scores below 720 when bank records are provided, and capping loans without bank statements at 1 million dollars, 75 percent loan-to-value, and a 700 minimum credit score.
QC implications
- Test Edge Alt Income loan files using CPA profit and loss statements on or after 2026-09-03 to confirm loan-to-value caps, credit score minimums, and maximum loan amounts are met according to bank record documentation status.
- For Tennessee DSCR loans originated by a broker or LO without a Tennessee license, verify the loan term is greater than 180 months, and validate closed-end second liens originated in Connecticut, Louisiana, and Minnesota.
Source and record
Version 2 · archivedChecks
Source verified: Passed
The document ID, link and publication date match the official source.
Quotes match the source: Passed, adjusted automatically
Every quoted passage appears word for word in the official document.
- A detail the source does not support was removed or adjusted
Requirements backed by the source: Passed
Anything marked required is backed by the requirement language and dates in the source.
In scope: Passed
The document is about residential mortgage lending.
Format and labels: Passed
The record follows the AWACS format and uses its standard labels.
Source
Version history
- Version 2 (current)Recorded
- Title updated
- Summary updated
- Version 1Recorded