FHA-TBI Origination Process

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					                               FHA-TBI ORIGINATION PROCESS

                                           September, 2008




                                  Training Segments
  FHA History - Purpose of FHA Loans; page 2

  FHA Advantages; page 2

  “Economic Stimulus Act of 2008” vs. “Housing and Economic Recovery Act of 2008”; page 3

  Toll AOS Estimated Delivery, Sales Price & MSA Loan Limit Requirements; page 3

  Toll Agreement of Sale & Amendatory Clause Disclosure; page 4

  TBI Operations Workflow Flow Steps; page 5

  TBI Mortgage Appraisal Process; page 6, 7

  Property Types- Single Family & Condominiums; page 8

  UFMIP & Monthly MIP Basics & Down Payment Requirements; page 9, 10

  Application Basics & Buyer Qualifications; page 11-19

  FHA Disclosures- Applicant & Toll Builder HUD forms; page 20

  BYTE File Setup, LTV, MIP & FHA Specific Fields & Screens; page 21-29

  FHA Products, TBI FHA Investors & Secondary Marketing; page 30-32

  Reference Sources; page 33

  Question & Answer Session
                                                                                         September 2008 Rev. 01


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                  250 Gibraltar Road   Horsham, Pennsylvania 19044   Tel: 215.938.8000
                                             tbimortgage.com
                                    FHA-TBI ORIGINATION PROCESS

                                                 September, 2008

                                   FHA History & Purpose of FHA Loans

The FHA and HUD have insured over 34 million home mortgages and 47,205 multifamily project mortgages since
1934. FHA currently has 4.8 million insured single family mortgages and 13,000 insured multifamily projects in its
portfolio*. In the more than 60 years since the FHA was created, much has changed and Americans are now
arguably the best housed people in the world. HUD has helped greatly with that success. * As of September 6, 2006.

    Established in 1934 as the Federal Housing Administration (FHA)
    Self-sustaining insurance fund – paid by homeowners via mortgage insurance premiums (MIP)
    Became part of HUD in 1965 when the agency was established
    To help achieve the national goal of safe and affordable housing
    To encourage lenders to fund “riskier” borrowers and properties
    To increase affordable homeownership opportunities
    To help more families achieve the American dream
    HUD oversees FHA programs & regulates FHA, creates & maintains handbooks & Mortgagee Letters
    FHA insures mortgages, responsible for Credit Policy & administers single family housing for HUD

                                                FHA Advantages

      Almost 100% insurance for lenders
      Only 3.50% required down payment (100% gifted)
      Seller, real estate agent, builder and developer can pay up to 6% of sales price in seller contributions
       (closing costs, prepaid items, discount points)
      Gift funds can cover all transaction costs
      Sweat equity can be used for down payment
      No mandatory credit (FICO ) scores and flexible credit/underwriting standards
      No reserve requirements for one and two unit properties
      Adjustable Rate Mortgages (1, 3, 5, 7, 10 year terms) with annual and maximum caps
      Qualifying ratios of 31% for housing expense and 43% total debt, up to 33% and 45% for new const.
      Ratios can be exceed with true compensating factors
      HUD’s automated underwriting Scorecard, TOTAL – reduced documentation requirements
      Non-occupant co-borrowers allowed for qualifying purposes
      FHA loans are assumable if occupant purchaser qualifies
      Premium pricing can be used to pay closing costs and prepaid items
      Loss Mitigation options available to borrowers if they encounter payment difficulties
      $300 cost for home inspection – eligible closing cost
      Streamline refinancing of current FHA-insured loan to new FHA-insured loan
      Upfront MIP 1.75%, monthly from .0025% to .0055% based on term & LTV on purchase transactions
      US Citizenship not required; lawful perm and non-perm resident aliens eligible with proper documentation

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                       250 Gibraltar Road   Horsham, Pennsylvania 19044     Tel: 215.938.8000
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                                              FHA-TBI ORIGINATION PROCESS

                                                               September, 2008


             Economic Stimulus Act of 2008 vs. Housing and Economic Recovery Act of 2008

                                          Hand out- Summary of Major Single Family Program Changes

The “Economic Stimulus Act of 2008” which was passed on February 13th 2008, allowed for temporarily higher FHA
loan amounts. The “Economic Stimulus Act of 2008” will expire on December 31, 2008. Under the Act, the
maximum FHA loan amount in “High Cost” areas for single family 1-2 units, (determined by HUD) was set at 175%
of the FNMA/FHLMC conforming limit of 417K. That represented a maximum FHA “Base Loan” amount of
$729,750 in High Cost areas. FHA Mortgages originated on this temporary Act must be closed and insured by
December 31, 2008. Note: TBI Mortgage’s date to close these temporary higher loan limits is- November 28, 2008.

With the passing of the “Housing & Economic Recovery Act of 2008” (HERA) on July 30, 2008 with an effective
date of January 1, 2009 the legislation includes several initiatives. Of major importance to TBI Mortgage is that it
allows for permanent, higher loan limits. Loan amount limits will be based on the lesser of 115% of the local area
median home price, as determined by HUD (but no lower than a floor of 65% of $417,000) or 150% of the GSE
limit. These changes are effective January 1, 2009 and permanently increase the national cap and floor. This new
FHA loan limit will not go into effect until after the limits in the Economic Stimulus Act of 2008 expire on December
31, 2008.

That would equate to a $625,500** maximum FHA loan limit potential in the highest home cost areas.
(150% of FNMA/FHLMC conforming limit of 417K)
**Base FHA loan amount excluding financed MIP. Final loan amount can exceed maximum loan limit if MIP is financed.

The minimum FHA loan limit nationwide will be $271,050 (65% of FNMA/FHLMC conforming limit of 417K)


                      Toll AOS Estimated Delivery, Sales Price & Loan Limit Requirements

With the upcoming expiration of the temporary FHA loan limits on December 31, 2008 (Economic Stimulus Act of
2008), all Toll Agreement of Sales where the FHA loan amount would exceed original (prior to February 13th 2008)
MSA loan limits where the property is located, must close by November 30, 2008. This will allow time for TBI
Mortgage to deliver an FHA insurable file to our investor by years end.

Note: for all contracts that close on or after January 1, 2009, loan limits will be determined by the provisions set forth in the Housing & Economic
Recovery Act of 2008 (HERA) as noted above.

