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					FHA                                                                                                                                           Wholesale




                                                                      Chapter 7: FHA

                                                                       General Requirements
Introduction            This Product Guide outlines policies for Federal Housing Administration (FHA) programs. An FHA loan is a Federal Assistance Mortgage
                        Loan insured by the Federal Housing Administration. An FHA loan allows for the refinance or purchase of a home with a low down
                        payment and more flexibility than a conventional mortgage. FHA primarily serves people who cannot provide a conventional down
                        payment or otherwise do not qualify for PMI.

                        For any issues not specifically addressed in this Product Guide, refer to the FTMC FHA Lending Manual.
Eligible States         Based upon individual Broker Approval through FHA
Eligible Products and                         UNIFI Product Codes                                       Closing Doc Set                       Term
Product Codes                       Fixed 15                               400                             VMP 1R                         15 Years
                                      Fixed 30                          401                               VMP 1R                         30 Years
                                                                                                                                                     1


                                  3/1 Libor ARM                         411                              VMP 590                          30 Years
                                  5/1 Libor ARM                         412                              VMP 590                          30 Years
                        1
                        Amortization terms from 181 – 360 months may be entered on product 401- Fixed 30 YR FHA.
Maximum Loan Amount     The maximum loan amount for an FHA Insured Mortgage is determined by individual county limits. The individual county limits can
                        be accessed by clicking on the following link: HUD County Limits.

                        Note: Refer to the FHA to FHA Refinances Exceeding Loan Limits section for additional guidance for loan amounts exceeding HUD
                        County Limits.
Minimum Loan Amount     None

                                                                        Program Eligibility
Maximum LTV/CLTV                                                                     Purchase
and Minimum FICO
                                                   LTV                            CLTV With Secondary Financing                                FICO
                                                                                                                                    680 in states of MO and TX
                        1-4 Unit Primary          96.5%                                     Unlimited                               660 in states of FL and IL
                                                                                                                                    640 in all other states
                                                                               Rate/Term Refinance
                                                   LTV                    CLTV With New or Existing Secondary Financing                       FICO




1                                                                                                                                05/24/2012
FHA                                                                                                                                                 Wholesale
                                                                            Program Eligibility
                                                                                                                                                                      2
                                                                                                                                       680 in states of MO and TX
                                                                                                         1
                            1-4 Unit Primary         97.75%                                     97.75%                                 660 in states of FL and IL
                                                                                                                                       640 in all other states
                                                                               Streamline Refinance with Appraisal
                                                       LTV                       CLTV With Existing Secondary Financing                             FICO
                                                                                                                                                                      2
                                                                                                                                       680 in states of MO and TX
                                                                                                                                                                  2
                            1-4 Unit Primary         97.75%                                       125%                                 660 in states of FL and IL
                                                                                                                                                               2
                                                                                                                                       640 in all other states
                                                                           Streamline Refinance without Appraisal
                                                       LTV                    CLTV With New or Existing Secondary Financing                         FICO
                                                                                                                                                                      2
                                                                                                                                       680 in states of MO and TX
                                                                                                                                                                  2
                            1-4 Unit Primary           N/A                                        125%                                 660 in states of FL and IL
                                                                                                                                                               2
                                                                                                                                       640 in all other states
                                                                                            Cash Out
                                                       LTV                                        CLTV                                              FICO
                                                                                                       With Existing Secondary
                                                                        With New Secondary Financing
                                                                                                       Financing
                            1-4 Unit Primary                                                                                                                          2
                                                                                                                                     680 in states of MO and TX
                                                                                                                       1
                                                    85%                         85%                             85%                  660 in states of FL and IL
                                                                                                                                     640 in all other states
                          Maximum LTV cannot exceed the FHA Mortgage Limits. Refer to: HUD County Limits for individual county limits.
                        2
                         There is no minimum FICO for non-credit qualifying streamline refinances where Fifth Third is the current Servicer
Occupancy                            Primary Residence                            Investment Property                                Second Home
                                           Eligible                                      Ineligible                                      Ineligible
Acceptable AUS Findings           Purchase and Non-Streamline Refinances                                             Manual Underwrite
                                       Total Scorecard Accept (LP or DU)                  File must be Manually Underwritten if:
                                                                                               Total Scorecard returns a Refer OR
                                                                                               Transaction is a Streamline Refinance

