FHA Streamline (Full Credit and Non-Credit Qualifying)

Transcription

1 . This matrix is intended as an aid to help determine whether a property/loan qualifies for certain financing. It is not intended as a replacement for FHA guidelines. Users are expected to know and comply with FHA requirements. *NOTE: This matrix includes overlays, which may be more restrictive than FHA requirements. A thorough reading of this matrix is recommended. If a topic is not mentioned, refer to FHA guidelines. These Guidelines are subject to change. Program Qualifications: Existing Endorsed FHA Fixed Rate Existing Endorsed FHA ARM At time of loan application borrower must have made 6 months consecutive payment on the FHA-insured mortgage being refinanced. Eligibility Matrix Loan Amount & LTV Limitations FHA Streamline (both full credit and non-credit qualifying) The Base Loan Amount may not exceed the current statutory loan limits, see Streamline Worksheet. The new FHA-insured mortgage may not have a term of more than 12 years in excess of the unexpired term of the existing FHA-insured mortgage. The loan must provide a net tangible benefit to the borrower. A reduction in the loan term without a net tangible benefit must be processed, underwritten and closed as a credit qualifying rate/ term refinance. Maximum 100% LTV Statutory County Limits: ( Secondary financing Existing 2 nd mortgage can be subordinated but no new secondary financing is allowed Refer to Section Calculating the Mortgage FHA maximum Mortgage Calculation Worksheet to be completed reviewed and signed by the DE Underwriter Refer to Section Geographic Locations/Restrictions for additional state specific restrictions or requirements. Product Description: Fixed Rate 15, 20, 25 and 30 year term; fully amortized Product Codes: FHA FHA 15 Years Streamline FHA 20 Years Streamline FHA 25 Years Streamline FHA 30 Years Streamline Product Code FHA15FS FHA20FS FHA25FS FHA30FS Eligibility Requirements: Application Appraisal Requirements Appraiser Requirements The Borrower s application must indicate their income source; however, the income is not required to be listed on the application, just the source of the income. The following sections of the loan application are not required to be completed. Section IV (only the Monthly Income questions) Section V, VI (must complete assets if funds are required to close) An appraisal is not required If an appraisal is used the Appraiser must be a 2055 appraisal and the appraisal company must adhere to the Appraiser Independent Requirements (AIR) Page 1

2 Assets Borrowers Calculating the New Mortgage Amount If assets are needed to close, verification of the assets is required regardless of the amount needed to close. Documentation required is as follows. Verification of Deposit or Most recent bank statement Large Deposits Any large non-payroll deposits may, at the underwriter s discretion, need to be sourced if they are determined to affect the funds to close. Borrowers may be deleted from the title on a streamlined refinance in the situations other than death. Property was transferred as a result of a divorce decree, Assumption or quit claim of interest occurred more than 6 months previously, and Remaining owner-occupant can demonstrate that he/she has made the mortgage payments (and was not delinquent) during this time; The borrower remaining must have been an original borrower on the Note and Title. This must be done as a Full- Qualifying Streamline Refinance; no exception. MAXIMUM MORTGAGE CALCULATION WORKSHEETS Refer to Section Geographic Locations/Restrictions for additional state specific restrictions or requirements The maximum base mortgage cannot exceed the lower of the county loan limits or: Unpaid principal balance (includes 30 days interest charged by servicing lender for the current month) Plus the interest charged by the servicing lender when the payoff will not be received on the first day of the month, but may not include delinquent interest, late charges or escrow shortages. MINUS Unearned UFMIP (from FHA refinance Authorization or appropriate MIP Refund Schedule) PLUS New UFMIP Closing costs, pre-paid expenses and discount points, late changes and escrow shortages may not be financed into the new loan. Principal Curtailment limited to maximum $2,000 at closing and must be on the HUD-1. If the amount exceeds $2,000 then the loan must be recalculated and reapproved with new documents drawn and signed by the borrower. The principal curtailment may not be done after closing. Additional Requirements Owner Occupied properties only LTV calculation is required only to determine if annual MIP is required on loans with 15-year term or less. The original appraised value is used to make this determination and is obtained using the Case Query Screen in FHA Connection Term of new mortgage is the lesser of 30 years or the un-expired term of the current mortgage plus 12 years. (This is particularly important when the term of the original loan was 15 years) New secondary financing is ineligible. No cash back to borrower permitted (incidental minor adjustment at closing not exceeding $ cash back is eligible). Refinance Authorization information must be obtained at Case Number Assignment directly from FHA Connection Non-Owner Occupied Properties Borrower is allowed to finance the current principal balance and the new upfront MIP. Borrower must bring closing costs to closing. Premium pricing is eligible Non-credit qualifying loan, Fidelity to Fidelity, the following is required. 620 minimum credit score required Primary residence only Employment is verified but no income is required to be stated For self-employed borrowers must verify business through CPA or Secretary of State, or similar 3 rd party verification Non-credit qualifying loan, Non-Fidelity to Fidelity, the following is required. 640 minimum credit score required A Streamline, tri-merge report with Mortgage only account credit rating Mortgage payments must have been made within the month due Page 2

