FHA 203(k) STANDARD FIXED GUIDELINES

Transcription

1 PRODUCT DESCRIPTION FHA Fixed Rate 30 year term mrtgage PRODUCT CODE FHA (Cnfrming Lan Amunt) FHA30-J203 (High Balance Lan Amunt) QUALIFYING RATE AND RATIOS Maximum 50% DTI with AUS Apprve/Accept n 1 unit prperty n Cnfrming Lan Amunts TYPES OF FINANCING Purchase Maximum 45% DTI with AUS Apprve/Accept n 1 unit prperty n High Balance Lan Amunts Maximum 45% DTI with AUS Apprve/Accept n 2 unit prperties n Cnfrming and High Balance Lan Amunts Rate/Term Refinance (cash-ut refinance is ineligible) Energy Efficient Mrtgage (EEM) are eligible Temprary Buydwns are ineligible Higher Priced Mrtgage Lans (HPML) are eligible MAX LOAN AMOUNT Maximum Base Lan Amunt cannt exceed the FHA Statutry Mrtgage Limits fr each cunty. Maximum Mrtgage Wrksheet 203(k) Maximum Mrtgage Wrksheet must be cmpleted fr lan amunt calculatin. This frm must be cmpleted in additin t the FHA Lan and Underwriting Transmittal LT frm Eligible Expenses fr Inclusin in Mrtgage Amunt Labr and materials Cntingency reserve Inspectins Title update fee(s) Architectural/Engineering fees Independent cnsultant fees Permits LTV/CLTV Purchase Other fees (as allwed fr EEM lans & HERS reprts, LBP fees r ther apprpriate fee t the renvatin prject) Supplemental riginatin fee Discunt pints n repair csts Escrwed mrtgage payments (PITI) fr up t six mnths during the renvatin perid while the prperty is nt ccupied 96.5% LTV/100% CLTV r as therwise allwed per FHA guidelines Rate/Term Refinance 97.75% LTV/97.75% CLTV r as therwise allwed per FHA guidelines High Balance Lan Amunts: Standard FHA LTV limits apply. The maximum CLTV is capped at the FHA maximum LTV fr prduct. Page 1 f 10 Rev. 3/27/13

2 SECONDARY FINANCING Permitted per FHA guidelines PROPERTY TYPES Eligible Prperties High Balance Lan Amunts: Allwed up t maximum FHA LTV calculatin. The maximum CLTV = maximum LTV. 1-2 units PUDs FHA Apprved cnds HUD REO prperties Mixed use Ineligible Prperties 3-4 units Lg hmes C-ps and Cndtels Manufactured hme Hmes cmpleted less than 1 year ag CONDO REVIEW/WARRANTY Must be n FHA apprved list Dcuments required in lan file: OCCUPANCY Primary Residence nly FHA Cnnectin printut verifying cnd apprved Lan-level certificatin fr individual unit financing Master HOA Certificate f Insurance with the required hazard/liability/fidelity/fld insurance t ensure the prper cverage and plicies will nt expire within 30 days frm the date f the subject lan Walls-in/HO-6 insurance in an amunt n less than 20% f the cnd r attached PUD s appraised value Cndminium rehabilitatin is subject t the fllwing additinal cnditins: Rehabilitatin is limited nly t the interir f the unit Mrtgage prceeds are nt t be used fr the rehabilitatin f exterirs r ther areas that are the respnsibility f the cndminium assciatin, except fr the installatin f firewalls in the attic f the unit Only the lesser f 5 units per cndminium assciatin, r 25% f the ttal number f units, can be underging rehabilitatin at any time The maximum mrtgage amunt cannt exceed 100% f the after imprved value The individual buildings within the cndminium must nt cntain mre than 4 units. Hwever, this des nt mean that the cndminium prject, as a whle, can nly have 4 units r that all individual structures must be detached Example: A prject might cnsist f 6 buildings each cntaining 4 units, fr a ttal f 24 units in the prject and, thus, be eligible fr Sectin 203(k). Likewise, a prject culd cntain a rw f mre than fur attached twnhmes and be eligible fr Sectin 203(k) because HUD cnsiders each twnhuse ne structure, prvided each unit is separated by a 1 ½ hur firewall (frm fundatin up t the rf) Page 2 f 10 Rev. 3/27/13