                                                                            Credit Requirements
                                              FHA Total Scorecard Accept                                               Manual Underwrite
Minimum Credit Score            660 in states of FL and IL                                      If a credit score is present on the credit report, the minimum FICO
                                640 in all other states                                         must be:
                                This requirement excludes all 5/3 to 5/3 Non-Credit                  o 660 in states of FL and IL
                                Qualifying Streamline Refinance transactions                         o 640 in all other states
                                                                                                When none of the occupant borrowers have credit scores, and




2                                                                                                                                      05/24/2012
FHA                                                                                                                                                    Wholesale
                                                                             Credit Requirements
                                              FHA Total Scorecard Accept                                                 Manual Underwrite
                                                                                                     TOTAL Scorecard renders an Accept/Approve, the loan must be
                                                                                                     manually downgraded to a Refer and the borrower(s) must be
                                                                                                     underwritten using non- traditional credit
Maximum Debt-to-Income Per Total Scorecard Feedback Certificate                                 31%/43%
Ratio                                                                                                Ratios may be exceeded with compensating factors on a
                                                                                                     case-by-case basis determined by the Underwriter
Minimum Cash Reserves 1-2 Unit Primary               Reserves are not required, but may be used as a compensation factor
                                                     All reserves listed on the loan application must be documented in the loan file
                         3-4 Unit Primary            3 months reserves required
                                                     Reserves cannot be derived from a gift
                                                     All reserves listed on the loan application must be documented in the loan file
Living and Land Trusts   Ineligible
Required Rental History  12 months rental history required for loans receiving a TOTAL Scorecard Refer Recommendation
                                   0 X 30 in the most recent twelve months required
Minimum Borrower
Contribution and         The borrower must have a minimum investment of 3.5 % of the lesser of the appraised value or the sales price
Downpayment                        Closing costs may NOT be used to help meet the minimum 3.5% required investment
Requirement for Purchase           Closing costs are not considered mortgage amount/cash investment calculation for purchase money mortgages
Transactions
Maximum Financing and         Up to 6% in sales contributions may be in the form of any of the following contributions given by the seller or any other party involved
Sales Contributions           in a mortgage transaction:
                                   o Loan discount points
                                   o Loan origination fees
                                   o Interest rate buydowns
                                   o Closing cost assistance
                                   o Payment of condominium fees
                                   o Down payment assistance
                                   o Monetary gifts
                                   o Personal property
                                   o UFMIP (entire payment must be paid at the time of closing, a partial payment is not acceptable)
                              Contributions from sellers or other interested third parties to the transaction that exceed 6% of the sales price or other financing
                              concessions must be treated as inducements to purchase, thereby reducing the amount of the mortgage
Borrower Paid Closing         The borrower may be charged customary and reasonable fees and charges
Costs                         The cost for any item charged to the borrower must not exceed the actual cost paid by FTMC, or charged to FTMC by the
                              service provider
                              Borrower cannot be charged a Tax Service Fee
                              These costs may be used to meet the borrower’s minimum investment requirement excluding any discount paid by the borrower




