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Training_CalSTRS

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					               Agenda
• Introduction
• Eligibility Guidelines
• Program Guidelines
  – Eligible 1st Loan Program
  – Second Loan Products
     • 80/17
     • 95/5
• Rate Locks, Fees and Float Downs
• CalSTRS Marketing Guidelines
Introduction to First Mortgage Corporation
Introduction to CalSTRS
Quick Facts
Advantages of the Program



INTRODUCTION
        Introduction to FMC
•   First Mortgage Corporation is an independent residential Mortgage Banking firm
    with branch offices located throughout the west.
•   Founded in 1975, FMC is a direct-lending mortgage banker approved as a lender
    and/or loan servicer by the Federal Housing Administration (FHA); the Veterans
    Administration (VA); the Federal National Mortgage Association (Fannie Mae); the
    Federal Home Loan Mortgage Corporation (Freddie Mac); the Government National
    Mortgage Association (Ginnie Mae); the California Housing Finance Agency
    (CalHFA); the Nevada Housing Division; the California Public Employees’
    Retirement System (CalPERS); the California Teachers’ Retirement System
    (CalSTRS); and many other major secondary market institutions.

•   Having funded in excess of $12 billion in residential real estate loans, FMC has
    assisted more than sixty thousand families with their mortgage needs. FMC
    enables families to enjoy the American Dream of Homeownership…“it’s the only
    thing we do.”
•   FMC has a longstanding tradition of providing unparalleled customer service and a
    reputation built on adding value to the home loan process. That’s why FMC should
    be considered…“YOUR FIRST LENDING RESOURCE”.
Introduction to CalSTRS
    CalSTRS is the California State Teachers Retirement Program
    providing retirement related benefits to teachers in public
    schools and Community Colleges in the state of California.
       Largest U.S. Teachers Retirement Fund
       2nd Largest U.S. Public Pension Fund
       CalSTRS assets stands at $173.7 billion as of December 31, 2007
       CalSTRS membership stands at 795,000

    The CalSTRS Home Loan Program was created in 1984 as a
    result of legislation that provided CalSTRS with a mortgage-
    backed security investment opportunity, and restructured in
    July of 2004. It was designed as additional source of home
    financing for its members and retirees giving them a great
    choice of mortgage loans with competitive rates.

–       Money Works for Pension Fund
      •   Borrowers can obtain a great loan with a competitive
          rate—and their money works for them, since income
          derived from mortgage payments goes directly into the
          Teachers’ Retirement Fund.

    CalSTRS has purchased over 32,300 loans at around $4 billion.
                           Quick Facts
        Topic                 06/30/06   06/30/07

Active Members                 453,365    455,693

Inactive Members               133,601    141,450

        Total Members         586,966    597,143


Service Retirements
Disabilities                   207,846    215,641
Survivor Benefits

         Total Members
       including Benefit      794,812    812,784
              Recipients
Advantages of the CalSTRS Program
 Low Cost loans with many options
      Buy a home
      Lower your existing payments
      Take cash out
 Conventional 15 & 30 year fixed loans up to $834,000

  Zero Down (95/5) program with combined loan amount up to $650k requiring NO money down from
the borrower.
  80/17 program requiring a 3% down payment from the borrower, and comes with a 17% 2nd with
deferred payments during the first 5 years. Combined loan amount up to $650k. This program allows
the borrower to qualify for a larger home.
 We’re on your side by offering the following:
       Competitive interest rates set daily
       FREE 45-day interest rate lock upon submission to protect from rising rates
       If rates drop after application, there is a ONE TIME interest rate reduction (float down
     option)
 Real Estate Assistance
       Receive cash rebates when SMARTMOVE is used to buy or sell a home
 Receive Discounts
       CalSTRS has negotiated discounts on escrow, title fees and mortgage insurance rates
 Additional Teacher Mortgage Programs
       Extra Credit Teachers Program through CalHFA with rates as low as 5.375% or the
     Community Solutions program through MyCommunityMortgage
Eligible Borrowers
Eligible Properties



ELIGIBILITY GUIDELINES
       CalSTRS Eligibility Guidelines
Topic                Description
                     Employees of a California public school district or California Community College,
                     and/or a member of the California State Teachers' Retirement System.

