Down Payment Assistance Program Administered by CBC Mortgage Agency. Product Line Guidelines

Transcription

1 Down Payment Assistance Program Administered by Product Line Guidelines

2 Introduction: was created under constitutional authority afforded the tribal council of the Cedar Band of Paiutes of the Paiute Indian Tribe of Utah, a constituent band of the Paiute Indian Tribe of Utah, a Federally recognized Native American Tribe as contemplated by 25 U.S.C. SS 477 and 48 Stat.984 under the Indian Reorganization Act of 1934 ( IRA ), as the band s housing and finance agency (HFA), operating as an arm of the tribal government. All down payment assistance is issued in strict compliance with FHA guidelines to homebuyers qualified for an FHA insured loan, whether tribal members or not. In addition to all FHA guidelines, this document contains requirements that apply to each loan issued. All loans meeting these guidelines will fully comply with FHA guidelines regarding down payment assistance from a Government Entity found in the under Source of Funds for Gifts (item F) and Secondary Financing (item J). Chenoa Fund is the name of the down payment assistance program administered by. Chenoa Fund was created in an effort to responsibly assist borrowers with their down payment requirement. This is done by simplifying the down payment assistance process by streamlining guidelines across state borders and making these loans financially viable to the originating lenders. This is done to encourage Lenders to offer these programs to qualifying borrowers in an effort to expand access to credit, allowing more responsible, hard-working Americans the opportunity of owning their own home. Conformance with these guidelines ensures concurrently issued FHA insured first mortgage loans will fully comply with FHA requirements for allowable down payment assistance as specified in the National Housing Act (12 USC 1709(b)(9) and 1735f 6) and associated rules, interpretive rules, handbook provisions and mortgagee letters. All down payment assistance must be issued in conjunction with a FHA insured first mortgage issued by or sold to. 1

3 Section I: Contact Information Address Headquarters: 600 N 100 E Cedar City, UT Loan Operations Center: 3630 W South Jordan Parkway Suite 201 (866) Shipping for Collateral and Trailing Docs 3731 W. South Jordan Parkway Ste Mortgagee Clause Its Successors and./ or Assigns ATIMA 3731 W. South Jordan Parkway Ste Contact Numbers Main Phone (866) Fax (435) Lock Desk [email protected] Loan Submissions [email protected] 2

4 Identifying Numbers EIN MERS FHA NMLS ID Section 2: Products The product offering consists of an FHA insured 30-Year Fixed- Rate Loan in conjunction with a down payment of 3.5% rounded up to the nearest whole dollar. Down payments are provided to the home buyer in the form of either a Gift, Forgivable, Soft-Second Mortgage, or a Repayable Second Mortgage. 2.1 The First Mortgage In all cases, files submitted to should be investment quality and saleable on the Secondary Market. Origination partners are all fully delegated and are expected to prudently underwrite all loans and ensure the file contains adequate documentation to support information represented in the Borrower s application and data elements entered into automated underwriting systems. The mortgage loan and the funding thereof must meet, or be exempt from, applicable state and federal laws, regulations, and other requirements pertaining to usury, fees, and expenses incurred in the making of a mortgage loan. This includes usury, TILA-RESPA Integrated Disclosure Rule (TRID), Truth-in-Lending (TILA), Real Estate Settlement Procedures Act (RESPA), applicable disclosure laws, consumer credit protection, and equal credit opportunity (ECOA) must all be complied with. The Origination Partner must comply with all applicable anti-money lauding laws and regulations, including without limitation the USA Patriot Act of 2001 (collectively, the Anti-Money Laundering Laws ); the Seller has established an anti-money laundering compliance program as required by the Anti-Money Laundering Laws. The underlying FHA loan must comply with the requirements of the applicable HUD Handbook as amended by applicable mortgagee letters and any requirements addressed in these Guidelines. Minimum requirements are: FICO Score of 620 or greater Single-family residences (2 units acceptable with prior approval-no 3-4 unit properties) No manufactured housing 3

