FICO/LTV Requirements

Transcription

1 DU Refi Plus (DURP) Product Profile Matrices FICOLTV Requirements *Property value should be based on the Borrower s Opinion of Value, as declared in the Initial 1003, must be used as the value. DU will no longer issue a value. Quick Links Matrices Quick Links Section 1: Program Summary 1.1 Program Summary 1.2 Underwriting 1.3 Ineligible Programs Section 2: Transaction Details 2.1 Loan Limits 2.2 Eligible Terms and Programs 2.3 ARM Adjustments 2.4 Eligible Transactions 2.5 Principal CurtailmentsReductions 2.6 Refinances (General) 2.7 Cash-out Refinances 2.8 Payoff Demands 2.9 Texas 50(a)(6) loans 2.10 Subordinate Financing Section3: Borrower Eligibility 3.1 Borrower Eligibility 3.2 Occupancy 3.3 Power of Attorney 3.4 Living Trust (Inter Vivos Revocable Trust) 3.5 Maximum # of Financed Properties 3.6 Multiple Mortgages to the Same Borrower Section 4: Collateral 4.1 Eligible Properties 4.2 Condos 4.3 Ineligible Properties 4.4 Properties Previously Listed for Sale 4.5 Appraisals 4.6 Disaster Areas 4.7 Geographic Restrictions Section 5: Income 5.1 Income 5.2 Verification of Employment Section 6: Credit 6.1 Credit 6.2 Qualifying Ratios Section 7: Assets 7.1 Assets 7.2 Cash Reserves Section 8: Program Details 8.1 Age of Documentation 8.2 Electronic Signatures 8.3 Escrows 8.4 Excluded Parties- LDPGSA Searches 8.5 Hardest Hit Funds 8.6 High Priced Mortgage Loans (HPML) 8.7 Interest Credit Hardships 8.8 Mortgage Insurance 8.9 Process to Add or Remove Borrowers 8.10 Title Insurance Section 9: References 9.1 References Section 10: Recent Product Profile Updates

2 Section 1: Program Summary 1.1 Program Summary Program Summary 1.2 Underwriting Underwriting 1.3 Ineligible Programs Ineligible Programs Section 2: Transaction Details This Program Guide serves as a Rate and Term (no cash-out) refinance of existing Fannie Mae owned loan closed on or before May 31, MARKSMAN NOTE: Select "New Penn Financial" from the Investor dropdown menu in Marksman when running pricing and eligibility on DURP loans with Mortgage Insurance. Loans must be underwritten through Desktop Underwriter (DU) and receive an ApproveEligible decision. Loans underwritten using DU 9.0 receiving an EA I, II, or III finding will be eligible; these findings will be retired with the launch of DU 9.1. Final DU Refi Plus eligibility is determined by the DU findings. With the exception of the overlays listed in this manual, FNMA guidelines should be followed. Interest Only loan programs Mortgage Credit Certificates (MCC) Temporary Buydowns Land trusts in the state of Illinois are not eligible Leaseholds secured by IndianTribal lands HomestyleHomepath Renovations 2.1 Loan Limits Maximum Loan Amount The total of the Unpaid Principal Balance + Closing Costs + Prepaid Items + Points 2.2 Eligible Terms and Programs Eligible Terms & Programs 2.3 ARM Adjustments Page 2 of 11

3 ARM Adjustments 2.4 Eligible Transactions Rate & Term (Limited Cash-out) Refinance of eligible properties Eligible Transactions ( Cash-back to the borrower may not exceed $ Principal CurtailmentsReductions Principal CurtailmentsReductions Permitted; follow FNMA guidance as described in B (Cash Back to the Borrower) and B (Principal Curtailments) 2.6 Refinances (General) The refinance of a modified mortgage is permitted; all other mortgage history requirements must be met Refinances (General) Continuity of Obligation as defined in FNMA B must be met A Net Tangible Benefit Worksheet must be completed on all DURP loans; the borrower benefit must meet the requirements outlined in B Cash-out Refinances Cash-out Refinances Not permitted; cash back to the borrower may not exceed $ Payoff Demands Page 3 of 11