3                                                                                                                                         05/24/2012
FHA                                                                                                                                                     Wholesale
                                                                             Credit Requirements
                                           FHA Total Scorecard Accept                                                  Manual Underwrite
                                                                                       nd
Existing Subordinate    Subordinate financing may remain in place as long as the 2 lien will be clearly subordinated to the new mortgage subject to LTV/CLTV
Financing               restrictions and guidelines. In addition:
                             The entire lien must be subordinated at refinance
                             The Combined Loan to Value (CLTV) ratio must be calculated using the maximum accessible credit limit of the existing subordinate
                             lien
New Secondary Financing The following information must be placed in the loan file:
                                  Documentation showing the amount of funds provided to the borrower for each transaction AND
                                  Copies of the loan instruments for the endorsement binder
Collateral Requirements      Per AUS with Total Scorecard Accept                                      Must be full appraisal for Manually Underwritten loans
                        If at any time multiple valuation products are obtained, the most comprehensive valuation must be utilized. Under no circumstance
                        should a valuation be deleted from a loan file. All loans requiring an appraisal must adhere to the Corelogic Collateral Manager
                        Cascade.
                        Appraisal Transfer           Appraisals prepared for another financial institution are acceptable provided all of the following conditions are
                                                     met:
                                                             Appraisal MUST come directly from the previous financial institution
                                                                   o Borrower CANNOT provide appraisal
                                                             Obtain written assurance that other lending institution, not the AMC, follows Appraisal Independence
                                                             Guidelines in connection with the loan being originated
                                                             It is an unaltered, original report
                                                             FTMC verifies the report is signed and dated by the appraiser
                                                             For appraisals ordered by a correspondent, closing in the name of a broker and subsequently
                                                             transferred to FTMC are considered ordered by a broker and are unacceptable for lending purposes
                                                                               A new appraisal showing Fifth Third as the client is required

                                                        **Under USPAP requirements, the appraiser may not change the name from the original lender/client**

                                                        Note: Due to the case number being assigned to the subject property, at the borrower’s request, the case
                                                        number must be assigned for the new transaction using the Case Transfer function in the FHA Connection.
Ineligible Properties            Manufactured Homes
                                 Attached housing located in Florida
FHA Flipping Waiver          A property may be purchased within 90 days of the seller’s acquisition if ALL of the following apply:
                                     Increase in value is < 20%
                                     Increase in value is supported by the appraisal
                                     Transaction is arms length and no identity of interest between the buyer and seller or other interested parties exists. Ways the
                                     Underwriter can ensure there is no inappropriate collusion or agreements between parties is to assess and determine the
                                     following:
                                                  Seller holds property to title




4                                                                                                                                          05/24/2012
FHA                                                                                                                                                 Wholesale
                                                                        Credit Requirements
                                        FHA Total Scorecard Accept                                                  Manual Underwrite
                                           LLCs, corporations or trusts that are serving as sellers were established and are operated in accordance with
                                              applicable state and Feral law
                                           No pattern of previous flip activity exists for the subject property, as evidenced by multiple title transfers within a
                                              12-month time frame
                                                   VERIFY ON TITLE NO MORE THAN 3 TRANSFERS HAVE BEEN MADE IN THE PAST 12 MONTHS
                                           Property was marketed openly and fairly, via MLS, auction, For Sale By Owner offering or developer marketing

                                Properties with an increase in value that is ≥ 20% are NOT eligible

                       Red Flags – Require Additional Review
                              Properties with contracts that refer to an “assignment of contract of sale” are not eligible
                              Property has had limited time on market, which can be indicative of a non-arms length transaction
Condominium Procedures                      Loans currently listed on FHA’s Approved Condominium List MUST be submitted to the Fifth Third Condo
                                            Review Desk for approval.

                                             The following documents are required at time of submission:
                                                         o FHA Case Number Assignment
                                                         o Fifth Third Condo Questionnaire
                                                         o Annual Budget
                                                         o Balance Sheet
                                                         o Insurance
                                                         o Satisfactory Appraisal (submitted prior to final approval of the condominium)

                                             Insurance Requirements:
                           FHA Approved      Hazard Insurance
                             Projects        The Homeowner’s Association (HOA) is required to maintain “master or blanket” property insurance in an amount
                                             equal to 100% of current replacement cost of the condominium exclusive of land, foundation, excavation and other
                                             items normally excluded from coverage. If the HOA does not maintain 100% coverage, the unit owner may not
                                             obtain “gap” coverage to meet this requirement.