5 Mortgages on properties with deed restrictions are not eligible for purchase Loan must be made in a state where CBCMA operates (see rate sheet for list of states where CBCMA operates) Loans underwritten by FHA TOTAL Scorecard that receive an Approve/Eligible or Accept may be processed according to the findings report. Loans receiving a refer recommendation should be underwritten to manual FHA underwriting requirements as per the HUD Handbook and FHA Mortgagee Letter AUS Tolerance CBCMA requires the final AUS findings to be present in the loan file at the time of purchase. If the loan has been submitted through DU, LP or TOTAL Scorecard, these agencies provided allowances for tolerances that CBCMA will honor in accordance with the appropriate guidelines. Valid AUS On loans approved through an AUS, CBCMA requires at the time of purchase an active and valid final AUS. High-Cost Loan The Origination Partner warrants each mortgage loan sold to CBCMA is not a highcost or a predatory loan. The mortgage loan is (i) a high-cost loan under the Home Ownership and Equity Protection Act (HOEPA) of 1994, specifically Section 32 of Regulation Z or (ii) a high-cost, threshold, covered, predatory, or similar loan under any other applicable state, federal, or local law, or similarly classified loan using different terminology. High Priced Mortgage Loans (HPML) are considered for purchase review with no additional overlays. Ability to Repay (ATR) and Qualified Mortgage (QM) Rule The ATR/QM rule requires you make a reasonable, good-faith determination before or when you consummate a mortgage loan that the consumer has a reasonable ability to repay the loan. CBCMA follows HUD and CFPB guidance in regards to QM. Safe Harbor and Rebuttable Presumption QM loans are considered for purchase review with no additional overlays. 4

6 4506T Transcript Policy Loans that receive an AUS Approved/Eligible finding, if the Borrower's only source of income is as a wage earner (including overtime, bonus, and commission income less than 25% of total income), a W-2 transcript may be ordered in lieu of a complete 1040 transcript. If the Borrower, receives retirement/disability income, or currently owns another property besides their primary one unit residence, complete 1040 transcripts must be ordered. If tax returns are not required, but are provided in the loan file, full transcripts must be ordered. Some Clarification on certain scenarios: FraudGuard shows self-employment or ownership of another property, full transcripts are required IF AUS requires 1040s for any reason, full transcripts would be required If borrower owns rental property, full transcripts are required If one borrower is W2 and one borrower is SSI, full transcripts are required If commission income is over 25%, AUS will require full 1040s and full transcripts are required File Requirements requires that each loan conforms to and complies with all applicable HUD/FHA underwriting, lending, selling, and servicing requirements, and all Ginnie Mae requirements for the inclusion of the mortgaged loan in a Ginnie Mae MBS pool. In addition to FHA requirements, the loan must also include: An electronic fraud detection report and compliance test to be included on all loans delivered for purchase review electronic covering standard areas of quality control, including Borrower validation, social security validation, property information, and MERS. Evidence of borrowers enrolled in a credit monitoring service through closing or a soft-pull credit report within three days of closing should be included. Appraisals must be in.xml format and searchable (1 st generation) OR lenders may opt to provide a Platinum Data Report with their appraisal The Deed of Trust should be stamped as True and Certified Completed Tax Information Sheet completed by Correspondent 4506-T Address must match the last filed tax transcripts Verbal verification of employment within 10 days of closing per agency guidelines. Independently obtain phone number or address for employer and document the source Evidence the FHA UFMIP has been paid W-9 where borrowers have selected a Federal Tax Classification Life of the loan flood certificate The loan must be fully eligible for FHA insurance, and is or within 60 days of the purchase date by CBCMA, be fully insured by HUD. 5

