diff --git a/pkg/engine/overlay.go b/pkg/engine/overlay.go
index a0107b7799..7fea8f4cec 100644
--- a/pkg/engine/overlay.go
+++ b/pkg/engine/overlay.go
@@ -6,6 +6,7 @@ import (
 	"fmt"
 	"reflect"
 	"strconv"
+	"strings"
 
 	"github.com/golang/glog"
 
@@ -19,19 +20,27 @@ import (
 func ProcessOverlay(rule kubepolicy.Rule, rawResource []byte, gvk metav1.GroupVersionKind) ([][]byte, error) {
 
 	var resource interface{}
-	var appliedPatches [][]byte
-	err := json.Unmarshal(rawResource, &resource)
-	if err != nil {
+	if err := json.Unmarshal(rawResource, &resource); err != nil {
 		return nil, err
 	}
 
-	patches, err := mutateResourceWithOverlay(resource, *rule.Mutation.Overlay)
-	if err != nil {
-		return nil, err
+	resourceInfo := ParseResourceInfoFromObject(rawResource)
+	patches, err := processOverlayPatches(resource, *rule.Mutation.Overlay)
+	if err != nil && strings.Contains(err.Error(), "Conditions are not met") {
+		glog.Infof("Resource does not meet conditions in overlay pattern, resource=%s, rule=%s\n", resourceInfo, rule.Name)
+		return nil, nil
 	}
-	appliedPatches = append(appliedPatches, patches...)
 
-	return appliedPatches, err
+	return patches, err
+}
+
+func processOverlayPatches(resource, overlay interface{}) ([][]byte, error) {
+
+	if !meetConditions(resource, overlay) {
+		return nil, errors.New("Conditions are not met")
+	}
+
+	return mutateResourceWithOverlay(resource, overlay)
 }
 
 // mutateResourceWithOverlay is a start of overlaying process
diff --git a/pkg/engine/overlayCondition.go b/pkg/engine/overlayCondition.go
index ac5e062182..c08128d699 100755
--- a/pkg/engine/overlayCondition.go
+++ b/pkg/engine/overlayCondition.go
@@ -143,7 +143,12 @@ func isConditionMet(resource []interface{}, anchors map[string]interface{}) bool
 				continue
 			}
 
-			if ValidateValueWithPattern(value, pattern) {
+			if len(resource) == 1 {
+				if !ValidateValueWithPattern(value, pattern) {
+					return false
+				}
+			} else {
+				ValidateValueWithPattern(value, pattern)
 				return true
 			}
 		}
diff --git a/pkg/engine/overlayPatch.go b/pkg/engine/overlayPatch.go
index 2a435d85a8..73c8ad9f47 100644
--- a/pkg/engine/overlayPatch.go
+++ b/pkg/engine/overlayPatch.go
@@ -2,7 +2,6 @@ package engine
 
 import (
 	"encoding/json"
-	"errors"
 	"strings"
 
 	"github.com/golang/glog"
@@ -24,12 +23,3 @@ func patchOverlay(rule kubepolicy.Rule, rawResource []byte) ([][]byte, error) {
 