                                             HO-6 Coverage
                                             If the master policy does not include interior unit coverage, including replacement of interior improvements and
                                             betterment coverage to insure improvements that the borrower may have made to the unit, the borrower must
                                             obtain a “walls-in” coverage policy (HO-6 policy).
                                             The policy must provide coverage in an amount that is no less than 20% of the condominium unit’s appraised
                                             value.

                                             Liability Insurance




5                                                                                                                                      05/24/2012
FHA                                                                                                                           Wholesale
                                                   Credit Requirements
                    FHA Total Scorecard Accept                                              Manual Underwrite
                        The HOA is required to maintain comprehensive general liability insurance covering all of the common elements,
                        commercial space owned and leased by the owner’s association, and public ways of the condominium project.

                         Fidelity Bond/Insurance (Employee Dishonesty)
                         Required for new and established condominium projects with 20 or more units. The HOA must maintain this
                         insurance for all officers, directors, and employees of the association and all other persons handling or responsible
                         for funds administered by the association. The coverage must be no less than a sum equal to three months
                         aggregate assessments on all units plus reserve funds.

                         Flood Insurance (When Applicable)
                         Insurance coverage equal to the replacement cost of the project less land costs or up to the National Flood
                         Insurance Program (NFIP) standard of $250,000 per unit, whichever is less. In the insuring of a residential
                         condominium building in a regular program community, the maximum limit of building coverage is $250,000 times
                         the number of units in the building (not to exceed the building’s replacement cost). The HOA, not the borrower or
                         individual unit owner, is responsible for obtaining and maintaining adequate flood insurance under the NFIP on
                         buildings located in a Special Flood Hazard Area (SFHA). The flood insurance coverage must protect the interest of
                         borrowers who hold title to an individual unit as well as the common areas of the condominium project. If the FHA
                         Roster Appraiser reports that buildings in a condominium project are located in a SFHA Fifth Third is responsible
                         for ensuring that the HOA obtains and maintains adequate flood insurance on buildings located within the SFHA,
                         per Mortgagee Letter 2009-37.

                         The FHA Approved Condo List may be viewed at the following link:
                         FHA Approved Condo List
        Projects NOT     Project must be submitted directly to HUD for the HUD Review and Approval Process (HRAP)
      Approved by FHA            o The MLO must work in conjunction with the Condominium’s Home Owner’s Association to submit the
          (New and                  Project to HUD for approval
         Established             o Refer to Mortgagee Letter 2009-46B for more information
          Projects)
                         Project approval is not required for Site Condominiums.
           Site
       Condominiums                  o   Condominium Rider is required
                                     o   Site Condos must be appraised on SFR Appraisal Form
                                     o   The Section of the Act for a Site Condo is 203(b)
           All FHA
          Streamline
                         Project approval is not required.
       Refinances and
       FHA/HUD REOs
      All Other Condos   The following types of Condominium Project approvals will continue to be required to be submitted directly to HUD




6                                                                                                                05/24/2012
FHA                                                                                                                  Wholesale
                                                 Credit Requirements
                  FHA Total Scorecard Accept                                           Manual Underwrite
                      for approval:
                                   o Condo Annexation for Additional Phasing
                                   o Proposed Construction
                                   o Condominiums Under Construction or Existing for < 1 Year
                                   o Existing Condominiums that are NOT currently FHA approved; Project Completed > 1 Year (If
                                     entire project needs approval)
                                   o Condo Conversions with an Operating Association
                                   o Condo Conversions with a Non-Operating Association
                       FHA Contact Information for Developer/HOA:

                       Atlanta Homeownership Center
                                        ATTN: James A. Gullatte, Chief Technical Branch I
                                        7th Floor
                                        5 Points Plaza
                                        40 Marietta Street
                                        Atlanta, GA 30303-2806
                                        Phone: 1-800-225-5342
                                        Email: Hud@custhelp.com

                       Philadelphia Homeownership Center
                                         ATTN: Darlene Shannon, Chief Technical Branch I
                                         The Wanamaker Bldg
      FHA HOC                            100 Penn Sq East
      Addresses                          Philadelphia, PA 19107-3389
                                         Phone: 1-800-225-5342
                                         Email: Hud@custhelp.com

                       Denver Homeownership Center
                                       ATTN: Technical Support Branch
                                       21st Floor
                                       1670 E. Broadway
                                       Denver, CO 80202
                                       Phone: 1-800-225-5342
                                       Email: Hud@custhelp.com


                       For additional information click here.