7 Hazard Insurance Requirement At the time of Closing Package submission, the Origination Partner must provide either a hazard insurance binder with a paid receipt for one full year s premium paid in advance, or the final hazard insurance policy evidencing coverage is paid-in-full and no payment is due. Unless state law requires a higher maximum amount, the maximum deductible may not exceed the higher of $5,000 or one percent (1%) of the face amount of the policy. The deductible clause may apply to fire coverage, extended coverage, or both. When a policy provides for separate wind-loss deductible (either in the policy itself or in a separate endorsement), the deductible may be the higher of $2,000 or two percent (2%) of the face amount of the policy, or two percent (2%) of a PUD unit s replacement cost, if the unit is covered under a blanket insurance policy. Locks Rate locks can be requested after rate sheets are released through 4PM Mountain on regular business days. CBCMA attempts to release rate sheets by 9AM Mountain time. Loans may be registered but do not have to be locked until a later date (floating). To register a loan, but not lock it, you simply complete all portions of the loan registration and rate lock request form except for the information pertaining to the rate lock. All loans must have all loan conditions cleared in our client portal and collateral delivered and cleared by the rate lock expiration date. If all loan conditions will not be cleared by the lock expiration date, for Best Efforts delivery, if your loan file images have been uploaded for review, your lock will automatically roll at a cost of.175 per 7 day period until the loan status is cleared for purchase. If your loan image files have not been uploaded by the lock expiration date, your lock will expire and you must re-lock the loan at worst case pricing based on the day of the lock or the current day s price. Mandatory deliveries, Direct Trades, and Bulk Commitments are available to origination partners selling $5M or more in loans each month. Submitting a Loan to CBCMA Your loan must be registered with CBCMA before you can submit images of the file for review 6

8 Individual loan images are uploaded via our Portal found at ChenoaFund.org. A login and password is required for access. Please follow the naming rubric before uploading the file. Purchase conditions will be released within 72 hours of your upload. A purchase advice will be generated by CBCMA and delivered to your company contact when the loan is purchased. Common Pre-Purchase Conditions QM Worksheet, or ComplianceEase Report Completed Tax Information Sheet completed by Correspondent 4506-T Address must match the last filed tax transcripts Verbal verification of employment within 10 days of closing per agency guidelines. Independently obtain phone number or address for employer and document the source Evidence the FHA UFMIP has been paid Complete chain of Les,CDs, and CoCs W-9 where borrowers have selected a Federal Tax Classification.xml format 1 st Generation Appraisal (searchable) Evidence of borrower enrollment in credit monitoring service or credit soft pull within three days of closing Mortgage Electronic Registration System (MERS) CBCMA requires that the first mortgage documents are MOM compliant and that the MIN is registered with MERS system. The originating lender must transfer the MIN using a TOS/TOB transfer to CBCMA within 2 business days of purchase. Loans sold to CBCMA must be transferred to CBCMA as Investor and Servicer via MERS, no more than 72 hours after purchase, and never before purchase. Note Endorsement The mortgage note must be endorsed via an Allonge to without recourse and signed by an authorized Officer of the Company. The Allonge must contain the Lender s name, loan number, loan amount, Borrower s names, subject property address, date of mortgage note and executed by an authorized Officer of the company. The data on the Allonge must match the mortgage note exactly. All closing packages must include a scanned copy of the original Allonge. Original Allonges should be mailed directly to CBC mortgage Agency. Handwritten corrections are not acceptable. 7

