E MORTGAGE MANAGEMENT, LLC 504 FHA STREAMLINES

Transcription

1 E MORTGAGE MANAGEMENT, LLC 504 FHA STREAMLINES PRODUCT GUIDELINES 2/10/2015

2 504 FHA Streamlines Mortgage Eligibility Product Code Short Description Long Description Description FF15SL FHA 15 YR SL FF15SL - FHA FIXED 15 YEAR STREAMLINE FF30SL FHA 30 YR SL FF30SL- FHA FIXED 30 YEAR STREAMLINE Description FHA Streamline Refinance transactions are government insured loans allowing current FHA mortgage loan holders the opportunity to refinance an existing FHA insured mortgage for a lower interest rate or to convert an ARM to a fixed rate, provided the loan meets tangible net benefit requirements in this guideline section. FHA Streamline products offered by E Mortgage Management (EMM) do not allow an appraisal. There are both credit qualifying streamline and non-credit qualifying (income documentation waiver) Streamline loan documentation types. EMM offers both options. Note- Where these guidelines are silent, refer to 000 General Underwriting Guidelines. If EMM guidelines are silent, refer to the FHA Handbook. Non-credit qualifying- - Employment is stated and verified. - Income is not stated and is not verified, except non-wage income as defined in Income and Employment Documentation in this guideline section. - Assets required to close, if any, are documented and verified in accordance with HUD guidelines. - DTI is not calculated and ability to repay is not documented. - Loan must meet product-specific tangible net benefit requirements. - Underwriting LTV/CLTV is based on original appraised value from FHA Connection. - Additional loan qualification requirements apply. Refer to guidelines below. Credit qualifying- - Employment is stated and verified. - Income is stated and verified. - Assets required to close, if any, are documented and verified in accordance with HUD guidelines. - DTI is calculated. - Loan must meet product-specific tangible net benefit requirements. - Pricing is based on HVE-based LTV/CLTV. - Underwriting LTV/CLTV is based on original appraised value from FHA Connection. Last Published Date: 02/10/ E Mortgage Management, LLC NMLS#2926 Page 1

3 Mortgage Eligibility Product Cash back to the borrower may not exceed $ and closing costs may not be included Description in the new loan amount. Refer to Maximum Mortgage Calculation in this guideline section. Higher Priced Mortgage Loans FHA Streamline transactions are not eligible as Higher Priced Mortgage Loans (HPMLs). Maximum Loan Amount The maximum loan amount is the lesser of the FHA county loan limit available on the FHA website or the conventional loan limit listed below. EMM does not offer FHA Streamline Refinance loan amounts greater than the conventional loan limit. 1 Units 1 Maximum Loan Amount 1 $417,000 2 $533,850 Refer to Geographic Restrictions in this guideline section for restrictions on properties located in New Jersey. ARM Terms Fixed Terms ARM loan products are not offered. Fixed rate loans have terms of 15 or 30 years. Interest Only loan products are not offered. Maximum Mortgage Term The maximum mortgage term is the lesser of 30 years or the remaining term plus 12 years. Documentation Types There are both credit qualifying Streamline and non-credit qualifying (income documentation waiver) Streamline loan documentation types. EMM offers both options. Credit qualifying transaction. Employment is stated and verified. Income is stated and verified. Assets required to close, if any, are documented and verified in accordance with HUD guidelines. Non-credit qualifying transaction. Employment is stated and verified. Income is not stated and is not verified, except non-wage income as defined in Income and Employment Documentation in this guideline section. Assets required to close, if any, are documented and verified in accordance with HUD guidelines. Last Published Date: 02/10/ E Mortgage Management, LLC NMLS#2926 Page 2

