E MORTGAGE MANAGEMENT LLC 501 FHA FIXED RATE

Transcription

1 E MORTGAGE MANAGEMENT LLC 501 FHA FIXED RATE PRODUCT GUIDELINES 2/18/2015

2 501 FHA Fixed Rate Mortgage Eligibility Product Codes Code Short Description Long Description FF10 FHA 10 YR FF15 - FHA FIXED 10 YEAR FF15 FHA 15 YR FF15 - FHA FIXED 15 YEAR FF20 FHA 20 YR FF20 - FHA FIXED 20 YEAR FF25 FHA 25 YR FF25 - FHA FIXED 25 YEAR FF30 FHA 30 YR FF30 - FHA FIXED 30 YEAR Maximum Loan Amount The maximum base loan amount is the lesser of the FHA county loan limit available on the FHA website or the conventional loan limit below. Base loan amounts exceeding the applicable conforming or FHA loan limit must be closed as an FHA High Balance Loan. Refer to section 503 FHA High Balance. 1 Units 1 Maximum Loan Amount 1 $417,000 2 $533,850 3 $645,300 4 $801,950 Refer to Geographic Restrictions in this guideline section for restrictions on properties located in New Jersey. Click here for FHA loan limits. Fixed Terms Fixed rate loans have a term of 10, 15, 20, 25 or 30 years. Documentation Types Full / Alt Doc Income, employment, and assets are stated and verified. Refer to Income in this guideline section for additional information. FHA Transactions EMM will not allow transactions including, but not limited to, the following: Cash-out refinances in the state of Texas or loans with any Section 50(a)(6) financing HOPE for Homeowner s Program HUD 184 Program - Indian Reservations Hawaiian Homelands FHA 203k Renovation or streamline 203k FHA Section 8 loans FHA Military Impact Area Loans FHA refinance loans for borrowers in a negative equity position. Refer to Mortgagee Letter ML Manufactured homes FHA single close Construction Permanent Mortgage Program Last Updated: 02/18/2015 Page 1

3 Mortgage Eligibility Maximum LTV/CLTV Transaction Identity of 2 Occupancy Units3 Type Interest Purchase Standard Eligibility Requirements Primary Residence Maximum LTV/CLTV/ HCLTV No 96.5/ Yes 85/85 Rate/Term 1-4 N/A 97.75/97.75 Refinance Cash-out 1 1 N/A 85/85 Refinance If subject property was purchased less than six months prior to application date, cashout is not permitted. Loans submitted as Construction-Permanent are considered two separate closing transactions and are subject to standard rate/term or cash-out refinance eligibility guidelines as defined in this table. Refer to Geographic Restrictions in this guideline section for restrictions on properties in New Jersey. HCLTV stands for Home equity Combined Loan-to-Value. The maximum HCLTV is always equal to the maximum CLTV. Maximum CLTV is 105% if second mortgage is through a government-sponsored Down Payment Assistance Program (DAP). Underwriting Underwriting System Submissions to Desktop Underwriter (DU ) must receive the following result: Desktop Underwriter DU uses TOTAL Scorecard to evaluate FHA loans. Loans must receive a decision of Approve/Eligible. Expanded Approval decisions (EA levels) are not permitted. Manual Underwriting 1 EMM permits manual underwriting if TOTAL Scorecard recommends a System Override (see below). Ratios may not exceed the standard maximum ratios of 31/43, regardless of any compensating factors in loan file. Minimum credit score is 640. Additionally, if a manual downgrade is required, manual underwriting is required (see below). Underwriting Method FHA loans are underwritten by EMM underwriters under EMM delegated authority. External underwriting methods, such as contract underwriting, are not permitted. TOTAL Scorecard Overrides When TOTAL Scorecard automatically triggers manual underwriting, it is called a System Override. The following conditions trigger a System Override: excessive qualifying ratios (loan will be manually denied) previous mortgage foreclosure within three years bankruptcy discharged within two years late mortgage payments (greater than 1 x 30 on purchase or rate/term refinance, or greater than 0 x 30 on cash out will be manually denied). Last Updated: 02/18/2015 Page 2