To check the maximum loan limits, useful tools are available on the Hud.gov website- FHA Mortgage Limits
page and FHA’s. These pages allow you to look up FHA mortgage limits in any area or several areas, and
then list them by state, county, or Metropolitan Statistical Area. The links are:

      https://entp.hud.gov/idapp/html/hicostlook.cfm http://www.fhaoutreach.gov/
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                             250 Gibraltar Road         Horsham, Pennsylvania 19044              Tel: 215.938.8000
                                                              tbimortgage.com
                                    FHA-TBI ORIGINATION PROCESS

                                                  September, 2008


                             Toll- AOS & Amendatory Clause (AC) Disclosure

                                       Hand out- Endorsement to Agreement of Sale

TBI Mortgage’s procedures for obtaining an FHA Appraisal are unique with Toll. The reason has to do with the
Agreement of Sale and FHA’s Amendatory Clause provision. FHA’s Amendatory Clause (AC) mandates that
buyers cannot be forced to consummate a purchase transaction if the appraised value does not meet (or exceed)
the sales price. As a result of the AC, Toll buyers have essentially an escape clause in their sales contract. The
Amendatory Clause is a separate endorsement included in Toll’s standard Agreement of Sale contract. The title of
the document is- “VA/FHA ENDORSEMENT TO AGREEMENT OF SALE”. The language below is in essence, the
AC disclosure.


      ENDORSEMENT TO AGREEMENT OF SALE dated                                 between
_____________________("Seller") and         ("Buyer") of House No. __________    Lot
No. _____ in the community of _____________        (the "Agreement").

        NOTWITHSTANDING anything contained in the Agreement to the contrary, Buyer and Seller
further agree as follows:

    1. Buyer has indicated that Buyer intends to apply for a first mortgage which is (i) a Veteran’s
        Administration (“VA”) Guaranteed Loan or (ii) insured by the Federal Housing Administration
        (“FHA”).

It is expressly understood and agreed that notwithstanding any other provision of the Agreement, that
Buyer shall not be obligated to complete the purchase of the Premises described herein or to incur any
penalty by forfeiture of the earnest money deposits or otherwise unless the Buyer has been given in
accordance with FHA or VA requirements a written statement setting forth the appraised value of the
Premises of not less than ______________________ (insert purchase price).


To mitigate the potential for a sales contract to be lost, TBI has created a workaround for determining the value of
the property before Toll signs the Amendatory Clause disclosure with their buyers. This workaround is discussed in
the “TBI Mortgage Appraisal Process” segment.


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                       250 Gibraltar Road   Horsham, Pennsylvania 19044         Tel: 215.938.8000
                                                  tbimortgage.com
                                            FHA-TBI ORIGINATION PROCESS

                                                             September, 2008

                                             TBI Operations Workflow Flow Steps


            1                   2                  3                   4                  5                   6                  7
           FHA           Case opener           TBI UW           File returned        Processor         **UW sends            Any final
       application        setup, first       initial stips      to processor         resubmits             file to          conditions
       originated,             UW           on the file &          for UW            file to UW           sponsor            cleared,
       returned &        submission         Conventional        conditions to        for review        (investor) or       loan closes
      submitted to        for first UW       conditional        be collected        and clearing         FHA (test
       Operations           review            appraisal                              conditions          cases) for
                                               ordered                                                    approval

**Step 6 will be in effect until TBI Mortgage has Direct Endorsement- DE authority with FHA. Test Cases are currently being submitted to
achieve our DE designation. Corporate underwriting will designate if a file is “Test Case” or “Non-Test Case” and inform the MLS of such.



                                                   Operations Workflow Detail
                                                       (From step #2 through #7 above)

          Register the loan and obtain the FHA or VA case number
          Order the appraisal, if required (see Ops Memo 08-07)
          Review the loan package for all required exhibits/documents/disclosures. If additional documentation is
          required and/or the file is incomplete the underwriter will notify the originator and/or the processor and
          request what is needed
          Once the file is complete the underwriter will send/transmit the necessary documentation to the
          FHA/VA/Sponsor, as the case may be, for review and approval.
          Once determined upon approval the underwriter will notify the originator and the processor of any
          additional conditions required for the final loan approval and closing.
          The processor will gather all required underwriting and closing conditions and submit to the underwriter for
          review and transmittal to FHA/VA/Sponsor for review and approval.
          Once all u/w conditions are cleared, and the closing conditions are received the file may be submitted for
          the closing to-
                   TBIM Closing Department for DE (or test cases) by the processor
                   To the Sponsor, Sponsors require at least 72 hours of advance notice, with all conditions
                   clear, to transact a closing.
          Either TBIM or the Sponsor will close and insure the loan.




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                             250 Gibraltar Road        Horsham, Pennsylvania 19044            Tel: 215.938.8000
                                                             tbimortgage.com
                                     FHA-TBI ORIGINATION PROCESS

                                                     September, 2008


                                         TBI Mortgage Appraisal Process

                                The appraisal ordering procedure- refer to Operations Memo 08-07

To mitigate the potential for a sales contract to be lost, TBI has created the following procedure which is a
workaround for determining the value of the property before Toll signs the Amendatory Clause disclosure.

1.      Buyer is identified as a FHA OR VA borrower.

2.      Buyer signs standard Toll AOS, together with the required FHA/VA Endorsement .

3.      Toll sales person notifies TBI Mortgage’s Business Development Manager (“BDM”) and requests that an
appraisal be ordered.

4.      BDM notifies TBI FHA/VA Underwriting Center of the need to obtain the FHA/VA preliminary appraisal
report.

5.      TBI Mortgage FHA/VA Underwriting Center orders an appraisal from an approved FHA or VA appraiser.
Toll PM/sales manager is notified of the name of the appraiser.

6.      The appraiser contacts the project manager/sales manager to get a copy of the plans, together with the
executed Builder’s Certification of Plans, Specifications and Site (a sample of which is attached) and any other
information (such as comps) which will assist the appraiser in getting the necessary appraised value.

7.     Once the appraisal is ordered, the buyer should not be permitted to purchase any additional
options which are not on the plans and specs provided to the appraiser.

8.      The appraiser should complete the appraisal within ten (10) days after receipt of information from the
project manager/salesperson.

9.      The appraisal is emailed to the TBI Mortgage FHA/VA Underwriting Center.

10.     The TBIM loan underwriter will review the appraisal report, and projected loan amount, to determine if a
second appraisal is required. If so, the TBIM underwriter will order and obtain the second appraisal for comparison
value. This will take an additional 10 days.

11.     Upon receipt of all required appraisals the TBIM loan underwriter emails the value as determined by the
appraisal(s) to the Toll PM, the sales manager and the TBI BDM.

     Continued-
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                        250 Gibraltar Road     Horsham, Pennsylvania 19044           Tel: 215.938.8000
                                                     tbimortgage.com
                                       FHA-TBI ORIGINATION PROCESS

                                                       September, 2008


                                  TBI Mortgage Appraisal Process- Continued

If the property appraises for an amount at least equal to the purchase price:
12.      Toll’s VP signs the AOS and the FHA/VA Endorsement and forwards both to Conveyancing.
Conveyancing distributes the AOS and FHA/VA Endorsement to all parties consistent with its standard AOS
distribution procedures.

13.     Upon receipt of the new loan application package the TBI FHA/VA Underwriting Center will register the
loan with either FHA or VA, obtain the case number and convert the appraisal as needed.

