Rural Housing Matrix

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					                                 USDA Rural Housing Guaranteed Loan Program
                                                   C30RH
                                     LTV           LTV                    Maximum
         Purpose                                        nd   TLTV
                                    w/o 2nd      with 2                    HTLTV        The Rural Housing Service (RHS) program provides very-low-,
                                        Owner Occupied                                  low- and moderate-income rural residents with better access to
Purchase & No Cash                                                                      affordable housing finance options with little or no down payment
                                  Up to 103.5%      N/A      N/A              N/A       or out-of-pocket costs.
Refi:

Cash out Refi:                   Not Allowed                                            Borrowers may obtain a loan to purchase a new or existing home
                                                                                        that is located in a designated rural area. A rural community
                                         Second Home                                    generally has a population of 10,000 or less; however, a
                                                                                        community with a population of 20,000 or less can be considered
Not Allowed                                                                             “rural” if it is located outside a metropolitan statistical area (MSA).

                                      Non-Owner Occupied                                To be eligible for RHS assistance, borrowers must lack sufficient
                                                                                        resources (for example, borrower is unable to secure the
                                                                                        necessary down payment which is generally 20%, to obtain
Not Allowed                                                                             conventional financing without RHS guarantee assistance).


Maximum LTV and Loan Amount
  The Maximum LTV may exceed 100% of the appraised value only by the amount of the Guarantee Fee being financed in the loan amount.
  Purchase transactions are eligible up to a maximum 100% LTV plus the 3.5% Guarantee Fee.
  Refinance transactions may exceed 100% only by the maximum 1.00% Guarantee Fee.
  There is no minimum loan amount.
  The maximum loan amount is 100% of the conforming loan limit or 103.63% when the Guarantee Fee is financed.




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Calculating the Guarantee Fee:
A Guarantee Fee of 3.50% of the Guaranteed Loan amount due at closing. The fee can be financed in the loan amount, included as part of a Lender contribution
or collected directly from the borrower at closing.


 Transaction Type                  Guarantee Fee Not Financed                      Guarantee Fee Financed

 Purchase Transactions             Multiply the loan amount by 3.50% and           The fee is calculated as follows:
                                   round to the nearest cent.                         1. Divide the base loan amount by .965 and round to the
                                                                                           nearest cent.
                                   Example: $100,000 x .035 = $3,500.                 2. Multiply that number by .035 (3.50%) and round to the
                                                                                           nearest cent.
                                                                                   Example:
                                                                                   $100,000 ÷ .965 = $103,626.943005 (rounded to $103,626.94).

                                                                                   $103,626.94 x .035 = $3,626.9429 (rounded to $3,626.94).


 Rate and Term Refinance           Multiply the loan amount by 1.00%.              Follow steps 1 and 2 above, substituting 99 for .965 and .01 for
                                                                                   .035.
                                   Example: $100,000 x .01 = $1,000.               Example:
                                                                                   $100,000 ÷ .99 = $101,010.10.
                                                                                   $101,010.10 x .01 = $1,010.10.


Excessive Points and Fees:                    Loans must adhere to a max of 5% points & fees requirement for loan origination, broker, finder, underwriting fees
                                              and any charge imposed as a condition of the loan, whether paid to lender or a third party.