9 FHA UFMIP and Monthly Mortgage Insurance The Origination Partner is responsible for payment of the monthly Mortgage Insurance Premium (MIP), from the initial UFMIP payment through the month that CBCMA purchases the loan. If the mortgage loan is purchased prior to the first payment due date, CBCMA will be responsible for all monthly MIP payments on the mortgage loan. Aged Loan Policy All closed loans must be delivered for purchase review on or before 30 days from the Note date. Further, all loans must be purchased by CBCMA on or before 45 days from the Note date. Loans not purchased on or before 45 days from the note date will be subject to a re-price as follows: days will be assessed a price hit of days will be assessed a price hit of.50 First Payment Information Payments due within 15 days of purchase must be collected by the Correspondent. CBCMA s purchase advice will indicate the first payment due to CBCMA. Any payment received by Origination Partner from the Borrower after the transfer of servicing must be sent to CBCMA at the address below: 3731 W. South Jordan Parkway Ste Required Docs 1. Bailee letter or security release with wire instructions. (Including loan manifest) 2. Original Note (including any required addendums if applicable) Endorsed to CBC Mortgage Agency (Allonges are acceptable). 8

10 Addresses Shipping Address: Attn: Collateral Department 3731 W. South Jordan Parkway Ste Borrower Payment Address CBC Mortgage agency typically does not collect payments on first mortgages, but occasionally collects an interim payment prior to selling the loan. Repayable second mortgages will be serviced at the same address: Attn: Loan Servicing 3731 W. South Jordan Parkway Ste Trailing Documents (Post-Closing Docs or Final Docs) Address Attn: Trailing Docs 3731 W. South Jordan Parkway Ste Each loan purchased by CBCMA requires all final closing documents delivered within 180 days (60 days for FHA MIC) of the purchase of such mortgage loan. If complete documentation is not received within the 180-day (60-day if FHA MIC) period, CBCMA may require Seller to repurchase the mortgage loan. Principal Reductions If there are any principal reductions listed on the Closing Disclosure, the Origination Partner must update FHA Connection and provide a MIC in order for CBCMA to consider the loan as eligible to purchase. Interest Credit Policy Maximum of 7 days. 9

11 Owner Occupancy Agreement An owner occupancy agreement is required on all mortgage loans where the Borrower(s) are going to reside in the subject property. Generally, the Borrower(s) must occupy the property within 60 days of closing and at all times thereafter for a minimum of one year (12 months). In addition, the mortgaged property is lawfully occupied under applicable law. All inspections, licenses, and certificates required to be made or issued with respect to all occupied portions of the mortgage property, and with respect to the use and occupancy of the same, including but not limited to, certificates of occupancy, have been made or obtained from the appropriate authorities and no improvement located on or part of the mortgaged property is in violation of any zoning law(s) or regulation(s). Power of Attorney (POA) Closing documents may be executed with a Specific Power of Attorney (POA) which complies with all applicable laws and agencies policies, provided the following conditions are met: The POA can be used for closing documents only, and is not acceptable for loan application and/or credit verifications purposes. Authorization is for the attorney-in-fact to perform specific functions related to the real estate financing or it must be specific to the subject property. The attorney-in-fact may not have any direct or indirect financial interest in the transaction. A statement is provided the POA is in full force and effect on the date of the closing of the subject property loan transaction, survives subsequent disability (durable), and has to be revoked in writing, or a specific expiration date is stated which survives the closing date. A statement is made of the grantor s (Borrower s) name exactly as it will appear on all closing documents. Notarized signature of grantor appears (if executed outside of the U.S., it must be notarized at a U.S. Embassy or military installation). Recorder s stamp appears, if previously recorded. The POA must be dated no more than 120 days prior to the loan closing date. At least one Borrower must be present at the closing, unless a face-to-face interview has been conducted on all applicants. The attorney-in-fact must execute all closing documents at settlement. The Title Company must insure the Seller is in first lien position without exception to the POA. The POA must be recorded immediately prior to the closing documents. A single Borrower (one loan applicant) may execute a POA as long as a face-toface interview has been conducted and the Borrower signed the loan application along with the disclosures. The attorney-in-fact must sign the Borrower s name, POA signature underneath with the following verbiage as attorney-in-fact. (E.g. John Doe by Mary Doe, as attorney-in-fact) In the case of initials, the following is to be followed (no exception): Initial the 10