                             As proof of eligibility, a copy of a CalSTRS benefits statement, or a pay
Eligible                   stub or VOE from a California public school district or Community College
Borrowers
                            Borrowers must have a valid social security number

                             Non-permanent resident aliens are eligible on the Standard Conventional
                           Program ONLY (LTV is limited to 75%)
Geographic           Properties within the State of California ONLY
Restrictions
Eligible               SFR Attached & Detached
Properties             PUDs Attached & Detached
                       Condos – must be Fannie Mae approved
                       2-4 Unit properties
Occupancy            Owner Occupied Primary Residences only
FTHB                 No First-Time Home Buyer requirement
Income Limits        No Income Limits
Sales Price Limits   No Sales Price Limits
ELIGIBLE PROGRAMS
  Standard 1st Mortgage Products
       Conforming 30 & 15 Year Fixed
       Non Conforming 30 & 15 Year Fixed


  2nd Mortgage Loan Products
       80/17 Program
       Zero Down (95/5) Program
IMPORTANT REMINDERS
   Factors that may reduce your LTV/CLTV on the
   CalSTRS programs:

      Properties in Declining Market Areas – Reduce
      LTV/CLTV by 5%

      Insurability of Mortgages by MI Companies:
         •   High LTV’s
         •   Lower credit scores
         •   Declining Market Areas


   **DECLINING MARKETS AFFECTS CALTRS
       PROGRAMS**
           Conforming Product
Topic                      Description
Term                       15 or 30 Year Fixed
Loan Amount                Up to $417,000 – Fannie Mae Loan Limit
Max LTV – 1st              95%
Max LTV – 2nd              Standard Fannie Mae Guidelines
Max CLTV                   95%
Loan Purpose               Purchases, R&T Refinance, Cash Out Refinance
Eligible Properties        Owner-occupied 2- to 4-units; attached and
                           detached SFRs; condos; and PUDs
Minimum Down Payment       5%
Sources of Closing Costs   Follow Standard Fannie Mae Guidelines
Own Other Properties       Borrower can own other properties but with only 1
                           CalSTRS mortgage at a time
                 Conforming Matrix
Loan Type                  Units                 Max              Min FICO           Loan-Level
                                                                                       Pricing
                                              LTV/CLTV
                                                                                     Adjustment

Conf Purch/Rate and Term            1            95%                 620
Refi
Conf Purch/Rate and Term           2             95%                 640
Refi
Conf Purch/Rate and Term           3-4           80%                 660
Refi
Conf Cash-Out Refi                 1-2           70%                 620
                                                                                   Refer to Fannie
                                                                                   Mae guidelines.
Conf Cash-Out Refi                 1-2      70.01% - 80%             720

Conf Cash-Out Refi                 1-2      80.01% - 90%             720

Conf Cash-Out Refi                 3-4           70%                 620

Conf Cash-Out Refi                 3-4      70.01% - 75%             720


                 LTV Restriction: Max LTV allowed when there is secondary financing is 80%
         Conforming Loan-Level Price
                Adjustments
                   Loan Amount up to $417,000
                                                                             Loan Level Price
                 Conforming Parameters
                                                                               Adjustment
C/O Refi with LTV > 70-80%                                                         0.500%


C/O Refi with LTV > 80-90%                                                         0.750%

2 Unit with LTV > 90-95%                                                           0.500%

LTV 65.01-80% & CLTV 90.01-95%                                                     0.500%
     (i.e. 80/15/5 and 75/20/5)


                Note:
                        All add-ons must be disclosed as Loan-Level Price Adjustments on the GFE or
                        HUD-1. Loan-level price adjustments must be disclosed on line 808, NOT on
                        line 802. They may not be disclosed as discount points.
        Non Conforming Product
Topic                      Description
Term                       15 or 30 Year Fixed
Loan Amount                $417,001 to $834,000
Max LTV – 1st              95%
Max LTV – 2nd              Standard Fannie Mae Guidelines
Max CLTV                   95%
Loan Purpose               Purchases, R&T Refinance, Cash Out Refinance
Eligible Properties        Owner-occupied 2- to 4-units; attached and detached
                           SFRs; condos; and PUDs
Down Payment               Min. 5%
Sources of Closing Costs   Follow Standard Fannie Mae Guidelines
Own Other Properties       Borrower can own other properties but with only 1
                           CalSTRS mortgage at a time
       Non-Conforming Matrix
       Attached/Detached SFRs, Attached/Detached PUDs, Low-Rise Condos, 2 Units
              Purchase and Rate and Term                          Cash Out
Max Loan    Max LTV/CLTV       Min Credit      Max LTV/CLTV        Min Credit    Max Cash Out
  Amount                           Score                               Score

$650,000        95/95             620               75/75             620          $200,000
$834,000        90/90             660               75/75             620          $200,000
                80/80             620               75/75             620          $200,000
                            High-Rise Condos and 3-4 Units
              Purchase and Rate and Term                          Cash Out
Max Loan    Max LTV/CLTV       Min Credit      Max LTV/CLTV        Min Credit    Max Cash Out
  Amount                           Score                               Score

