FHA Streamline Refinance Guidelines

Transcription

1 The following guidelines apply to all DIRECTORS MORTGAGE s FHA Streamline Refinance loan program. All loans must adhere to the criteria of these guidelines or the individual loan programs. While DIRECTORS MORTGAGE makes every attempt to include all guidelines, the user is also encouraged to consult the HUD HANDBOOK which can be found at Please note, however, that DIRECTORS MORTGAGE FHA Streamline Refinance Guides will supersede any conflict with the HUD HANDBOOK. DIRECTORS MORTGAGE may, at its discretion allow exceptions to the guidelines. Exceptions must be requested by a Loan Officer or Processor. Any exception granted will have a price adjustment. DIRECTORS MORTGAGE philosophy is to weigh all the risk factors inherent in the loan file. Consideration is given to each individual transaction, applicant profile, documentation provided, and collateral. Because each loan is unique, underwriters are expected and encouraged to use professional judgment in making a lending decision based on the entire profile presented and the relative risk for DIRECTORS MORTGAGE. Our commitment to fairness and equal opportunity is clear. In keeping with that, all transactions/borrowers will be treated in a consistent and fair manner. And all customers/clients should receive the HIGHEST level of customer service. DIRECTORS MORTGAGE FHA STREAMLINE REFINANCE Guidelines Last Updated 06/18/2012 Page 1

2 Table of Contents Appraisal 3 Borrower Eligibility 3 Cash Reserves 3 Condo/PUD 3 Credit 3 Documentation 4 Down Payment/Funds to Close 4 Escrow/ Escrow Holdbacks 4 Income 4 Liabilities 4 Loan Terms 6 Mortgage Insurance/Upfront MIP 6 Maximum Mortgage Calculations 6 Net Tangible Benefits 7 Occupancy 7 Property Eligibility 7 Ratios 7 Seasoning 7 Subordinate Financing 7 Title Reports 7 Underwriting 8 Additional required documentation 8 Net Tangible Benefits chart 9 DIRECTORS MORTGAGE FHA STREAMLINE REFINANCE Guidelines Last Updated 06/18/2012 Page 2

3 Appraisal May be done with or without an appraisal see maximum mortgage calculation section for more details.. Eppraisal required if using the no appraisal option; max LTV/CLTV* 150% based on the eppraisal; over 150% would require an exception. Or an exterior 2055 or 1073 condo. Appraisal must be completed by an FHA approved appraiser. DIRECTORS Mortgage will not accept appraisal dated more than 120 days from the note date. *see subordinate financing section Borrower Eligible: A borrower is eligible for a streamline refinance if; Eligibility The current loan is FHA insured. 6 months seasoning, before application or case # is ordered. o At least six months have been made on the loan being paid off. and o At least six months must have passed since the first payment due date of the loan being paid off and o At least 120 days have passed from closing/note date of the mortgage being refinanced. Must be a net tangible benefit to the borrower, defined as: A 5% reduction in PI and annual MIP or Refinancing from an ARM to a fixed rate mortgage (see chart on last page) Borrower Additions or Deletions to the Title I Is allowed since we are only offer full credit qualifying streamlines Cash Reserves Condos/PUD s Not Required Attached condominiums must be approved be FHA. The approved list can be located at Credit History Acceptable Individual Credit Reports: Residential Mortgage Credit Report or Tri-Merge Report. Alternate credit is NOT acceptable. Individual in-file credit reports from at least two (2) national credit repositories. Credit Score Determination Use: lower of two (2), middle of three (3). Use the lowest score of all borrowers on the loan. DIRECTORS MORTGAGE FHA STREAMLINE REFINANCE Guidelines Last Updated 06/18/2012 Page 3