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                                                                                                                                                      Effective (date)
Eligible Borrowers:                   Maximum of 4 borrowers
                                         Borrowers must lack sufficient resources (for example, borrower is unable to secure the necessary down
                                          payment which is generally 20%, to obtain conventional financing without RHS guarantee assistance.)
                                         Borrowers must have a valid Social Security number.
                                         Title must be placed in individual names only. Title can not be taken in a Trust.
                                         All borrowers must be screened using CAIVRS to determine if an applicant is delinquent on a federal loan.
                                         Co-borrowers are allowed (the maximum number of borrowers allowed on a single transaction is four).
                                         Non-Occupant Co-borrowers are not allowed
                                         U. S. Citizens
                                         Permanent Resident Aliens
                                                   o Provide Permanent Resident Card (USCIS form I-551)
                                                   o Unexpired Foreign Passport “Processed for I-551 Temporary Evidence of Lawful Admission for
                                                       Permanent
                                                   o Residence. Valid until mm-dd-yy. Employment authorized.”
                                         Non-Permanent Resident Aliens
                                                   o Must have valid visas or other proof of legal residency. Acceptable visas include but are not
                                                       limited to E-1, H-1B, H 2A, H-2B, H-3, L-1, G series and O-1.
                                                   o Documentation must be provided showing that the borrower is a legal resident with a U.S. source
                                                       of income that can be expected to continue for three years.
                                                   o Obtaining a copy of a valid work permit satisfies both requirements.
                                                   o Must be a legal resident as evidenced by social security number
                                      Foreign Nationals are not eligible
                                      Trailing income borrowers are not eligible
Non-Occupant Co-Borrowers             Not Allowed
Multiple Loans to the Same Borrower      Borrower may not own any other property
                                         Borrowers may only have one primary residence. Borrowers may be the current owner of a structurally sound,
                                          functionally adequate house, as long as it is sold prior to or concurrently with the purchase of the new home.
                                         Rural housing loans are limited to one loan per borrower and co-borrower.

Types of Financing:                   Purchase Mortgages
                                      Rate and Term Refinance
                                           The interest rate cannot exceed the interest rate of the existing loan.
                                           The loan security must include the same property as the original loan. The security property must be
                                              owner-occupied as the borrower’s primary residence.
                                           Maximum loan amount cannot exceed the balance of the loan being refinanced, plus the guarantee fee
                                              and reasonable and customary closing costs (including funds necessary to establish a new tax and
                                              insurance escrow account). Subordinate financing, such as home equity lines of credit and down payment
                                              assistance “silent” seconds, cannot be included in the new loan amount. Unpaid fees, such as late fees
                                              due the servicer, cannot be included in the new loan amount.
                                              Any existing secondary financing must be subordinate to the first lien.
                                      Cash Out Refinances
                                          Not allowed


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                                                                                                                                            Effective (date)
Continuity of Obligation:             If there is a current outstanding lien that will be satisfied through the rate/term refinance transaction, there must be
                                      at least one Borrower obligated on the new Loan who was also obligated on the outstanding Loan being
                                      refinanced.
                                      An acceptable continuity of obligation (assuming that there is an outstanding lien against the property) exists
                                      when:
                                                There is at least one Borrower obligated on the new Loan who was also a Borrower obligated on the
                                                existing loan being refinanced
                                                The Borrower has been on title and residing in the property for at least 12 months and has either paid the
                                                mortgage for the last 12 months or can demonstrate a relationship (relative, domestic partner, etc.) with
                                                the current obligor
                                                The existing Loan being refinanced and the title have been held in the name of a natural person or an LLC
                                                as long as the Borrower was a member of the LLC prior to transfer. Transfer of ownership from a
                                                corporation to an individual does not meet the continuity of obligation requirement
                                                The Borrower has recently inherited or was legally awarded the property (divorce or separation)
                                      Loans with an acceptable continuity of obligation may be underwritten as either a rate/term refinance or a cash-out
                                      refinance based on the standard definitions. We will continue to allow “buy-outs” resulting from divorce settlements
                                      or property inheritance as rate/term refinances in accordance with this standard guidelines. In addition, the
                                      requirements for payoffs of installment land contracts remain in place and are unaffected by these changes.

                                      If the Borrower is currently on title but is unable to demonstrate an acceptable continuity of obligation, or there is
                                      no outstanding lien against the property, the Loan must be underwritten as a cash-out refinance and therefore
                                      ineligible.
Refinance Of Loans With Less Than 1   If the property has been owned less than 12 months, the LTV must be based on the lesser of the appraised value
Year Seasoning                        or the original purchase price plus the costs of any improvements.
                                           If the value has increased more than 15%, photos of the improvements are required.