4 Payoff Demands Payoff demands are required to ensure the current lien is paid in full prior to closing. The expiration date of the payoff demand must be reviewed. A loan may not move to closing if the payoff will expire prior to funding. If the payoff demand contains an expiration date, the underwriter must verify the date is after the funding date. If the payoff demand does not contain an expiration date, the underwriter must verify a per diem amount is listed. The per diem should be applied to the payoff amount to cover proceeds through the funding date; it can be used for an unlimited number of days; unless otherwise specified in the payoff letter. A payoff is considered expired when: The document instructs the associate to void after a specified date; or The interest accrued amount on the statement signals the borrower will be past-due when the new loan funds; o The borrower must make a mortgage payment prior to closing to avoid a late payment on the credit; and o The borrower must provide evidence the payment has been made and the updated payoff demand must reflect that a payment has been made. 2.9 Texas 50(a)(6) loans Texas 50(a)(6) loans Not Permitted 2.10 Subordinate Financing Resubordination of existing subordinate financing is allowed up to the program maximum. New subordinate financing and payoff of existing subordinate financing with loan Subordinate Financing proceeds is not allowed; Payoff of existing subordinate liens from the borrower's own funds is allowed, but must be completed prior to the loan being cleared for closing. A copy of the Note for the Subordinate lien is not required. Section3: Borrower Eligibility 3.1 Borrower Eligibility Borrower Eligibility Eligible Applicants: All borrowers must have valid and verifiable Social Security Numbers, as well as a valid driver s license, state-issued ID or passport. Other forms of taxpayer identification are not allowed. Borrowers must be either U.S. Citizens or be lawful permanent or nonpermanent residents of the United States. A non-u.s. citizen, who is lawfully residing in the U.S. as a permanent or a nonpermanent resident alien, is eligible for a mortgage on the same terms as a U.S. citizen. 3.2 Occupancy Occupancy 3.3 Power of Attorney Power of Attorney There can be no more than 4 borrowers per loan. Eligible occupancy types include: Primary residences (for 1-4 unit properties) Second home residences (for 1-unit properties) Non-Owner OccupiedInvestment (for 1-4 unit properties) The use of a Power of Attorney must be approved by New Penn s Underwriting and Legal teams. Generally, a Power of Attorney may be used for closing in the following scenarios: Incapacitated Borrower - the borrower is incapacitated and therefore unable to sign documents due to disability, legal incapability, or heshe lacks the physical ability; o Incapacitated borrowers must occupy the property as their primary residence; the underwriter must validate occupancy and review for red flags within the loan file; o Example: verify the signer of the POA is not acting as a straw buyer or purchasing Page 4 of 11

5 an investment property utilizing the incapacitated borrower s credit. Military Personnel - the borrower is currently deployed or stationed overseas and is unable to sign documents or attend closing; Hardship Circumstance - the borrower is unable to attend closing because heshe is out of the state or country for an extended period of time, bedridden, in the hospital with a serious illness, or the borrower is incarcerated. o POA will not be permitted for borrowers that are on vacation Government Contractor the borrower is employed by the government and currently working overseas o A letter from the borrower s employer is required to verify overseas travel Business Reasons permitted on Purchase and RateTerm Refinance transactions when the spouse has Power of Attorney for the unavailable borrower. There are 4 acceptable types of power of attorney. The following persons may sign security instruments on a borrower s behalf: Attorney-in-fact - heshe may sign the security instruments as long as NPF obtains a copy of the POA. In some jurisdictions the POA must be recorded with the security instrument; in this case, NPF must confirm the document has been recorded. The person acting as the attorney-in-fact must have a familial, personal or fiduciary relationship with the borrower and can t have any type of financial interest in the transaction or be involved in the transaction in any capacity such as the closing agent attorney, broker or realtor; Specific - this type of POA is specific to the mortgage transaction; therefore the POA must specify the legal description, property address, and transaction type within the body of the document. It must be recorded at closing; Durable - traditionally a POA becomes ineffective upon the disability of the principal but the POA must remain valid even if the borrower becomes incapacitated or disabled prior to closing. In order for the POA to be acceptable it must contain the following language This POA shall not terminate on the disability of the principal or This POA is not affected by the subsequent disability of incapacity of the borrower ; General Military - this type of POA is generally used in situations where a borrower or hisher spouse may be deployed or is on active duty. All loan files wishing to utilize a power of attorney require the following: A Letter of Explanation from the borrower advising why the loan is closing with a POA Completed and Signed POA Form 3.4 Living Trust (Inter Vivos Revocable Trust) A living trust is an eligible mortgage borrower if it meets the following requirements as well as State requirements. All trusts must be approved by NPF legal prior to close. Living Trust (Inter Vivos Revocable Trust) 3.5 Ineligible Borrowers Ineligible Borrowers To determine whether or not the Trust meets all the criteria required by State and investor standards, one of the following will be required: A copy of the trust document must be included in the file Exception: California, where a current (less than 1 year old) trust certification completed by the borrower may be provide din lieu of the full trust document. If this certification is incomplete or contrary to title results, the full trust documentation may still be required. Co-SignersCo-Guarantors Limited Partnerships, Corporations and LLC s Non-Revocable Trusts or Guardianships Foreign Nationals Page 5 of 11

