214: Fannie Mae DU REFI PLUS (08/20/11)
DESCRIPTION DU Refi Plus is a limited cash-out refinance program that allows for expanded
eligibility criteria, as well as reduced documentation requirements. Loans must be
underwritten through DU and receive an acceptable finding. Fannie Mae must
currently own all loans; however they do not have to be serviced by PacificBanc.
Eligibility for DU Refi Plus is determined and identified in the DU Underwriting
Findings Report. Standard Limited Cash-out refinances must not be coded as DU
Refi Plus loans.
Available ONLY for loans with no Mortgage Insurance on the existing loan.
CURRENT • Since eligible loans may not contain mortgage insurance, PacificBanc is not
SERVICER required to be the current servicer of the existing mortgage.
SPECIAL Note: DU cannot determine if the following requirement is met, so Lender must
CRITERIA represent and warrant that the borrower is receiving a benefit from refinancing in
REQUIRED the form of either:
BENEFIT • A reduced monthly mortgage principal and interest payment; or
• A more stable mortgage product, such as:
◊ Refinancing an ARM product to a Fixed Rate
◊ Refinancing an Interest only product to a fully amortizing product
◊ Refinancing a short-term ARM to a longer term ARM product (i.e., 3/1 to
◊ Refinancing a 30-year term to a 15-year term, whereby amortization is
accelerated and equity is built up faster
◊ Refinancing from a shorter term to a longer term (i.e., 30-year fixed to a
40-year fixed) would only be considered a benefit if there is also a
• The required borrower benefit must be noted in the Underwriter approval
rationale on the 1008.
SPECIAL Principal and interest payment for the new loan must be lower than the existing
CRITERIA loan, unless the loan is being refinanced into a more stable product.
SPECIAL • Borrowers on the existing mortgage must match the borrowers on the new
CRITERIA mortgage, except as indicated below.
ELIGIBILITY • A new borrower may be added to the new loan, provided the existing
borrower(s) is/are retained.
• An existing borrower may be removed provided:
◊ The remaining borrower(s) provide evidence that they have been making the
payments on the existing mortgage from their own funds for the most recent
12 months prior to the origination of the new mortgage. This 12-month
payment history must be for the existing mortgage only – it may not be
satisfied using multiple consecutive mortgages.
◊ If the borrower is being removed due to death, the 12–month payment history
is not required; however, the remaining borrower must provide evidence of
the deceased borrower's death. In lieu of a death certificate, borrower may
provide a written statement confirming the deceased borrower’s death and
the date of the death.
◊ The borrower being removed must also be removed from the deed (or provide
evidence of death, as applicable. Note: Removal of borrowers can be for any
reason, not solely due to death or divorce.
Trusts: If the existing loan was closed in the name of the individual borrowers, but
has been transferred to an inter vivos revocable trust, the loan is eligible provided
the borrowers on the existing mortgage are the only trustees to the trust and the
trust otherwise meets all eligibility requirements in Section 803.1 of this manual.
Note: Existing loan may have been in the name of one borrower, with title
transferred to a trust for borrower and spouse.
Social Security Number Messaging: Refer to the Borrower Eligibility section of
the Desktop Underwriting for additional requirements. Note: ITIN numbers are not
SSN Correction: If an inaccurate SSN is preventing DU from underwriting a
casefile as a DU Refi Plus loan, the new lender no longer has to have the borrower
work with their servicer to get the number corrected; they can contact Fannie Mae’s
Customer Contact Center at 1-877-722-6757. The lender must provide the new DU
Casefile ID to Fannie Mae.
SPECIAL Eligible Existing Loans:
EXISTING • DU will determine if the existing loan is eligible for this program.
• For loans submitted to DU prior to April 11, 2011, the existing loan must have
been delivered to Fannie Mae prior to March 1, 2009 for loans submitted to
DU on or after April 11, 2011, the existing loan must have been delivered to
Fannie Mae prior to June 1, 2009.
Ineligible Existing Loans:
• Existing loan has mortgage insurance in place.
