VA Fixed-Rate Adjustable-Rate Mortgage

VA Fixed-Rate & Adjustable-Rate Mortgage Full Documentation PRIMARY RESIDENCE – PURCHASE Property Type • • • • 1- to 4-units. Condominiums. PUDs. 1 Manufactured homes. Maximum LTV 100% LTV will depend on loan amount requested. VA guaranty & downpayment must together equal at least 25% of lesser of purchase price or CRV. Maximum Loan Amount Higher of $417,000 or FHA 1-unit high-cost loan limit (up to $729,750 max.) $650,000 Underwriting Engine & Required Response DU – Approve or LP – Accept; Or Refer (Manually underwritten) Qualifying Ratios Total debt-toincome ratio of 2 41% PRIMARY RESIDENCE – CASH-OUT REFINANCE Property Type • • • • 1- to 4-units. Condominiums. PUDs. 1 Manufactured homes. Maximum LTV 90% 3 Maximum Loan Amount $144,000 Underwriting Engine & Required Response DU – Approve or LP – Accept; Or Refer (Manually underwritten) Qualifying Ratios Total debt-toincome ratio of 2 41% LTV will depend on loan amount requested. VA guaranty & downpayment must together equal at least 25% of CRV. $650,000 1. Refer to STATE ELIGIBILITY and ELIGIBLE PROPERTY TYPES sections. 2. Refer to QUALIFYING RATIOS section. 3. Refinance of construction, installment land sale contracts and loans assumed at a higher interest rate may exceed 90% LTV. PROGRAM SUMMARY: The Veterans Administration loan program enables veterans and active duty personnel to purchase or refinance (cash-out) a home with favorable loan terms. VA offers fixedand adjustable-rate mortgages that can accommodate no down payment on many purchase transactions. The VA Interest Rate Reduction Refinance Loan (IRRRL) program (Doc. #5821) is for use by borrowers who would like to refinance an existing VA loan into a fixed-rate loan, a lower interest rate or shorter loan term without taking additional equity out of the property. For all required guidelines and updates refer to the VA manuals or Web site, http://www.homeloans.va.gov. PRODUCTS OFFERED Fixed Rate Mortgages: • 15- or 30-year fixed rate mortgage. Adjustable Rate Mortgage: • 3/1 or 5/1 CMT adjustable rate mortgage. ELIGIBLE BORROWERS • Refer to Web site: http://www.homeloans.va.gov/elig2.htm. • Non-veterans are not eligible borrowers except as the spouse of an eligible veteran. ELIGIBLE PROPERTY TYPES • 1-to 4- unit property. • Condominiums (refer to VA Regional Office). • PUDs. • Manufactured homes (double-wide) – refer to STATE ELIGIBILITY section. INELIGIBLE PROPERTY TYPES • Manufactured homes (single-wide). • Cooperatives. • Working farms, ranches or orchards. V. Product Descriptions 1 of 5 Document #5820 08/29/2008 VA Fixed-Rate & Adjustable-Rate Mortgage LOAN AMOUNTS PURCHASE TRANSACTIONS: The maximum loan amount, for borrowers with full VA entitlement and a 100% LTV, is the greater of $417,000 or the FHA one-unit high-cost loan limit (to a maximum of $729,750). Financing within these levels will provide a borrower with a 25% VA guaranty and permit no downpayment. Financing above these levels (but not above $729,750) is available but will require the borrower to make a cash downpayment, which when added to the amount of their VA guaranty, equals at least 25% of the lesser of the purchase price or the Certificate of Reasonable Value. CASH-OUT REFINANCE TRANSACTIONS: The maximum loan amount, for borrowers with full VA entitlement and a 90% LTV (10% minimum equity position), is $144,000. Financing above this amount (to a maximum of $650,000) is available but will require a greater equity position (lower LTV). The amount of the borrower’s equity in the home, when added to the amount of their VA guaranty, must equals at least 25% of the Certificate of Reasonable Value. SELLER CONTRIBUTIONS Any seller concession or contribution which exceeds 4% of the established reasonable value of the property is considered excessive, and unacceptable for VA-guaranteed loans. Do not include normal points and payment of the buyer’s closing costs in total concessions for determining whether concessions exceed the 4% limit. TEMPORARY BUYDOWN Temporary buydowns