4 Mortgage Eligibility Maximum LTV/CLTV Loans with subordinate financing may not exceed 125% CLTV based on the original appraised value provided by FHA via FHA connection. Maximum Mortgage Calculation Maximum Mortgage Calculation The maximum insurable mortgage for streamline refinances without an appraisal cannot exceed the original principal balance of the loan being refinanced as verified on the refinance authorization from FHA Connection: minus the applicable refund of the UFMIP, plus the new UFMIP that will be charged on the refinance, and may not include pre-paid costs, closing costs, or discount points Outstanding principal balance may include- interest charged by the servicing lender when the payoff is not received on the first day of the month (i.e. up to 60 days interest), and two months annual (prorata) MIP, provided it is itemized on the payoff statement Outstanding principal balance may not include- accrued delinquent interest, or late charges, or escrow shortages, or any other financing charges (e.g. prepaid costs, closing costs, and discount points) Escrow balance- Existing escrow balance may not be deducted from the principal balance on the payoff statement and/or on the HUD-1. Escrow shortages may not be paid through premium pricing. Borrower must bring funds to closing that are equal to or exceed the amount of the escrow shortages listed on the payoff statement. Cash back to borrower cannot exceed $ Lender credits may be used to pay borrower s closing costs and prepaid closing costs. Any excess lender credits are to be applied to principal balance. Underwriting Underwriting System Submission to the TOTAL Scorecard system Desktop Underwriter (DU ) is not permitted on FHA Streamline loans. Manual underwriting is required. If a Streamline loan is entered into the TOTAL Scorecard system, the underwriter must contact HUD to have the FHA case number removed. Underwriting Method FHA loans are underwritten by EMM underwriters under EMM delegated authority. External underwriting methods such as contract underwriting are not permitted. Occupancy Primary residence only Last Published Date: 02/10/ E Mortgage Management, LLC NMLS#2926 Page 3

5 Loan Purpose Streamline Refinance Pay off outstanding principal balance only The following may not be included in the loan amount Pay off of any second lien Interested party buyout Incidental cash back Continuity of obligation must be established Property may not be currently listed for sale Seasoning At the date of the case number assignment on a streamline: The borrower must have made at least six payments on the FHA insured mortgage that is being refinanced, and A minimum of six months must have elapsed since the first payment due date of the refinanced mortgage, and A minimum of 210 days must have elapsed since the closing date of the mortgage being refinanced Secondary Financing New secondary financing is not permitted. 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. Refer to Maximum LTV/CLTV and Maximum Mortgage Calculation in this guideline section for LTV and HCLTV calculation requirements. Last Published Date: 02/10/ E Mortgage Management, LLC NMLS#2926 Page 4

6 Mortgage Eligibility Mortgage FHA requires both up front mortgage insurance (UFMIP) and an annual mortgage insurance Insurance premium (MIP), to be paid monthly. Factors vary by transaction type, case assignment date and other factors. Refer to the applicable FHA Mortgagee letter for details: Streamline Refinance transactions with case numbers assigned on or after June 11, 2012 that are refinancing FHA loans endorsed on or before May 31, 2009 are eligible for reduced mortgage insurance premiums. Reduced MI amounts Up Front (all loan terms) 1 bps Annual (all loan terms) 55 bps Loans qualifying for the reduced MI amounts are not eligible to receive an MIP refund. Up Front MIP Refund If the borrower is refinancing his/her current FHA loan to another FHA loan within three years, a refund credit must be applied to reduce the amount of the UFMIP paid on the new loan. Refund amounts are available through FHA Connection when ordering the new FHA Case Number. The original case number endorsement date is available through a case number query within FHA Connection. Case numbers may not be requested prior to the loan application date. Mortgage Eligibility Tangible Net The table below defines tangible net benefit on all FHA Streamlines: Benefit Existing (Old) Loan New Fixed Rate Loan Fixed Rate Hybrid ARM, Fixed Period Hybrid ARM, Adjustable Period Reduction of at least 5% of P&I and MIP Reduction of at least 5% of P&I and MIP New rate no greater than 2% above the current rate Reduction in Term Streamline Not Eligible A refinance that reduces the term of the mortgage but doesn t meet the requirements in the table above does not meet the tangible net benefit for a streamline refinance and the loan must be closed as a rate/term refinance. Escrow Waiver Temporary Buydowns Escrow waiver is not permitted. Temporary buydown loan products are not offered. Last Published Date: 02/10/ E Mortgage Management, LLC NMLS#2926 Page 5