14.     During the final stages of construction but before settlement, Toll must get a pest control company to
complete a termite inspection (and treatment if necessary) and to execute the Termite Soil Treatment Record (copy
attached).

15.     For FHA loans SETTLEMENT MUST OCCUR BY DECEMBER 31, 2008, in order to take advantage of the
increased FHA limits which are presently not scheduled to be extended beyond December 31, 2008.

16.     SETTLEMENT MUST ALSO OCCUR WITHIN SIX MONTHS FROM THE DATE OF THE APPRAISAL. At
the end of six months, the appraiser will have to recertify the property’s value. If the recertified value is less than
the purchase price, the buyer will be able to walk away with its deposit and Toll will have a spec. home.

17.     At Settlement, TBI VP executes Warranty of Construction and Termite Soil Treatment Guarantee (copies
attached). PM also causes the pest control company to complete Termite Soil Treatment Record (copy attached).

If the property appraises for an amount less than the purchase price:
• Toll will renegotiate a new purchase price with the buyer or allow the buyer to terminate and receive a refund of
     all deposit money and any other money paid in connection with the purchase.

          NOTE: FHA Second Appraisal Requirements. Refer to: Mortgagee Letter 2008-09

FHA will require a second appraisal for “high-balance” loans secured by properties in declining markets as
indicated on the appraisal report or determined by the lender using other sources.
    • The loan amount, excluding the upfront mortgage insurance premium, will exceed $417,000, and
    • The LTV1, excluding upfront MIP, equals or exceeds 95%, and
    • The property is determined as being in a declining market.
                       Hint- Structure the max LTV at 94.9% if home may be determined to be in a declining market.


1
  Loan-to-Value is defined as the mortgage amount, excluding any financed upfront mortgage insurance premium,
divided by the lower of the adjusted sales price or the appraiser’s estimate of the property’s value.
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                        250 Gibraltar Road       Horsham, Pennsylvania 19044            Tel: 215.938.8000
                                                       tbimortgage.com
                                           FHA-TBI ORIGINATION PROCESS

                                                           September, 2008


                                   Property Types- Single Family & Condominiums

Single Family Properties and Condominiums are treated differently as to their HUD/FHA insurance eligibility.
While single family attached (townhomes) and detached homes are easily insurable (must meet FHA minimum
property standards and specific requirements if located in a PUD) condominiums are subject to different treatment.

For new construction, condominium presale and owner-occupancy requirements must be certified in accordance
with HUD Handbook 4150.01 REV-1, Paragraph 11-3. These presale and owner occupancy requirements state
that at least 51% of the total units within the condominium or phase of the condominium must be sold, and sold to
owners who intend to occupy the unit. The 51% requirement must be met before any unit is eligible for insurance.
Units sold as a “lease/rent-to-own” are not allowed to be counted towards the 51% presale requirement.

NOTE: Loans that have a high LTV (over 90%) are only acceptable with a HUD approved ten year warranty plan for each of the units

To check if a condominium is on HUD’s approved list, a useful tool is available on the Hud.gov website- The
Condominium’s page. The Condominiums page allows users to search for FHA-approved condominium projects by
location, name, or status. The search can be configured to find specific types of projects through the use of the pull-
down menus and entry fields. The link is:

                                        https://entp.hud.gov/idapp/html/condlook.cfm




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                            250 Gibraltar Road       Horsham, Pennsylvania 19044           Tel: 215.938.8000
                                                           tbimortgage.com
                                           FHA-TBI ORIGINATION PROCESS
                                                         September, 2008


                         UFMIP & Monthly MIP Basics & Down Payment Requirements

What is FHA’s mortgage insurance?

    •    Protects the lender against mortgage loss in the event of default
    •    FHA pays the servicing lender if the property is foreclosed and a claim is filed
    •    Almost 100% insurance
    •    MIP paid for by borrower as an upfront and annual premium (usually amortized monthly)

FHA has two forms of Mortgage Insurance and they are required on both Single Family (203b) & Condominiums
(234c) properties. Both are a part of FHA’s Mutual Mortgage Insurance Fund (MMI) which is sustained entirely by
borrower premiums.

The first one is the “Up Front Mortgage Insurance Premium”- UFMIP. The UFMP premium is a one-time up front
payment. Payment of this one-time UFMIP can be done in two ways- The total premium can be paid in cash at
settlement OR financed in whole by inclusion in the new mortgage amount. Note: Partial financing of the UFMIP is
not allowed and loan amounts are rounded down to the nearest dollar. Currently the UFMIP is 1.75% of the Base
Loan Amount for all Purchase Money Mortgages and Full-Credit Qualifying Refinances.
                                           See Mortgagee Letter: 2008-22 (September 4, 2008)

The second is the “Monthly Mortgage Insurance”- MIP. This MIP premium is an annual premium that is paid
monthly and must be paid for a minimum of 5 years. Below are the Monthly Premiums.

              LTV             Annual for Loans >15                        LTV            Annual for Loans < 15
                                     Years)                                                      Years
             < 95                      50                                 < 90                   -None-
             > 95                      55                                 > 90                     25
The following are calculation examples for computing the UFMIP and MIP:

Base Loan Amount-           $475,000
UFMIP Financed-             $8,312 (475,000 X .0175)
Total Loan Amount-          $483,312
Monthly MIP**-              $217.70 (475,000 X .0055 / 12 = 217.70)
**MIP is based on the Base Loan Amount

In the above example, the total monthly cost for both premiums is- $270.24 per month. Compare that monthly cost
to a conventional PMI premium of $344.38. That is a difference of $74.14/month lower with FHA.
Based on a 30 fixed rate @ 6.50% financing UFMIP of $8,312= 52.54/month. PMI premium factor of .00870 is based on 95% LTV, 700 score.

    Continued-
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                           250 Gibraltar Road      Horsham, Pennsylvania 19044           Tel: 215.938.8000
                                                         tbimortgage.com
                                              FHA-TBI ORIGINATION PROCESS
                                                            September, 2008


                 UFMIP & Monthly MIP Basics & Down Payment Requirements- Continued

Canceling FHA’s Annual Mortgage Insurance Premiums

Effective for all loans closed on or after January 1, 2001, FHA’s annual mortgage insurance premiums will be
automatically canceled under the following conditions:

         For mortgages with terms more than 15 years, the annual mortgage insurance premiums will be canceled
         when the loan to value ratio reaches 78 percent*, provided the mortgagor has paid the annual mortgage
         insurance premiums for at least five years.

         For mortgages with terms 15 years and less and with loan to value ratios 90 percent and greater, the
         annual mortgage insurance premiums will be canceled when the loan to value ratio reaches 78 percent*,
         irrespective of the length of time the mortgagor has paid the annual mortgage premiums.

