E MORTGAGE MANAGEMENT LLC 303 DU REFI PLUS

Transcription

1 E MORTGAGE MANAGEMENT LLC 303 DU REFI PLUS PRODUCT GUIDELINES 12/8/2014

2 MORTGAGE ELIGIBILITY Product Description and Product Codes Code Short Description Long Description CF30RP 30 YR REFI PLUS CF30RP - 30 YR REFI PLUS CF25RP 25 YR REFI PLUS CF25RP - 25 YR REFI PLUS CF20RP 20 YR REFI PLUS CF20RP - 20 YR REFI PLUS CF15RP 15 YR REFI PLUS CF15RP - 15 YR REFI PLUS The DU Refi Plus program is designed to assist homeowners in refinancing their mortgages, even if they owe more than the home s current value. DU Refi Plus products put responsible borrowers in a better position by reducing their monthly principal and interest payment, reducing their interest rate, reducing the amortization period, or moving them from a more risky loan product (such as an interest-only loan or a short-term ARM) to a more stable product (such as a fixed rate loan). Original Note date must be on or before May 31, Maximum Loan Amount Units Properties NOT in Alaska, Hawaii, Guam and US Virgin Islands Maximum Loan Amount Properties in Alaska, Hawaii, Guam and US Virgin Islands Maximum Loan Amount 1 $417,000 $625,500 2 $533,850 $800,775 3 $645,300 $967,950 4 $801,950 $1,202,925 Fixed Terms Fixed rate loans have a term of 15, 20, 25, or 30 years. 1 Interest only loan products are not offered. Refer to product codes above. 1 Refer to section 100 Conventional Underwriting Guidelines Eligible Transactions Occupancy Types Product Restrictions for Multiple Financed Investment Properties for requirements when the subject is an investment property and borrower owns more than one financed one- to four-unit investment property. ARM Terms ARM terms are not offered for this product. Last updated 12/08/2014 Page 1

3 Documentation Types Full / Alt Doc Income, employment, and assets are stated and verified. All credit documents must be dated within 120 days of the Note date. Follow reduced documentation guidelines issued in Fannie Mae SEL With the release of DU 9.1 on November 16, 2013, DU findings will reflect these requirements. Maximum LTV/CLTV 1 Transaction Type Rate/Term Refinance 3 Occupancy Units Credit Score Maximum LTV/CLTV/ HCLTV /200/200 Primary /200/200 Second home /200/200 Investment Maximum allowable LTV in this matrix may not apply to certain mortgage loans secured by properties in condominium projects in Florida. Refer to Geographic Restrictions in this guideline section. HCLTV stands for Home equity Combined Loan to Value. The HCLTV ratio is 5% greater than the CLTV ratio. If the secondary financing includes a HELOC, then the loan amount plus the draw amount at time of closing cannot exceed the CLTV ratio and the loan amount plus the total available line amount cannot exceed the HCLTV. Currently, both requirements are the same in all cases. Maximum cash to borrower is $250. Underwriting Underwriting System Submissions to Desktop Underwriter (DU ) must receive an Approve/Eligible decision. Manual underwriting, even due to errors on credit, is not permitted. Underwriting Method Conventional conforming loans must be underwritten by EMM underwriters under EMM delegated authority. Approval DU indicates the minimum income and asset verification requirements, credit-related documentation requirements, and the required level of property fieldwork necessary to complete the processing of the loan file. Requirements are based on risk factors in the loan file and appear in the Underwriting Findings report in the section titled Verification Message / Approval Conditions. Underwriters are required to provide a written analysis of the income used to qualify the borrower on the Transmittal Summary or like document(s) in the file. An Income Analysis must be completed for self-employed borrowers. Note- EMM underwriters may require additional documentation based on loan file review and the overall risk profile of the loan. Last updated 12/08/2014 Page 2

4 Desktop Underwriter Indications The DU Refi Plus program uses existing product codes within DU. Therefore, potentially eligible loans should be run through DU. The DU findings report provides indications regarding Refi Plus features. The loan must receive the following message from DU: This loan casefile was underwritten according to the DU Refi Plus expanded eligibility guidelines offered on certain limited cash-out refinance loan casefiles where the borrower s existing loan is identified by DU as a Fannie Mae loan. This loan casefile must be delivered with Special Feature Code 147. Risk-Based Decisions DU is a risk-based decision engine. Refi Plus loans that meet written guidelines might not always be approved by DU, due to excessive risk. All Refi Plus loans must have a DU approval to be eligible. Exceptions based on meeting written guidelines are not permitted. Occupancy Primary residence Second home Investment property 1 1 Refer to section 100 Conventional Underwriting Guidelines Eligible Transactions Occupancy Types Product Restrictions for Multiple Financed Investment Properties for requirements when the subject is an investment property and borrower owns more than one financed one- to four-unit investment property. Loan Purpose Rate / Term Refinance Second lien payoff is not permitted. Maximum cash to borrower is $250. Interested Party Buyout Interested party buyout transactions are not permitted. Secondary Financing Subordinate financing is permitted. Maximum CLTV is - 200% New secondary financing is not permitted. Existing second lien must be re-subordinated and must meet Fannie Mae requirements. Subordinate financing may not be paid off with loan proceeds regardless of the type or features of the second loan. Refer to Fannie Mae Seller Guide Subordinate Financing for additional requirements. Last updated 12/08/2014 Page 3