3 UNDERWRITING Must adhere t FHA guidelines and Platinum Plicies lcated in the Crrespndent Seller Guide All lans must be scred thru FHA TOTAL Screcard and receive Apprve/Accept recmmendatin frm DU r LP AUS Apprve/Accept Ineligible recmmendatin allwed fr LTV n the Gd Neighbr Next Dr and/r HUD $100 Dwn REO prgrams r ther such dcumented prgramming issues, as lng as in accrdance with FHA guidelines All lan data submitted t AUS fr Apprve/Accept Finding must be accurate and validated All lans must meet FHA guidelines and eligibility requirements, as well as credit, capacity and dcumentatin requirements in additin t items listed in this matrix NOTE: Identity f Interest transactins are ineligible AUS Refer and manually underwritten lans are ineligible If manual dwngrade is required, lan is ineligible fr purchase Vacating Primary Residence If the brrwer is cnverting his/her primary residence t a Investment prperty; Refer t Vacating Primary Residence Matrix fr requirements BORROWER ELIGIBILITY All brrwers (including permanent and nn-permanent resident aliens) must have a valid scial security number Permanent Resident Aliens Cpy f valid Alien Registratin Receipt Card (Resident Alien card), I-551 (frnt & back) Nn-Permanent Resident Aliens Brrwer must be eligible t wrk in the U.S. Cpy f valid eligible visa and unexpired passprt Cpy f the valid Emplyment Authrizatin Card, I-766, with histry f renewal NOTE: A scial security card is nt acceptable as evidence f wrk status CO-BORROWERS Permitted per FHA guidelines CREDIT Must adhere t FHA guidelines and Platinum plicies lcated in the Crrespndent Seller Guide Minimum FICO Scre requirements Minimum 640 FICO fr each brrwer n Cnfrming Lan Amunts Minimum 660 FICO fr each brrwer n High Balance Lan Amunts Nn-traditinal credit files are ineligible. All brrwers must have traditinal credit histry Fllw FHA guidelines fr adverse credit histry Any payment plan fr adverse credit must have a minimum 6 mnth dcumented satisfactry payment histry ASSETS/RESERVES Must adhere t FHA guidelines and Platinum Plicies lcated in the Crrespndent Seller Guide In additin t AUS requirements, a minimum 30 day bank statement r acceptable printut dated within 45 dates f applicatin is required. VOD as standalne dcumentatin is nt acceptable. INTERESTED PARTY CONTRIBUITONS Maximum up t 6% Seller cntributins limited t discunt pints, seller paid clsing csts, prepaid expense, UFMIP (entire amunt f UFMIP) Page 3 f 10 Rev. 3/27/13