         Mortgages with terms 15 years and less and with loan to value ratios of 89.99 percent and less will not be
         charged annual mortgage insurance premiums.
         Note: *The 78% requirement is based on the lower of the original sales price or current appraised value.


                                               FHA Down Payment Requirements

With the passing of the “The Housing and Recovery Act of 2008”, this revised the National Housing Act to allow
FHA to change its down payment requirements. In effect this has created a simplified, industry standard down
payment requirement when compared to FHA previous down payment calculations.
See Mortgagee Letter: 2008-23 (September 5, 2008)

   Minimum of a 3.50% down payment, based on lesser of sales price or appraised value
   Maximum LTV limit is 96.5%
   Gift funds can cover all the down payment
   No party of interest can contribute any part of the borrower’s down payment either directly or through a third
    party
Note: The new revised 3.50% down payment requirements take effect with all FHA case numbers assignments on or after January 1, 2009.
Until that time, FHA requires borrowers to have a minimum investment of 3.00% of the sales price in the transaction. The maximum LTV under
the previous down payment calculations was 97.75%. The remaining .750% investment was allowed to include allowable closing costs and
Prepaids.

Transactions that Affect Maximum Mortgage Calculations-

Identity of Interest – Non-arm’s length limit max LTV to 85% (family/business relationships)
Non-Occupying Borrowers – Maximum LTV reduced to 75% Exceptions are: related by blood, marriage or law
(Spouses, parent/child, siblings, step-children, aunts/uncles, nieces/nephews, etc) which allows maximum financing

________________________________________________________________________________________ 10
                            250 Gibraltar Road       Horsham, Pennsylvania 19044             Tel: 215.938.8000
                                                           tbimortgage.com
                                     FHA-TBI ORIGINATION PROCESS

                                                   September, 2008


                               FHA Application Basics & Buyer Qualifications


Application basics are very similar in comparison to a conventional loan application. Starting with a quality
interview at application by the MLS, with an understanding of how and what the underwriter is looking for in the
submission package, will greatly improve the approval percentage. The credit decision on an FHA file is based on
a through analysis of the entire loan and not any one single factor. The components of underwriting as follows:

        Loan-to-Value, Transaction Type and Eligible Properties

  A primary measurement of risk for a lender is the loan-to-value (LTV). LTV ratios are limited by the transaction
  and property type.

        Ability to Repay the Loan

  Careful consideration is given in the analysis of the borrower’s ability to repay the loan as follows:

Cash reserves or liquid assets remaining after the close
Stable employment and income
Increase in new housing expense compared to present housing expense

        Willingness to Repay the Loan

  The history of a borrower’s payment habits, with other creditors, will enable the underwriter to determine the
  willingness to repay the loan. An excellent credit history would consist of the following:

No late payments over 30 days
No derogatory information such as past due payments, repossessions, or foreclosures
No bankruptcies, collections, liens or judgments

Underwriter Decisions

The Direct Endorsement (DE) Underwriter is responsible for both the approval and the denial of FHA loans. It Is
the DE Underwriter’s responsibility to execute all HUD documents that require an underwriter’s signature. FHA
loans may not be transferred without a DE Underwriter’s acknowledgement and signature.




Continued-

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                        250 Gibraltar Road    Horsham, Pennsylvania 19044      Tel: 215.938.8000
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                                            FHA-TBI ORIGINATION PROCESS

                                                             September, 2008


                            FHA Application Basics & Buyer Qualifications- Continued

In this segment we will cover all of the FHA application basics including:

1.   Eligible Borrowers                                                6. Compensating Factors
2.   Qualifying Income                                                 7. Assets & Funds to Close
3.   DTI Ratios & FHA Total Scorecard                                  8. Occupancy & Taking Title
4.   Liabilities                                                       9. Standard Applicant Documentation
5.   Credit                                                            10. Valuable Tips for Quality Submissions


                                                           Eligible Borrowers

     Owner-occupants
     Non-profit organizations (approved by HUD)
     Governmental Agencies
     No investors; except on HUD REO sales
     1. Can be:
             a. Co-borrower (occupying and non-occupying)
             b. Living Trust
     2. Citizenship not required (must be in the US legally) Must have a SSN#
     3. No maximum age; minimum age determined by legal ability to sign mortgage note in State

                                                           Qualifying Income

               –    Income-
                    Must be stable
                    Must verify 2 years employment history
                    Must be expected to last 3+ years
                    Generally salaries or wages
                    Other verified income may be considered
                    Self-employed (2+ years ) acceptable
                    Commission, bonus and overtime is averaged (typically need two years history to use)
                    Can be manual or automated underwriting using HUD’s TOTAL Scorecard
Note: All FHA purchase and cash-out loans are “full doc” loans. Or refer to the Automated Feedback/Findings Certificate.

Continued-
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                            250 Gibraltar Road        Horsham, Pennsylvania 19044             Tel: 215.938.8000
                                                            tbimortgage.com
                                       FHA-TBI ORIGINATION PROCESS

                                                   September, 2008


                          FHA Application Basics & Buyer Qualifications- Continued

                                          DTI Ratios & FHA Total Scorecard

         Ratios-
             o Basic ratios are 31/43 or 33/45 for new construction
             o May be exceeded with compensating factors*
             o FHA does not use credit scores (manual underwriting allowed)
             o FICO scores must be entered into FHA Connection if borrower has a credit score
             o Ratios may be exceed with FHA’s Total Scorecard automated underwriting approval
*See Compensating Factors section.

Manual underwriting required when-

              o   CAIVRS reveals existing Federal debt
              o   Parties to the transaction appear on suspended & debarred list
              o   Credit issues are present to include:
              o   Previous Mortgage Foreclosure
              o   Bankruptcy
              o   Late Mortgage Payment
              o   Borrowers with limited/no credit history

FHA’s Total (technology open to approved lenders) Scorecard evaluates the overall creditworthiness of the
applicants based on credit variables and with the AUS functionality indicates a recommended level of underwriting
& documentation for FHA insurance eligibility.




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                          250 Gibraltar Road   Horsham, Pennsylvania 19044   Tel: 215.938.8000
                                                     tbimortgage.com
                                    FHA-TBI ORIGINATION PROCESS

                                                 September, 2008


                       FHA Application Basics & Buyer Qualifications- Continued

                                                    Liabilities

All debts must be considered
Recurring obligations-
Installment loans, revolving charge accounts, real estate loans, alimony, child support, and other
continuing obligations
Debts lasting less than ten months must be counted if the amount of the debt affects the borrower’s ability to make
the mortgage payment during the month’s immediately after loan closing; especially true if limited or no cash
reserves after loan closing.
Revolving accounts- If no payment is shown for an outstanding balance, then 5% of the balance or $10 will be used
Alimony- Because of the tax consequences of alimony payments, the underwriter may choose to treat the monthly
alimony as a reduction from gross income vs. a monthly obligation. (The applicant will always benefit from this
process)
Projected Obligations- If a debt, such as a student loan that is scheduled to begin within twelve months of loan
closing, the debt must be included. Same for balloon notes due within one year of closing

Contingent liabilities-
Where borrower can be held responsible for payment of debt if other party defaults
An acceptable 12 month payment history from other party may offset this obligation

                                                      Credit

The purpose of mortgage underwriting is to determine a borrower’s ability and willingness to repay the mortgage
debt, thus limiting the probability of default. The property is also examined to determine if the property is of
sufficient collateral.