5 Tangible Net Benefit DU Refi Plus loans must have a tangible net benefit to the borrower in the form of at least one of the following: Reduced monthly mortgage principal and interest payment; More stable mortgage product; Reduction in interest rate; Reduction in amortization term Borrower benefit provision is met if- Amortization term is extended (for example, from 15 to 30 years), resulting in a reduction in the principal and interest payment Note- An extension of the amortization term is not considered movement to a more stable product. Principal and interest payment is remaining the same or increasing and the borrower is moving to a shorter term mortgage or more stable product. 1 Refer to section 000 General Underwriting Guidelines Tangible Net Benefit for additional information. 1 Increasing Payment (new section) If the Principal and Interest payment for the subject loan is increasing by more than 20% than the maximum DTI is 45% and must have a 620 credit score. This requirement must be manually applied to DU. Last updated 12/08/2014 Page 4

6 Mortgage Insurance Mortgage Insurance Requirements Mortgage insurance (MI) requirements are based on both the new loan and the existing loan. If the existing loan has MI and the MI is still in force (not expired), then the new loan must have mortgage insurance with the same coverage percentage. If the existing loan does not have MI, then MI is not required on the new loan. Loans qualifying for MI waiver under the DU Refi Plus program are eligible. Eligible Providers DU Refi Plus loans that require MI are eligible only if the MI is continued or transferred from one of the providers listed below. Other MI providers are not eligible. CMG Genworth MGIC PMI Radian RMIC Triad UGIC Eligible Coverage Lender Paid Single Premium (already paid) Borrower Paid Single Premium (already paid) Borrower Paid monthly Financed MI Ineligible Coverage Lender Paid Monthly (must be converted to Borrower Paid) Loans covered by recourse and/or indemnification agreements Split Premium MI Reduced MI Escrow Waiver Escrow waiver is permitted if the subject loan does not include Private Mortgage Insurance. Loans with PMI require escrows. Refer to rate sheet for pricing adjustments. Temporary Buydowns Temporary buydown loan products are not offered. Last updated 12/08/2014 Page 5

7 Prepayment Penalty Prepayment penalties are not permitted. Title Requirements Title to the property may not be transferred as part of the subject transaction. Higher-priced Mortgage Loans (HPMLs) 1 (new section) EMM will close an HPML provided- Loan complies with all applicable federal and state regulations, and Underwriter validates the borrower s ability to repay through verification of income, liabilities, and assets in accordance with full documentation requirements, and An escrow account is established for property taxes and insurance premiums if the subject is the borrower s primary residence, and Maximum DTI is 45% Refer to section 100 Conventional Underwriting Guidelines Eligible Transactions Higher-priced Mortgage Loans for additional information. Requirement must be manually applied to DU. CREDIT Credit Report EMM requires a full, three credit bureau tri-merge report or a residential mortgage credit report for all borrowers on all loans. Joint reports should be used only for married co-borrowers. Non-traditional credit is not permitted. Credit Score EMM requires that each borrower have a minimum of two credit scores. Use the middle score of three scores or the lower score of two scores of the lowest scoring borrower. Minimum eligible credit score is Last updated 12/08/2014 Page 6

