FHA Standard, Simple, & Streamline Refinance Products

Transcription

1 Topic Program Description Products AUS method Eligible States Anything not specifically addressed within, follow FHA Guidelines. Guidelines can change without notice. This is base FHA mortgage parameters set forth by HUD. These products adhere to the automated underwriting systems Loan Prospector and Desktop Underwriter along with overlays that are created to the secondary market. Do not run AUS on the FHA Streamline product. Refer to FHA Single-Family Handbook for complete details. FHA 30 yr fixed, 25 yr fixed, 20 yr fixed, 15 yr fixed, and 10 yr fixed FHA 5/1 arm These products adhere to the automated underwriting systems Loan Prospector and Desktop Underwriter along with overlays that are created to the secondary market. Loans must have a result of DU Approve/Eligible or LP Accept through FHA TOTAL Scorecard. Manual underwrite is permitted on the FHA Streamlines and loans receiving a Refer/Eligible status. All approved states within Lending Channel. Maximum Loan Amounts FHA Mortgage Limits Maximum LTV/CLTV/HCLTV FHA MIP UFMIP is 1.75%. Per Mortgagee Letter the following Annual MIP table is effective for all case numbers assigned on or after January 26, The table shows the MIP rates by amortization term, base loan amount, and LTV. 09/14/2015 Page 1

2 Minimum Credit Score Minimum Score 580 Scores from AUS approve only Homebuyers Education is required - Purchase Only. GSE Approved education courses offered through MGIC and Radian Credit score < 620 max DTI is 43% regardless of AUS recommendations Additional information on ML Occupying borrower must have one score to be eligible See FHA Streamline/Simple Refinance and Manufactured for credit score requirements Minimum Loan Amount $50,000, Wholesale: $75,000 *due to Section 32 and pricing concerns please consult with Management and Secondary before requesting a loan less than $50,000. Borrower Eligibility All borrowers must have a valid social security number US Citizen Permanent Resident Alien, with proof of lawful permanent residence Non-Permanent Resident Alien Section 8 is ineligible Refinance-Listed Property Properties currently listed for sale are ineligible for financing Cash-out properties listed for sale within the previous 6 months are ineligible No Cash-Out Refinance A No Cash-Out Refinance is a refinance of any Mortgage in which the mortgage proceeds are limited to the purpose of extinguishing the existing debt and costs associated with the transaction. FHA offers three types of no cash-out refinances: A) Rate & Term Maximum cash back to the borrower is limited to $500 Payoff of existing first mortgage Financing of closing costs (including prepaid expenses) Subordinate financing that was used in whole to acquire the subject property or any second 09/14/2015 Page 2

3 seasoned for 12 months. If HELOC, no draws within the last 12 months. Texas R/T originated to pay off an existing home equity/cash-out mortgage is ineligible B) Simple Refinance Refers to a no cash-out refinance of an existing FHA-insured Mortgage in which all proceeds are used to pay the existing FHA-insured mortgage lien on the subject Property and costs associated with the transaction. C) Streamline Refinance Refers to the refinance of an existing FHA-insured Mortgage requiring limited Borrower credit documentation and underwriting. There are two different streamline options available. (I) Credit Qualifying: The Mortgagee must perform a credit and capacity analysis of the Borrower, but no appraisal is required. (II) Non-Credit Qualifying: The Mortgagee does not need to perform credit or capacity analysis or obtain an appraisal. See Simple and Streamline Sections Below Cash-Out Refinance A Cash-Out Refinance is a refinance of any Mortgage or a withdrawal of equity where no Mortgage currently exists, in which the mortgage proceeds are not limited to specific purposes. Cash-out refinance transactions are only permitted on owner-occupied Principal Residences. The Property securing the cash-out refinance must have been owned and occupied by the Borrower as their Principal Residence for the 12 months prior to the date of case number assignment. Borrower has made all payments for all their Mortgages within the month due for the previous 12 months or since the Borrower obtained the Mortgages, whichever is less. Additionally, the payments for all Mortgages secured by the subject Property must have been paid within the month due for the month prior to mortgage Disbursement. Properties with Mortgages must have a minimum of six months of Mortgage Payments. Properties owned free and clear may be refinanced as cash-out transactions. No maximum on dollar amount on cash out Non Occupant Co Borrower not permitted on cash out transactions Texas Equity 50 (a) (6) not eligible Eligible Property Types Ineligible Property Types Special Property Types Recast Option Prepayment Penalty Option Conversion option Terms Amortization Detached/Attached SFR and PUDs, FHA Approved Condos, Factory Built -Modular/Pre-Cut/Panelized Housing covered by the HUD Structural engineering bulletin, 2-4 Unit properties, Manufactured Housing. Deed Restricted Properties with legal approval. See Manufactured Housing Section below for additional details. Non-FHA approved Condos, Condotels, Co-op, Mixed-Use, Dome, Straw/Bale, Log, Earth, Working Farms/Ranches, Mobile Homes, Commercial (income producing), Energy Efficient Loans, Life Estates, Hope for Homeowners, HUD 184 Indian Reservations, Hawaiian HomeLands, Loans to Non-Profit Organizations, refinances to borrowers in a negative equity position, 203ks, and Construction properties Leasehold Estates: Permitted if marketable for area, and lease term must be reviewed by underwriting manager IL Land Trust is an institutional corporate entity; individuals are not acceptable. Beneficiary must execute Note and Guarantee Payment of Mortgage N/A N/A N/A Fixed :360 months, 300 months, 240 months, 180 months, and 120 months ARM: 360 months Fully Self amortizing 09/14/2015 Page 3