4 Mortgage Eligibility Underwriting Manual Downgrades A manual downgrade is necessary if additional information, not considered in the DU/TOTAL decision, affects the insurability or eligibility of a mortgage otherwise rated as an accept or approve. Manual downgrades might be triggered by inaccuracies in credit reporting, by eligibility issues, and for other reasons including the failure of TOTAL and/or DU to recognize a derogatory credit reference. Occupancy Primary residence Loan Purpose Purchase Rate / Term Refinance Pay off existing first lien (no seasoning requirement) Pay off second lien (minimum one year seasoning required) o HELOC (requires no draws within previous 12-month period) Interested party buyout (see below) Cash back to borrower is limited to $500 Continuity of obligation must be established Property may not be currently listed for sale Cash-out Refinance Properties owned less than 12 months use lesser of original sales price or new appraised value All borrowers must have been on title to the property for a minimum of six months. Non-occupant co-borrowers are not eligible. Mortgage history must be 0 x 30 in the last 12 months. Pay off tax liens, judgments, borrower liabilities, etc. Pay off an unseasoned second lien Property may not be currently listed for sale. No limit on cash out Minimum credit score 620. Interested Party Buyout Owner-occupant borrower may receive no cash proceeds from the transaction and must have the ability to qualify using only his/her own income. Divorce decree or property settlement agreement (or in case of paying off an heir, copy of the will) must be included in the loan file. Buyout proceeds must appear on the HUD-1 and be payable directly to the party being bought out. Secondary Financing Seller-held secondary financing is not permitted. Community second mortgages are permitted. Down Payment Assistance programs are eligible provided they meet FHA guidelines for DAP programs. Secondary financing may not have a negative amortization feature. Re-subordination of existing subordinate financing that meets FHA guidelines is permitted. Existing subordinate financing must be re-subordinated, or - Second liens must be paid off at closing and - Lines of credit must be closed prior to loan closing. Last Updated: 02/18/2015 Page 3

5 Mortgage Eligibility Mortgage Insurance FHA requires both up front mortgage insurance (UFMIP) and an annual premium, to be paid monthly. UFMIP (all loan terms) is equal to 1.75% (175 basis points (bps)) of the base loan amount. Previous and new MIP rates by amortization term, base loan amount and LTV. MIPs in this table are effective for case numbers assigned on or after January 26, (Mortgagee Letter ) Base Loan Amount LTV Previous MIP Term > 15 years Annual MIP (on or after 1/26/2015) $625, bps 80 bps $625,500 > bps 85 bps > $625, bps 100 bps > $625,500 > bps 105 bps Term 15 years $625, % 45 bps 45 bps $625,500 > 90.00% 70 bps 70 bps >$625, % 45 bps 45 bps > $625, bps 70 bps > $625,500 > bps 95 bps Mortgage Eligibility Mortgage Insurance FHA to FHA Refinance On any refinance transaction where the MIP refund exceeds the new UFMIP (based on 1.75%) HUD will refund the overage directly to the borrower. Use the tables above to determine the annual premium and subtract the lesser of the MIP refund or the new UFMIP from the unpaid principal balance before calculating the new mortgage amount. Escrow Waiver Temporary Buydowns Escrow waiver is not permitted. Temporary buydown loan products are not offered. Last Updated: 02/18/2015 Page 4

6 FHA 90 Day Anti-flip Waiver FHA s temporary waiver prohibiting the use of FHA financing to purchase single family properties being resold within 90 days of the previous acquisition has expired and will not be extended. As a result properties resold 90 days or fewer following the date of acquisition be the seller are not eligible for FHA financing unless the loan meets the exceptions set forth in H. Property resales Sold between 91 and 180 Days After Acquisition: A lender must obtain a second appraisal by another appraisal if: The resale date of the property is between 91 and 180 days following the acquisition of the property by the seller and the resale price is 100% or more over the price paid by the seller when the property was acquired. Last Updated: 02/18/2015 Page 5