• Any loan not currently owned by Fannie Mae
• Borrowers may not be sourced via marketing campaigns that expressly single
out Fannie Mae loans for the purpose of refinancing existing loans.
• Loan has Lender-Purchased MI.
SPECIAL Eligible New Loans:
NEW MORTGAGE • Agency Conforming Loans – Fully Amortizing Fixed Rate and LIBOR ARM
• Agency Jumbo Loans - Fully Amortizing Fixed Rate and LIBOR ARM
• DU findings must indicate the loan is eligible as a DU Refi Plus loan, or, for
loan sizes above the standard conforming limit, if it is eligible as an Agency
Jumbo loan. (Refer to Maximum Loan Amount section below.)
• Since mortgage insurance is not eligible, PacificBanc is not required to be the
current servicer of the existing mortgage.
Ineligible New Loans:
• Mortgage insurance is required on the new loan
• Loans that were previously submitted to DU and received a DU Refi Plus
finding are not eligible for manual underwriting
• DU Expanded Approval
• Flexible Mortgage Loans
• MyCommunityMortgage® Loans
• Bond Programs
• Construction to Permanent
• Cash-Out Refinance
• Texas Section 50(a)(6)
• Products or programs not currently offered by PacificBanc, including balloon
loans, negatively amortizing ARM loans, Option ARM loans and HomeStyle
• Loans with amortization terms greater than 30 years that have resale
• PACE or ELTAP loans as shown in Section 808.
• Loans that do not meet the policies as outlined in this fact sheet.
LOAN PURPOSE Limited Cash-Out Refinance (a.k.a. rate/term refinance), which includes:
• The payoff of the unpaid principal balance on the existing first mortgage (no
• The financing of the payment of closing costs, prepaid items, and points,
• Cash back to the borrower is permitted up to a maximum of $250 to allow for
changes in closing costs. Cash back on the final HUD-1 may only exceed
$250 by the amount that was paid outside of closing by the borrower, as
documented in the loan file. Note: Refunding an existing escrow account at
closing does not have to be included in the $250 restriction since these funds
are paid by the borrower.
• If changes exceed $250, the loan amount must be adjusted.
• Principal curtailments are only allowed as a result of at closing excess
premium rate credits. The amount must be identified on the HUD-1
Settlement Statement and is limited to the amount of the excess remium
OCCUPANCY • Primary Residence
• Second Home (1 unit only)
• Investment Property (excludes co-ops)
Note: Although Fannie Mae permits multi-unit second homes, if borrower currently
receives rental income or has ever received rental income from the property, the
subject property must be treated as an investment property.
PROPERTY TYPE Eligible:
• 1-4 Unit, including condominiums, PUDs (Type E only) and co-ops
• Manufactured homes
• Non-warrantable Condos
* See Section 609 for flip tax on co-ops.
MULTIPLE • Primary home subject property: There is no limit on number of financed
MORTGAGES properties held by the same borrower.
• Second homes and investment subject property: May not have a combined
total of more than 4 residential properties financed at the time of application
(applies to either a single lender or several different lenders, including
PRODUCTS Eligible - Fully Amortizing:
• Fixed Rate (10, 15, 20, 25, 30 and 40 year terms)
◊ Note: Terms other than 15- and 30-years are permitted for Agency
Jumbo loans; however only the 15- and 30-year product codes are
used; the 40-year product is not available for Agency Jumbo.
• LIBOR ARMs (5/1, 7/1 and 10/1) (30-year terms)
• Interest Only Fixed Rate
• Interest Only ARM
• FHA or VA products
• ARM loans with initial fixed period less than 5 years (1/1 or 3/1)
• DU Expanded Approval
• All other products not listed above as eligible
MAXIMUM LOAN • Agency Conforming or Agency Jumbo loan size, depending upon eligibility.
LTV/ CLTV/ HCLTV • Maximum LTV/CLTV/HLTV is 105%/105%/105%, regardless of DU. (Over
80% LTV is only permitted if MI is not required
• Florida Condos – LTVs/CLTVs and investment properties are not restricted
for this program as they are for other programs.
• PacificBanc Declining Markets Policy does not apply to these loans.