7                                                                                                       05/24/2012
FHA                                                                                                                                                Wholesale

                                                                            Transactions
                                             FHA Total Scorecard Accept                                                 Manual Underwrite
Paying off a Land        If the new FHA loan is to complete payment on a land contract, in which the borrower does not have title to the property, the new
Contract                 mortgage may be processed as either a purchase or refinance with maximum insured financing. The borrower cannot receive any cash
                         back. If the property was acquired fewer than 12 months, and all loan proceeds are used to pay the balance on the land contract and
                         eligible repairs, renovations, etc. , the LTV is applied to the lesser of:
                              The appraised value OR
                              The total cost to acquire the property (original purchase price, plus any documented costs incurred for repairs, rehab, renovation or
                              weatherization), plus allowable closing costs and if treated as a refinance, discount points
Purchase and Rate/Term        The combined amount of the first and second mortgages cannot exceed the applicable LTV ratio and the maximum base
Refinance                     mortgage limit for the area
                              The repayment term for the second mortgage must not provide for a balloon payment before ten years (or such term acceptable
                              to FHA)
                                   o If the property is sold or refinanced, and must permit prepayment by the borrower, without penalty, 30 days advanced
                                       notice must be sent out to the mortgage holder
                              The required monthly payment under both the insured mortgage and the second mortgage or lien, plus other housing expenses
                              and all recurring charges, cannot exceed the borrowers reasonable ability to pay
Rate/Term Refinance           Appraisal is required
                              Borrowers must be current on the mortgage being refinanced for the month due prior to the month in which they close the refinancing
                              AND for the month in which they close
                              The Underwriter must review the payoff to insure the mortgage payment due for the previous month has been paid and payoff
                              indicates mortgage is current
                              In determining the existing debt as part of the mortgage amount calculation, the mortgage may include accrued late charges and
                              escrow shortages
                              Prepaid expenses may include per diem interest, hazard insurance premium deposits, MIP premiums, tax and insurance escrows
                              Delinquent interest on existing lien may not be included
                              Borrower may not receive cash back at closing in excess of $500
Cash-Out Refinance            Appraisal is required
                              The Underwriter must document that the borrower has an acceptable payment history and meets ALL of the following:
                                   o Mortgage being refinanced is current
                                   o All payments on the mortgage have been made within the month due for the previous 12 months
                                             For mortgages with more than 6 months and less than 12 months of payment history, the borrower must have made
                                               all payments when due
                                             Mortgages with less than 6 months of payment history are not eligible for a cash-out refinance
                                   o Acceptable payment history is required regardless of FHA Total Scorecard findings
                              Borrower may qualify up to 85% LTV if all of the following conditions are met:
                                   o Most recent 12 months mortgage/rental history must be 0x30
                                   o Subordinate financing may remain in place regardless of CLTV, but must re-subordinate to the new first mortgage




8                                                                                                                                     05/24/2012
FHA                                                                                                                                             Wholesale
                                                                       Transactions
                                         FHA Total Scorecard Accept                                                 Manual Underwrite
                                o New subordinate financing is limited to 85% CLTV
                                o All borrowers must sign the Note
                                o Non-Occupant borrowers are not permitted
                                                                   Seasoning Requirements on Cash-Out Refinance
                           If the property was acquired > 12 months prior to the loan application as the borrower’s primary residence, the maximum LTV/CLTV is
                           85% of the appraised value.
                           If the property was acquired < 12 months prior to the loan application as the borrower’s primary residence, the mortgage amount is
                           limited to the lesser of 85% of the appraised value or 85% of the sales price of the property when acquired. The previous sales price
                           does not need to be taken into consideration if the property was acquired as the result of an inheritance and is or will become the
                           borrower’s primary residence.
Streamline Refinance                                                             General Requirements
                       Streamline Refinances are designed to lower the monthly principal and interest payments on a current FHA insured mortgage and must
                       involve no cash back to the borrower except minor adjustments, not to exceed $500. Minor adjustments should only be from changes in
                       actual fees collected on the HUD-1 versus initial fee quotes on the Good Faith Estimate which were used to determine the loan amount.
                       The loan amount should never be calculated in such a fashion as to ensure the borrower is getting money back at the closing table.
                       Streamline Refinances can be made with or without an appraisal.