4 INCOME Must adhere t FHA guidelines and Platinum Plicies lcated in the Crrespndent Seller Guide If any brrwer is wrking fr a temprary agency, a minimum f 24 mnths wrk histry is required with the temprary agency in rder t cnsider incme fr qualificatin In additin t AUS requirements, a cmpleted and signed IRS Frm 4506-T fr each brrwer n lan is required and the 2 mst recent years validated tax transcripts APPRAISAL REQUIREMENTS Must adhere t FHA guidelines and Platinum Plicies lcated in the Crrespndent Seller Guide Must cmply with the FHA Appraisal Independence Plicy Appraisal must be cmpleted by a HUD-apprved appraiser. The appraisal reprt must be cmpleted with the as imprved value. The appraiser must refer t the cnsultant s wrk write-up and cst estimate. Appraisal must be cmpleted subject t cmpletin per plans and specs. The appraisal needs t state that the prperty meets FHA requirements nce the renvatins are cmpleted. The lender must establish an as-is value, but the lender may determine that an as-is appraisal is nt necessary. The lender may use the cntract sales price (n a purchase transactin) r the existing debt n the prperty (n a refinance transactin) as the as-is value when it is clear t the lender that this amunt des nt exceed a reasnable estimate f value. On a refinance transactin, when a large amunt f existing debt suggests t the lender that the brrwer has little r n equity in the prperty, the lender shuld always btain an as-is appraisal n which t base the estimate f as-is value. Fr a HUD-wned prperty, request the utstanding HUD prperty dispsitin appraisal n the prperty frm the M&M cntractr. This must be included in the file regardless f the date f the appraisal. This als must be supplied t the appraiser. The HUD appraisal can be used t dcument the "as is" value if the appraisal is nt ver 120 days ld prir t bid acceptance frm HUD r DE Underwriter may request a new as-is appraisal if HUD appraisal is insufficient An "as-imprved" appraisal must ALWAYS be rdered and brrwer can be charged this fee. If existing HUD appraisal is ver 120 days ld, lender required t determine as-is value as nted abve. NOTE: if "as is" value is lwer n new dcuments, then lwer value must be used in Max Mrtgage Calculatin Flips within 90 days are ineligible if the sales price increase is 20% r greater frm seller acquisitin's cst. MORTGAGE INSURANCE Fllw FHA guidelines MAX PROPERTIES Brrwer may nt have mre than 4 financed prperties, including the subject prperty. Page 4 f 10 Rev. 3/27/13

5 CAIVRS, LDP & GSA SEARCH Dcument the results n the FHA Lan Underwriting & Transmittal Summary (LT) A cpy f the FHA Cnnectin screen results fr all searches must be in the lan file CAIVR System Access FHA Cnnectin t check CAIVRS fr all brrwers n the transactin: brrwers, c-brrwers and c-signrs, if applicable If the name f any party t the transactin appears n any f the lists belw, the lan is nt eligible Limited Denials f Participatin (LDP) List COMMUNITY PROPERTY STATES List f Cmmunity Prperty States: Examine/Search the list fr all parties t the transactin: all brrwers including AKAs, sellers, listing and selling real estate agents and lan fficer. Gvernment Services Administratin's (GSA) Lists f Parties Excluded frm Prcurement fr Nn-Prcurement Prgrams Examine/Search the list fr all parties t the transactin: all brrwers including AKAs, sellers, listing and selling real estate agents and lan fficer. Arizna Califrnia Idah Luisiana Nevada New Mexic Texas Washingtn Wiscnsin If prperty is lcated in a cmmunity prperty state, r the brrwer resides in a cmmunity prperty state, the fllwing requirements apply: A credit reprt fr the nn-purchasing spuse is required t determine any jint r individual debts. The spuse's authrizatin t pull a credit reprt must be btained. If the nn-purchasing spuse des nt have a scial security number, the credit reprting cmpany must rder a credit reprt with the nn-purchasing spuse's name, address, and date f birth (DOB). The scial security number filed must be left blank. The credit reprt shuld verify that the nn-purchasing spuse has n credit histry and n public recrds recrded against him/her The debts f the nn-purchasing spuse must be cnsidered in the qualifying ratis. All defaulted federal debt, pen judgments and liens, including thse f the nn-purchasing spuse, must be satisfied prir t r at clsing NOTE: Credit histry f the nn-purchasing spuse shuld nt be the basis fr declining the lan HIGHER PRICE MORTGAGE LOANS Higher Priced Mrtgage Lan Disclsure MUST be signed as part f the applicatin dcuments Must pass all High Cst tests, including but nt limited t Agency, City, Cunty, State & Federal Verificatin f incme and assets always required REHABILITATION AMOUNT Minimum $5,000 N Maximum. The ttal mrtgage must be within the FHA statutry lan limits fr the subject prperty lcatin Amunts include all rehabilitatin csts such as labr and materials, cntingency reserve, permits, inspectins, final title update, etc. REHABILITATION PERIOD Rehabilitatin cnstructin must begin within 30 days f clsing, and all wrk shuld be cmpleted within 6 mnths f clsing r less Page 5 f 10 Rev. 3/27/13