12 Borrower s initials, POA initial underneath, with the following verbiage as attorney-in-fact. (E.g. JD by MD, as attorney-in-fact) Escrow Holdbacks Escrow holdbacks are acceptable as long as they meet FHA guidelines and are complete including an appraiser s final inspection of the work certifying the completion of the escrowed items. EPO Policy If a first mortgage loan prepays in full within 13 months, the origination partner may be subject to an EPO penalty equal to the assistance funds provided to the borrower plus any YSP received. Servicer of Record CBC Mortgage will be a placeholder servicer of record for the first mortgage as the final investor is not known until the loan has been sold. The actual servicer of record will be the final investor. In FHA connection, only holding rights should be transferred to CBCMA. Once the final investor receives holding rights, they will pull servicing rights. CBC Mortgage agency will be the servicer of record for the secondary financing. Section 3: The Down Payment Assistance CBCMA offers three forms of down payment assistance, all of meet the FHA requirements for providing the MRI (Minimum Required Investment) as outlined in these guidelines and HUD Handbook Assistance may be offered in the form of Gifts, Soft, Forgivable Secondary Financing, and Repayable Secondary Financing. No matter which type of product is chosen (gifts, soft, forgivable 2 nd, or repayable 2 nd ), in accordance with Mortgagee Letter (now incorporated into the ), a Funding Commitment (called an MRI Funding Obligation Letter-or verbiage that is part of the Gift Letter in the case of a gift) will be issued at the time of first mortgage loan registration, creating a legally enforceable obligation by CBC Mortgage Agency to provide the funds towards the borrower s minimum required investment in accordance with the terms and conditions of the Lender Participation Agreement. 11

13 3.1 The Gift An outright gift of 3.5% (rounded up to the nearest whole dollar) of the Adjusted Value of the property may be given to a borrower whose qualifying income is 115% of area median income or less. Please note that Origination Partners offering the Gift (instead of the Soft, Forgivable 2 nd ) will be subject to early-payoff penalties on the first mortgage if the borrower refinances the underlying first mortgage loan during the first thirteen months of the loan per the Loan Purchase and Sales Agreement. Gift Letter When an Origination Lender opts to arrange a gift for a borrower from CBCMA, the Origination Lender must obtain a gift letter. Gift letters are received when the transaction is registered with CBCMA. Gift letters should be included in the assets section of the loan file. All borrowers on the loan must sign the gift letter. 3.2 The Soft, Forgivable Second For borrowers with qualifying income equal to or less than 115% of area median income a loan for 3.5% of the Adjusted Value of the property (rounded up to the nearest whole dollar) can be made to the buyer and a lien subordinate to the FHA insured mortgage is then recorded against a borrower s title to the property being purchased. These liens do not accrue interest nor do they require any monthly payments. These loans may be forgiven by CBCMA after the borrower(s) has made 36 monthly payments on time on the underlying FHA insured first mortgage. (Ontime payments defined as no more than 30 days past the due date). Until the loan is forgiven, the down payment loan will require repayment if, among other things, (1) the loan is not forgiven prior to the maturity date, (2) the underlying first mortgage is paid in full before the loan is eligible for forgiveness (3) the property ceases to be used as the borrower(s) primary residence during the initial twelve (12) months of the loan, (4) the property is sold or transferred, or (5) the underlying first mortgage is refinanced. When a non-occupant co-borrower is involved, only the income of the occupying buyer is used in determining the Area Median Income calculation. 3.3 The Repayable Second Mortgage If a borrower s qualifying income exceeds 115% of area median income, a loan for 3.5% of the Adjusted Value of the property (rounded up to the nearest whole dollar) is made to the buyer and a lien subordinate to the FHA insured mortgage is recorded against a borrower s title to the property being purchased. These loans require regular monthly payments. No interest accrues if a borrower chooses to repay the loan over 10 years. For borrowers desiring a lower monthly payment, the loan may be repaid over thirty years at a 5% interest rate. These are fixed rates. 12