are available on 30-year fixed-rate purchase mortgages only; the borrower must qualify at the Note Rate. CREDIT ALERT INTERACTIVE VOICE RESPONSE SYSTEM (CAIVRS) All borrowers must be screened using HUD’s Credit Alert Interactive Voice Response System (CAIVRS). Generally, any lien must be paid-off or existing delinquent account brought current. TELEPHONE ACCESS: • Dial (304) 744-4073. • Enter your Credit Alert Access Code – your company’s VA Agent Identification Number (or use Flagstar’s Lender ID number: 74032200001). • Enter Option 4. • Enter each applicant’s social security number. • Include CAIVRS code for each borrower in the “Remarks” section on the VA loan analysis form (26-6393). INTERNET ACCESS: CAIVRS authorization may also be obtained through FHAConnection, which is a Web-based system that requires prior approval through HUD. Refer to the FHA Connection Web site, https://entp.hud.gov/clas. HUD is moving exclusively to Web-based CAIVRS access as of October 1, 2008. All users will need to request a CAIVRS Connection Identification (ID) and password to access the system via the web: http://www.hud.gov/offices/hsg/sfh/sys/caivrs/caivrs.cfm. APPRAISAL / VA CASE NUMBER All appraisals and VA case numbers must be ordered through Flagstar Bank by completing VA Case Number/Appraiser Assignment (Flagstar Document #9701). POINTS Veteran can pay. Veteran must read/sign Interest Rate and Disclosure Statement (Doc. #9704). V. Product Descriptions 2 of 5 Document #5820 08/29/2008 VA Fixed-Rate & Adjustable-Rate Mortgage QUALIFYING RATE Note rate. QUALIFYING RATIOS VA has implemented a total debt-to-income ratio of 41% for all loans. Loans exceeding the ratios may be acceptable only if significant compensating factors are documented and are recorded on the mortgage credit analysis worksheet, or if the loan receives either an Accept from LP or an Approve from DU. UNDERWRITING 1. All loan applications will be underwritten to VA and Flagstar current guidelines. Refer to Flagstar’s Seller’s Guide on Loantrac (the 9000-series of documents) for Government Lending Guidelines. 2. Loans are underwritten using Desktop Underwriter or Loan Prospector. Loans receiving a Refer response will then be manually underwritten. 3. For underwriting questions and support, please call Government Customer Support at (800) 447-7181 (Option 2) or e-mail Government Customer Support at: governmentuw@flagstar.com. 4. Refinance transactions require an existing lien. If no lien exists, VA financing is not permitted. RESIDUAL INCOME Residual income is the amount of net income remaining (after deducting debts, monthly federal, state, local income tax deductions, and monthly housing expenses) to cover the family living expenses (food, clothing, health care, etc.). The following tables display the minimum residual income required for a veteran to qualify for a VA loan: Table of Residual Incomes by Region for Loan Amounts of $79,999 and Below Family Size 1 2 3 4 5 Over 5 Family Size 1 2 3 4 5 Over 5 Northeast $390 $654 $788 $888 $921 Midwest South $382 $382 $641 $641 $772 $772 $868 $868 $902 $902 Add $75 for each additional member up to a family of seven. Midwest South $441 $441 $738 $738 $889 $889 $1,003 $1,003 $1,039 $1,039 Add $80 for each additional member up to a family of seven. New Hampshire New Jersey Kansas Michigan Minnesota Georgia Kentucky Louisiana Maryland Mississippi Hawaii Idaho Montana New York Pennsylvania Missouri Nebraska North Dakota North Carolina Oklahoma Puerto Rico South Carolina Tennessee Nevada New Mexico Oregon Rhode Island Vermont Ohio South Dakota Wisconsin Texas Virginia West Virginia West $425 $713 $859 $967 $1,004 Table of Residual Incomes by Region for Loan Amounts of $80,000 and Above Northeast $450 $755 $909 $1,025 $1,062 West $491 $823 $990 $1,117 $1,158 Key to Geographic Regions Used in the Preceding Tables Northeast Midwest Connecticut Maine Massachusetts Illinois Indiana Iowa Alabama Arkansas Delaware District of Columbia Florida Alaska Arizona California Colorado South West Utah