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                                                                                                                                                 Effective (date)
Property Types                      Eligible Properties:
                                          Single family non-farm residence, approved condominiums and PUDs.
                                          The property must be located in a rural area, as designated by the local RHS office.
                                                 o To determine whether the property is located in a designated rural area, go to the Rural
                                                      Development Web site at http://eligibility.sc.egov.usda.gov.
                                                 o From the home page, click “Single Family Housing” under “Property Eligibility.” Enter the property
                                                      address to get an instant determination or to view a map.
                                          The value of the site should not exceed 30% of the total value of the property. Exceptions by the local
                                             Rural Development office may apply on a case-by-case basis.
                                          The property must be contiguous to and have access to a paved or all-weather surface street, road or
                                             driveway.
                                          The property must have dependable water and waste disposal systems that are approved by local
                                             authorities.
                                          Leaseholds are permitted if long-term leasing of home-sites is a well-established local practice, and such
                                             leaseholds are freely marketable in the area.

                                    Ineligible Property Types:
                                       Manufactured Housing
                                       Properties with an in-ground swimming pool. Exceptions may be requested through your Rural Development
                                           office. If approved, the maximum loan will be reduced to the adjusted appraised value (full value less the
                                           pool value).
                                       Properties located in a flood or mudslide zone. This restriction may be waived for existing homes in some
                                           states. In those states, National Flood Insurance must be available and flood insurance is required. Contact
                                           your local Rural Development office for details.
                                    Properties that are located in an area not designated as rural by RHS.
Property Listing for Sale                Rate/term: must be taken off the market prior to application.
Investment Properties                    Not Allowed
Principal Residence Pending Sale         Borrowers may be the current owner of a structurally sound, functionally adequate house, as long as it is sold
                                          prior to or concurrently with the purchase of the new home. Exceptions may apply on a case-by case basis
                                          by Rural Development.
Options for Borrower’s who are      Not Allowed
Retaining their current home
Ratios                                 Guaranteed Loan Program maximum ratios are 29/41%
                                       Debt ratios exceeding 29/41% may be acceptable with compensating factors.
                                       Ratios may be automatically waived to 31/43% in states that meet the International Energy Code of 2000.
                                         Contact the local Rural Development office for verification.
                                       In addition, exceptions for higher ratios may be approved by Rural Development Office.




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                                                                                                                                           Effective (date)
Credit                              Minimum credit score 640
                                    Evaluated by GUS
                                    Bankruptcies not allowed in last 36 months
                                    Documentation of adverse credit history waivers are required for those involving a delinquent Federal debt or
                                      previous RHS loan.
                                    No action is necessary for any derogatory items, except for those involving a delinquent Federal debt or
                                      previous RHS loan.
                                    Letter of explanation from borrowers for all derogatory credit regardless of the date of the incident
                                    Credit history must indicate a reasonable ability and willingness to meet obligations as they become due. The
                                      following are indications of unacceptable credit history and must be carefully investigated:
                                      o More than one payment being more than 30 days late in the last 12 months
                                      o A foreclosure or bankruptcy in the past 36 months
                                      o A judgment in the past 12 months
                                      o Outstanding tax liens, no matter what their age, that are currently delinquent.
                                      o Two or more rent payments paid 30 days or more past due.
                                      o Outstanding collection accounts, no matter what their age, that are currently delinquent.
                                      o Previous RHS debt or non-RHS debt that resulted in a loss.
                                      o Any outstanding judgment obtained by the United States in a federal court (other than tax lien)
Housing Payment History          Written VOR or Credit supplement required for most recent 12 months
Pre Foreclosure Sale             4 years seasoning from completion date
                                   Note: Extenuating circumstances require 2 years seasoning and are subject to investor consideration and
                                   additional guides
Deed in lieu of Foreclosure      4 year seasoning from completion date (date deed-in-lieu executed)
                                 After 4 years up to 7 years following completion date, the following restrictions apply:
                                     Owner occupied, second home and non-owner transactions allowed
                                     Must use the greater of 10 percent minimum down payment or the minimum down payment required for the
                                      transaction
                                     Rate & term
                                     o Cash out requires 7 years elapsed time period