The “The Three C’s of Credit” are-
Credit- History, previous and current
Capacity- Sufficient income to repay the mortgage
Collateral- Appraised value supports the mortgage

FHA requires the use of a “TRMCR” credit report- Three Repository Merged Credit Report, “Tri-Merge”. A
Residential Mortgage Credit Report (RMCR) from an independent consumer-reporting agency also may be used.
Continued-



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                       250 Gibraltar Road   Horsham, Pennsylvania 19044    Tel: 215.938.8000
                                                  tbimortgage.com
                                            FHA-TBI ORIGINATION PROCESS

                                                             September, 2008

                            FHA Application Basics & Buyer Qualifications- Continued


                                                                    Credit


Credit-
Overall pattern
Reasons for delinquencies
Non-traditional credit (if no credit exists)
Collections-
Court ordered judgments must be paid off
Bankruptcy-
Chapter 7
Discharged at least 2 years
Good credit re-established
Chapter 13
1 year of pay out into Chapter 13
Court approved for new mortgage
Foreclosure-
A 3 year waiting period
FHA won’t insure another FHA loan for 3 years from date the claim was paid
If on principal residence and caused by major extenuating circumstances, exception may be granted by DE
Underwriter

Extenuating Circumstances-

    Extenuating circumstances are catastrophic events resulting in extreme financial hardships. Events must have
    caused either a long term loss of income which was not preventable or massive debt which the applicant was
    not able to pay. Applicants must provide evidence of the events as well as an explanation of the event.

CAIVRS
    (Credit Alert Voice System- identify individuals who are in default or have had claims paid on direct or guaranteed Federal loans, or are
    delinquent or other debts owed to Federal agencies)
Should be checked at case number assignment
Defaulted loans – check with servicing lender or agency

LDP/GSA lists must be checked
    (Limited Denials of Participation- LDP’s are issued to parties, individuals & companies who fail to comply with HUD program
    standards)
Review to be documented on the credit analysis worksheet


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                                   FHA-TBI ORIGINATION PROCESS

                                               September, 2008

                      FHA Application Basics & Buyer Qualifications- Continued

                                            Compensating Factors

Compensating Factors-
Compensating factors that may be used to justify approval of mortgage loans with ratios exceeding FHA’s
benchmark guidelines are those listed below. Any compensating factor used to justify mortgage approval must be
supported by documentation.

The borrower has successfully demonstrated the ability to pay housing expenses equal to or greater than
the proposed monthly housing expense for the new mortgage over the past 12-24 months.

The borrower makes a large down payment (ten percent or more) toward the purchase of the property.

The borrower has demonstrated an ability to accumulate savings and a conservative attitude toward the
use of credit.

Previous credit history shows that the borrower has the ability to devote a greater portion of income to
housing expenses.

The borrower receives documented compensation or income not reflected in effective income, but directly
affecting the ability to pay the mortgage, including food stamps and similar public benefits.

There is only a minimal increase (10% or less) in the borrower's housing expense.

The borrower has substantial documented cash reserves (at least three months’ worth) after closing. In
determining if an asset can be included as cash reserves or cash to close, determine if the asset is liquid
or readily convertible to cash and can be done so absent retirement or job termination. Funds borrowed
against these accounts may be used for loan closing, but are not to be considered as cash reserves.
Similarly, funds from gifts from any source are not to be included as cash reserves.

The borrower has substantial non-taxable income (if no adjustment was made previously in the ratio
computations).

The borrower has a potential for increased earnings, as indicated by job training or education in the
borrower's profession.




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                                                 tbimortgage.com
                                     FHA-TBI ORIGINATION PROCESS

                                                 September, 2008


                        FHA Application Basics & Buyer Qualifications- Continued

                                             Assets & Funds to Close
Sources-

Borrower’s cash and/or loan/gift from a relative
Checking/Savings etc.
IRA’s & KEOGHS, TSP, 401K use 60% of value; if used to close, proof of liquidation is required
Earnest money deposit(s), if $1,000 or greater, copy of check and bank statement to verify cleared
Sale of personal property
Gift from a charitable organization, governmental agency, union, employer or public entity
Down payment assistance programs funded by an interested party in the sale are not allowed
Real estate commission, either borrower’s or gifted from a family member
2nd mortgage from governmental agency, non-profit, other group or person (some restrictions)
Seller contributions – not to exceed 6% of sales price
Seller cannot provide any part of the 3.50% down payment
Seller can pay closing costs, discount points and prepaid items
Premium pricing by lender (cannot use premium pricing to pay unallowable fees or discount points)

Seller Contributions-

            o   Sellers (builders, realtors, etc) may contribute up to 6% of sales price toward closing costs, prepaid
                expenses, discount points, & other financing concessions
            o   Contributions exceeding 6% viewed as inducements to purchase which will reduce mortgage
                amount; i.e. Buy-downs (Perm & Temp), Loan Protection Insurance

                                             Occupancy & Taking Title

Principal Residence-

            o   Occupied by at least one borrower for the majority of the calendar year
            o   Borrower to establish occupancy within 60 days of closing with continued occupancy of 1 year
            o   All borrowers, regardless of occupancy status, must sign the security instrument and mortgage
                note as well as take title to the property
            o   Living Trusts- Eligible as long as an individual borrower remains the beneficiary & occupies the
                property as a principal residence

FHA will not insure more than one mortgage for any borrower with exception of-
1) Relocations 2) Increase in family size 3) Vacating a jointly owned property 4) Non-occupying co-borrowers


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                        250 Gibraltar Road   Horsham, Pennsylvania 19044     Tel: 215.938.8000
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                                    FHA-TBI ORIGINATION PROCESS

                                                  September, 2008


                       FHA Application Basics & Buyer Qualifications- Continued

                                       Standard Applicant Documentation

Social Security Number Validation-

Social Security card not required
May be validated with pay stubs, verifications, W-2’s, etc

Paystub and Verification of Employment VOE-

Current pay stub covering a 30 day period for all employers
Not older than 120 days old when loan closes
180 days on new construction
If used in lieu of VOE pay stub must contain borrower’s name, SSN, and YTD earnings

Current Bank Statement / Verification of Deposit VOD-

VOD and one complete bank statement or
Two months complete bank statements
Number may be reduced per AUS

Document Expiration Dates-

New Construction – not older than 180 days from the date of the note
Includes credit report, canceled checks when verifying payment history
Verifications of rental, mortgage, other debts, bank statements, pay-stubs

Existing property – not older than 120 days from date of the note
Includes credit report, canceled checks when verifying payment history
Verifications of rental, mortgage, other debts, bank statements, pay-stubs




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                                                   tbimortgage.com
                                    FHA-TBI ORIGINATION PROCESS

                                                  September, 2008


                       FHA Application Basics & Buyer Qualifications- Continued

                                     Valuable Tips for Quality Submissions


1) The Application
It all starts with a COMPLETE loan application. Underwriters cannot be expected to make informed choices and
decisions on “naplications.” The #1 reason for file issues such as suspense’s, resubmissions and denials is due to
the MLS not taking a complete and accurate application.