SUBORDINATE • New subordinate financing is not permitted.
• Existing subordinate liens must be re-subordinated; they may not be paid off
or paid down with the proceeds of the new mortgage.
• Lenders must represent and warrant that Community Seconds meet Fannie
Mae requirements and approval guidelines.
HIGHER PRICED HPML loans are permitted; income and asset documentation must be obtained as
MORTGAGE defined in this fact sheet. In addition lending parameters per the Higher-Priced
LOANS (HPML) Mortgage Loans fact sheet must also be met.
• Desktop Underwriter (DU)
• All other documentation processes
UNDERWRITING Underwriting Delegation Level Eligible to UW this program
Non-Delegated Correspondent No
AUS Conforming Delegated Yes
AUS Non-Conforming $700,000 Yes
Full Delegation Yes
Contract UW to $650,000 Yes
BUY DOWNS Not permitted.
ESCROW • Generally, the LTV must be 80% or less (unless state law dictates escrows
WAIVERS are not required for mortgage loans with an LTV > 80%), however, escrows
on the new loan may be waived if the existing loan has escrows waived.
HPML loans must still comply with all regulations in regard to escrow impound
waivers, regardless of whether escrows were waived for the existing account. For
more details and requirements on escrows, refer to Section 908 of this manual.
QUALIFYING Determined by DU
MORTGAGE Mortgage Insurance may or may not be required, depending on the current MI
INSURANCE coverage on the existing loan (see table below).
- If MI is required per DU findings, the loan is NOT eligible for purchase by
PacificBanc Correspondent Lending.
ORIGINAL LTV Existing loan has MI required for
of existing loan MI in force? new ELIGIBLE
< 80% No No1 YES
> 80% terminated per No1 YES
> 80% Yes Yes NO
DU will indicate when MI is not required.
• DU Refi Plus loans will receive messages relating to MI coverage, but the
lender must confirm whether MI coverage is required or not.
• New loans with LTVs less than 80% do not require mortgage insurance.
The following MI options are not permitted:
• Financed MI
• Lender-purchased MI.
DU DECISIONS • Submission to DU: An accurate address is critical to determining if the
subject property address on the loan casefile matches a subject property
address for an existing Fannie Mae loan. Incomplete and/or inaccurate
property address data may prevent a loan casefile from being underwritten
according to DU Refi Plus underwriting guidelines.
◊ If DU is unable to match the borrowers and subject property address on
the loan casefile with an existing eligible Fannie Mae loan, the loan
casefile will be underwritten according to the standard DU eligibility and
• Underwriting Findings Report: DU will issue the following message when
the loan is identified as being eligible for DU Refi Plus. Loans must receive
this message to be eligible for this process type:
"This loan casefile was underwritten according to the DU Refi Plus
expanded eligibility guidelines offered on certain limited cash-out
refinance loan casefiles where the borrower's existing loan is identified
by DU as a Fannie Mae loan. This loan casefile must be delivered with
Special Feature Code 147."
• DU Recommendations: Loans must receive one of the following
◊ Approve / Eligible
* Co-ops with subordinate financing are permitted with ineligibility
due to presence of subordinate financing.
* Loan amount > Permanent High Cost Amount:
For DU 7.1 findings, if the loan amount exceeds the current loan
limit applied by DU (i.e., the permanent high-cost limit for the area
in which the property is located) an ineligible finding will result. If
this is the only ineligible reason, the loan is OK. The loan amount
cannot exceed the temporary high-cost limit applicable to the area
in which the property is located.
* For DU 8.0, an ineligible finding due to loan amount is not
Loans that receive any recommendation from DU other than those listed
above are not eligible for this program, and are not eligible for manual
underwriting under a different process type.
• Resubmission Requirements: Standard DU Resubmissions guidelines
apply per Section 406.
• Validation Requirements: All requirements in the final DU underwriting
findings report must be met.
SPECIAL U/W • There are no exceptions to the requirements in this program.
• In addition to the requirements in the DU findings, the underwriter must
confirm that all requirements in this fact sheet are met.