7 Mortgage Eligibility Identity of Interest Transaction An identity of interest transaction is a sale between parties with family or business relationships. Family Member Transactions A family member purchases another family member s home as a primary residence. If the property is sold from one family member to another and is the seller s investment property, the maximum mortgage is the lesser of 85 percent of the appraised value or program maximum. The 85 percent limit may be waived if the family member has been a tenant in the property for a minimum of six months immediately predating the sales contract. A lease or other written evidence is required to verify occupancy. Tenant Purchase A current tenant, including a family member tenant, purchases the property where he/she has rented for a minimum of six months immediately predating the sales contract. Lease or other written evidence is required to verify occupancy. The maximum mortgage calculation is not affected by a sales transaction between a tenant and a landlord with no identity-of-interest relationship. Builder s Employee Purchase An employee of a builder purchases one of the builder s new homes or models as a primary residence. Corporate Transfer A corporation: transfers an employee to another location, and purchases the employee s home, and sells the home to another employee Sales Contract Changes/ Renegotiated Purchase Agreements EMM will not accept re-negotiated purchase agreements that increase the sales price after the original appraisal has been completed if: The appraised value is higher than the price provided to the appraiser, and the new purchase agreement and/or addendum used to modify the sales price is dated after the appraisal is received, and The only change to the purchase agreement is an increase in sales price. If the purchase agreement is re-negotiated subsequent to the completion of the appraisal, the LTV will be based on the lower of the original purchase price or the appraised value, unless: Re-negotiation of only seller-paid closing costs and/or pre-paid costs where seller paid closing costs/pre-paid costs are common and customary for the market and supported by the comparables, or An amended purchase agreement for new construction property is obtained due to improvements that have been made that impact the tangible value of the property. In the event of such changes, an updated appraisal must be obtained to confirm the value of the modifications. Last Updated: 02/18/2015 Page 6

8 Credit Credit Report EMM requires a full, three credit bureau tri-merge report or a residential mortgage credit report for all borrowers. Joint credit reports should be used only for married co-borrowers. Non-traditional Credit Full non-traditional credit profiles are not permitted. Non-traditional trade lines may be used to satisfy FHA trade line requirements provided the borrower- meets credit score requirements, and has a minimum of two traditional trade lines or one housing payment history. 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 regardless of DU decision. 1 Credit Scores must be Approve/Eligible through Total scorecard. Purchase and Rate/Term only. 0x30 housing payment if applicable. Private VOM s or VOR s not permitted. Housing Payment History - If TOTAL Scorecard requires mortgage/rental history or if manual underwriting is required - Mortgage and/or rental history requirements apply to all properties owned. - 0 x 30 in the last 12 months for purchase and cash out transactions - 1 x 30 in the last 12 months requires DU approval. Mortgage or rent may not be past due at the time of closing. Borrowers with fewer than 12 months of verifiable mortgage or rental history are eligible provided there are no late payments within the available history and DU accepts the history. Documenting Housing Payment History EMM accepts TOTAL Scorecard findings for documenting rental payment. EMM underwriters may require additional documentation based on loan file review and the overall risk profile of the loan. Housing Payment Waiver A waiver of the housing payment history for first time home buyers or any individual who currently lives rent-free is permitted only with TOTAL Scorecard approval. Last Updated: 02/18/2015 Page 7