6 IMPROVEMENTS Eligible Imprvements Structural alteratins such as repair r replacement f structural damage, additins t structure and finished attics and/r basements Eliminating health and safety hazards Installing wells and/r septic systems and recnditining plumbing Changes fr imprved functins and mdernizatin Changes fr aesthetic appeal and eliminating bslescence Repairing r adding rfing, gutters and dwnsputs Energy cnservatin imprvements Landscaping, grading, repairing patis and terraces that imprve the prperty equal t the dllar amunt spent n the imprvements Creating accessibility fr the handicapped Rehabilitatin r imprvements t a detached garage, a new detached garage, r the additin f an attached unit(s) (if allwed by the lcal zning rdinances) The repair f an existing swimming pl, nt t exceed $1,500 Ineligible Imprvements Any luxury item and/r imprvement that des nt becme a permanent part f the subject prperty is nt eligible Luxury items such as new swimming pls, exterir ht tubs, sauna, tennis curts, gazeb, barbeque pits, etc. Alteratin t supprt cmmercial use Repairs requiring wrk schedule lnger than 6 mnths Prcess Brrwer selects a cntractr fr wrk t be cmpleted based n wrk write-up and cst estimate prepared by cnsultant The wrk write-up and cst estimate frm the cnsultant and cntractr must be reviewed t ensure the planned wrk meets all prgram and repair eligibility requirements The wrk write-up and cst estimate frm the cnsultant are prvided t appraiser fr cnsideratin f value fr the appraisal reprt The repairs and imprvements must meet any lcal cdes and rdinances and all required permits must be btained prir t the start f wrk Prjects that increase density r change the current use must be addressed and verified in cmpliance with zning prir t clsing Page 6 f 10 Rev. 3/27/13

7 CONSULTANT 203(k) cnsultant is required The cnsultant must be listed in gd standing n the FHA 203(k) Cnsultant Rster and cmply with ML The lender has the sle respnsibility fr selectin f the cnsultant frm the rster and will be held accuntable, alng with the cnsultant, fr deficient wrk write-ups, cst estimates and prgress payments Cnsultants t prepare the wrk write-up & cst estimate utilizing the Specificatin f Repairs frm (r cmparable wrk write-up frm) and all required architectural exhibits. A plan review f a cntractrs bid is nt acceptable. ALLOWABLE CONSULTANT FEES: $7,500 r Less - $400 $7,501 t $15,000 - $500 $15,001 t $30,000 - $600 $30,001 t $50,000 - $700 $50,001 t $75,000 - $800 $75,001 t $100,000 - $900 $100,001 and abve - $1,000 Each Additinal Unit - $25 Feasibility Study - $100 Allwable Inspectin Fee Varies by Hmewnership Center CONTRACTOR REQUIREMENTS All wrk must be cmpleted by a licensed and bnded cntractr r cntractr must meet the requirements fr the prperty s lcale, if licensing nt required by state. Cntractr must carry insurance and wrkman s cmp insurance, if applicable. The cntractr must supply evidence f license, bnd, city certificate, insurance, etc The cntractr must cmplete the FHA 203(k) Hmewner-Cntractr Agreement. Lender must ensure all renvatin lans have a legally binding cntract between the brrwer and cntractr prir t lan clsing. Bid letters are nt an acceptable substitute. The cntract must cntain the terms and cnditins fr cmpletin and be fr an amunt that des nt exceed the wrk write-up. Clauses that prvide fr pen-ended changes are nt acceptable. The cntractr must cmplete the FHA 203(k) Cntractr Questinnaire r a cmparable dcument. This frm must be included in the file. Cntractr t be reviewed by lender. Lenders are respnsible fr reviewing the credentials f cntractrs, hme inspectrs, cnsultants and appraisers. Cntractr shuld have a minimum 3 year wrk experience in field and a minimum 1 year wnership in business SELF HELP Self-help r the brrwer acting as the general cntractr is strngly discuraged unless the applicant s ability t cmpletely perfrm the wrk in a timely and wrkmanlike manner is self-evident and easily dcumented Lans utilizing self-help r brrwer acting as general cntractr will be cnsidered and are subject t a price adjustment LEAD BASED PAINT REPAIRS The cntractr cmpleting lead based paint repairs must be EPA certified. Cntractr s EPA OR state lead training certificate are required fr dcumentatin f cmpliance NOTE: Funds allcated t lead based paint repairs will nt be disbursed until thse repairs are 100% cmplete. Page 7 f 10 Rev. 3/27/13