Washington Wyoming V. Product Descriptions 3 of 5 Document #5820 08/29/2008 VA Fixed-Rate & Adjustable-Rate Mortgage VA ALLOWABLE FEES AND CHARGES Refer to VA Allowable Fees and Charges (Doc. #9708 (pgs. 2-22)). VA FUNDING FEE VA collects a funding fee on each loan to compensate for any losses or defaults unless veteran is exempt. The following table displays all applicable funding fees: Purchase Transactions Type of Veteran Down Payment None Regular Military 5% or more (Up to 10%) 10% or more None Reserves / National Guard 5% or more (Up to 10%) 10% or more Disabled Veteran N/A Percentage for First-Time Use 2.15% 1.50% 1.25% 2.40% 1.75% 1.50% Exempt Percentage for Subsequent Use Prior to 10/1/06: 3.30% 10/1/06-9/30/07: 3.35% 10/01/07 & after: 3.30% 1.50% 1.25% Prior to 10/1/06: 3.30% 10/1/06-9/30/07: 3.35% 10/01/07 & after: 3.30% 1.75% 1.50% Exempt Cash-Out Refinance Transactions Type of Veteran Regular Military Percentage for First-Time Use 2.15% Percentage for Subsequent Use Prior to 10/1/06: 3.30% 10/1/06-9/30/07: 3.35% 10/01/07 & after: 3.30% Prior to 10/1/06: 3.30% 10/1/06-9/30/07: 3.35% 10/01/07 & after: 3.30% Exempt Reserves / National Guard Disabled Veteran 2.40% Exempt Other Loan Types Type of Loan Interest Rate Reduction Refinancing Loans Percentage for Either Type of Veteran Whether First-Time or Subsequent Use 0.50% ADJUSTABLE RATE DETAILS Interest rate adjustment caps 3/1 & 5/1 ARM: Margin Index 3/1 & 5/1 ARM: Interest rate floor Change dates 3/1ARM: 5/1ARM: Conversion option Assumption Negative amortization Initial – 1% up/down; Periodic – 1% up/down; Lifetime – 5% up. Refer to daily price indication sheet. 1-Year Constant Maturity Treasury. Margin is the floor. Initial interest rate change date will occur within 36 to 42 months, depending on disbursement date. See table below. Interest rate will adjust every 12 months thereafter. Initial interest rate change date will occur within 60 to 66 months, depending on disbursement date. See table below. nterest rate will adjust every 12 months thereafter. None. Subject to conditions, fees and rate adjustment. None. V. Product Descriptions 4 of 5 Document #5820 08/29/2008 VA Fixed-Rate & Adjustable-Rate Mortgage Initial Interest Rate Change Dates1 Disbursement Date January 16 – April 15 April 16 – July 15 July 16 – October 15 October 16 – January 15 1. 2. Also refer to the daily price indication sheet for the initial interest rate change date. The change date is always the first day of the month. Initial Change Date2 July 1 October 1 January 1 April 1 TEXAS REFINANCES All refinance loans in Texas will be evaluated against the criteria outlined in Doc. #6116 (Owner Occupied Property Refinance Mortgage) to determine whether or not they must be originated under the requirements of Section 50(a)(6) of the Texas Constitution. Those determined to fall under Section 50(a)(6) will be ineligible under this program. Refer to the applicable Texas Cash-out 50(a)(6) program description [Doc. #5906 (Correspondents) or Doc. #5907 (Brokers)] for eligibility standards for those loans that fall under Section 50(a)(6) guidelines. STATE ELIGIBILITY Available with the following geographic restrictions: Available In The Following States/Territories With Restrictions State Kentucky New York Puerto Rico US Virgin Islands Restriction No manufactured homes. No manufactured homes. No manufactured homes. No manufactured homes. CLOSING DOCUMENTATION Closing docs may be ordered through Flagstar's Web-Based Closing Docs (WBCD) service available on Loantrac. Please call (866) 945-9872 for questions pertaining to drawing Web-Based Closing Docs. Closing docs may also be ordered through Flagstar's Government Lending Department. Please refer to the FS Closing Document and Funding Request Form (Doc. #9321) for instructions in obtaining VA Closing packages. IF APPLICABLE: 2-1 Buydown loans require the following additional documents: • VA Buydown Agreement (Doc. #9731). • VA Buydown Agreement Summary (Doc. #9732). V. Product Descriptions 5 of 5 Document #5820 08/29/2008