2) Credit Report
Submit a cleaned up credit report. Have the credit report update any outdated trade lines to reflect current account
balances and statuses, have the VOR’s added right to the credit report, have non-traditional credit sources verified
and added to the credit report. If you submit a messy credit report, the underwriter will have a difficult time
establishing the current credit profile for the borrowers.

3) Applicant Explanation Letters
Submit letters of explanation for all derogatory credit, read the letters, make sure they hold water, make sure they
make sense and if justified, request supporting documentation to prove the explanations. Underwriters can’t always
take a person’s “word for it” when there is a substantial history of derogatory credit, especially when there are
recent derogatory reported. Be prepared to back up the explanations.

4) Budget-Savings
Request “budget letters” from borrowers whose proposed housing expense is increasing substantially. These are
especially important for borrowers who have little or no reserves and are facing a “payment-shock”. It’s not too
much to address how they intend to handle a large increase to their monthly budget.

5) Employment History
Establish a complete 2 year history with no significant gaps. Verify dates of employment for “job hoppers.” If
needed, request a letter of explanation for frequent job changes, type up a “history” for underwriting, make notes in
margins on copies of W2s, and most importantly, don’t forget to update that data to the 1003.

6) Submit a Complete File
If you are simply submitting the credit documentation for an opinion as to approvability, be sure to submit every
single piece of information the underwriter will need to make an informed judgement on a possible approval. If you
are submitting a new file, review the entire contents prior to submission or have another MLS double check you.

7) Processor-Underwriter Memo / Letter
Always use a cover letter or memo to the file. Underwriters appreciate cover letters for manual underwriting files or
special circumstances. They greatly appreciate an outline of the file which addresses the challenges and concerns
while pointing out the compensating factors to make the loan approvable.
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                       250 Gibraltar Road    Horsham, Pennsylvania 19044     Tel: 215.938.8000
                                                   tbimortgage.com
                                    FHA-TBI ORIGINATION PROCESS

                                                  September, 2008


                          FHA Disclosures- Applicant & Toll Builder HUD Forms

FHA disclosures are found in Byte and are in print groups to facilitate ease of printing and to ensure none are
missed at the point of application.

FHA Application Disclosures:
HUD/VA Addendum to URLA; form HUD-92900A
Adjustable Rate Mortgage Loan Program Disclosure; form Byte no # (where applicable)
Notice to Homeowner Assumption to HUD/FHA Insured Mortgage; form Byte 343
FHA Informed Consumer Choice Disclosure; form Byte no #
Important Notice to Homebuyers; form HUD-92900-B (signed same as initial 1003)
Interest Rate and Discount Disclosure Statement; form Byte 351
FHA Real Estate Certification; Byte 346
For Your Protection: Get a home inspection; form HUD-92564-CN (dated same as sales contract or before)
Potential Home Energy Benefits; form Byte 348
FHA Appraised Value Disclosure; form Byte 349
General Disclosures:
Initial TIL
Initial GFE
Authorization to Release Information
Transfer of Servicing Disclosure
Signed IRS Form 4506
Notice to Home Loan Applicant Credit Score Disclosure Statement
Appraisal Disclosure (Borrower’s right to a copy of the appraisal)
State Disclosures
Builder (From Toll) Disclosures:
Builder’s Certification of Plans, Specifications & Site; form HUD-92541
Warranty of Completion of Construction; form HUD-92544
Building Permit and Certificate of Occupancy or Compliance Inspections and 10-Year Warranty
Subterranean Termite Soil Treatment Builder’s Guarantee; form HUD-NPCA-99-A & HUD- NPCA-99-B
Local Health Authority well water analysis or septic report (where applicable)



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                                                  tbimortgage.com
                                    FHA-TBI ORIGINATION PROCESS
                                                 September, 2008


                      BYTE File Setup, LTV, MIP & FHA Specific Fields & Screens


MLS Origination Steps

MLS completes ERLS form and emails to Secondary (rate locks) and copies the Proxy
MLS inputs file in BYTE and exports file emails MTG_Files, copies Proxy and Openers
MLS turns in hard copy file to Opener. Note in file must give instructions on appraisal, do we have a Conventional
Appraisal and do they want it flipped to FHA at this time, etc.

Please Note – in order to obtain an FHA Case Number, Appraiser Assignment, CAVIERS, LDP and GSA, the
following items are needed:

Full Name for each borrower
Social Security Number for each borrower
Birth Date for each borrower
Current Address for each borrower
Subject Property Address
Type of Property/Home (Single Family, attached, detached, Condo, PUD, etc)
Full copy of Sales Contract, complete with all schedules, including FHA Amendatory Clause


BYTE Release 5.7 FHA Enhancements

What’s New with BYTE- FHA?

Modified MIP Calculations

Maximum Mortgage Calculations (effective January 1, 2009)

Revisions to the HUD-92900 forms
               Modification to the FHA/VA Addendum to the 1003 and the form previously known as the MCAW

Modified MIP Calculation
Byte offers the users three ways to calculate UFMIP based on Case Number order date
Prior to July 14, 2008: Flat Rate of 1.5
Between July 14, 2008 and October 1, 2008: Risked Based
On or After October 1, 2008: Flat Rate of 1.75% for purchases and refinanced OR 1.50% for streamline refinance
OR 3.00% for delinquent FHA Secure refinances

Continued-

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                               FHA-TBI ORIGINATION PROCESS

                                           September, 2008


                  BYTE File Setup, LTV, MIP & FHA Specific Fields & Screens

                                Byte Loan Program Screen MIP Setup

Loan Programs Screen




                                                                        Click on the Asterisk next
                                                                        to Loan with MIP/FF to
                                                                        ensure that you are using
                                                                        the correct dates to
                                                                        calculate your MIP factor.