                               CAIVRS check is not required
                               o When a CAIVRS number is obtained from FHA Connection, the information must be reviewed and utilized regardless of
                                    whether or not the selected program requires the CAIVRS to be pulled
                               LDP (Limited Denial of Participation) and GSA (General Services Administration) must be checked and cleared
                               o The Underwriter must note the date cleared and findings received on the 92900-LT
                               At the time of application, the borrower must exhibit an acceptable payment history
                               o For mortgages with 12 month payment history, the borrower must have made all mortgage payments within the month due
                               o For mortgages with 12 months payment history, the borrower must have no more than 1x30 in the preceding 12 months
                                    AND
                               o Made all mortgage payments within the month due for the 3 months prior to the loan application
                               Junior subordinate liens may be subordinated with a maximum CLTV of 125%
                               The outstanding principal balance for a Streamline Refinance with or without an appraisal may include interest charged by the
                               servicing lender when the payoff is not received on the first day of the month, but may not include delinquent interest, late
                               charges or escrow shortages

                               Seasoning of Mortgage
                               On the date of the case number assignment ALL of the following must be true:
                               o The borrower must have made at least 6 payments on the FHA-insured mortgage that is being refinanced
                               o At least 6 full months must have passed since the first payment due date of the refinanced mortgage
                               o At least 210 days must have passed from the closing date of the mortgage being refinanced




9                                                                                                                                  05/24/2012
FHA                                                                                                                                                Wholesale
                                                                           Transactions
                                             FHA Total Scorecard Accept                                              Manual Underwrite
                                    Certifications/Verifications:
                                    o If assets are needed to close, all assets submitted must be verified and documented
                            Refer to the FHA Lending Manual for additional guidance on certifications/verifications.

                                   Net Tangible Benefit:
                                   Net Tangible Benefit must be determined on all Streamline Refinance Transactions. Net Tangible Benefit is defined as:
                                   o Reduction in the total mortgage payment
                                               A 5% reduction to the P&I of the mortgage payment plus the annual MIP OR
                                               Refinancing from an ARM to a Fixed Rate

                                   Note: Determination of the Net Tangible Benefit must meet one of the definitions above. A reduction in the mortgage term is
                                   acceptable if the new mortgage meets one of the Net Tangible Benefit definitions above.

                                   Refer to the following table to determine the Net Tangible Benefit requirements for various refinance transactions:

                                                                        Net Tangible Benefit Requirements

                                             Current Product Type                                 New Product Type
                                                                                    Fixed Rate                              ARM
                                         Fixed Rate                      Reduction of at least 5% of P&I Reduction of at least 5% of the
                                                                         and Annual MIP                      P&I and Annual MIP
                                         1 Year ARM                      New interest rate no greater        New interest rate at least 2%
                                                                         than 2% above the current           below the current interest rate
                                                                         interest rate of the ARM            of the ARM
                                         ARM during Fixed Rate           Reduction of at least 5% of P&I Reduction of at least 5% of P&I
                                         period                          and Annual MIP                      and Annual MIP
                                          ARM during Adjustable          New interest rate no greater        New interest rate at least 2%
                                         period                          than 2% above the current           below the current interest rate
                                                                         interest rate of the ARM            of the ARM
                                         Example: When refinancing from a Fixed rate to a Fixed rate, reduction of at least 5% of P&I and
                                         Annual MIP is required