9 Credit Major Derogatory Credit Consumer Credit Counseling Services Participating in a consumer credit counseling program does not disqualify a borrower from obtaining an FHA-insured mortgage, provided the following is documented: if the plan was paid out and completed within the last 12 months, the borrower s payment performance was satisfactory and all required payments were made on time if the plan is open- a minimum of one year of the pay-out period has elapsed under the plan, and the borrower s payment performance has been satisfactory and all required payments have been made on time, and the borrower has received written permission from the counseling agency to enter into the mortgage transaction A borrower s decision to participate in consumer credit counseling does not trigger a requirement for additional documentation, as the credit scores already reflect the degradation in credit history. No explanation or other documentation is needed. Collections, Charge-offs, Judgments and Disputed Accounts Must follow AUS total scorecard. If not addressed in total scorecard than the following must be applied: FHA does not require that collection/charged-off accounts be paid off as a condition of mortgage approval. However, FHA recognizes that unpaid collections could affect the borrower s ability to repay the mortgage. To mitigate the risk, FHA requires the lender to do a capacity analysis. (Mortgagee Letter and ) When the total outstanding balances of all non-medical collection and charge-off s exceed $2,000: Capacity analysis (Collections and Charge-off s): Payment in full of the accounts or- Payment arrangements are made with the creditor. (The monthly payment must be included in the DTI ratio s. or If evidence of a payment arrangement is not available, the lender must calculate the monthly payment using 5% of the outstanding balance of each account and include in the borrowers DTI ratio. Judgments: FHA requires judgments to be paid off before the loan is eligible for FHA insurance, An exception to payoff a judgment may be made if the judgment does not affect title and a written agreement with the creditor to make regular timely payments has been made. Evidence that a minimum of 3 months scheduled timely payments have been made prior to credit approval. Prepay scheduled payments is not permitted in order to meet the 3 month requirement. The payment amount is to be included in the borrowers DTI calculation. Note: Collection/Charge-off s and Judgments of a non-purchasing spouse in a community property state are included in the cumulative balance. Last Updated: 02/18/2015 Page 8

10 Disputed Accounts: If the borrower is disputing derogatory accounts, the borrower must provide a letter of explanation and documentation supporting the basis of the dispute. A manual downgrade will be required as follows: If the credit report reveals that the borrower is disputing any credit accounts or public records, the loan application must be referred to a DE underwriter for review, unless the disputed account has a zero balance; is marked as paid in full or resolved; or has both a balance less than $500 AND the date of the dispute is more than 24 months old. Preforeclosure, Short Sale or Short Refinance A borrower is not eligible for an FHA-insured mortgage if he/she pursued a short sale agreement on his/her primary residence simply to - take advantage of declining market conditions, and - purchase a similar or superior property within a reasonable commuting distance at a reduced price as compared to current market value. - Borrower Current at time of Short Sale: A borrower is considered eligible for a new FHA insured mortgage if, from the date of loan application for the new mortgage all - Mortgage payments due on the prior mortgage were made within the month due for the 12 month period preceding the short sale, and - Installment debt payments for the same period were also made within the month due. - Borrower in Default at time of Short Sale. A borrower in default on his/her mortgage at the time of the short sale (or pre-foreclosure sale) is not eligible for a new FHA - insured mortgage for three years from the date of the pre-foreclosure sale. Note: A borrower who sold his or her property under FHA s pre-foreclosure sale program is not eligible for a new FHA insured mortgage from the date that FHA paid the claim associated with the pre-foreclosure sale. Last Updated: 02/18/2015 Page 9

11 Credit Major Derogatory Credit Tax Liens Garnishments and Tax liens must be paid at or before closing, with documentation included in the loan file. Funds sufficient to satisfy these liens must also be verified. Tax liens may remain unpaid provided a payment arrangement has been made and the lien holder subordinates the tax lien to the FHA-insured mortgage. Foreclosure or Deed-in-Lieu Minimum of three years elapsed since foreclosure completion date. Evidence of foreclosure completion must be in the file. A credit report reflecting foreclosure completion does not meet this requirement. Bankruptcy Chapter 7 bankruptcy (liquidation)- Minimum of two years elapsed since the discharge date and the borrower must have- re-established good credit, or chosen not to incur new credit obligations. If the bankruptcy was discharged within the last two years, then the borrower might be eligible for an FHA-insured mortgage provided- A minimum of 12 months have elapsed since the discharge date, and the borrower- documents that the bankruptcy was the result of extenuating circumstances beyond his/her control, and has since exhibited a documented ability to manage his/her financial affairs in a responsible manner Note- Document that the borrower s current situation indicates that the events leading to the bankruptcy are not likely to recur. Chapter 13 bankruptcy (reorganization)- A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA-insured mortgage, provided- one year of the bankruptcy pay-out period has elapsed, and borrower s payment performance has been satisfactory and all contractual payments have been made on time, and borrower receives written permission from the bankruptcy court to enter into the mortgage transaction. DU will not issue an Approve/Eligible decision if the credit report reflects a bankruptcy discharged within the past two years. If fewer than two years have elapsed since discharge of the Chapter 13 bankruptcy, then the loan must be downgraded to a Refer and evaluated by a Direct Endorsement (DE) underwriter. Last Updated: 02/18/2015 Page 10