8 Housing Payment History Mortgage History The mortgage history must be reflected on the credit report and DU must read and acknowledge it. If DU does not read and acknowledge the mortgage history, the loan is not eligible. The issue must be corrected and the loan resubmitted to DU. The mortgage may not be past due at the time of closing. Documenting Housing Payment History EMM accepts DU finding requirements for documenting the housing payment history. EMM underwriters may require additional documentation based on loan file review and the overall risk profile of the loan. Major Derogatory Credit Consumer Credit Counseling Services For loans underwritten by DU, a DU decision of Approve/Eligible is valid even with the presence of Credit Counseling Services on the credit report. Exercise caution when underwriting loans with CCCS. Approval to refinance must be obtained from the credit counseling service. Borrower must provide evidence of perfect payment history for the duration of the consumer credit counseling account. Collections and Charge-offs Conventional conforming loans have no limit on the amount of adverse credit that may be open prior to close. The maximum amount that may be left open at closing is: Primary residence, Single Family Follow AUS findings. Borrowers are not required to pay off outstanding collections or charge-offs regardless of amount if the AUS does not require it. 2-4 unit primary or second home collections and charge-offs totaling more than $5,000 aggregate amount must be paid in full prior to or at closing. Investment property individual accounts equal to or greater than $250 and accounts that total more than $1,000 aggregate amount must be paid in full prior to or at closing. Paying down collection accounts to less than the limit is not permitted. Judgments and Tax Liens Open judgments, garnishments, and all outstanding liens that appear in the Public Records section of the credit report will be identified in the Underwriting Findings report. All liens must be paid at or before closing and supporting documentation must be included in the loan file. Funds sufficient to satisfy these liens must also be verified. Bankruptcy, Short Refinance, Preforeclosure, Short Sale, Foreclosure, and Deed-in-lieu of Foreclosure There is no waiting period. DU findings will include language acknowledging the derogatory credit event. Last updated 12/08/2014 Page 7

9 Restructured / Modified Mortgage Mortgage loans that have previously been restructured are not eligible for delivery to Fannie Mae. However, the subsequent refinance of a restructured loan may be delivered to Fannie Mae if: The borrower(s) made a minimum of 24 consecutive months of timely mortgage payments on the restructured loan before closing on the refinance mortgage loan. In other words, the borrower had to make at least 24 timely mortgage payments based on the terms of the loan after the loan was restructured. After this time, if the borrower chooses to refinance the restructured loan, the new refinance transaction is eligible for sale to Fannie Mae if the loan otherwise meets all limited cash-out or cash-out refinance requirements, as applicable. The new refinance meets all other DU Refi Plus requirements, as applicable. BORROWER ELIGIBILITY Eligible Borrowers Borrowers must have a valid Social Security number. U.S. citizens Permanent resident aliens Non-permanent resident aliens 1 Non-occupant co-borrowers Inter vivos revocable trusts Non-Occupant Co-Borrowers Non-occupant co-borrowers are eligible provided they are on title to the property and are borrowers on the existing loan. Refer to section 100 Conventional Underwriting Guidelines Borrower Guidelines Non-occupant Co-Borrower for additional information. Inter Vivos Revocable Trusts 1 Borrower(s) must be the Trustee(s) or one of the co-trustee(s). Occupancy- primary residence, second home, and investment property Refer to section 100 Conventional Underwriting Guidelines Borrower Guidelines Inter Vivos Revocable Trust for additional information. Ineligible Borrowers 1 The following borrower types are not eligible: Corporations General Partnerships Foreign nationals Borrowers with diplomatic immunity or political asylum Non-natural entities Last updated 12/08/2014 Page 8

10 Adding or Removing a Borrower One or more existing borrowers may be removed provided- At least one existing borrower remains on the new loan, Borrower(s) may be added to the new loan and used for qualifying provided at least one existing borrower remains on the new loan. INCOME Qualification Documentation Types Full/Alt documentation is required. Qualifying Rate Qualifying rate is equal to the Note rate. Debt Ratio Maximum DTI is75%, regardless of the DU decision. Maximum DTI is 45% if the loan is a higher-priced mortgage loan (HPML). Refer to section 100 Conventional Underwriting Guidelines Eligible Transactions Higher Priced Mortgage Loans for additional information. If the Principal and Interest payment for the subject loan is increasing by more than 20% than the maximum DTI is 45% and must have a 620 credit score. This requirement must be manually applied to DU. EMM underwriters evaluate the borrower s ability to repay the loan. Payoff of Debts to Qualify Revolving debts may not be paid off to qualify unless the accounts are verified as closed to further transactions at loan closing. Full/Alt Documentation Income, employment, and assets required for closing are stated and verified. Follow DU findings for documentation requirements. EMM will not accept just handwritten VOE s or VOD s in lieu of paystubs or bank statements. Last updated 12/08/2014 Page 9

11 Income Source Employment income (primary or secondary), Bonus Overtime Minimum Documentation Requirements YTD paystub or salary voucher reflecting a minimum of 30 days of income Commission Income YTD paystub or salary voucher reflecting a minimum of 30 days of income, or Most recent year s tax returns Self-employment (all types, primary or secondary) Alimony, Child Support, Separate Maintenance Rental Income (regardless of percentage of income) Most recent year s personal tax return Copy of signed court order and evidence of receipt of total court ordered amount for most recent one month Provide executed lease agreement or most recent personal tax return. Two- to four-unit primary residence 1 Second home may not have rental income One- to four-unit investment property 1 Property must have a minimum of six months rent loss insurance coverage for losses that might be incurred during a rehabilitation period following a casualty, unless rental income is not used to qualify and borrower is qualified using PITIA for the rental property. Refer to section 100 Conventional Underwriting Guidelines Employment and Income Rental Income Rent Loss Insurance for additional information. Borrowers must currently own a primary residence or own other investment properties in order to use rental income to qualify. Refer to section 100 Conventional Underwriting Guidelines Employment and Income Departure Residence for requirements when converting a primary residence to an investment property. 1 Refer to Additional Requirements for LTV > 105 in this guideline section for restrictions. Retirement, Pension, and Social Security Provide one of the following: award letter, or most recent year s tax return, or W-2 or 1099, or one month bank statement reflecting direct deposit Last updated 12/08/2014 Page 10