6 Borrowers with Diplomatic Immunity EmployeesPrincipalsOwners NPF Third Party Originators; related parties (family members) are eligible so long as they are not employed, in any capacity, by the submitting brokercorrespondent Individuals on the LPDGSA exclusionary lists 3.6 Maximum # of Financed Properties Maximum # of Financed Properties 3.7 Multiple Mortgages to the Same Borrower Multiple Mortgages to the Same Borrower Section 4: Collateral 4.1 Eligible Properties Borrowers financing their Primary Residence may have up to 10 properties (financed or free & clear). Borrowers with greater than 4 financed properties must have a minimum 12 month history of landlord experience (the agencies may require additional experience). Borrowers financing a second home or investment property may have a maximum of 4 financed properties; however the borrower may not own more than 10 total properties. o When financing a second home or investment property, the primary residence should be considered in the financed property total (if it s not free and clear) These limitations apply to the borrower s ownership in one-to four unit properties or mortgage obligations on such properties and are cumulative for all borrowers. This limitation includes properties financed abroad. These limits may be exceeded, as permitted by the agencies, with a second sign from Underwriting. NPF will finance no more than 4 properties for any one borrower NPF limits its maximum exposure to one borrower at $1.5M Maximum of 2 financed units in a single condo project or PUD AttachedDetached SFRs AttachedDetached PUDs LowMidHigh-Rise Condos and site Condos 2-4 Unit Properties Modular Homes (these are not considered to be manufactured and are eligible under the guidelines for 1-unit properties) Eligible Properties 4.2 Condos Condos 4.3 Ineligible Properties Ineligible Properties Mixed Use Properties: For mixed use properties, originators may follow FNMA guidelines with the exception that the square footage of commercial part of the property cannot exceed 25% of the total square footage Deed Restricted Properties: All deed restricted properties must be reviewed and approved by legal prior to loan approval and must adhere to FNMA requirements (B5-5.2) Project reviews are not required, but confirmation that the property is not a condohotelmotel or co-op-hotelmotel is required. A DU Refi Plus HOA Cert must be completed. Co-ops Condotels Non-Warrantable Condos ManufacturedMobile homes Bed and Breakfast Properties LiveWork Units not meeting the standards of a Mixed Use Property Page 6 of 11

7 Properties with manufactured on site being used as storage Properties with excessive acreage (25 acres +); loans secured by properties with >10 acres will require a desk review in addition to the required full appraisal Properties where farm or agricultural income from the subject property is claimed on borrowers tax returns 2nd home where the borrower generates any significant rental income from renting subject out insignificant income ok Properties Land held in a life estate Properties encumbered with private transfer fee covenants Properties which are subject to a right of redemption (permitted in retail) Properties appraised with a property condition of C5 or worse 4.4 Properties Previously Listed for Sale Properties Previously Listed for Sale 4.5 Appraisals Appraisals 4.6 Disaster Areas Disaster Areas 4.7 Geographic Restrictions Geographic Restrictions Section 5: Income Listing must have been cancelled or expired prior to the application date, and the borrower must confirm their intent to occupy the subject (Owner Occupied). Properties listed for sale at the time of application are not eligible. In all instances, careful consideration should be given to the listing price and appraised value to be sure the value is supported If an appraisal is required, it must be processed in compliance with Appraiser Independence Requirements (AIR). The use of an exterior only appraisal or property inspection option is not allowed, regardless of DU Findings, full appraisal or PIW required on all transactions Appraisal must be completed by a Certified appraiser from an NPF approved AMC Copy of the appraiser s licensee must be included in all funded loan files The re-use of an appraisal is not permitted DU Refi Plus transactions with or without Appraisal Waivers are excluded from the NPF Disaster Policy. At this time, New Penn Financial cannot finance or purchase loans secured by properties located in Utah, Alaska or Hawaii. 5.1 Income Follow AUS Findings with one exception - VOE s as standalone documentation are not permitted Income Unemployment benefits may only be used as qualifying income for seasonal employees; otherwise unemployment benefits are not considered qualifying income A fully complete and signed 4506T for each borrower is required 5.2 Verification of Employment Verification of Employment With the exception of instances where the borrower is employed by a relative or participant to our loan transaction, follow agency guidelines. In instances where the borrower is employed by a relative or participant to our loan transaction the following documentation must be obtained (in addition to standard program guides): Borrower's signed and completed personal federal income tax returns for the most recent two-year period, and Verbal Verification of Employment YTD paystub documenting at least 30 days of income W2s for the most recent two years. Current income reported on the pay stub may be used if it is consistent with W2 earnings Page 7 of 11