Continued-
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                  250 Gibraltar Road   Horsham, Pennsylvania 19044   Tel: 215.938.8000
                                             tbimortgage.com
                                 FHA-TBI ORIGINATION PROCESS

                                             September, 2008


             BYTE File Setup, LTV, MIP & FHA Specific Fields & Screens- Continued

Upfront MIP Calculations and Dates




                                                     The field title Case Number Assigned is a drop
                                                     down with the following options:
                                                        Before 7/14/2008
                                                        Between 7/14/2008 and 9/30/2008
                                                        Between 10/1/2008 and 12/31/2008
                                                        On or After 01/01/2009
                                                     Dependent upon the date the case number was/is
                                                     order dictates UFMIP factor




Continued-

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                    250 Gibraltar Road   Horsham, Pennsylvania 19044   Tel: 215.938.8000
                                               tbimortgage.com
                                 FHA-TBI ORIGINATION PROCESS

                                             September, 2008


             BYTE File Setup, LTV, MIP & FHA Specific Fields & Screens- Continued

Upfront MIP Calculations and Date




                                                 The UFMIP calculation is the same for loans where the
                                                 case number was assigned either:
                                                 Between 1/1/2008 and 12/31/2008 or on or after 1/1/2009
                                                 (3.50% down payment rule becomes effective)

                                                 HOWEVER, the LTV calculations are different so BEWARE.




Continued-
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                    250 Gibraltar Road   Horsham, Pennsylvania 19044   Tel: 215.938.8000
                                               tbimortgage.com
                                      FHA-TBI ORIGINATION PROCESS

                                                    September, 2008


                BYTE File Setup, LTV, MIP & FHA Specific Fields & Screens- Continued

3.50% Down Payment Rule

Effective for Case Numbers originated after January 1, 2009 the borrower will have to have a down payment of
3.50%. What does this mean?
Maximum LTV w/out UFMIP is 96.5%. There will be only one loan amount calculation.
FYI: If there is no seller, realtor, or lender assist, the borrower will have to pay for closings costs, discount points,
and pre-paids out of pocket. Reference: HUD Mortgagee Letter 2008-23




                                                               For Loan Amount Calculation:
                                                               Click the asterisk next to Base Loan Amount

Continued-
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                         250 Gibraltar Road    Horsham, Pennsylvania 19044       Tel: 215.938.8000
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                                FHA-TBI ORIGINATION PROCESS

                                            September, 2008


             BYTE File Setup, LTV, MIP & FHA Specific Fields & Screens- Continued


3.50% Down Payment Rule




                                                                         This screen shot is for the
                                                                         loan calculation in effect
                                                                         01/01/2009.

                                                                         FYI:
                                                                         If the UFMIP screen date
                                                                         is correct for the other
                                                                         examples the loan amount
                                                                         will calculate properly but
                                                                         BE AWARE of how loan
                                                                         amount is calculated

                                                                         Please notice that the only
                                                                         calculation here is for the
                                                                         max LTV of 96.5%.
                                                                         The old 3% investment in
                                                                         the transaction NO
                                                                         LONGER applies as the
                                                                         borrower must put down
                                                                         3.50%. They are also
                                                                         responsible for paying all
                                                                         costs associated with the
                                                                         loan unless there is seller,
                                                                         realtor or lender assist.

Continued-
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                   250 Gibraltar Road   Horsham, Pennsylvania 19044   Tel: 215.938.8000
                                              tbimortgage.com
                                   FHA-TBI ORIGINATION PROCESS

                                                September, 2008


               BYTE File Setup, LTV, MIP & FHA Specific Fields & Screens- Continued

Seller Closing Costs- Seller credit entry fields.




                                             For FHA loans the Seller Contribution must be designated to pay
                                             either Closings Costs, Prepaids, Discount Points, or Buydown Funds.

                                             Discount Points and Buydown Funds must be shown as Seller paid
                                             items on the GFE screen.

                                             The maximum Seller assist cannot exceed 6% of the sales price.

                                             FHA does not allow for Seller Concessions unless deducted dollar for
                                             dollar from sales price.

Continued-
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                      250 Gibraltar Road   Horsham, Pennsylvania 19044   Tel: 215.938.8000
                                                 tbimortgage.com
                                  FHA-TBI ORIGINATION PROCESS

                                              September, 2008


              BYTE File Setup, LTV, MIP & FHA Specific Fields & Screens- Continued

Applicant/Seller closing cost splits dropdown box




Continued-

________________________________________________________________________________________ 28
                     250 Gibraltar Road   Horsham, Pennsylvania 19044   Tel: 215.938.8000
                                                tbimortgage.com
                                 FHA-TBI ORIGINATION PROCESS

                                             September, 2008


             BYTE File Setup, LTV, MIP & FHA Specific Fields & Screens- Continued

Informed Consumer Choice Screen. In this disclosure set up, a side-by-side comparison is shown between
a similar structured (LTV) Conventional with mortgage insurance and the proposed FHA financing
mortgage.




                                                           The Informed Consumer Choice screen is
                                                           located thorough the Good Faith /
                                                           Compliance screen and then selecting
                                                           “Informed Consumer Choice Disclosure”.

                                                                Click on the “Fill from current loan” to
                                                           transfer all pre-loaded data.
                                                                In the right hand column, fill in the
                                                           nearest comparable conventional loan.
                                                           Consider, LTV and mortgage insurance
                                                           limitations currently available.




________________________________________________________________________________________ 29
                    250 Gibraltar Road   Horsham, Pennsylvania 19044     Tel: 215.938.8000
                                               tbimortgage.com
                                     FHA-TBI ORIGINATION PROCESS

                                                     September, 2008


                     FHA Products, TBI FHA Investors & Secondary Marketing

203(b) Fixed Rate Loan                                               203(b) Adjustable Rate Mortgage

Most commonly used loan program                                1-year (Caps 1/5) Qualifies at Start Rate + 1%
Purchase or refinance of 1-4 owner occupied
Existing & new construction                                    New hybrid fixed/ARM
Terms of 15-30 years                                                 Mortgagee Letter 04-10 issued March 10, 2004
Temporary buy-downs allowed                                    Allows fixed rate first 3, 5, 7 or 10 years
                                                               3/1 (Caps 1/5) Qualifies at Start Rate
                                                               5/1 (Caps 1/5) Qualifies at Start Rate
                                                               7/1 (Caps 2/6) Qualifies at Start Rate
                                                               10/1 (Caps 2/6) Qualifies at Start Rate
                                                               Ratios may only be exceeded with AUS approval
                                                               Purchase or refinance of 1-4 owner occupied
                                                               Existing & new construction
                                                               Terms of 15-30 year


                                    *ARMS not offered by TBI due to current note rates available.

TBI FHA Investors and Long-Term Locks

Current FHA investors are- 33, Wells & 53, Countrywide. FHA locks are allowed at the point of issuance of a
commitment. All FHA loans originated with a closing date at least 30 days out (non QDH’s) will be handled as test
cases. All FHA loans are registered and locked using the ELRS form emailed to Rate Locks.

While both offer long-term lock-in options, they differ. Also, both do not offer long term locks on “Jumbo FHA’s”.