12 Income Source Minimum Documentation Requirements Temporary Leave Income Written confirmation from borrower of his/her intent to return to work, and No evidence or information from borrower s employer indicating that the borrower does not have the right to return to work after the leave period. Regardless of the date of return, the amount of the regular employment income the borrower received prior to the temporary leave must be used to qualify. Unemployment Income Award Letter Evidence of receipt All other income types Refer to Fannie Mae Seller Guide. ASSETS Reserves EMM follows the DU certificate for reserve requirements. If reserves are required, then they must be documented in accordance with requirements in Fannie Mae SEL , outlined below. Reserves not sourced from the borrower s own funds are not eligible. Asset Verification Verification Requirements One recent statement (monthly, quarterly, or annual) reflecting asset balance. If assets are required to satisfy DU reserve requirements, then standard policy regarding discounting of certain assets applies. Refer to section 100 Conventional Underwriting Requirements Assets, Reserves, and Funds to Close for requirements. Joint Bank Accounts If assets/reserves are sourced from a joint bank account, EMM requires a signed letter from all account holders who are not party to the subject transaction confirming that the borrower requesting the loan has access to all funds in the account. Business Accounts Business assets may be used. Refer to section 100 Conventional Underwriting Guidelines Assets, Reserves and Funds to Close Assets for Down Payment and Closing Costs Use of Business Funds for requirements. Real Estate Owned 1 There is no limitation on the number of financed residential properties a borrower may own. Last updated 12/08/2014 Page 11

13 Borrowers may not have more than three financed properties with any single investor. Use credit report to determine investors. New multiple loans must be underwritten simultaneously. PROPERTY Property Valuation Reduced Appraisal Requirements Per DU findings, DU Refi Plus loans are eligible to be closed with a Property Inspection Waiver (PIW). EMM follows the recommendation of the DU findings report. NOTE: Reduced appraisal requirements are not permitted when the subject property is located in a disaster area within 120 days of the disaster event. Refer to section 000 General Underwriting Guidelines Disaster Policy for instructions regarding reduced appraisal types in disaster areas within 120 days of a disaster declaration. Site Analysis Subject property site should generally conform to and be acceptable in the market area in terms of size, shape and topography. Appraisal must include the actual size of the site and not a hypothetical portion of the site for the subject property (e.g. appraiser may not appraise only five acres of an un-subdivided 40-acre parcel. The appraisal must reflect the entire 40-acre parcel) Note- Site analysis requirements apply only if an appraisal is required. Supporting Documents Rental Property Requirements The following schedules are required for rental properties. Single Family Comparable Rent Schedule (form 1007) required when rental income is used in qualifications. Operating Income Statement (form 216) required for all investment properties and all multi-unit primary residences Appraisal Update and/or Completion Report The appraisal report may not be older than 120 days at closing. An appraisal update is not permitted for a seasoned appraisal. A new appraisal must be ordered. In addition, if the original appraised value is listed as subject to then the Appraisal Update and/or Completion Report is required Field Review A field review is not required on DU Refi Plus loans unless the underwriter rejects the appraisal document as substandard. Last updated 12/08/2014 Page 12

14 Properties Listed for Sale Properties previously listed for sale must be taken off the market a minimum of one day prior to the loan application date. Property Eligibility 1 Eligible Properties Properties with less than 400 square feet of living area, and Property types listed in in section 100 Conventional Underwriting Guidelines Property and Appraisal Ineligible Property Types Condominiums Unit Numbers DU Refi Plus loans on condominiums must have a condominium unit number listed on the loan application and DU certification, regardless of the UAD address. Project Warranty Condominium projects do not require warranty. The warranty from the previous loan is considered to be still active. Updated insurance documents are required. Geographic Restrictions. Texas Texas (a)(6) loans are eligible subject to: A full appraisal and maximum LTV/CLTV of 80%. Borrower may receive -0- cash back. No Secondary Financing. 3% fee restriction in accordance with Texas Constitution (including discount points) Power of Attorney is not permitted. Last updated 12/08/2014 Page 13