8 Section 6: Credit 6.1 Credit Credit 6.2 Qualifying Ratios report on the tax returns. If the tax returns do not include W2 earnings or income is substantially lower than the current pay stub, further investigation is needed to determine whether income is stable. A tri-merge credit report is required; Non-TraditionalAlt Credit is not permitted Revolving debt cannot be paid down to qualify; revolving debt may be paid off to qualify when proof of the debt being paid and closed prior to CTC is available All credit inquiries within 120 days of the credit report are required to be addressed by the customer Derogatory Credit o Follow FNMA Guidance on Bankruptcies, Foreclosures, and other Derogatory Credit Disputed Accounts o See section B DU Credit Report Analysis for more information; manual underwrites will not be permitted. Maximum DTI 65% DTI calculations are based on: Qualifying Ratios Section 7: Assets 7.1 Assets Assets 7.2 Cash Reserves Cash Reserves 7.3 Ineligible Assets Ineligible Assets Section 8: Program Details 8.1 Age of Documentation Age of Documentation 8.2 Electronic Signatures Assets must be verified as noted by the AUS; large deposits are not required to be sourced, unless required by the AUS. Written Verifications of Deposit (VOD) are not acceptable. Only system generated Verifications of Deposit from the financial institution are acceptable. Follow the Agency guidelines in terms of cash reserves Cash on Hand UTMACustodial Accounts for minors (cannot be used by account custodian) Follow FNMA Guidance New Penn Financial will accept electronic signatures on third party documents in accordance with Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA), as applicable. Electronic Signatures Third party documents are those that are originated and signed outside of the NPF s direct control, such as sales contracts. The electronic signature and date must be clearly visible when viewed electronically and in a paper copy of the electronically signed document. In addition, with prior approval, TPO partners can submit initial disclosures signed by both the TPO and borrower. To become approved for e-signature, please send the following to Page 8 of 11

9 your AE: Appropriate e-sign questionnaire (Wholesale or CorrespondentMini Correspondent) E-sign authorization to release supporting documentation, Sample e-sign audit trail from document vendor Copy of signed vendor agreement with acceptable vendor listed on questionnaire Once approved, e-signed initial disclosures can be submitted as long as the e-sign audit log for the specific transaction is supplied. NPF employees may also use electronic signatures on NPF Verbal Verifications of Employment. 8.3 Escrows Not permitted if the loan requires monthly mortgage insurance Escrow Waivers Borrower must have previously waived escrows if the LTV on the new loan is greater than 80% 8.4 Excluded Parties- LDPGSA Searches Agency loans require confirmation that companies or individuals involved in the origination or underwriting of a mortgage transaction are not on the Freddie Mac Exclusionary List, General Services Administration (GSA) excluded party list or the HUD Limited Denial Participation (LDP). Regardless of the reason for the party being excluded, any party to the transaction included on either list will result in the loan being ineligible for delivery. All name variations found throughout the loan file must be run when performing the searches. The search must be run on the following parties in the transaction: Excluded Parties- LDPGSA Searches 8.5 Hardest Hit Funds Hardest Hit Funds Borrowers Seller Builder LO BrokerCorrespondent Listing Agent & Listing Company Selling Agent & Selling Company Title Agent Title Company Closing Attorney Appraiser and Appraisal Company Hardest Hit Funds may be used from the state of NV and AZ. Housing Finance Agencies (HFAs) have established programs utilizing Hardest Hit Fund (HHF) programs, which provide funding for various purposes, including funds for principal curtailment, to help homeowners obtain more affordable mortgages or to help homeowners retain their homes. Each participating HFA establishes its own eligibility guidelines for borrower participation and approves the provision of the funds. Fannie Mae permits grant-like unsecured financing provided to the borrower through an HFA's HHF program for the purpose of paying down the outstanding mortgage balance at the time of closing resulting in a lower new loan amount. The HHFs may also be used for the payment of closing costs. Arizona (Approved originators only; state agency training required). General Information: Recorded Training: Page 9 of 11