• DU is not able to identify or message the following items, therefore special
attention must be paid if any of the following are present on the loan:
◊ Non-taxable income
◊ Trailing secondary wage earner income (Not an eligible income type per
◊ Deed Restrictions – Refer to Section 808 of the Correspondent Manual
◊ Up-front fees finanded with a credit card
◊ Individual Development Accounts
• Bankruptcy & Foreclosures: 48 months must have elapsed from the date of
bankruptcy was discharged or dismissed (84 months for a foreclosure) or per
DU output whichever is more restrictive. Note: DU identifies prior foreclosures
as follows: Mortgage accounts, including first and second liens, home
improvement loans, HELOCs and mobile home loans are identified as a
foreclosure if there is a current status or manner or payment/MOP code of "8"
(foreclosure) or "9" (collection or charge-off), or if there is a foreclosure-
related Remarks Code in the credit report data that is associated with the
• Unpaid Charge-offs & Collections: Only accounts that impact PacificBanc’s
first lien position must be paid or as determined by DU.
Lawsuits: The underwriter should consider whether a lawsuit the borrower is
involved in impacts PacificBanc’s first lien position.
• Borrower Identity Verification, Social Security Numbers, Validation of
Qualified Parties to Transaction and Unit Numbers - refer to the Borrower
Eligibility section of this Manual for requirements.
CREDIT REPORT • A new merged credit report with the borrower(s) representative credit score is
• DU will determine if the Borrower meets mortgage payment delinquency,
bankruptcy and foreclosure policies applicable for DU underwritten loans,
based on information contained in the credit report. See Mortgage History
section of this fact sheet for additional requirements.
• Credit Inquiries: The underwriter must address inquiries per the Credit
section of the Correspondent Manual.
CREDIT SCORE • Minimum FICO score is 660, regardless of DU. (DU will not apply a minimum
score to DU Refi Plus loans.)
• DU Expanded Approval loans are not ineligible.
DEBT RATIO • Qualifying rate and debt ratios are as determined by DU, except the
maximum DTI for HPML loans is 45%.
• DU Refi Plus loans will continue to be subject to the maximum allowable total
expense ratios currently applied to all DU loan case files. Loans that exceed
the maximum will receive an Ineligible recommendation, which is not an
MORTGAGE • 0x30 late pays in the past 12 months for all mortgages, regardless of DU.
RESERVES Determined by DU.
SEASONING There is no minimum seasoning requirement for the existing mortgage.
DOCUMENTATION • Loan Application: A new executed Uniform Residential Loan Application
REQUIREMENTS (Form 1003 or 1003(S)) from the borrower(s) with all information completed
including borrower income, employment, and assets is required.
• Closing Documents: A new mortgage note, security instrument, and
applicable riders and addenda are required.
WAGE EARNER • Determined by DU.
SELF-EMPLOYED • Determined by DU.
VOE • Wage Earner: Documented telephone verification of employment with the
employer no more than 10 business days prior to the loan closing is required.
Neither a pay stub nor a written VOE may replace the verbal VOE.
• Self-Employed: Refer to “Verifying the Existence of the Business” in Section
RENTAL INCOME • Rental income is not permitted for second homes.
• When verification of rental income is required, refer to Section 805.3
OTHER INCOME • Determined by DU.
ASSETS • Determined by DU.
• Verification of assets is required if loan is an HPML loan.
IRS FORM 4506-T A signed IRS Form 4506-T is required on all loans, regardless of income type
(salary, self-employed, social security, etc.). All borrowers must sign the IRS Form
4506-T at application and closing. If tax returns are used to calculate borrower
income, the Form 4506T must be processed prior to loan approval. All forms and
transcripts must be included in the closed loan package. The 4506-T does not need
to be processed prior to closing. For complete signature and processing
requirements, refer to Section 805 of the Correspondent Manual.
PROPERTY The gross monthly rent for each unit must be documented in each loan, even when
MARKET RENTS the borrower is not utilizing rental income to qualify.