 	return patches, err
 }
-
-func processOverlayPatches(resource, overlay interface{}) ([][]byte, error) {
-
-	if !meetConditions(resource, overlay) {
-		return nil, errors.New("Conditions are not met")
-	}
-
-	return mutateResourceWithOverlay(resource, overlay)
-}
diff --git a/pkg/engine/overlayPatch_test.go b/pkg/engine/overlayPatch_test.go
deleted file mode 100644
index 4d07c5da13..0000000000
--- a/pkg/engine/overlayPatch_test.go
+++ /dev/null
@@ -1,587 +0,0 @@
-package engine
-
-import (
-	"encoding/json"
-	"testing"
-
-	jsonpatch "github.com/evanphx/json-patch"
-	"gotest.tools/assert"
-)
-
-func TestProcessOverlayPatches_NestedListWithAnchor(t *testing.T) {
-	resourceRaw := []byte(`
-	 {  
-		"apiVersion":"v1",
-		"kind":"Endpoints",
-		"metadata":{  
-		   "name":"test-endpoint",
-		   "labels":{  
-			  "label":"test"
-		   }
-		},
-		"subsets":[  
-		   {  
-			  "addresses":[  
-				 {  
-					"ip":"192.168.10.171"
-				 }
-			  ],
-			  "ports":[  
-				 {  
-					"name":"secure-connection",
-					"port":443,
-					"protocol":"TCP"
-				 }
-			  ]
-		   }
-		]
-	 }`)
-
-	overlayRaw := []byte(`
-	 {  
-		"subsets":[  
-		   {  
-			  "ports":[  
-				 {  
-					"(name)":"secure-connection",
-					"port":444,
-					"protocol":"UDP"
-				 }
-			  ]
-		   }
-		]
-	 }`)
-
-	var resource, overlay interface{}
-
-	json.Unmarshal(resourceRaw, &resource)
-	json.Unmarshal(overlayRaw, &overlay)
-
-	patches, err := processOverlayPatches(resource, overlay)
-	assert.NilError(t, err)
-	assert.Assert(t, patches != nil)
-
-	patch := JoinPatches(patches)
-	decoded, err := jsonpatch.DecodePatch(patch)
-	assert.NilError(t, err)
-	assert.Assert(t, decoded != nil)
-
-	patched, err := decoded.Apply(resourceRaw)
-	assert.NilError(t, err)
-	assert.Assert(t, patched != nil)
-
-	expectedResult := []byte(`
-	 {  
-		"apiVersion":"v1",
-		"kind":"Endpoints",
-		"metadata":{  
-		   "name":"test-endpoint",
-		   "labels":{  
-			  "label":"test"
-		   }
-		},
-		"subsets":[  
-		   {  
-			  "addresses":[  
-				 {  
-					"ip":"192.168.10.171"
-				 }
-			  ],
-			  "ports":[  
-				 {  
-					"name":"secure-connection",
-					"port":444.000000,
-					"protocol":"UDP"
-				 }
-			  ]
-		   }
-		]
-	 }`)
-
-	compareJSONAsMap(t, expectedResult, patched)
-}
-
-func TestProcessOverlayPatches_InsertIntoArray(t *testing.T) {
-	resourceRaw := []byte(`
-	 {  
-		"apiVersion":"v1",
-		"kind":"Endpoints",
-		"metadata":{  
-		   "name":"test-endpoint",
-		   "labels":{  
-			  "label":"test"
-		   }
-		},
-		"subsets":[  
-		   {  
-			  "addresses":[  
-				 {  
-					"ip":"192.168.10.171"
-				 }
-			  ],
-			  "ports":[  
-				 {  
-					"name":"secure-connection",
-					"port":443,
-					"protocol":"TCP"
-				 }
-			  ]
-		   }
-		]
-	 }`)
-	overlayRaw := []byte(`
-	 {  
-		"subsets":[  
-		   {  
-			  "addresses":[  
-				 {  
-					"ip":"192.168.10.172"
-				 },
-				 {  
-					"ip":"192.168.10.173"
-				 }
-			  ],
-			  "ports":[  
-				 {  
-					"name":"insecure-connection",
-					"port":80,
-					"protocol":"UDP"
-				 }
-			  ]
-		   }
-		]
-	 }`)
-
-	var resource, overlay interface{}
-
-	json.Unmarshal(resourceRaw, &resource)
-	json.Unmarshal(overlayRaw, &overlay)
-
-	patches, err := processOverlayPatches(resource, overlay)
-	assert.NilError(t, err)
-	assert.Assert(t, patches != nil)
-
-	patch := JoinPatches(patches)
-
-	decoded, err := jsonpatch.DecodePatch(patch)
-	assert.NilError(t, err)
-	assert.Assert(t, decoded != nil)
-
-	patched, err := decoded.Apply(resourceRaw)
-	assert.NilError(t, err)
-	assert.Assert(t, patched != nil)
-
-	expectedResult := []byte(`{  
-		"apiVersion":"v1",
-		"kind":"Endpoints",
-		"metadata":{  
-		   "name":"test-endpoint",