8 ADDITIONAL DOCUMENTATION REQUIREMENTS FHA 203(k) Brrwer Acknwledgement (cmpleted by brrwer and lan fficer) FHA 203(k) Brrwer Identity f Interest Certificatin (signed by brrwer) FHA 203(k) Cnsultants Identity f Interest Certificatin (signed by cnsultant) FHA 203(k) Cntractr Questinnaire (cmpleted by each cntractr and infrmatin t be verified by lender) FHA 203(k) Hmewner-Cntractr Agreement (cmpleted by brrwer and each cntractr) FHA 203(k) Self-Help Agreement (cmpleted by brrwer) 203(k) Maximum Mrtgage Wrksheet Frm HUD (signed by underwriter and brrwer at clsing) Rehabilitatin Lan Agreement (cmpleted by clser and signed by brrwer at clsing) Rehabilitatin Lan Rider (cmpleted by clser and signed by brrwer at clsing) Draw Request Frm HUD-9746-A (cmpleted by applicable parties) CLOSING COSTS Custmary and reasnable csts as defined by FHA. The fllwing are additinal clsing csts specific t the 203(k) prgram Supplemental riginatin fee. This fee is calculated as 1.5% f the prtin f the mrtgage allcated t rehabilitatin, r $350, whichever is greater, and financed int the mrtgage amunt. The supplemental riginatin fee is cllected in additin t the 1% riginatin fee. Discunt pints n repairs csts Inspectin fees (maximum f five). The charge is the custmary fee fr the area and can be included in the rehab csts in the maximum mrtgage calculatin. Title update fees as required by the prperty lcatin can be included in the rehab csts and maximum mrtgage calculatin. The title updates are rdered by the lender and at least ne is required befre the final disbursement is made. Architectural/Engineering fees Independent cnsultant fees Permits and ther fees Escrwed mrtgage payments (PITI) fr up t six mnths during the renvatin perid while the prperty is nt ccupied CONTINGENCY RESERVE A cntingency reserve is required t cver unexpected expenses. The reserve is 10% (can be up t 20% based n the scpe f the prject) f labr and materials nly. If utilities were nt turned n at time f inspectin and mechanical systems culd nt be tested, 15% is required. The cntingency reserve is used n thse changes that affect the health, safety, r an increase in cst due t a necessity item. If the cntingency reserve is insufficient, the brrwer must place additinal mnies int the accunt fr payment upn acceptance f the change. If a change rder results in a decrease in csts, the amunt will be added t the cntingency reserve. May be used fr additinal imprvements nce the health, safety and necessity items have been addressed If the reserve is unused, the remaining amunt is applied t the principal balance. N cash can be given t brrwer. Page 8 f 10 Rev. 3/27/13