                                 Note: Extenuating circumstances require 2 years seasoning and are subject to investor consideration and
                                 additional guides
Foreclosure                      Seasoning is 36 months from the completion date with re-established credit
                                     No 30 day mortgage lates in the past 12 months and no 60 day mortgage lates in the past 24 months
                                 After 5 years up to 7 years following completion date, the following restrictions apply:
                                     Purchase of an owner occupied only with 10% down payment from borrowers own funds.
                                     Minimum credit score of 680.
                                     Non-owner, second home and cash out refi is not allowed
                                     Rate & term refi allowed for all occupancy types as per the guidelines in effect at the time of the loan
                                      transaction. (contact Secondary/Underwriting)

                                 Note: Extenuating circumstances may apply and subject to investor consideration and additional guides


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Bankruptcy                       Length of time is determined from dismissal or discharge date
                                    No 30 day mortgage lates in the past 12 months and no 60 day mortgage lates in the past 24 months

                                 Chapter 7:
                                    Requires 36 months seasoning with re-established credit
                                 Chapter 13:
                                    Discharged BK seasoning is 36 months
                                    Dismissed BK seasoning is 36 months

                                 Note: Extenuating circumstances require 36 months seasoning and are subject to investor consideration and
                                 additional guides.
                                 Multiple Bankruptcies:
                                     A 5-year elapsed time period is now required to re-establish credit from the most recent discharge or dismissal
                                      date for borrowers who have more than one bankruptcy filing in the past 7 years.
                                 Note: Extenuating circumstances require 3 years seasoning and are subject to investor consideration and
                                 additional guides.
Employment Verification               A signed and dated IRS Form4506-T completed at application and closing, is required for all borrowers
                                         authorizing transcripts for the most recent two years.
                                      IRS transcripts dated prior to the date of closing are required at closing. If the IRS returns “no transcripts
                                         available” for the time period requested, proof of extension and t he most recent years’ IRS transcripts
                                         available, as determined by the AUS certificate, are required.
                                      If no VOE is available, applicant income may be verified by W-2 tax forms for the previous two tax years,
                                         telephone verification of the applicant’s permanent employment and one of the following:
                                              o Paycheck stubs or payroll earnings statements covering the most recent 30-day period
                                         OR
                                              o Electronic or computer-generated verification of earnings for the most recent 30-day period.




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Income                                  The borrower’s adjusted income may not exceed 115% of the U.S. median income.
                                        If Bond financing is involved, the borrower’s income cannot exceed the lesser of 115% area*median
                                         income or income limits specified by the Bond Program.
                                      Moderate income is defined as the greater of 115% of the U.S. median family income or 115% of the
                                         average of the state-wide and state non-metro median family incomes or 115/80ths of the area low-income
                                         limit.
                                              o An income calculator is available on the Rural Development Web site at
                                                  http://eligibility.sc.egov.usda.gov.
                                              o From the home page, click “Single Family Housing” under “Income Eligibility.”
                                      The following are included in annual income to qualify for an RHS guaranteed loan:
                                              o Gross amount of wages, salaries, overtime pay, commissions, fees, tips, bonuses and other
                                                  compensation for personal services of all adult members of the household.
                                              o Net income from the operation of a farm, business or profession, interest, dividends and other net
                                                  income of any kind from real or personal property.
                                              o Payments from social security, annuities, insurance policies, pensions, unemployment, workers
                                                  compensation, alimony and/or child support and other types of periodic receipts.
                                              o All regular pay, special pay and allowances of a member of the armed forces who is the borrower
                                                  or spouse whether or not that family member lives in the unit.
                                      The following sources are not included in annual income but will be considered in determining the ability to
                                         repay the loan:
                                              o Income from minors.
                                              o Food stamp allotment.
                                              o Payments from foster care.
                                              o Irregular cash gifts.
                                              o Lump sum additions, such as capital gains, etc.
                                              o Medical reimbursements.
                                              o Educational benefits.
                                              o Hazardous duty pay for military person exposed to hostile fire.
                                              o Income exempted by Federal Statue
                                      Adjustments to reduce annual income include $480.00 for each minor child, full time student or a disabled
                                         member of the family. $400.00 may be deducted from annual income for each family member over 62
                                         years of age. An additional deduction may be calculated for certain expenses when added together
                                         exceed 3% of gross annual income.
Assets                            Borrowers must lack sufficient resources (for example, borrower is unable to secure the necessary down
                                   payment which is generally 20%, to obtain conventional financing without RHS guarantee assistance.)
Reserves requirements            Cash reserves are not required.
based on PITIA




