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Balloon Fixed Rate Mortgages

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					Balloon Fixed Rate Mortgages

PRODUCT TYPE              Freddie Mac 5 year Balloon

WEB PRODUCT TYPE          FHLMC 5 Year Balloon

LOAN AMOUNTS             Property Type             Continental US
                         1-Unit                    $359,650
                         2-Unit                    $460,400

MINIMUM LOAN              $25,000 (owner-occupied and 2nd homes)
AMOUNTS                   $40,000 (investment properties)

LOAN-TO-VALUE             PURCHASE TRANSACTION
                                                                      nd
                          PROPERTY DESCRIPTION LTV          LTV w/2           CLTV
                          1-2 unit primary         95%      90%              95%
                          1 unit second home       95%      90%              95%
                          1-2 unit investment      90%      85%              90%

                          LIMITED CASH-OUT REFINANCE TRANSACTION
                                                                      nd
                          PROPERTY DESCRIPTION LTV          LTV w/2           CLTV
                          1-2 unit primary         95%      90%              95%
                          1 unit second home       95%      90%              95%
                          1-2 unit investment      90%      85%              90%

                          CASH-OUT REFINANCE TRANSACTION
                                                                      ND
                          PROPERTY DESCRIPTION LTV          LTV w/2           CLTV
                          1-2 unit primary         90%      85%              90%
                          1 unit second home       90%      85%              90%
                          1-2 unit investment      85%      80%              85%

                          NOTE:      See special requirements section for additional
                          requirement for refinance transactions with subordinate
                          financing.

CONVERTIBILITY            At the end of 5 years, borrower may “re-set” interest rate for the
                          remaining 25 year term. See special requirement section for
                          conditions to re-set.

CONVERSION RATE           .50% over the Freddie Mac 60 day price
CONVERSION FEE            $250.00

TERM / AMORTIZATION       360 amortization with 5 year balloon payment. At the end of the
                          initial 5 year period, borrower has the option to “re-set” loan for
                          the remaining 25 year term. See special requirements section
                          for conditions.

ASSUMPTION                Not Allowed




                                                            American Southwest Mortgage Corp
                                                                            Revised 6/4/2005
                                                                                      Page 1
PREPAYMENT PENALTY      None

ELIGIBLE PROPERTIES
                        •     1-2 Units Only
                        •     Condos must be FHLMC Warrantable only.
                              California Condos may require earthquake insurance.
                        •      1-2 Unit Investor available
                                   1. Refer to rate sheet for possible pricing adjustments
                                   2. Seller contributions limited to 2%
                        •     1 Unit Second/Vacation home. Must be suitable for year-
                              round use. No rental income may be used for qualifying.
                        •     Other properties such as FHLMC Warrantable PUD’s and
                              townhomes. Warranties must be in file.

INELIGIBLE PROPERTIES
                        •     Co-ops
                        •     Any property located in the states of Alaska, Hawaii and U.S.
                              Virgin Islands
                        •     Manufactured Homes

UNDERWRITING            Traditional underwrite or LP Accept only

                        Eligible for Delegated underwriting

                        Eligible for Contract underwriting by the following MI
                        companies:
                        Genworth, MGIC, PMI, Radian, RMIC, UGRIC and TRIAD

EXPANDED APPROVALS      N/A

QUALIFYING RATE         Note Rate

QUALIFYING RATIOS       Determined by LP. If underwriting other than LP, traditional
                        ratios should be used.

CO-MORTGAGORS           Yes, per FHLMC guidelines.

CREDIT SCORES           Determined by LP. For manually underwritten loans, refer to
                        Exhibit 7-03 for enhanced guidelines. Borrowers should always
                        be credit worthy.

SECONDARY FINANCING     See LTV / CLTV Exhibits (7-01, 7-02, 7-03 and 7-04) for
                        maximum LTV / CLTV limits. Secondary financing must meet
                        Freddie Mac Guidelines.

TEMPORARY BUYDOWN       Not allowed

REFINANCE               See LTV / CLTV Exhibits (7-01, 7-02, 7-03 and 7-04).
                        For limited cash-out refinance to include the payoff of a
                        subordinate mortgage, the subordinate mortgage must have
                        been used in whole to acquire the subject property. Written
                        documentation must be obtained and included in the loan file.