$650,000        90/90             620               75/75             720          $100,000
                                                    70/70             620          $100,000
$834,000        80/90             660               75/75             720          $100,000
                                                    70/70             620          $100,000

                 LTV Restriction: Max LTV allowed when there is secondary financing is 80%
    Non-Conforming Loan-Level Price
             Adjustments
                  Loan Amount $417,001 to $834,000
                   Non-Conforming Parameters                                     Loan Level Price
                                                                                   Adjustment

Loan balances > $650,000 to $834,000 & credit score < 660                              0.25%

Condos                                                                                0.375%

2-unit property                                                                       0.375%

3-unit property                                                                        1.00%

LTV 75.01% to 80% & CLTV 80.01% to 90% with loan balance >                             0.25%
$650,000

LTV 75.01% to 80% & CLTV 90.01% to 95% with loan balance >                            0.375%
$650,000

                  Note:
                          All add-ons must be disclosed as Loan-Level Price Adjustments on the GFE or
                          HUD-1. Loan-level price adjustments must be disclosed on line 808, NOT on
                          line 802. They may not be disclosed as discount points.
Second Loan Products
  • 80/17
    – Purchase Only
    – 30 Year Conforming
    – 30 Year Non-Conforming

  • Zero Down (95/5)
    – Purchase Only
    – 30 Year Conforming
    – 30 Year Non-Conforming
          Second Mortgage Loans
                          (80/17 & 95/5)
2nd Mortgage Information
  Interest rates for the second mortgage loans are set by CalSTRS, and
  carries the same rate as the first mortgage
  30-year term with a five-year deferred payment structure
  Simple interest calculation will be used for years 1 through 5, no principal
  or interest payments shall be due during the first 5 years / 60 months.

Year 6 / Payment number 61:
   The accrued simple interest balance from the deferral period will be
   added to the original loan balance.
   The new loan amount will be amortized over the remaining 25 years / 300
   months, and the borrower will then make monthly payments for the
   remaining life of the 2nd loan.
            **Down Payment Assistance Program (95/5 & 80/17) has
                       2 Notes & 2 Deeds of Trust***
         80/17 Program Summary
Topic                           Description
Term                            30 Years 1st & 2nd
Conforming Loan Amount          Up to $417,000 (Up to $505,612 - 1st & 2nd combined)
Non Conforming 1st Loan Amt     $536,082 (Up to $650,000 – 1st & 2nd combined)
Max LTV – 1st                   80%
Max LTV – 2nd                   17%
Max CLTV (Combined 1st & 2nd)   97%
Loan Purpose                    Purchase Only
Eligible Properties             Owner-occupied SFRs; approved Condos; and attached and
                                detached PUDs
Down Payment                    3% (1% min from borrower’s own funds)
Sources of Closing Costs        Borrower’s own funds, seller contributions up to 3%, gift
                                from relative, or unsecured grant from approved
                                government agency
2nd Mortgage                    Deferred payments on the 17% 2nd mortgage for the first
                                5 years
Own Other Properties            Borrower cannot own any other properties and only
                                1 CalSTRS mortgage at a time
                    80/17 Matrix
                                                             Max        Max
                       st   *LTV:   Max Loan    Max Loan
Loan Type      *LTV: 1        nd           st         nd   Combined   Purchase
                             2      Amt: 1      Amt: 2
                                                           Loan Amt     Price



Conforming       80%         17%    $417,000    $88,612    $505,612   $521,250




Non-
                 80%         17%    $536,082    $113,918   $650,000   $670,103
Conforming



*LTVs must be exactly 80% and 17%

               Minimum Fico Scores:
                   620 for LA up to $400k
                   680 for LA between $401k and $650k (combined 1st & 2nd)
  Zero Down (95/5) Program Summary
Topic                           Description
Term                            30 Years 1st & 2nd
Conforming Loan Amount          Up to $417,000 (Up to $438, 947 – 1st & 2nd combined)
Non Conforming 1st Loan Amt     Up to $617,500 (Up to $650,000 – 1st & 2nd combined)
Max LTV – 1st                   95%
Max LTV – 2nd                   5%
Max CLTV (Combined 1st & 2nd)   100%
Loan Purpose                    Purchase Only
Eligible Properties             Owner-occupied SFRs; approved Condos; and attached and
                                detached PUDs
Down Payment                    0%
Sources of Closing Costs        Borrower’s own funds, seller contributions up to 3%, gift
                                from relative, or unsecured grant from approved
                                government agency
2nd Mortgage                    Deferred payments on the 5% 2nd mortgage for the first
                                5 years
Own Other Properties            Borrower cannot own any other properties and only
                                1 CalSTRS mortgage at a time
   Zero Down (95/5) Matrix
                                                      Max
                                         Max Loan
                     *LTV:     *LTV:                  Loan      Max Combined
Loan Type                                Amount:
                      1st       2nd                  Amount:    Loan Amount
                                           1st
                                                       2nd