12 Borrower Borrower Eligibility Eligible Borrowers Borrowers must have a valid Social Security number. Title to the property must be in the name of the individual borrowers. U.S. Citizens Permanent resident aliens Non-permanent resident aliens Non-occupant co-borrowers Inter-vivos revocable trusts Trailing co-borrower income may not be used to qualify Refer to Full/Alt Documentation Non-employment Income in this guideline section for additional information. Non-occupant Co-borrowers A non-occupying co-borrower transaction involves two or more borrowers where one or more of the borrower(s) will not occupy the property as his/her primary residence. Non-occupant co-borrowers are not eligible for loans with a 15-year term. Non-occupant co-borrowers are not eligible for cash-out refinance transactions. For loans with non-occupant co-borrowers it must be reasonable that the occupying borrower(s) will be the primary payor(s) of the loan. If the primary borrower(s) does not have income or assets sufficient to make a significant contribution to the loan, EMM will consider it to be an investment transaction and, thus, ineligible for FHA financing. If a parent is selling to a child and will be a co-borrower on the new loan, then the maximum LTV is 75 percent. The non-occupant co-borrower must be a family member or an individual who has documented a longstanding substantial family-type relationship not arising out of the loan transaction with the occupying borrower. The loan must meet LTV and unit restrictions in the table below Non-occupant Co-borrower LTV Restrictions Units 1 Established Relationship Yes to 2 Yes > 75 1 No Refer to Geographic Restrictions in this guideline section for restrictions on properties located in New Jersey. Inter-Vivos Revocable Trusts Borrower must be the Trustee or a co-trustee. Borrower s name must appear on the Note along with the name of the trust. Borrower does not need to be on title. Refer to section 100 Conventional Underwriting Guidelines Borrower Guidelines Inter Vivos Revocable Trust for additional information. Last Updated: 02/18/2015 Page 11

13 Income Qualification Documentation Types Full/Alt documentation is required. Qualifying Rate Qualifying rate is equal to the Note rate. Debt Ratio Maximum DTI is 50% 1. The underwriter may allow a greater DTI by exception subject to the following: o loan is DU-approved with the greater DTI. Manual underwriting is not permitted. o includes two compensating factors as described by HUD in FHA Handbook, Section F.3.b Compensating Factors o DTI greater than 55% are not permitted. Maximum DTI on manually underwritten loans is 31/43%. Payoff of Debts to Qualify The payoff of revolving debts to qualify is permitted when the accounts are verified as closed at the time of loan closing. Full/Alt Documentation Full / Alt Doc - Employment Income, employment, and assets are stated and verified. Written verification of income, employment or assets may not be used as standalone documentation. Documentation from the borrower (paystub, bank statements, etc.) is required. An executed 4506-T and tax return transcripts are required for year in which income is verified on the loan. Salaried borrowers Borrower must have a consistent work history for the previous two years. Follow DU documentation requirements. Self-Employed Borrowers Two years of self-employment with the same entity is required. If the borrower has been self-employed for fewer than two years, then the borrower must have a minimum of two years of documented previous successful employment in the line of work in which he/she is self-employed, or in a related occupation. One full year of self-employment is required. Note- A combination of one year of employment and formal education or training in the line of work in which the borrower is self-employed or in a related occupation is also acceptable. Last Updated: 02/18/2015 Page 12

14 Income Full/Alt Documentation Retirement and Social Security Income Retirement and Social Security income must be expected to continue for a minimum of three years. If no expiration date is stated on the award letter it may be assumed that the income will continue for three years. Refer to Mortgagee Letter One of the following is required: Award letter for the fixed income, or Most recent bank statement evidencing receipt of the income, or Tax returns, or 1099 for Social Security income Non-employment Income Non-employment income, such as child support or alimony, must be expected to continue for three years. Provide a copy of the award document (divorce decree, etc.) Proof of receipt is required. - Provide 12 months cancelled checks or - Bank statements or - Tax returns Borrowers who receive government/public assistance income (commonly known as Section 8) are not eligible. Last Updated: 02/18/2015 Page 13