-		   "labels":{  
-			  "label":"test"
-		   }
-		},
-		"subsets":[  
-		   {  
-			  "addresses":[  
-				 {  
-					"ip":"192.168.10.171"
-				 }
-			  ],
-			  "ports":[  
-				 {  
-					"name":"secure-connection",
-					"port":443,
-					"protocol":"TCP"
-				 }
-			  ]
-		   },
-		   {  
-			  "addresses":[  
-				 {  
-					"ip":"192.168.10.172"
-				 },
-				 {  
-					"ip":"192.168.10.173"
-				 }
-			  ],
-			  "ports":[  
-				 {  
-					"name":"insecure-connection",
-					"port":80,
-					"protocol":"UDP"
-				 }
-			  ]
-		   }
-		]
-	 }`)
-
-	compareJSONAsMap(t, expectedResult, patched)
-}
-
-func TestProcessOverlayPatches_TestInsertToArray(t *testing.T) {
-	overlayRaw := []byte(`
-	 {  
-		"spec":{  
-		   "template":{  
-			  "spec":{  
-				 "containers":[  
-					{  
-					   "name":"pi1",
-					   "image":"vasylev.perl"
-					}
-				 ]
-			  }
-		   }
-		}
-	 }`)
-	resourceRaw := []byte(`{  
-		"apiVersion":"batch/v1",
-		"kind":"Job",
-		"metadata":{  
-		   "name":"pi"
-		},
-		"spec":{  
-		   "template":{  
-			  "spec":{  
-				 "containers":[  
-					{  
-					   "name":"piv0",
-					   "image":"perl",
-					   "command":[  
-						  "perl"
-					   ]
-					},
-					{  
-					   "name":"pi",
-					   "image":"perl",
-					   "command":[  
-						  "perl"
-					   ]
-					},
-					{  
-					   "name":"piv1",
-					   "image":"perl",
-					   "command":[  
-						  "perl"
-					   ]
-					}
-				 ],
-				 "restartPolicy":"Never"
-			  }
-		   },
-		   "backoffLimit":4
-		}
-	 }`)
-
-	var resource, overlay interface{}
-
-	json.Unmarshal(resourceRaw, &resource)
-	json.Unmarshal(overlayRaw, &overlay)
-
-	patches, err := processOverlayPatches(resource, overlay)
-	assert.NilError(t, err)
-	assert.Assert(t, patches != nil)
-
-	patch := JoinPatches(patches)
-
-	decoded, err := jsonpatch.DecodePatch(patch)
-	assert.NilError(t, err)
-	assert.Assert(t, decoded != nil)
-
-	patched, err := decoded.Apply(resourceRaw)
-	assert.NilError(t, err)
-	assert.Assert(t, patched != nil)
-}
-
-func TestProcessOverlayPatches_ImagePullPolicy(t *testing.T) {
-	overlayRaw := []byte(`{
-		"spec": {
-			"template": {
-				"spec": {
-					"containers": [
-						{
-							"(image)": "*:latest",
-							"imagePullPolicy": "IfNotPresent",
-							"ports": [
-								{
-									"containerPort": 8080
-								}
-							]
-						}
-					]
-				}
-			}
-		}
-	}`)
-	resourceRaw := []byte(`{
-		"apiVersion": "apps/v1",
-		"kind": "Deployment",
-		"metadata": {
-			"name": "nginx-deployment",
-			"labels": {
-				"app": "nginx"
-			}
-		},
-		"spec": {
-			"replicas": 1,
-			"selector": {
-				"matchLabels": {
-					"app": "nginx"
-				}
-			},
-			"template": {
-				"metadata": {
-					"labels": {
-						"app": "nginx"
-					}
-				},
-				"spec": {
-					"containers": [
-						{
-							"name": "nginx",
-							"image": "nginx:latest",
-							"ports": [
-								{
-									"containerPort": 80
-								}
-							]
-						},
-						{
-							"name": "ghost",
-							"image": "ghost:latest"
-						}
-					]
-				}
-			}
-		}
-	}`)
-
-	var resource, overlay interface{}
-
-	json.Unmarshal(resourceRaw, &resource)
-	json.Unmarshal(overlayRaw, &overlay)
-
-	patches, err := processOverlayPatches(resource, overlay)
-	assert.NilError(t, err)
-	assert.Assert(t, len(patches) != 0)
-
-	doc, err := ApplyPatches(resourceRaw, patches)
-	assert.NilError(t, err)
-	expectedResult := []byte(`{  
-		"apiVersion":"apps/v1",
-		"kind":"Deployment",
-		"metadata":{  
-		   "name":"nginx-deployment",
-		   "labels":{  
-			  "app":"nginx"
-		   }
-		},
-		"spec":{  
-		   "replicas":1,
-		   "selector":{  
-			  "matchLabels":{  
-				 "app":"nginx"
-			  }
-		   },