Conforming 1st        95%        5%      $417,000    $21,947      $438,947



Non-Conforming
                      95%        5%      $617,500    $32,500      $650,000
1st


*LTVs must be exactly 95% and 5%
                 Minimum Fico Scores:
                     620 for LA up to $400k
                     680 for LA between $401k and $650k (combined 1st & 2nd)
Program Underwriting Guidelines
Standard Program Guidelines
Specific 80/17 UW Guidelines
Specific 95/5 UW Guidelines
Mortgage Insurance


GENERAL GUIDELINES
Standard AUS Underwriting
      Standard Underwriting Guidelines
Topic                    Description
Manual UW                Manual UW allowed – Follow Fannie/Freddie guidelines. Non Conforming
                         loans cannot exceed DTI stated in previous table
Reserves:                    DU: Per DU or 2 months PITI
                             LP: Per LP or 2 months PITI
                              Manual: 2 Months PITI
                         • Funds from 401k, 403b and IRA/Keogh may be used for reserves if
                         accessible prior to retirement
                         • CalSTRS retirement accounts may not be considered cash reserves.

Homebuyer Education      Not Required on Standard Conventional Program only


Non Occupant Co-         Allowed on Standard Conventional Program only
Borrowers / Co-Signers

Down Payment             Minimum 5% from borrower’s own funds

Closing Costs            May be paid by 3rd Party
   80/17 Underwriting Guidelines
Specific guidelines to the 80/17 program:
  Homebuyer Education is required for 1st Time Homebuyers. A copy of the
Homebuyer Education Certificate is required in the loan file.
  Non-occupant co-borrowers and co-signers are not permitted
       Non-occupant co-borrowers allowed according to Fannie/Freddie guidelines on the Standard
     Conventional Program only.
  3% down payment is required, a minimum of 1% must come from the borrower’s own
funds. Remainder may come from:
     • Gift from a relative if repayment is not required
     • Grant from a government agency or an employer-assisted housing program, which
     has been approved
  Closing costs and prepaid items can be paid from following sources:
     •Borrower’s own funds
     •Seller contributions up to 3%
     •Gift from relative
     •Unsecured grant from a government agency or an employer–assisted housing
     program, needs approval by Countrywide.
  Ratios: 38% (may exceed w/ DU Approved/Eligible)

  Reserves: 2 Months (may come from retirement funds, if funds are accessible)
                 Zero Down (95/5)
               Underwriting Guidelines
Specific guidelines to the Zero Down (95/5) program:
  Homebuyer Education is required for 1st Time Homebuyers. A copy of the Homebuyer
Education Certificate is required in the loan file.
  Non-occupant co-borrowers and co-signers are not permitted

  NO MINIMUM DOWN PAYMENT required from the Borrower
  Closing costs and prepaid items can be paid from following sources:
     •Borrower’s own funds
     •Seller contributions up to 3%
     •Gift from relative
     •Unsecured grant from a government agency or an employer–assisted housing program,
     needs approval by Countrywide
                                             Or
     •A minimum $500 contribution from borrower’s own funds

  Ratios: 41% (may exceed w/ DU Approved/Eligible)

  Reserves: 2 Months (may come from retirement funds, if funds are accessible)
           General Program Guidelines
Topic                  Description
Buydowns               Temporary and Permanent buydowns not permitted
Seller Contributions   Conforming: 3% for LTV >90%; 6% for LTV 75-90%; 9% for LTV <75%
                       Non Conf: 3% for LTV >90%; 6% for LTV <90%
                       80/17 & 95/5: 3% Max
Assumable              Loans are not assumable
Prepayment Penalties   Allowed but not required or recommended

Title Policies         Title Policies required.
                                Title Policy for 80/17 & 95/5 must cover 1st & 2nd loan amounts
                             including recording information on 2nd
Hazard Insurance       Must equal 100% of value or unpaid balance of the mortgage with
                       replacement cost
Alt Docs               Permitted according to Fannie Mae & Freddie Mac guidelines.
                       Appraisal or property inspection required according to AUS Cert unless
                       waived by AUS cert (fee assessed)
Homebuyer Education    Not required on Standard Conventional Program
           Mortgage Insurance
    LTV            Standard MI%                Reduced MI% No Cost