4 Buy down, Temporary Special Features and Specifications Not Permitted Construction to Perm post construction financing allowed. (Single close construction loans ineligible.) Revocable Inter-Vivos trust: Permitted on Underwriting management approval HPML: Permitted, 30 yr only Identities of Interest: An Identity-of-Interest Transaction is a sale between parties with an existing Business Relationship or between Family Members. Business Relationship refers to an association between individuals or companies entered into for commercial purposes. Family Member is defined as follows, regardless of actual or perceived sexual orientation, gender identity, or legal marital status: child, parent, or grandparent; o a child is defined as a son, stepson, daughter, or stepdaughter; o a parent or grandparent includes a step-parent/grandparent or foster parent/grandparent; spouse or domestic partner; legally adopted son or daughter, including a child who is placed with the Borrower by an authorized agency for legal adoption; foster child; brother, stepbrother; sister, stepsister; uncle; aunt; or son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law of the Borrower. The maximum LTV percentage for Identity-of-Interest transactions on Principal Residences is restricted to 85 percent. The maximum LTV percentage for a transaction where a tenant-landlord relationship exists at the time of contract execution is restricted to 85 percent. The 85 percent maximum LTV restriction does not apply for Identity-of-Interest transactions under the following circumstances. Family Member Transactions: The 85 percent LTV restriction may be exceeded if a Borrower purchases as their Principal Residence: o o the Principal Residence of another Family Member; or a Property owned by another Family Member in which the Borrower has been a tenant for at least six months immediately predating the sales contract. A lease or other written evidence to verify occupancy is required. Builder s Employee Purchase: The 85 percent LTV restriction may be exceeded if an employee of a builder, who is not a Family Member, purchases one of the builder s new houses or models as a Principal Residence. Corporate Transfer: The 85 percent LTV restriction may be exceeded if a corporation transfers an employee to another location, purchases the employee s house, and sells the house to another employee. Tenant Purchase: The 85 percent LTV restriction may be exceeded if the current tenant purchases the Property where the tenant has rented the Property for at least six months immediately predating the sales contract. A lease or other written evidence to verify occupancy is required. Escrow Waiver Not Available Escrows Required Assumability Permitted on all FHA loans - subject to credit worthiness review Underwriting Run DU or LP FHA TOTAL Scorecard for approval except Streamlines 09/14/2015 Page 4