15 Assets Reserves All reserves stated in TOTAL Scorecard must be verified. Three months PITI reserves are required if the subject property is three- to fourunits. Reserves from gift funds are- permitted on one- to two-unit properties not permitted on three- to four-unit properties. Cash proceeds from the subject property transaction may not be used to satisfy minimum reserve requirements. Refer to Geographic Restrictions in this guideline section for restrictions on properties located in New Jersey. Asset Verification Earnest Money Deposit Any funds to close appearing on the HUD-1 must be verified. Satisfactory documentation Copy of borrower s cancelled check Certification from the deposit-holder acknowledging receipt of funds, or Separate evidence of the source of funds. Separate evidence includes a verification of deposit (VOD) or bank statement reflecting an average balance sufficient to cover the amount of the earnest money deposit at the time of the deposit. Verification of Funds to Close A VOD, together with all pages of most recent bank statement, may be used to document savings and checking accounts. A standalone VOD is not acceptable by itself. If there is a large increase in an account balance or the account was recently opened, obtain from the borrower a satisfactory explanation and documentation of the source of the funds. TOTAL Scorecard Recommendation If the loan receives an Accept/Approve or Refer recommendation from the TOTAL Scorecard, the following is required: explanation and documentation for recent large deposits in excess of 2% of the property sales price, and documentation confirming any recent debts were not incurred to obtain part, or all, of the required cash investment on the property being purchased. 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 Self-employed borrowers who operate as sole proprietors may utilize funds from business accounts for the loan transaction. Other types of businesses are not eligible for this. Last Updated: 02/18/2015 Page 14

16 Assets Contributions Borrower Contribution Minimum borrower contribution is 3.5 percent of sales price from borrower s own funds or other acceptable source as defined by HUD. Maximum Seller Contribution Maximum total contribution from all sources is 6 percent of sales price. Gifts Gift funds may be used to satisfy down payment, closing costs or reserve requirements. Any family member, fiancée, fiancé, church, municipality or nonprofit may contribute gift funds. Refer to Reserves in this guideline section for additional gift fund restrictions for three- to four-unit properties. Gift Verification Regardless of when the gift funds are made available to a borrower FHA requires the lender to determine that the gift funds were not provided by an unacceptable source, and were the donor s own funds. Gift letter signed by the donor is required (refer to EMM website for required form) Receipt of funds can be documented with one of the following: - Copy of gift check, - HUD-1 Settlement Statement reflecting credit for the funds received at closing. - Evidence the borrower deposited the funds. Gifts must be identified in DU as a "gift." This requirement also applies if gift funds were deposited in a liquid asset account (e.g. checking or savings account) belonging to the borrower. Gifts of equity are permitted for purchase money transactions provided- Gift of equity is identified in DU as a "gift. Gift of equity meets the same requirements as gift funds, including minimum borrower contribution requirements. Gift of equity is coming from the seller Seller is a family member of the borrower Transaction complies with requirements for non-arm s length transactions (identity of interest) Real Estate Owned The maximum number of financed residential properties a borrower may have is four. Borrowers with five or more financed residential properties are not eligible for financing with EMM. The total of four includes residential properties owned by the borrower or an LLC owned by the borrower. Commercial properties are not included in this calculation. New multiple loans must be underwritten simultaneously. Refer to Mortgage History in this guideline section. Last Updated: 02/18/2015 Page 15

17 Departure Residence EMM will not accept a BPO or AVM to determine value of the departure residence. An appraisal is required. Gift funds may not be used for reserves. The borrower may not pay down the existing loan on the departure residence to meet any required LTV restrictions. Pending Sale If the current primary residence is a pending sale, but will not be sold and escrow closed prior to the closing date of the subject loan or will convert to a second home: Both the current and the new mortgage PITIA must be included in debt ratio calculations, regardless of any equity in the property, and Reserves required by DU must be documented in the loan file. Investment Property If the current primary residence will become an investment property and at least 30 percent equity in the current primary residence can be documented, 75 percent of rental income may be used to qualify provided that: Borrower s tax returns reflect a one-year history of managing investment properties, and Rental income is documented with a fully executed lease, and Documentation is provided that a security deposit was received and deposited, and Any reserves required by DU are documented in the loan file If the current primary residence will become an investment property and at least 30 percent equity in the current primary residence cannot be documented and the borrower does not have a one-year history of managing investment properties: Rental income may not be used to offset the mortgage payment, and Both the current and the new mortgage PITIA must be included in debt ratio calculations, and Any reserves required by DU must be documented in the loan file. Last Updated: 02/18/2015 Page 16