9 REHABILITATION/ REPAIR DISBURSEMENT PROCESS DRAW REQUESTS & DISBURSEMENTS RELEASES FROM THE ESCROW ACCOUNT AT CLOSING Only allwable csts that are shwn n Line B13 f the Maximum Mrtgage Wrksheet can be released at clsing. These csts can be released with the apprpriate dcumentatin in the frm f a paid receipt r an invice that is t be paid. Releases fr repairs cannt be dne until evidence is received that all required permits have been btained and inspectin f the cmpleted wrk has been dne. PERMITS: Prir t the start f wrk and prir t the release f any escrw funds, building permits fr all aspects f the renvatin prject must be in place. If permits are nt required by the lcal jurisdictin, a certificatin r ther dcumentatin stating n permits are required fr the prject must be btained in lieu f the permit. Funds will be released after the wrk is inspected by a HUD-apprved inspectr. Advances fr repairs are nt permitted. Paid receipts r cancelled checks are required t reimburse the brrwer r cntractr fr paid allwable csts that are financed in the renvatin escrw after the service has been prvided. Advances are nt permitted. Draw requests are made by cmpleting a Draw Request frm and Escrw Disbursement frm alng with all supprting dcumentatin. Original signatures frm the brrwer(s), inspectr r cnsultant, the cntractr and the Lender s underwriter r authrized agent/emplyee are required n the Draw Request Frm prir t each release. Draw requests will be reviewed upn receipt. If any crrectins r additinal dcumentatin is needed t apprve the draw, Crrespndent Lending will cntact the lender. Upn receipt f cmplete draw dcumentatin, checks will be prcessed in 24 t 48 hurs. All f the disbursement checks are sent t the Lender fr distributin t the apprpriate parties. NOTE: Checks c-payable t the brrwer(s) and cntractr are encuraged. Mrtgagr s Letter f Cmpletin & Final Release Ntice t be executed upn cmpletin and needed fr the final disbursement TITLE UPDATE: Title updates r lien waivers are required when apprpriate based upn lcal lien laws fr interim draws. An endrsement t the title plicy extending the effective date thrugh the cmpletin f the renvatin and assuring first lien psitin is required t be prvided by lender fr final disbursement. AUS PROCEDURES Sectin f the Act: 203(k) FHA Rehabilitatin MIP: same as the 203(b) prgram Instructins fr entering data in the Details f Transactin screen: Line A Purchase Price. Enter the as is sales price, withut the repairs Line B Alteratins, imprvements, repairs. Enter the rehabilitatin amunt frm Line B14 in the 203(k) wrksheet Instructins fr entering the Prperty Appraised Value: The appraised value entered must be the after imprved appraised value f the prperty. Page 9 f 10 Rev. 3/27/13

10 FHA CONNECTION PROCEDURES MORTGAGE INSURANCE CERTIFICATE (MIC) ADDITIONAL MISC. INFORMATION Initial Case Number Assignment: ADP Cde data entry is 702 fr single family, 804 fr cnd and 807 fr EEM Cnstructin cde data entry is Substantial Rehabilitatin. 203(k) Cnsultant ID required. Escrw Clse-Out Screen: FHA 203(k) lans cannt be clsed-ut in FHA Cnnectin until Mrtgage Insurance Certificate (MIC) has been issued Lender r hlder/servicer f recrd is required t cmplete the escrw clse-ut screen n FHA Cnnectin when the final cmpletin f the renvatin has ccurred. Refinances cannt be prcessed until the renvatin prject is cmpleted and the clse-ut infrmatin has been prcessed in FHA Cnnectin. If the prject is nt cmpleted, n new case number will be issued n the prperty withut an verride by the HOC jurisdictin. Platinum expects that FHA lans be insured within 30 days f clsing. Case binders can be submitted and insurance issued befre the wrk is cmplete. Cmpletin f initial and final HUD Addendum - Questin #20 shuld be checked #2 finance imprvements t existing prperty Cnditinal Cmmitment t be cmpleted by underwriter as subject t 203(k) repairs listed n appraisal PRICING/RATES/LOCKS Refer t Platinum Crrespndent website fr daily pricing and pricing plicies. REFERENCES Refer t HUD Handbk rev-2, Appendix B-1, ML 94-11, ML and ML fr additinal infrmatin nt cvered in this prduct guideline Page 10 f 10 Rev. 3/27/13