For all investment properties AND all 2-4 unit primary residences, when rental
income is not used to qualify, the gross monthly rental income for each unit must be
documented with one of the following:
• Current Lease Agreement(s), or
• Form 216: Operating Income Statement for investment and 2-4 unit owner
occupied properties (including those in which the borrower occupies one of
the units as a principal residence), or
• Form 1007: A Single Family Comparable Rent Schedule for one-unit
investment properties, or
• Small Residential Income Property Appraisal Report (Form 1025)
APPRAISAL • Lender must comply with the property fieldwork recommendation issued by
DU except as indicated below*, or a different appraisal format is required to
met PacificBanc’s standard project approval requirements
* Note: DU will indicate the type of fieldwork recommendation that is
required, and if applicable, that a fieldwork waiver is permitted. If the
property is located within an area subject to a natural disaster, or if the
DU findings reflect red flags in connection with the value submitted, the
minimum fieldwork recommendation should be followed; a PIW would
not be permitted.
Note: Refer to the Appraisal Documentation section for additional requirements
for reduced property fieldwork recommendations.
Property Fieldwork Waivers
• For certain eligible loan casefiles, DU will waive the requirements of an
appraisal or exterior-only property inspection for a fee of $75 at delivery.
(Fees for PIWs (property inspection waivers) are net funded at the time of
◊ Listed for Sale: PacificBanc policy related to properties listed for sale
does not apply.
• A DU Refi Plus Property Inspection Waiver (PIW) may only be exercised if:
◊ The final submission of the loan casefile to DU resulted in a property
fieldwork waiver offer; and
◊ The property fieldwork waiver offer is not more than four months old on
the date of the note and the mortgage.
• When a DU Refi Plus DU Refi Plus PIW is exercised, Fannie Mae accepts the
property value estimate submitted to DU as the market value for the subject
property, and the lender is not required to make any representation or
warranty as to value, marketability, or condition of the subject property.
However, the lender continues to be required to represent and warrant that all
of the information and data submitted to DU is complete and accurate.
• A DU Refi Plus property fieldwork waiver may not be exercised if there is
reason to believe that fieldwork is warranted based on additional information
obtained about the property or subsequent events such as a hurricane or
other natural disaster, or based on additional information provided by DU
regarding the subject property for these loans. In these situations the
minimum level of property fieldwork as specified by DU must be ordered.
• For those eligible, DU will issue two DU Refi Plus property fieldwork
◊ The first message will indicate that the loan casefile is eligible for the
property fieldwork waiver.
◊ The second message will indicate the minimum level of fieldwork
required if the lender does not elect to exercise the property fieldwork
waiver when delivering the loan to Fannie Mae.
• Appraisal update and aging requirements apply to these loans. Refer to the
Appraisal Requirements section 501 of the Correspondent Manual.
• PacificBanc Declining Markets Policy does not apply to these loans.
CONDO/PUD/CO- • Must meet PacificBanc Project Approval guidelines.
APPROVAL • Condo Type V is not eligible. Standard project coding must be used.
• PUD Type E only; PUDs must be an established project in which control of
the homeowners association has been turned over to the unit purchasers.
• Coops Type 2 (Building Style for co-ops must be 38-FNMA Coop)
• Insurance Coverage: Although project approval is not required, evidence of
hazard/ liability/fidelity/flood insurance, must be obtained to ensure the
policies have not expired, or will not expire within 30 days from the date of the
• Property Address: The subject property address and unit number must be
included on the proof of master insurance.
Refer to the Condo chapter for appraisal requirements for project approvals.
Refer to the PUD Section 607 for appraisal requirements on project approvals.
NOTE / DELIVERY New Mortgage loans must close and have an original note date on or before June
DATES 30, 2012.
REGISTRATION Process Type: DU
INSTRUCTIONS Program Code:
• DU Refi Plus
• DU Refi Plus Agency Jumbo
• DU Refi Plus >80% LTV w/o MI
• DU Refi Plus Jumbo >80% LTV w/o MI
• Agency Jumbo Temp Loan Limit (to be used with loans exceeding the county
Permanent loan limits)
• Deed Restrictions Age Survive Foreclosure
• Deed Restriction Age Do Not Survive Foreclosure