5 Procedure No non-traditional credit underwriting Any loan with a case warning (Prior Mortgage Credit Reject, CAIVRS Alert and/or Mortgage Credit Sanction) is subject to manual underwriting credit guidelines. Refer to FHA SF HB , Chapter II. Section A, 5. Manual Underwriting of the Borrower The borrower must be downgraded and manually underwritten on any Mortgage that received an Accept recommendation if: o the mortgage file contains information or documentation that cannot be entered into or evaluated by TOTAL Mortgage Scorecard; o additional information, not considered in the AUS recommendation affects the overall insurability of the Mortgage; o the Borrower has $1,000 or more collectively in Disputed Derogatory Credit Accounts; o the date of the Borrower s bankruptcy discharge as reflected on bankruptcy documents is within two years from the date of case number assignment; o the case number assignment date is within three years of the date of the transfer of title through a Pre-Foreclosure Sale (Short Sale); o the case number assignment date is within three years of the date of the transfer of title through a foreclosure sale; o the case number assignment date is within three years of the date of the transfer of title through a Deed-in-Lieu (DIL) of foreclosure; o the Mortgage Payment history requires a downgrade as defined in Housing Obligations/Mortgage Payment History; o the Borrower has undisclosed mortgage debt; or o business income shows a greater than 20 percent decline over the analysis period. Principal Curtailment Excess cash representing the difference between the estimated and the actual payoff of the original loan plus closing costs and prepaid fees must be applied as a principal curtailment or reduce the loan amount to an insurable amount. Documentation Requirements Full Documentation Standard FHA documents apply Tax Transcripts are required for the number of years of income documented required by AUS Credit History Acceptable credit history determined by AUS The Borrower s credit history must be analyzed in accordance with the Accept Risk Classifications Requiring a Downgrade to Manual Underwriting section. 0x30 in the recent 12 months for manual underwrite Bankruptcy, Foreclosures, and Deed-in-Lieu must be recognized by the AUS system. Event BK 7 or 11 BK 13 Waiting Period Passage of two years since the discharge date of any bankruptcy. If the bankruptcy was discharged within two years from the date of case number assignment, the Mortgage must be downgraded to a Refer and manually underwritten. Passage of two years since the discharge date of any bankruptcy. If the bankruptcy was discharged within two years from the date of case number assignment, the Mortgage must be downgraded to a Refer and manually underwritten. Must have minimum 1 year of timely payments under the BK and borrower must obtain written permission from BK court to enter into the mortgage 09/14/2015 Page 5

6 Liabilities and Debts transaction Consumer Credit Counseling Participating in a consumer credit counseling program does not require a downgrade to a manual underwriting. Foreclosure Must manually downgrade to a Refer if the Borrower had a foreclosure in which title transferred from the Borrower within three years of case number assignment. Deed-in-Lieu of Foreclosure Must manually downgrade to a Refer if the Borrower had a DIL of foreclosure in which title transferred from the Borrower within three years of case number assignment. Pre-foreclosure, Short Sale Passage of three years since the date of the Short Sale. If the Short Sale occurred within three years of the case number assignment date, the Mortgage must be downgraded to a Refer and manually underwritten. Collections, Judgments, and Court ordered judgments must be paid prior before the loan Charge-Off is insurable ML Collection: non-medical, >$2000 in the last 12 mo, the ML payment must be included in DTI (Collections not excluded by state law - of a non-purchasing spouse in a community property state are included in the cumulative balance) Medical collections and charge offs are excluded from this guidance The Mortgagee must review all credit report inquiries to ensure that all debts, including any new debt payments resulting from material inquiries listed on the credit report, are used to calculate the debt ratios. The Mortgagee must also determine that any recent debts were not incurred to obtain any part of the Borrower s required funds to close on the Property being purchased. Material Inquiries refer to inquires which may potentially result in obligations incurred by the Borrower for other Mortgages, auto loans, leases, or other Installment Loans. Inquiries from department stores, credit bureaus, and insurance companies are not considered material inquiries. General Liabilities and Debts listed on URLA The Mortgagee must determine the Borrower s monthly liabilities by reviewing all debts listed on the credit report, Uniform Residential Loan Application (URLA), and required documentation. All applicable monthly liabilities must be included in the qualifying ratio. Closed-end debts do not have to be included if they will be paid off within 10 months and the cumulative payments of all such debts are less than or equal to 5 percent of the Borrower s gross monthly income. The Borrower may not pay down the balance in order to meet the 10-month requirement. Accounts for which the Borrower is an authorized user must be included in a Borrower s DTI ratio unless the Mortgagee can document that the primary account holder has made all required payments on the account for the previous 12 months. If less than three payments have been required on the account in the previous 12 months, the payment amount must be included in the Borrower s DTI. Loans secured against deposited funds, where repayment may be obtained through extinguishing the asset and these funds are not included in calculating the Borrower s assets, do not require consideration of repayment for qualifying purposes. The Mortgagee must document that the funds used to pay off debts prior to closing came from an acceptable source, and the Borrower did not incur new debts that were not included in the 09/14/2015 Page 6