                                                          American Southwest Mortgage Corp
                                                                          Revised 6/4/2005
                                                                                    Page 2
MORTGAGE INSURANCE     Primary Residences, Second Homes and Investment Property
                       LTV                Coverage
                       90.01-95%          30% Standard fixed payment coverage
                       85.01-90%          25% Standard fixed payment coverage
                       80.01-85%          12% Standard fixed payment coverage

                       Single premium MI is acceptable but must be paid by the
                       borrower out of pocket. Financed MI not allowed.

NO INCOME / NO ASSET   Not applicable

STATED INCOME          Not applicable

REQUIRED               Full / Alternate documentation or document according to LP
DOCUMENTATION          findings report.

SPECIAL REQUIREMENTS   Loan file must contain a Transmittal Summary (Form 1077/1008)
                       FREDDIE MAC EXCLUSIONARY LIST MUST BE CHECKED
                       FOR ALL PARTIES TO THE TRANSACTION AND
                       DOCUMENTED ON THE TRANSMITTAL SUMMARY. You may
                       access the Exclusionary List from the LP site:
                       https://www.loanprospector.com/lp-credit/indexservlet#
                       The user must log in to LP then click on Business Tools and choose the Access
                       Exclusionary List option.

                       Re-set Option:
                       At the end of 5 years, borrower may be allowed to avoid the
                       balloon payment by “re-setting” interest rate for the remaining 25
                       year term. Conditions of re-set are;
                       1. Borrower must still be the owner occupant unless the loan
                           was originally sold to Freddie Mac as an investment property
                           mortgage.
                       2. Loan must be current with no 30-day lates in previous
                           12-month period.
                       3. No defects, liens, encumbrances against the property.
                           Subordinate financing is acceptable only if the balloon/reset
                           mortgage was originally sold to Freddie Mac with secondary
                           financing which meet the following criteria:
                               • Maturity date of the secondary financing is at least
                                    12 months prior to the balloon maturity date or
                               • the subordinate lien contains language clearly
                                    subordinating the lien of the secondary financing to
                                    the balloon re-set mortgage and the re-set mortgage
                                    after re-set.
                       4. New rate may not exceed initial note rate by more than 5%.
                       5. Borrower must make written request to note holder of
                           intention to re-set.
                       6. Updated title work will be required prior to re-set of
                           mortgage. There may be no other liens on the property




                                                              American Southwest Mortgage Corp
                                                                              Revised 6/4/2005
                                                                                        Page 3
                                  except as noted above. Borrower must provide proof of
                                  ownership and occupancy prior to re-set date of mortgage.
                               7. This product is not eligible for DU.
                               8. If the property is an investment property or second home
                                  applicants, may own no more than 10 financed properties
                                  including their primary residence.

SPECIAL NOTICE             For each balloon mortgage, the lender must insert a special notice
                           regarding the nature of the balloon features on Form 1003 or in a
                           separate attachment to the form. If an attachment is used, the
                           borrower(s) must sign the attachment. The following language
                           must be inserted, using capital letters:
       "THIS LOAN MUST EITHER BE PAID IN FULL AT MATURITY OR REFINANCED TO A
MARKET LEVEL FIXED-RATE MORTGAGE. YOU MUST REPAY THE ENTIRE PRINCIPAL
BALANCE OF THE LOAN AND UNPAID INTEREST THEN DUE IF YOU DO NOT QUALIFY FOR
THE CONDITIONAL RIGHT TO REFINANCE AS SPECIFIED IN THE NOTE ADDENDUM AND
MORTGAGE RIDER. THE LENDER IS UNDER NO OBLIGATION TO REFINANCE THE LOAN
IF QUALIFICATION CONDITIONS ARE NOT MET. YOU WILL, THEREFORE, BE REQUIRED
TO MAKE PAYMENT OUT OF OTHER ASSETS THAT YOU MAY OWN, OR YOU WILL HAVE
TO FIND A LENDER, WHICH MAY BE THE LENDER YOU HAVE THIS LOAN WITH, WILLING
TO LEND YOU THE MONEY. IF YOU REFINANCE THIS LOAN AT MATURITY, YOU MAY
HAVE TO PAY SOME OR ALL OF THE CLOSING COSTS NORMALLY ASSOCIATED WITH A
NEW LOAN EVEN IF YOU OBTAIN REFINANCING FROM THE SAME LENDER."




                                                              American Southwest Mortgage Corp
                                                                              Revised 6/4/2005
                                                                                        Page 4

				
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