18 Property Property Valuation One full URAR appraisal with interior and exterior photos is required. Required Forms Attachments Market Conditions Addendum to the Appraisal Report (Fannie Mae Form 1004MC) Operating Income Statement (Fannie Mae Form 216) Statement of Assumptions and Limiting Conditions and Appraiser s Certification (Fannie Mae Form 1004B) Submission Summary Report (SSR) (required per UCDP) URAR Forms 1004/70 Inspection Report Form Exterior Form 2055 Forms 2075/ 2070 Condo Forms 1073/ 465 Ext Condo Forms 1075/ 466 X n/a n/a n/a n/a X n/a n/a X n/a X X X X X X X n/a X X Appraisal Update and/or Completion Report Appraisal report may not be more than 120 days old at closing. An appraisal update is not permitted for a seasoned appraisal. A new appraisal is required. If the original appraisal lists the value as Subject To, then an Appraisal Update and/or Completion Report is required. Field Review A field review is generally required only for the following: Rural properties (at underwriter s discretion) Non-arm s length transactions Properties Listed for Sale HUD REO Properties Properties listed for sale within the last six months are eligible provided- Property was taken off the market prior to the application date Borrower provides a written confirmation of their intent to occupy the property moving forward. The property may not be relisted during or after (at least 120 days) the loan closing. EMM will not finance a repair escrow account. All repairs must be completed prior to loan close Last Updated: 02/18/2015 Page 17

19 Property Property Eligibility Eligible Properties Single family residences Two- to four-unit properties 1 - For two- to four- unit properties to be considered owner-occupied acceptable proof that the borrower will occupy the property is necessary. o An executed Occupancy Declaration or Letter of Explanation is required o For refinance transactions, an occupancy inspection to verify owner occupancy must be completed prior to loan closing. The inspection may be performed by the appraiser or a property inspection company. o Homeowner s insurance policy must reflect the same mailing and property address. o Homeowner s insurance policy must reflect coverage is for an owneroccupied primary residence. - First time homebuyers are eligible with no additional restrictions - Condominiums - HRAP approved condominiums PUDs - FHA HRAP approval is not required. Factory Built Homes - Factory built homes (not built on a permanent chassis) such as modular, panelized, prefabricated, or sectional housing are eligible. - Manufactured and mobile homes are not eligible. Rural Properties - If subject lot is very large, underwriters should follow HUD guidance regarding unique properties. - Field review by a national firm may be required. - Total land value may not exceed 50% of the value of the subject property or the comparables without corporate approval. Leaseholds - No additional restrictions Mixed-use Properties - Borrower must be the owner and operator of the business. - Single family residences only 1 Refer to Geographic Restrictions in this guideline section for restrictions on properties in New Jersey. Last Updated: 02/18/2015 Page 18

20 Property Property Eligibility Geographic Restrictions Ineligible Properties Assisted Living Projects Builder Model Leaseback Houseboats Investment Securities Manufactured Homes Mobile Homes Multi-family dwellings containing more than four units Properties not suitable for year-round occupancy Condo-Hotels (Condotels) Properties with resale restrictions Properties without full utilities installed to meet all local health and safety standards Properties used for commercial or industrial purposes Residential properties with a permanently affixed manufactured home on property Tax-sheltered syndicates Timeshare units Unimproved land Properties zoned commercial Properties zoned agricultural Working farm, ranch, or orchard New Jersey Two- to four-unit properties are not eligible. Texas Texas (a)(6) loans are not eligible. Cash out loans in the state of Texas are not eligible. Last Updated: 02/18/2015 Page 19