Non-Subject Properties

How do you handle non-subject properties in Scarlett? There are several different ways that lenders consider non-subject rental properties and rental income, and Scarlett Mortgage is set up to handle any method they may use.

In this video tutorial, we walk through the addition of a non-subject owner occupied property, as well as a rental. Written instructions are below the video.

To edit non-subject property information, click on edit on the applicants who own that property. Then use the hamburger to jump to the properties owned section.

Here you have the option to enter a property owned by applicant one or applicant two. If they own one jointly, you can put it in under applicant one or applicant two. It doesn't matter.

Once you click the add property, you have the ability to enter in the address, property value, occupancy, and property taxes, heating costs, and any applicable condo fees.

To exclude taxes, condo fees & heat from ratios, you simply uncheck the "Include in TDS calculation" box located above those expenses.

To add a mortgage, you click the "Add Mortgage" button underneath that property information. You can add as many mortgage as needed, if the property has more than one.

Within that mortgage information, you would enter in the balance, payment amount, and payment frequency, as well as any other known information about that mortgage.

Entering the property and mortgage into this properties owned section automatically enters in values for the property in both the Assets and Liabilities section of the mortgage application. They will appear grayed out, as they must be edited in the Properties Owned section.

To add another property, you repeat this process.

If you indicate the occupancy as "Rental" or "Owner-Occupied Rental" more options will appear under the property to account for additional costs you may need to include in ratios, and the rental income.

The rental income comes with three options for how to include that income in the file:

1. None

2. Add Percentage to Gross Income

3. Reduce Rental exp., add bal to Gross Inc.

Depending on the lender you are sending the file to, they will have different approaches to rental income.

To remove a property entirely from ratio so that you can use a rental worksheet, you would:

1. Uncheck the "Include in TDS calculation"

2. Set Rental Income Options to "None"

3. Indicate the mortgage(s) as "Prior to Advance" in the Payoff Options

Depending on whether your rental worksheet comes out to a positive or negative, you would either:

1. Go to the Liabilities section and add a liability using type "Other" and enter in the rental loss

2. Go to the Other Income section and add an income source using type "Other" and enter in the rental surplus.

If your lender uses a rental wash calculation instead of a worksheet, you would enter the wash surplus or deficit in the same way.

Remember that you can always click on the TDS window for a popup detailing the inclusions within that ratio.

These steps would remain the same regardless of the number of non-subject properties on the file.