-		   "template":{  
-			  "metadata":{  
-				 "labels":{  
-					"app":"nginx"
-				 }
-			  },
-			  "spec":{  
-				 "containers":[  
-					{  
-					   "image":"nginx:latest",
-					   "imagePullPolicy":"IfNotPresent",
-					   "name":"nginx",
-					   "ports":[  
-						  {  
-							 "containerPort":80
-						  },
-						  {  
-							 "containerPort":8080
-						  }
-					   ]
-					},
-					{  
-					   "image":"ghost:latest",
-					   "imagePullPolicy":"IfNotPresent",
-					   "name":"ghost",
-					   "ports":[  
-						  {  
-							 "containerPort":8080
-						  }
-					   ]
-					}
-				 ]
-			  }
-		   }
-		}
-	 }`)
-
-	compareJSONAsMap(t, expectedResult, doc)
-}
-
-func TestProcessOverlayPatches_AddingAnchor(t *testing.T) {
-	overlayRaw := []byte(`{
-		"metadata": {
-			"name": "nginx-deployment",
-			"labels": {
-				"+(app)": "should-not-be-here",
-				"+(key1)": "value1"
-			}
-		}
-	}`)
-	resourceRaw := []byte(`{
-		"metadata": {
-			"name": "nginx-deployment",
-			"labels": {
-				"app": "nginx"
-			}
-		}
-	}`)
-
-	var resource, overlay interface{}
-
-	json.Unmarshal(resourceRaw, &resource)
-	json.Unmarshal(overlayRaw, &overlay)
-
-	patches, err := processOverlayPatches(resource, overlay)
-	assert.NilError(t, err)
-	assert.Assert(t, len(patches) != 0)
-
-	doc, err := ApplyPatches(resourceRaw, patches)
-	assert.NilError(t, err)
-	expectedResult := []byte(`{  
-		"metadata":{  
-		   "labels":{  
-			  "app":"nginx",
-			  "key1":"value1"
-		   },
-		   "name":"nginx-deployment"
-		}
-	 }`)
-
-	compareJSONAsMap(t, expectedResult, doc)
-}
-
-func TestProcessOverlayPatches_AddingAnchorInsideListElement(t *testing.T) {
-	overlayRaw := []byte(`
-	{
-		"spec": {
-			"template": {
-				"spec": {
-					"containers": [
-						{
-							"(image)": "*:latest",
-							"+(imagePullPolicy)": "IfNotPresent"
-						}
-					]
-				}
-			}
-		}
-	}`)
-	resourceRaw := []byte(`
-	{
-		"apiVersion":"apps/v1",
-		"kind":"Deployment",
-		"metadata":{
-			"name":"nginx-deployment",
-			"labels":{
-				"app":"nginx"
-			}
-		},
-		"spec":{
-			"replicas":1,
-			"selector":{
-				"matchLabels":{
-					"app":"nginx"
-				}
-			},
-			"template":{
-				"metadata":{
-					"labels":{
-						"app":"nginx"
-					}
-				},
-				"spec":{
-					"containers":[
-						{
-							"image":"nginx:latest"
-						},
-						{
-							"image":"ghost:latest",
-							"imagePullPolicy":"Always"
-						},
-						{
-							"image":"debian:10"
-						},
-						{
-							"image":"ubuntu:18.04",
-							"imagePullPolicy":"Always"
-						}
-					]
-				}
-			}
-		}
-	}`)
-
-	var resource, overlay interface{}
-
-	json.Unmarshal(resourceRaw, &resource)
-	json.Unmarshal(overlayRaw, &overlay)
-
-	patches, err := processOverlayPatches(resource, overlay)
-	assert.NilError(t, err)
-	assert.Assert(t, len(patches) != 0)
-
-	doc, err := ApplyPatches(resourceRaw, patches)
-	assert.NilError(t, err)
-	expectedResult := []byte(`
-	{
-		"apiVersion":"apps/v1",
-		"kind":"Deployment",
-		"metadata":{
-			"name":"nginx-deployment",
-			"labels":{
-				"app":"nginx"
-			}
-		},
-		"spec":{
-			"replicas":1,
-			"selector":{
-				"matchLabels":{
-					"app":"nginx"
-				}
-			},
-			"template":{
-				"metadata":{
-					"labels":{
-						"app":"nginx"
-					}
-				},
-				"spec":{
-					"containers":[
-						{
-							"image":"nginx:latest",
-							"imagePullPolicy":"IfNotPresent"
-						},
-						{
-							"image":"ghost:latest",
-							"imagePullPolicy":"Always"
-						},
-						{
-							"image":"debian:10"
-						},
-						{
-							"image":"ubuntu:18.04",
-							"imagePullPolicy":"Always"
-						}
-					]
-				}
-			}
-		}
-	}`)
-	compareJSONAsMap(t, expectedResult, doc)
-}