4 Credit History Credit Score Requirements: All borrowers must have a minimum 680 credit score The mortgage being refinanced must be current at the time of application and no lates in the past 12 months. Non-purchasing Spouses. The community property states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington & Wisconsin. A. If the borrower resides in or the subject property is located in a community property state and only one spouse is the borrower, a credit report of the non-purchasing spouse must be pulled and all of the debts included in the qualifying ratios for the loan. The payment history is not factored into the loan decision and CAVIRS, LDP & GSA checks are not completed for the non-purchasing spouse. Documentation AGE OF DOCUMENTATION Credit documentation may not be dated more than 120 days prior to the Note date. Please refer to appraisal section for appraisal criteria. Funds to Close Escrow/ Escrow Holdbacks Income documentation Verify funds need to close with 2 months bank statements. Escrows are required on all FHA loans. Escrow holdbacks are NOT allowed. Full Documentation type is permitted only. 4506T required to be executed by all borrowers on all loans. Liabilities Recurring Obligations. The borrower's liabilities include all installment loans, revolving charge accounts, real estate loans, alimony, child support, and all other continuing obligations. In computing the debt-to-income ratios, the lender must include the monthly housing expense and all other additional recurring charges extending ten months or more, including payments on installment accounts, child support or separate maintenance payments, revolving accounts and alimony, etc. Debts lasting less than ten months must be counted if the amount of the debt affects the borrower's ability to make the mortgage payment during the months immediately after loan closing; this is especially true if the borrower will have limited or no cash assets after loan closing. Car leases must always be counted regardless of months remaining. The following additional information deals with revolving accounts and alimony payments: 1. Revolving Accounts. If the account shown on the credit report has an outstanding balance, monthly payments for qualifying purposes must be calculated at the greater of 5 percent of the balance or $10 (unless the account shows a specific minimum monthly payment). 2. Alimony. Because of the tax consequences of alimony payments, the lender may choose to treat the monthly alimony obligation as a reduction from the borrower's gross income in DIRECTORS MORTGAGE FHA STREAMLINE REFINANCE Guidelines Last Updated 06/18/2012 Page 4

5 calculating qualifying ratios, rather than as a monthly obligation. Obligations Not Considered Debt. Obligations not to be considered debt (or subtracted from gross income) include federal, state, and local taxes; FICA or other retirement contributions such as 401(k) accounts (including repayment of debt secured by these funds) commuting costs union dues open accounts with zero balances automatic deductions to savings accounts child care Voluntary deductions. Non-purchasing Spouses. If required by state law in order to perfect a valid and enforceable first lien, the non-purchasing spouse may be required to sign either the security instrument or documentation evidencing that he or she is relinquishing all rights to the property. When the security instrument is executed for this reason, the non-purchasing spouse is Not considered a borrower, and Not required to sign the loan application NOTE: In all other cases, the non-purchasing spouse does not Appear on the security instrument or Take title to the property at loan settlement Non-Purchasing Spouse Credit History: Except for the obligations specifically excluded by state law, the debts of the non-purchasing spouse must be included in the borrower's qualifying ratios if the borrower resides in a community property state or Property to be insured is located in a community property state. Loan Terms Non-Purchasing Spouse Credit History: The non-purchasing spouse's credit history is not to be considered a reason for credit denial, however, the non-purchasing spouse s credit report that complies with the requirements of the above non-purchasing guides must be obtained for the non-purchasing spouse in order to determine the debt-to-income ratio 30 year fixed rate 15 year fixed rate 5/1 ARM DIRECTORS MORTGAGE FHA STREAMLINE REFINANCE Guidelines Last Updated 06/18/2012 Page 5