7 Credit Credit Report EMM requires a three credit bureau tri-merge report to verify mortgage history only. (The tri-merged report does not need to include all tradelines, inquiries, employer or residency information). Joint credit reports should be used only for married co-borrowers. Credit Score Mortgage Payment History EMM requires that each borrower have a minimum of two credit scores. Available credit scores must be entered into FHA Connection. Use the middle score of three scores or the lower score of two scores of the lowest scoring borrower. Minimum credit score is 620. Mortgage History EMM will not accept mortgage a history with more than 1 x 30 days late payments within the lesser of the last 12 months or the life of the current loan. A minimum of six months of history must be available on the current mortgage. Refer to Seasoning Requirements in this guideline section. Mortgages may not be past due at the time of closing. Existing loan being refinanced must be current for the month in which the subject transaction closes (e.g. If the subject transaction closes on April 8, the borrower must have made the April payment prior to closing.) 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 only. U.S. citizens Permanent resident aliens Non-permanent resident aliens Non-occupant co-borrowers Inter vivos revocable trusts Trailing spouse income may not be used to qualify Inter Vivos Revocable Trusts Borrower(s) must be the Trustee(s) or one of the co-trustees. Borrower s name must appear on the Note along with the name of the trust. Borrower does not need to appear on title. Refer to section 100 EMM Conventional Underwriting Guidelines Borrower Guidelines Inter Vivos Revocable Trust for additional information. Last Published Date: 02/10/ E Mortgage Management, LLC NMLS#2926 Page 6

8 Borrower Adding or Removing Borrowers Borrowers may be added to or deleted. Refer to table below. FHA Streamline Refi Scenario Non-credit Qualifying Credit Qualifying (max DTI 31/43) Adding an individual to ownership 1 permitted permitted (deed/ title) Adding an individual to repayment 1 permitted permitted (note only) e.g. co-signer Adding an individual as a full borrower (both repayment on note permitted permitted and ownership on deed/title) 1 Deleting an individual from 2 not permitted permitted ownership (deed/title) Deleting an individual from 2 not permitted permitted repayment (note only) Deleting an individual as a borrower (removing from both repayment on not permitted permitted note and ownership on deed/title) Existing borrower(s) must remain on Note and deed. Borrower being removed does not occupy the subject property. Income Qualification Qualifying Rate The qualifying rate is equal to the Note rate. Debt Ratio If income documentation is required, the maximum DTI is 43%. Refer to Income and Employment Documentation in this guideline section for additional requirements. Last Published Date: 02/10/ E Mortgage Management, LLC NMLS#2926 Page 7

9 Income Income and Employment Documentation A verbal Verification of Employment (VVOE) is required for all employed borrowers. VVOEs are acceptable for prior employment if prior employment needs to be verified. Refer to Documentation Waiver requirements in this guideline section. Non-Credit Qualifying Employment is stated and verified. Income is not stated on the application and is not verified,. 4506T is not obtained Employed borrowers- - A verbal VOE with no reference to income is required for all employed borrowers. - Borrowers who receive 1099 income are considered self-employed. - Employment history o Two-year employment history is required. o Employment gaps are not permitted, regardless of reason. o Frequent changes in employment represent an additional risk. o Employment history reflecting multiple and/or recent job changes is subject to additional underwriter review. Letters of explanation may be requested at the underwriter s discretion Self-employed borrowers- - Verify through an independent third party the existence of the borrowers business. (Lexis-Nexis, D&B, CPA letter, etc. are acceptable. Yellow Pages listing alone is not acceptable.) Non-wage income- - Retirement and/or social security income requires the award letter or most recent bank statement evidencing receipt. Last Published Date: 02/10/ E Mortgage Management, LLC NMLS#2926 Page 8