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                                                                                                                                      Effective (date)
Definition of PITIA for Required Reserves         Principal and interest
                                                  Hazard, flood, and mortgage insurance premiums (as applicable)
                                                  Real estate taxes
                                                  Ground rents
                                                  Special assessments
                                                  Owners’ association dues (excluding individual unit utility charges)
                                                   Monthly cooperative corporation fees (less the pro rata share of the master utility charges for servicing
                                                   individual units attributable to the borrower’s unit), and subordinate finance payments on mortgages secured
                                                   by the subject property. (Refer to FNMA product guidelines for specific qualifying information on subordinate
                                                   financing.)
Gift Funds                                       Gifts are acceptable from someone who is not a member of the household.
                                                 A fully completed gift letter stating no repayment of the gift is required.
                                                 Evidence of funds must be included in the file.
Seller Contributions                             An amount of 6% of the sales price can be contributed towards all closing costs.
(Limit is based on TLTV ratio)
Mortgage Insurance                          N/A
Acceptable Mortgage Insurance               N/A
Companies
Appraisal Requirements                       The Uniform Residential Appraisal Report (URAR) must be completed using the sales comparison (market)
                                              and cost approach to market value. Use the most recent revision of URAR. Appraisals must be completed
                                              within 120 days from the effective date of the appraisal to the Note date.
                                             If the appraisal report will be more than 120 days old, a re-inspection by the appraiser is required. The
                                              appraiser must use the Appraisal Update and/or Completion Report (Form 1004D or 442) which must include
                                              all of the following:
                                                   A determination on whether or not the property value has declined
                                                   That there has been, at minimum, an exterior inspection of the property
                                                   Notes on any market changes
                                               If the appraiser determines that the value has declined, a new appraisal and loan must be re-underwritten
                                                   using the new value.
                                               Note: The original appraisal cannot exceed 6 months, even if a recertification is completed.
                                               For refinance transactions, a full appraisal may only be required in cases when any accrued interest,
                                                   closing costs and/or fees (other than the guarantee fee) will be financed into the new loan amount.
                                               Market Conditions Addendum: The Fannie Mae -1004MC / Freddie Mac -#71 form must be included with
                                                   all appraisals.
                                               Appraisals must be completed by an FHA Roster appraiser for Rural Housing loans. When prepared in
                                                   accordance with HUD Handbooks 4905.1 and 4150.2, the appraisal constitutes acceptable documentation
                                                   to comply with existing dwelling inspections made in accordance with RD Instruction 1980-D, section
                                                   1980.341(b)(1)(i). The lender should be careful to select an appraiser familiar with and who can certify that
                                                   the requirements of HUD Handbooks 4905.1 and 4150.2 have been met.




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                                                                                                                                                     Effective (date)
Buydowns                            Temporary buydowns are allowed only if the property seller or third party pays the cost.
                                     Permanent interest rate buydowns are allowable. However, they cannot be included in the loan amount
                                     funded unless the borrower’s income is less than 80% of the area median income.
                                    Funded buydown accounts are not allowed on refinance transactions.
Energy Efficient Mortgages       Not Allowed
Secondary Financing              Not Allowed
Payment Shock                    In cases where payment shock is 100% or higher, no additional risk layering should be allowed without strong
                                 compensating factors
Impounds                         Impound accounts are required for property taxes and hazard insurance
Documents                        Standard Fannie Mae/Freddie Mac conventional or FHA loan documents are allowed. In addition, the following
                                 RHS documents are required.

                                        Guaranteed Loan Program
                                               Income Eligibility Calculation Worksheet
                                               Reservation of Funds (Form 1980-86)
                                               Request for Single Family Housing loan Guarantee (Form 1980-21)
                                               Conditional Commitment for Single Family Housing Loan Guarantee (Form 1980-18) with
                                               completed Lender Certification.
                                               Guaranteed Loan Closing Report (Form 1980-19)
                                               Original Loan Note Guarantee (Form 1980-17)
                                               Lender Record Change (Form 1980-11)
                                               Certificate of Completion (if applicable)




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