6 Mortgage Insurance 3/1 ARM See net tangible benefit section for requirements and restrictions and chart on last page. FHA loans that were endorsed by HUD on or before 5/31/09, the UFMIP is.01% and the annual is.55% regardless of LTV. Endorsement date is on the case query screen in FHA Connection. Loans endorsed prior to 5/31/09 the UFMIP is 1.75%; the annual is reflected in the chart below LTV Annual for Loans >15 Years) LTV Annual for Loans < 15 Years <78% < % < %.00%.35% > % > % Maximum Mortgage Calculation Without an appraisal the maximum insurable mortgage is lesser of: the outstanding principal balance minus the applicable UFMIP refund plus may include up to 60 days interest on the old loan. Plus the new UFMIP. OR Maximum of 150% LTV/CLTV based on AMV. With an appraisal the maximum insurable amount is the lesser of: Outstanding principal balance minus the applicable UFMIP refund, plus closing costs, prepaid items to establish the escrow account plus the new UFMIP OR 97.75% of the appraised value plus the new UFMIP Notes: The existing first mortgage may include the interest charged by the servicing lender when the payoff is not received on the first day of the month, as is typically assessed on FHA mortgages, and may not include delinquent interest. Prepaid expenses may include per diem interest to the end of the month on the new loan hazard insurance premium deposits DIRECTORS MORTGAGE FHA STREAMLINE REFINANCE Guidelines Last Updated 06/18/2012 Page 6

7 monthly mortgage insurance premiums, and any real estate tax deposits needed to establish the escrow account, regardless of whether the lender refinancing the existing loan is also the Servicing lender for that mortgage. Discount points may not be included in the new mortgage. If the borrower has agreed to pay discount points the funds to pay them must be verified. Net Tangible benefit Borrower cannot receive more than $500 cash back at closing. Loan must close by the 25 th day of the month. There must be a net tangible benefit as a result of the streamline refinance transaction, with or without an appraisal. Net Tangible benefit is defined as: * Reduction in total mortgage payment (PITI HOA) by 5% * Refinancing from an ARM to a fixed new rate cannot be greater than 2% above current ARM rate of a 1 year ARM or increase the payment by more than 20% on a hybrid ARM. Fixed to an ARM new rate must be at least 2% below current fixed rate. Occupancy Property Eligibility Ratios Seasoning Subordinate Financing Title Reports Reduction in term Loan must be underwritten and closed as a regular refinance Owner occupied properties only. ELIGIBLE PROPERTY TYPES 1-4 UNITs PUD, Detached or Attached: Condos - Warrantable only see Condo Section for details 31/43 higher may be acceptable with an exception and string compensating factors. Borrowers must have made the payments for a minimum of 6 months on the loan being paid off. 6 months seasoning, before application or case # is ordered. o At least six months have been made on the loan being paid off. and o At least six months must have passed since the first payment due date of the loan being paid off and o At least 210 days have passed from closing/note date of the mortgage being refinanced. FHA CONNECTION WILL NOT ASSIGN A CASE NUMBER UNITL THE FULL 6 MONTHS SEASONING HAS ELAPSED Max CLTV is 100% of the original appraised value. Limited exceptions may be possible up to 125% Subordinate liens, including credit lines, regardless of when taken, may remain outstanding, but must be subordinate to the FHA-insured mortgage. A 24 month chain of title will be required for all transactions. Your title commitment/preliminary title report must show an acceptable history or the underwriter must pull it from another acceptable source. Judgment/lien search required on all borrowers/title holders. DIRECTORS MORTGAGE FHA STREAMLINE REFINANCE Guidelines Last Updated 06/18/2012 Page 7

8 Underwriting Manual underwriting - not to be ran through AUS Additional streamline New Case number with refinance netting Authorization required forms and Fully completed 1003 documents for underwriting A page 1 & 2 signed prior to underwriting; page 3 signed by underwriter as of date of final approval and page 4 signed by borrower. Tri-merged credit report Copy of the note and deed of trust to verify rate reduction Copy of the old HUD Estimated HUD for this transaction Income documentation Verification of funds to close FHA refinance netting authorization FHA case # assignment FHA connection SS# verification Payoff demand Clear LDP/GSA on all parties Net Tangible benefit form Important notice to Home buyers (92900-B) EEM notice All standard disclosures Net Tangible Benefit Chart SEE NEXT PAGE DIRECTORS MORTGAGE FHA STREAMLINE REFINANCE Guidelines Last Updated 06/18/2012 Page 8

9 DIRECTORS MORTGAGE FHA STREAMLINE REFINANCE Guidelines Last Updated 06/18/2012 Page 9