10 Income Income and Employment Documentation Credit Qualifying Borrower s capacity to repay the loan is considered. EMM accepts general equivalents to Fannie Mae Reduced Documentation as follows: Income is stated on the application and is verified. - Salaried or commissioned borrowers o most recent year-to-date paystub covering a minimum of 30 days, and o most recent W-2 - Self-employed borrowers o One year of self-employment with the same entity is required. o Two years of self-employment in the same field is required. o Minimum of six months of self-employment income must be reflected on tax returns. o Two most recent years tax returns Two most recent years business returns might also be required. - Non-wage incomeo Receipt and amount of non-wage income (e.g. child support, retirement, IRA, Note, SSI, VA, etc.) must be fully documented according to standard FHA requirements. 4506T is signed and processed. Employment history - Salaried or commissioned borrowers o Two-year employment history is required. o Employment gaps are not permitted, regardless of reason. o Frequent changes in employment represent an additional risk. o Employment history reflecting multiple and/or recent job changes is subject to additional underwriter review. Letters of explanation may be requested at the underwriter s discretion. o Borrowers who receive 1099 income are considered self-employed. - Self-employed borrowers o One year of self-employment with the same entity is required. o Two years of self-employment in the same field is required. Last Published Date: 02/10/ E Mortgage Management, LLC NMLS#2926 Page 9

11 Assets Reserves Reserves are not required. Reserves used as a compensating factor must be verified. Refer to Asset Verification in this guideline section. Cash-to-Close Asset Verification Any required cash to close must be verified according to FHA asset documentation guidelines. Refer to Asset Verification in this guideline section for requirements. Verification Requirements If assets are needed to qualify, then the following is required: All pages of most recent monthly bank statement reflecting both the beginning and ending balance dated within 30 days of the application date If a quarterly statement is provided, confirm that the funds in the account have not been transferred to another asset account that is verified with documentation that is more current. Quarterly asset statements must be dated within 90 days of application date. A written Verification of Deposit (VOD), completed by the depository institution, may be obtained to supplement the bank statement(s), but may not replace them. The VOD should detail holdings. The average balance held in all accounts for the most recent two months must be dated within 120 days of the closing date. Explanation should be provided for large deposits, generally defined as a single deposit that exceeds 2% of the mortgage amount, over the statement period, as applicable. 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. Real Estate Owned The maximum number of properties a borrower may have financed is four. Borrowers with five or more residential financed properties are not eligible. The total of four includes residential properties owned by the borrower or an LLC owned by the borrower. Commercial properties are not included in the calculation. New multiple loans must be underwritten simultaneously. Refer to Mortgage Payment History in this guideline section. Last Published Date: 02/10/ E Mortgage Management, LLC NMLS#2926 Page 10

12 Property Property Valuation EMM does not permit Streamlines with an appraisal. The loan must be closed as a rate/term refinance if an appraisal is required. Value is based off value provided by FHA via FHA netting authorization. Properties Listed for Sale Property Eligibility Properties listed for sale within the last six months are eligible with the following restrictions: The property was taken off the market prior to the application date The borrower must provide 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. Eligible Properties Single family residences Two-unit properties 1 Condominiums - FHA project approval is not required. PUDs - FHA project approval is not required. Factory built homes - Factory built homes (not built on a permanent chassis) such as modular, panelized, prefabricated, or sectional housing built on a permanent foundation are eligible. - Manufactured and mobile homes are not permitted. Leasehold Estates - No additional restrictions Mixed-use properties - Borrower must be the owner and operator of the business. - Single family residences only - Commercial usage may not exceed 25% of gross living area of the subject. 1 Refer to Geographic Restrictions in this guideline section for restrictions on properties in New Jersey. Property Eligibility Ineligible Properties Assisted Living Projects Builder Model Leaseback Houseboats Investment Securities Manufactured Homes Mobile Homes Three- to four-unit properties 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 Last Published Date: 02/10/ E Mortgage Management, LLC NMLS#2926 Page 11

13 Geographic Restrictions 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, regardless of whether or not the current loan contains a cash out provision. Last Published Date: 02/10/ E Mortgage Management, LLC NMLS#2926 Page 12