All Non-Credit Qualifying   Not permitted to be run through TOTAL except under the following circumstance:
Streamline Refinances              Loans inadvertently run through TOTAL Scorecard may be processed as non-credit qualifying streamlines requiring no
                                   documentation to verify values submitted
                                   If the loan is run through TOTAL, the following is required:




10                                                                                                                                    05/24/2012
FHA                                                                                                                                                   Wholesale
                                                                            Transactions
                                             FHA Total Scorecard Accept                                               Manual Underwrite
                                         o   Underwriter must enter their Direct Endorsement (DE) designation in FHA Connection AND
                                         o   Verify that ZFHA is NOT listed as the Underwriter in FHA Connection

                             Verbal Verfication of Employment
                             A Verbal Verfication of Employment is not required.

Fifth Third to Fifth Third   All FHA non-credit qualifying streamline refinances, where Fifth Third IS the current Servicer:
Streamline Refinance                 No minimum FICO required

                             At the time of loan application, the borrower must exhibit an acceptable payment history as described below:
                                      For mortgages with less than a 12 months payment history, the borrower must have made all mortgage payments within the
                                      month due
                                      For mortgages with a 12 months payment history or greater, the borrower must have:
                                           o Experienced no more than one 30 day late payment in the preceding 12 months AND
                                           o Made all mortgage payments within the month due for the three months prior to the date of loan application
Non-Fifth Third to Fifth     All FHA non-credit qualifying streamline refinances, where Fifth Third is NOT the current Servicer require:
Third Streamline                      A tri-merge credit report must be generated/ supplied and actual FICO’s must be entered into the system to ensure accurate loan
Refinance                             pricing and reporting. The credit report is only to be used for credit score and validating the mortgage payment history.
                                       0 X 30 mortgage payment history in the most recent 12 months. If loan being refinanced has been open < 12 months, a previous
                                      mortgage/rental history totaling 12 months must be obtained and meet the 0X30 payment history guideline.
Streamline Refinance         Credit Qualifying         The maximum mortgage amount is the lower of:
with Appraisal                                            Outstanding principal balance minus the applicable refund of the UFMIP, plus closing costs, prepaid items
                                                          to establish an escrow account and the new UFMIP that will be charged on the new refinance OR 97.75% of
                                                          the appraised value of the property plus the new UFMIP that will be charged on the new refinance
                                                          The outstanding principal balance may include interest charged by the servicing lender when the payoff is
                                                          not received on the first day of the month, but may not include delinquent interest, late charges or escrow
                                                          shortages
                                                          Discount Points cannot be included in the new mortgage
                                                              o If the borrower has agreed to pay Discount Points, the Underwriter must verify and document the
                                                                  assets needed to close




11                                                                                                                                       05/24/2012
FHA                                                                                                                                                Wholesale
                                                                      Transactions
                                          FHA Total Scorecard Accept                                           Manual Underwrite
                         Non-Credit              The maximum insurable mortgage amount is limited to the sum of the outstanding principal balance of the loan
                         Qualifying              being refinanced plus the new UFMIP.

                                                   The following may not be added to the new loan balance:

                                                           closing costs
                                                           discount points
                                                           prepaid item
                                                           other financing costs