10 All state guidelines must be met. Please note, these loans must close with Fidelity National Title on East Camelback Road in Phoenix, AZ. Nevada The funds must be reflected in the Uniform Residential Loan Application (Form 1003 or 1003(S)) (and in the online loan application for DU Refi Plus) in Section VII, Details of Transaction as an Other Credit. The loan file must be documented with a copy of the promissory note or other documentation specifying the terms and conditions of the loan. If the promissory note (or other documentation) indicates that repayment of the HHF funds is expected, the monthly payment must be included in the debt-to-income ratio, unless repayment is only due upon sale or default. The transfer of the loan proceeds must be reflected on the HUD-1 Settlement Statement. 8.6 High Priced Mortgage Loans (HPML) High Priced Mortgage Loans (HPML) HPML will be permitted, where allowed by state law, if the borrower is able to qualify with full income verification and escrows (escrows cannot be waived on HPML). Additionally, Per FNMA, a 620 FICO and maximum 45% DTI is required if the loan is classified as a HPML. 8.7 Interest Credit Hardships Interest Credit Hardships Permitted on Conventional loans, both purchases and refinances; must fund by the 5 th day 8.8 Mortgage Insurance Approved MI Companies: CMG, Genworth, MGIC, PMI, Radian, RMIC, Triad and United Guaranty. If loan being refinanced does not currently have PMI then the new loan will not require PMI. If loan being refinanced currently has PMI through an eligible PMI company, then new loan must be submitted to the existing PMI company for Refinance to Modification Mortgage Insurance (RTM) of the PMI Certificate. If loan currently has PMI with a company other than those listed in these guides, then the new loan is ineligible. The loan must then be submitted as a Non-DURP transaction in DU as a "Standard LCOR". Split Premium, Annual (borrower or lender paid), and Lender Paid Monthly Monthly MI are not allowed. Transfers from monthly LPMI to BPMI are allowed with documented MI company approval. 8.9 Process to Add or Remove Borrowers Existing borrowers may be removed from the new loan or new borrowers added in accordance with the FNMA Seller Guide (Section B5.5.2) Process to Add or Remove Borrowers Adding Borrowers Adding a borrower to a loan at any time during the loan process, unless the loan has received an adverse credit decision, is acceptable. When this occurs a new RESPA package will be sent out and cool off period will be 7 days. File should be submitted back to UW for review of additional borrower s information. Removing Borrowers Removing a borrower from a loan is allowed only in the following scenarios o No credit decision has been made on the loan and borrower expresses desire to withdraw their name from the application o Loan has been approved with both borrowers as submitted and one borrower expresses desire to withdraw their name from the application. In both of the above scenarios - Request in writing from borrower should be submitted to NPF supporting their desire to withdrawn their name from the Page 10 of 11

11 8.10 Title Insurance Title Insurance application. Detailed notes should also be placed in the file to eliminate any possible confusion with the file. Removing a borrower from a loan is NOT allowed in the following scenarios o Loan is declined by underwriting In this scenario the loan would need to be adversed and a new application would need to be taken with only the 1 borrower. Exceptions Any exceptions to the above rules or scenarios not explained above should be submitted to NPF Compliance for review. The title policy must be in the lender s name andor its assigns. Title must be vested in the borrower s name, in the name of an eligible inter vivos trust (if permitted per program guides), or, in the case of a purchase, be currently vested in the seller s name with a requirement for a deed to be recorded transferring title to our borrower s name at closing. The insured amount of the policy must be at least for the gross loan amount and the policy must be dated within 45 days of closing. A minimum of a twelve month title chain must be provided on each policy. The chain of title will be reviewed for flips as part of the underwriting process. Section 9: References 9.1 References References Fannie Mae Guidelines (PDF version) Fannie Mae Guidelines (AllRegs version) Limited Denial of Participation (LDP) List General Services Administration (GSA) Exclusionary List Section 10: Recent Product Profile Updates Updated credit requirements, including: Matrix Grid Increased maximum LTV s on Investment Properties (now up to 150%) Increased maximum DTI of 65% 3.3 Power of Attorney Guidance on Business Travel was broadened to now cover Business Reasons as defined in this Product Profile and the NPF UW P&P 5.2 Verification of Employment Updated to provide clarification (mirrors standard Conventional product updated earlier this fall) 6.3 Qualifying Ratios Updated to reflect expanded LTV requirement (now up to 65%) 8.3 Escrow Waivers Updated to include details on FNMA restrictions as it pertains to Rate & Term refinances and escrow waivers Page 11 of 11