80.01% to 85%              12%                               N/A

85.01% to 90%              25%                               17%

90.01% to 95%              30%                               25%

    Required on all loans exceeding 80% LTV
    If DU allows reduced coverage, it must be given to the borrower. Lower Cost MI
    is an option
    Acceptable MI Companies include MGIC, PMI, Radian, RMIC, Triad, UGI and
    Genworth.
    95/5 Zero Down program must have standard MI of 30%
    80/17 program does not require MI.
Interest Rate Lock, Float Down & Commitments
CalSTRS Program Fees
Current CalSTRS Program Rates



PRICING & COSTS
           CalSTRS Interest Rate Lock,
            Float Down & Commitments
Topic            Description
Interest Rates     Available daily on the FMC Website or individual AE websites
                   FMC website: www.firstmtgcorp.com
                   Available from your Account Executive
Lock Periods       FREE 45 day rate lock
                   A one time FREE 15 day extension is available
Float Down        One-time FREE float down
Opportunity       The float down may occur at any time during the 45-day lock period
                  The Float Down is NOT available after the 15-day extension period is
                 exercised, regardless of when the extension is take
Worse Case       Loans that have not closed after all other extensions have been
Extension        exhausted:
                        Rate will be the higher of original lock or current market rate with a
                      .125% fee
  Locks for 80/17 and Zero Down(95/5)1st and 2nd mortgages must be made concurrently
  Property changes require new lock
  No fee for cancellations, all loans that will not be delivered must be cancelled
           CalSTRS Program Fees
Topic                  Description
Max Origination Fees   Standard Conventional: Up to 1%
                       80/17 & 95/5: Up to 1.25% (1st Loan Only)

                        Origination Fee retained by Broker – FMC will not keep any of it.

Discount Points        NOT ALLOWED

Rebate/Premium         None available
Pricing:
Other Closing Costs    Normal and customary fees including an appraisal fee, credit report
                       fee, survey fee, title insurance premium, and other closing costs as
                       permitted by the respective agency. Must be fully disclosed on the
                       HUD-1.
                              See FMC website for list of our lender fees
CalSTRS Current Interest Rates
          Conventional Loan Program (Up to 1% Origination Fee)
                                                        Non Conforming Loans from
   Conforming Loans to $417,000
                                                          $417,001 to $834,000
               Rates           Price                             Rates               Price
30 Yr:        5.875%          100.00           30 Yr:           6.375%              100.00
15 Yr:        5.125%          100.00           15 Yr:           5.875%              100.00

         Zero Down 95/5 Program (Up to 1.25% Origination Fee)
                                                    Non Conforming Loans from
 Conforming Loans to $417,000
                                                      $417,001 to $650,000
               Rates           Price                             Rates               Price
30 Yr:        6.000%          100.00           30 Yr:           6.500%              100.00

             80/17 Program (Up to 1.25% Origination Fee)
                                                    Non Conforming Loans from
 Conforming Loans to $417,000
                                                      $417,001 to $650,000
               Rates           Price                             Rates              Price
30 Yr:        6.125%          100.00           30 Yr:           6.625%              100.00


              *Rates are for FMC Training purposes only and are current as of 02/14/08 only.
   Marketing Guidelines
ALL marketing materials must be approved by CalSTRS. Marketing materials
include hard copy advertisements (e.g., flyers, letters, ads, bulletins, etc.) as
well as electronic advertising.


CalSTRS-approved marketing pieces from previous mortgage loan programs
are not allowed.


Check out the First Mortgage Website for prior approved marketing pieces.


Contact your Account Executive for more information or for your scenarios.
                    FMC - FAQS
1.   On the 80/17 where there’s a 3% minimum down payment (1% from borrower’s
     own funds), can the CHDAP program be used for the remaining 2%?
         CHDAP can only be used behind the CalSTRS Standard Conventional
         program and must meet all CHDAP requirements. It cannot be used on
         the 80/17 & 95/5 program. You can only use gift funds or a grant for the
         remaining 2% required for the borrower’s down payment.
2.   Regarding Homebuyer Education which is required for FTHB on the 80/17 &
     95/5 programs, if it’s a husband and wife, do both have to attend or can one
     spouse represent both borrowers?
         If both husband and wife are on the loan, both must attend a homebuyer
         education class.
3.   How do we sign up borrowers for the Homebuyer Education?
         Please use the following website:           http://www.mgichome.com/
On behalf of First Mortgage Corporation,
 we thank you for joining our training
 today on CalSTRS and we hope the
 information provided was informative
 and will help you build your business!

				
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