7 Income DTI ratio. Negative income must be subtracted from the Borrower s gross monthly income, and not treated as a recurring monthly liability unless otherwise noted. Undisclosed Debt Other Than a Mortgage When a debt or obligation (other than a Mortgage) not listed on the mortgage application and/or credit report and not considered by the AUS is revealed during the application process, the Mortgagee must: o o verify the actual monthly payment amount; re-submit the Mortgage for evaluation by TOTAL if the cumulative change in the amount of the liabilities that must be included in the Borrower s debt increases by more than $100 per month; and o determine that any funds borrowed were not/will not be used for the Borrower s MRI. Undisclosed Mortgage Debt When a debt or obligation that is secured by a Mortgage not listed on the mortgage application and/or credit report and not considered by the AUS is revealed during the application process, the Mortgagee must downgrade to a Refer and manually underwrite the Mortgage. Federal Debt The Mortgagee must include the debt. The amount of the required payment must be included in the calculation of the Borrower s total debt to income. Alimony, Child Support, and Maintenance For Alimony, if the Borrower s income was not reduced by the amount of the monthly alimony obligation in the Mortgagee s calculation of the Borrower s gross income, the Mortgagee must include the monthly obligation in the calculation of the Borrower s debt. Child Support and Maintenance are to be treated as a recurring liability and the Mortgagee must include the monthly obligation in the Borrower s liabilities and debt. Non-Borrowing Spouse Debt in Community Property States If the Borrower resides in a community property state or the Property being insured is located in a community property state, debts of the non-borrowing spouse must be included in the Borrower s qualifying ratios, except for obligations specifically excluded by state law. The nonborrowing spouse s credit history is not considered a reason to deny a mortgage application. Deferred Obligations o The Mortgagee must use the actual monthly payment to be paid on a deferred liability, whenever available. o If the actual monthly payment is not available for installment debt, the Mortgagee must utilize the terms of the debt or 5 percent of the outstanding balance to establish the monthly payment. o For a student loan, if the actual monthly payment is zero or is not available, the Mortgagee must utilize 2 percent of the outstanding balance to establish the monthly payment. Installment Loans, not secured by real estate o If the credit report does not include a monthly payment for the loan, the Mortgagee must use the amount of the monthly payment shown in the loan agreement or payment statement Effective Income refers to income that may be used to qualify a Borrower for a Mortgage. Effective Income must be reasonably likely to continue through at least the first three years of the Mortgage, and meet the specific requirements described below. 09/14/2015 Page 7

8 The Borrower may only have their income considered if it is legally derived and, when required, properly reported as income on the Borrower s tax returns. Negative income must be subtracted from the Borrower s gross monthly income, and not treated as a recurring monthly liability unless otherwise noted. Mortgage Insurance Subordinate Financing Project Eligibility Appraisal Qualifying Ratios Contributions to Closing Costs Down Payment/Gift Rules Reserves For all Employment related Income, the Mortgagee must verify the Borrower s most recent two years of employment and income, and document using one of the methods described within SF HB II. A. Section 4c. Income Requirements. Gaps in Employment For Borrowers with gaps in employment of six months or more (an extended absence), the Mortgagee may consider the Borrower s current income as Effective Income if it can verify and document that: the Borrower has been employed in the current job for at least six months at the time of case number assignment; and a two year work history prior to the absence from employment using standard or alternative employment verification. See FHA MIP section for details Permitted for closing costs and/or down payment, but must conform to the above CLTV limitations. Texas Payoff of subordinate financing used for purchase or home improvements or the subordination of a second can be done as long as the first mortgage was not a home equity/cash-out Section 50(a)(6) loan No negative amortization on the subordinate financing. The repayment terms of the subordinate must provide for regular payments that cover no less than interest due. The interest rate on the subordinate should be less than the rate on the first Should not restrict the borrower from selling the property No cash back to borrower Condominium: Must be approved by HUD as referenced in the FHA connection Co-ops: Not Permitted Standard Full Appraisal is required All Appraisals must be ordered by the Appraisal order desk The standard FHA Appraisal is required including interior and exterior of the subject property Maximum Qualifying Ratio: AUS determination AUS Refer loans 31/43% - may exceed with multiple compensating factors at underwriters discretion Contributions may not exceed 6% regardless of LTV Allowable seller contributions are actual closing costs, prepaid expenses, discount points and other financing concessions. Minimum Borrower Contribution: 3.5% Per AUS findings will vary based on property type 09/14/2015 Page 8