Streamline Refinance     The maximum mortgage amount cannot exceed:
without Appraisal                Outstanding principal balance minus the applicable UFMIP refund PLUS the new UFMIP that will be charged on the new
(Credit Qualifying and           refinance
Non-Credit Qualifying)           The outstanding principal balance may include interest charged by the servicing lender when the payoff is not received on the first
                                 day of the month, but may not include delinquent interest, late charges or escrow shortages
                                 CLTV is based on the original appraised value of the property
Credit Qualifying        A Credit Qualifying Streamline Refinance must be considered when the monthly mortgage payment will increase > 20%
Streamline Refinance     Required Documentation:
With or Without an               The Underwriter must certify that the borrower is employed and has income at the time of application
Appraisal                        o Refer to the FHA Lending Manual for complete guidance on employment verification for ALL types of income received
                                 Credit report must be verified
                                 Funds to close must be verified
FHA to FHA Refinance     FHA to FHA refinance transactions may exceed the loan limits.
Exceeding HUD County             The maximum loan amount for the new mortgage cannot exceed the original principal balance of the existing FHA mortgage.
Limits
                         All the following must be met:
                                  The new mortgage must be a refinance of an existing FHA-insured mortgage
                                  The maximum loan amount of the new FHA-insured mortgage, including all fees, closing costs, mortgage insurance premiums
                                  (MIP), interest, etc., must not exceed the original principal amount of the existing FHA-insured mortgage. Should the maximum
                                  loan amount (based on the original principal balance of the existing FHA mortgage) be insufficient to cover allowable interest,
                                  MIP, closing costs, fees, etc., the borrower shall provide cash to cover the costs that exceed the allowable maximum loan amount.
                                  The new FHA-insured mortgage may not have a term of more than 12 years in excess of the unexpired term of the existing FHA-
                                  insured mortgage
                                  The monthly payment due under the new FHA-insured mortgage is less than that due under the existing FHA-insured mortgage
                                  for the month in which the new FHA-insured mortgage is executed
                                  The mortgagee cannot require a minimum principal amount to be outstanding on the existing FHA-insured loan




12                                                                                                                                    05/24/2012
FHA                                                                                                                                              Wholesale
                                                                       Transactions
                                       FHA Total Scorecard Accept                                                     Manual Underwrite
HUD Home Incentive   HUD has released $100 down payment incentive program for borrowers purchasing single- family HUD Real Estate Owned (REO)
                     properties in certain states (see the link below to determine if your state is eligible). The program is limited to owner-occupant buyers who
                     have not purchased a HUD REO property within the last 24 months.

                     The maximum amount of escrow hold-back allowed for this program is $5000. Homes needing more than $5000 in improvements would
                     be considered Rehabilitation loans .

                     Additional information on this program can be found at: $100 down HUD Homes

                     Unifi Impacts: Unifi will require overrides in order to take advantage of this program.
Upfront Mortgage                                                                All Transactions
Insurance                                                                             1.75%
Annual Mortgage      In addition to the UFMIP, certain mortgages require the payment of an annual premium. The percentage amount of the annual premium is
Insurance Premium    based upon the LTV and the term of the mortgage as shown in the following chart:
                                                                                All Transactions
                                     LTV                       Term > 15 years                         LTV                       Term ≤ 15 years

                                    95%                              120bps                                 78%                                  None

                                   > 95%                             125bps                            78.01-90%                              35bps

                                                                                                          > 90%                               60bps


                                                                            Pricing
                                                                        Fannie Mae (DU)
Escrows                  Required on all LTV’s
Extended Lock            Available up to 120 days
                         Purchase transactions ONLY
Temporary Buydowns   2-1 Temporary Interest Rate Buydowns are only allowable on:
                         Fixed Rate Purchase Transactions
                         The loan must be underwritten at the Note Rate

                     Buydown funds may be paid from:
                        The seller
                        The borrower
                        Any other interested party
                        Funds from the seller or any other interested third party are considered seller contributions, and must be included in the 6% limit on




13                                                                                                                                  05/24/2012
FHA                                                                                                                                       Wholesale
                                                                         Pricing
                    seller contributions
ARM Guidelines                                                                     ARM Loan Overview
                 Index                 LIBOR adjusted to a constant maturity of one year

                 Interest Rate         3/1 ARM     Fixed for the first 36 months, then adjust every 12 months.
                 Change Date
                                       5/1 ARM     Fixed for the first 60 months, then adjust every 12 months.
                 Margin                2.250%

                 Interest Rate Caps3/1 ARM                       Initial Period: 1%                 Subsequent Periods: 1%      Lifetime: 5%
                                   5/1 ARM                       Initial Period: 2%                 Subsequent Periods: 2%      Lifetime: 6%
                 Conversion Option Ineligible

                 Qualifying Rate       Note Rate




14                                                                                                                           05/24/2012

				
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