53 offers the best long term options as they allow for a traditional float down within 45 days of closing under the
Builder Rate Cap Program with locks up to 345 days

33 offers long term locks up to 345 days, however, there is no float down available. This is a “hard lock”

NOTE: Remember we currently price all FHA loans with a .500% Origination Fee quoted on the GFE. If the
published rates do not allow a .500% Origination Fee to be collected without incurring excessive overage, quote a
rate/point structure accordingly. Additionally, if for competitive comparison a zero points / Origination fee quote is
requested by the customer, build the .500% Origination Fee into the rate quoted.

Continued-
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             FHA Products, TBI FHA Investors & Secondary Marketing- Continued

Investor 33 Sample Rate Sheet

Sample quotes- Red cells for a Maryland property with TAP Pricing quoting the required .500% on the GFE.

                                                              FHA High Balance
   FHA / VA - GNMA I           FHA / VA - GNMA II                GNMA II                    FHA / VA - GNMA I
   30/25/20 Yr Fixed - 60      30/25/20 Yr Fixed - 60
                                                            30 Year Fixed - 60 Day
            Day                         Day                                                15 Year Fixed - 60 Day
    Rate         Points         Rate         Points          Rate            Points        Rate           Points
   5.000          5.250        5.750          1.125          6.250           1.250
   5.500          1.250        5.875          0.625          6.375           0.875
   6.000         -0.375        6.000          0.125          6.500           0.500
   6.500         -1.500        6.125         -0.250          6.625           0.125
   7.000         -2.125        6.250         -0.250          6.750           0.500
   7.500         -3.125        6.375         -0.625          6.875           0.125
                               6.500         -1.000          7.000           -0.125         Submit Rate Request
                               6.625         -1.375          7.125           -0.375
                               6.750         -1.000          7.250           -0.500
                               6.875         -1.250          7.375           -0.750
                               7.000         -1.625          7.500           -1.000
                               7.125         -1.875          7.625           -1.125

                 Price Adjustments - All Add-on's are to the points unless
                 indicated
                 Government Price Adjusters - All Add-on's are to the points unless indicated
                 (Note: if multiple adjusters apply, All adjusters must be used)
                 VA Loans                                                               0.875
                 Non-Owner 30 & 15 Year Fixed                                           0.500
                 FHA Refinance 30 & 15 Year Fixed                                       0.125
                 FHA FICO 600 - 619                                                     0.250
                 FHA FICO 580 - 599                                                     1.000
                 FHA FICO < 580                                                          N/A
                 VA FICO 530 - 579                                                       Call
                 VA FICO < 530                                                           Call
                 30 YR VA >= $1M                                                         Call
                 FHA ARM >= $999,999                                                     Call

                                  State Adjustments
                                  TX                                     -0.500
                                  NY                                     -0.375
                                  GA, PA, SC                             -0.250
                                  CT, DE, FL, MN, NC, NJ, VA, WV         -0.125
                                  AZ, CA, CO, IL, MA, MD, MI, NV         0.000
Continued-

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                                                  tbimortgage.com
                   FHA Products, TBI FHA Investors & Secondary Marketing- Continued

 Investor 53

 Builder Rate Cap Program- FHA view only.

Program Description:
The Builder Rate Cap Program allows customers to lock in rate and points on specific products for new construction
properties. The available lock periods under the Builder Rate Cap Program are 105, 165, 255, & 345.
This program only protects the interest rate; it does not protect the guidelines

Eligible Programs
Provided loans meet all underwriting guidelines, the Builder Rate Cap Program is generally available on the following loan Programs:

    Government Fixed Rate - See table below. Loans outside of these guidelines may not be long term locked
         Program                   Occupancy             Doc. Type           LTV         Score         Ratios                Notes:           Min Note
                                                                                                                                               Rate
    Gov 30 Yr (FHA)                    Owner                 Full            98.75        620          40 / 45          US Citizens only        5.25
    Gov Jumbo 30 Yr                     N/A                  N/A              N/A         N/A           N/A                  N/A
         (FHA)                                                                                                                                  N/A

      Up-Front Fee and Rate Add-On's
An Up-Front Fee is required on all Builder Rate Cap Programs. A percentage of the up-front fee is applicable and will be
applied at time of closing with this investor. The up-front fee is 1.) MANDATORY, 2.) NON-REFUNDABLE,
     3.) MUST BE RECEIVED AT TIME OF LOCK-IN.

         The following schedule applies:
                 Fixed Rate and FHA Programs                                                              ARM Programs
  Lock           Up-Front           Applicable          Rate Add-on*                      Lock        Up-Front        Applicable       Rate
 Period            Fee                 Fee                                               Period         Fee              Fee           Add-
                                                                                                                                       on*
   105            1%              100%             0.250                                   105           N/A              N/A          N/A
   165            1%               75%             0.375                                   165           N/A              N/A          N/A
   255            1%               75%             0.500                                   255           N/A              N/A          N/A
   345            1%               50%             0.500                                   345           N/A              N/A          N/A
         * The Rate Add-on is added to the 60 Day Rate

   Floatdown Feature:
Within 45 Days of closing, locks may float down to the current 45 day pricing of any program eligible under the Builder Rate
Cap Program, provided the loan meets the current underwriting guidelines. The New Lock Expiration Date will be the
earlier of the original lock expiration date OR the new 45 day lock expiration date.




 Continued-
 ________________________________________________________________________________________ 32
                                250 Gibraltar Road          Horsham, Pennsylvania 19044                 Tel: 215.938.8000
                                                                  tbimortgage.com
                                   FHA-TBI ORIGINATION PROCESS

                                                   September, 2008


                                                Reference Sources

HUD provides manuals to guide lenders through their programs. All are available on HUD’s website and are
valuable references to anyone originating an FHA mortgage. The following sites are the most common used in
originating FHA mortgages-


           –   Headquarters Web-site www.hud.gov/

           –   FHA Homepage http://portal.hud.gov/portal/page?_pageid=73,1&_dad=portal&_schema=PORTAL

           –   Mortgagee Letters                  www.hud.gov/fha/mletters/mltrmenu.html

           –   Maximum Mortgage Limits            www.hud.gov/fha/sfh/sfhhicos.html or http://www.fhaoutreach.gov/

           –   Condominium Lookup          https://entp.hud.gov/idapp/html/condlook.cfm

           –   FHA Connection                     http://entp.hud.gov./clas/infor.html

           –   Handbooks & Forms           http://www.hud.gov/offices/adm/hudclips/index.cfm

           –   Atlanta HOC                 www.hud.gov/local/atlhoc.html

           –   Philadelphia HOC                   www.hud.gov/local/philhoc.html

           –   Denver HOC                  www.hud.gov/local/denhoc.html

           –   Santa Ana HOC               www.hud.gov/local/sanhoc.html




                                                     Document End

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