9 Non-Occupying Co- Borrower Trailing Co-Borrower Foreign Borrower Multiple Property Ownership Max LTV is 75% if not a qualified family member and if greater than 75% LTV it must be a one unit property only Not permitted on cash out transactions If the parent is selling to a child, the parent cannot be the co borrower unless the LTV is 75% Max program financing is available for borrowers related by blood, marriage, or law: Spouses, parents-children, siblings, stepchildren, aunts-uncles, and nieces-nephews or Unrelated individuals who can document evidence of longstanding family-type relationship not arising out of the loan transaction ( B.3.b) Not permitted Non-residents not permitted Only one FHA loan to a borrower with exception: Policy Exceptions Eligibility Requirements Relocation A Borrower may be eligible to obtain another FHA-insured Mortgage without being required to sell an existing Property covered by an FHAinsured Mortgage if the Borrower is: relocating or has relocated for an employment-related reason; and establishing or has established a new Principal Residence in an area more than 100 miles from the Borrower s current Principal Residence. If the Borrower moves back to the original area, the Borrower is not required to live in the original house and may obtain a new FHAinsured Mortgage on a new Principal Residence, provided the relocation meets the two requirements above. Increase in family size A Borrower may be eligible for another house with an FHA-insured Mortgage if the Borrower provides satisfactory evidence that: the Borrower has had an increase in legal dependents and the Property now fails to meet family needs; and the Loan-to-Value (LTV) ratio on the current Principal Residence is equal to or less than 75% or is paid down to that amount, based on the outstanding Mortgage balance and a current residential appraisal. Vacating a jointlyowned Property Non-occupying co- Borrower A Borrower may be eligible for another FHA-insured Mortgage if the Borrower is vacating (with no intent to return) the Principal Residence which will remain occupied by an existing co-borrower. A non-occupying co-borrower on an existing FHA-insured Mortgage may qualify for an FHA-insured Mortgage on a new Property to be 09/14/2015 Page 9

10 their own Principal Residence. Property Flips A practice whereby recently acquired property is resold for a considerable profit with an artificially inflated value, often abetted by a lender's collusion with an appraiser. The restrictions do not apply to a builder selling a newly built home or building a home for a borrower. 1. The sale must be by the owner of record. 2. Appraisers are required to analyze any prior sales of a subject property in the previous three years for one to four family residential properties. 3. If a property is re-sold 90 days or fewer following the date of acquisition by the seller, the property is not eligible. 4. A lender must obtain a second appraisal by another appraiser if: the re-sale date of a property is between 91 and 180 days following the acquisition of the property by the seller, and the re-sale price is 100 percent or more over the price paid by the seller when the property was acquired. FHA reserves the right to require additional documentation from a lender to support the re-sale value of a property if: the re-sale date is more than 90 days after the date of acquisition by the seller, but before the end of the twelfth month following the date of acquisition, and the re-sale price is 5 percent or greater than the lowest sale price of the property during the preceding 12 months. Manufactured Housing Manufactured Housing is a Structure that is transportable in one or more sections. It may be part of a Condominium Project, provided the project meets applicable FHA requirements. All Manufactured Housing must: Be located in a geographic area where sale comparisons are readily available. Minimum credit score: 640 be designed as a one-family dwelling; have a floor area of not less than 400 square feet; have the HUD Certification Label affixed or have obtained a letter of label verification issued on behalf of HUD, evidencing the house was constructed on or after June 15, 1976, in compliance with the Federal Manufactured Home Construction and Safety Standards; be classified as real estate (but need not be treated as real estate for purposes of state taxation); be built and remain on a permanent chassis; be designed to be used as a dwelling with a permanent foundation built in accordance with the Permanent Foundations Guide for Manufactured Housing (PFGMH); and Have been directly transported from the manufacturer or the dealership to the site. Refer to FHA SF HB Chapter II Section B, 5. Property Acceptability Criteria for Manufactured Housing for Title II Insured Mortgages. Simple Refinance Only permissible for owner-occupied Principal Residences. Borrower Eligibility: the Borrower s employment documentation or obtain utility bills must be reviewed to evidence the Borrower currently occupies the Property as their Principal Residence. Payment History: For manually underwritten Mortgages with less than six months of Mortgage Payment history, the Borrower must have made all payments within the month due. For 09/14/2015 Page 10

11 manually underwritten Mortgages with greater than six months history, the Borrower must have made all Mortgage Payments within the month due for the six months prior to case number assignment and have no more than one 30-Day late payment for the previous six months for all Mortgages. The Borrower must have made the payments for all Mortgages secured by the subject Property for the month prior to mortgage Disbursement. Maximum cash back to the borrower is limited to $500 An Appraisal is required on Simple Refinances. No minimum FICO Streamline Refinance May be used for Principal Residences or non-owner occupied Properties Fixed Rate is only allowed for Non-owner occupied. Underwriting Procedure: Must be manually underwritten. Certain sections of FHA SF HB Origination through Post-Closing/Endorsement do not apply to Non-credit or Credit qualifying Streamlines. The Borrower s employment documentation or obtain utility bills to evidence that the Borrower currently occupies the Property as their Principal Residence. The Mortgagee must process the Streamline Refinance as a non-owner occupied Property if the Mortgagee cannot obtain evidence that the Borrower occupies the Property as a Principal Residence. Payment History: The Borrower must have made all Mortgage Payments within the month due for the six months prior to case number assignment and have no more than one 30-Day late payment for the previous six months for all Mortgages. The Borrower must have made the payments for all Mortgages secured by the subject Property within the month due for the month prior to mortgage Disbursement. If the Mortgage on the subject Property is not reported in the Borrower s credit report, the Mortgagee must obtain a verification of Mortgage to evidence payment history for the previous 12 months. Mortgage Seasoning o the Borrower must have made at least six payments on the FHA-insured Mortgage that is being refinanced; o at least six full months must have passed since the first payment due date of the Mortgage that is being refinanced; o at least 210 Days must have passed from the closing date of the Mortgage that is being refinanced; and o if the Borrower assumed the Mortgage that is being refinanced, they must have made six payments since the time of assumption. Net Tangible Benefit: must be met according to FHA SF HB From To 09/14/2015 Page 11

12 Fixed Rate New Combined Rate One-Year ARM New Combined Rate Hybrid ARM New Combined Rate Fixed Rate At least 0.5 percentage points below the prior At least 2 percentage points below the prior At least 2 percentage points below the prior Any ARM With Less Than 15 Months to Next Payment Change Date No more than 2 percentage points above the prior Combined Rate. At least 1 percentage point below the prior At least 1 percentage point below the prior Any ARM With Greater Than or Equal to 15 Months to Next Payment Change Date No more than 2 percentage points above the prior Combined Rate. At least 2 percentage points below the prior At least 1 percentage point below the prior Exclusionary List: must be checked against the HUD Limited Denial of Participation (LDP) and System for Award Management (SAM) list to confirm the Borrower s eligibility to participate. Credit Reports: FHA does not require a credit report on the non-credit qualifying Streamline Refinance. The Mortgagee must obtain a credit report for the credit qualifying Streamline Refinance. If the Mortgagee obtains a credit score, the Mortgagee must enter it into FHAC. If more than one credit score is obtained, the Mortgagee must enter all available credit scores into FHAC. Funds to Close: Borrower s funds to close, in excess of the total Mortgage Payment of the new Mortgage, in accordance with Sources of Funds. Max Mortgage Amortization Period: Limited to the lesser of the remaining amortization period of the existing Mortgage plus 12 years; or 30 years. Maximum cash back to the borrower is limited to $500 Appraisals are not required on Streamline Refinances. Maximum CLTV Ratio and Subordinate Financing: Existing Subordinate financing, in place at the time of case number assignment, must be resubordinated to the Streamline Refinance. New Subordinate financing is permitted only where the proceeds of the subordinate financing are used to: o reduce the principal amount of the existing FHA-insured Mortgage, or o finance the origination fees, other closing costs, or discount points associated with the refinance There is no maximum CLTV. DTI: If Credit Qualifying - DTI per HUD guidelines - 31/43% - may exceed with multiple compensating factors at underwriters discretion 2nd Home and non-owner occupied properties: Even if originally the loan was acquired as a principal residence by the current borrowers, the refinance will be for the outstanding principal balance only HPML: Allowed only with complete credit qualifying MIP: Follow the current MIP schedule; UFMIP varies depending on when the loan was last insured Proposed Payment. If the change in mortgage term will result in an increase in the mortgage payment of more than 20% the loan must credit qualify ( C.2.d) Primary Residence only 09/14/2015 Page 12

13 Non Occupying Co Borrower: Permitted if they are on the existing note being refinanced 2015 Banc Home Loans. All Rights Reserved. Product parameters are subject to change without forward notice. This document is used for reference for Mortgage Professionals Only. Not intended for the general public. 09/14/2015 Page 13