3 Employment / Income Full-credit qualifying loan, Non-Fidelity to Fidelity, the following is required 620 minimum credit score required (see chart below for ) A tri-merge credit report Mortgage account rating with 0x30 in the last 12 months Non-traditional credit is ineligible For Non-Fidelity to Fidelity full-credit qualifying loans with credit scores between , the borrower(s) must meet ALL of the following. AUS Approval Analysis DTI Maximum DTI 45% Housing Payment History Verification Reserves Serious N/A. No AUS is required Payment History No active revolving, installment or mortgage account may be presently past due and must be 0x30 in the last 12 months on all credit Medical collections are excluded. Tradeline Requirement Minimum of two traditional tradelines each reporting the Tri-Merge Report with at least 12 months of acceptable payment history. At least one tradeline must be open with date of last activity within the last 24 months. Authorized User Accounts and Deferred Student Loans with no payment history do not meet this criterion. 0x30 in the last 12 months Not required if Borrower has been living on a military base prior to loan application. If the Borrower(s) rent, a VOR is required regardless of AUS Findings If the landlord is a private individual, twelve (12) months of cancelled checks are required If the borrower(s) has no verifiable housing payment history, then the maximum DTI ratios are 31%/43%. Minimum of two months of reserves Must be from Borrower s own funds Borrowers with Single Major : DEROGATORY TYPE FHA for DTI>50% to <=55%) exception, OR FHA FICO 620 to 639 exception* Bankruptcy 13 2 years Bankruptcy 7 3 years Deed-in-Lieu of Foreclosure, 4 years Short Sale, or Charge-off of Mortgage Account Foreclosure 4 years NOTE: Borrowers with Multiple Major Derogatories have additional credit requirements. Refer to the Serious Seasoning Requirements section below. Non- qualifying loans Verification of Employment Salaried Verbal Verification of Employment Self-employed Verification of business through third party source Retirement and/or Social Security Award letter Income The Borrower s application must indicate their income source; however, the income is not required to be listed on the application. Form 4506-T is not required Escrow Holdback Escrow Waivers Financing Types Full-credit qualifying loans Standard 2 years of income documentation required Form 4506-T is required Ineligible Ineligible Properties listed for sale in the last 6 months are eligible as follows. Property has been taken off the market on or before the application date. Borrower provides written confirmation of the intent to occupy if a primary residence Page 3

4 Geographic Locations/ Restrictions, as applicable Internet Links Mortgage Insurance Multiple Major Events Occupancy Prepayment Penalty Processing Property Types Refer to the Fidelity Bank Out of State Lending Matrix document To access Mortgagee Letters, National HOC Reference Guide, HOC Letters, Handbooks, go to: HUD Forms, Handbook & Mortgagee Letters Mortgage Insurance is required on all loans. Refer to the Fidelity Bank FHA Mortgage Insurance Matrix for details on UPMIP and monthly MIP) The section of the Act under which the loan will be insured determines the mortgage insurance to be used. Sections 203b, and 234c (Condos) Up Front MIP (UFMIP) is required Monthly MIP is required Borrowers reflecting multiple major derogatory events are subject to additional credit requirements. See Serious Seasoning section below. Primary Residence A borrower who has re-occupied an investment or second home within 12 months from the application date is ineligible. Investment Property allowed provided the Borrower(s) meet the following requirements: Minimum 660 FICO 6 months reserves Do not own more than two investment properties Maximum DTI is 45% Allowed as a full credit qualifying Streamline only (without appraisal) Not permitted. However, if refinancing and the payoff check for the existing loan is not received by the servicing lender by the first day of the month, the lender may collect interest on the existing loan through the end of the month. Streamline Eligible 1 unit only o PUDs o Modular Pre-Cut/Panelized housing o Condos (including site condos) do not require condominium project approval Ineligible 2-4 units Condo Hotels Co-ops Manufactured Homes Properties located within designated Coastal Barrier Resource System (CBRS) areas Page 4

5 Qualifying Rate and Ratios Qualify at Note Rate Non- Qualifying Streamline Ratios are not calculated The Borrower s application must indicate their income source; however, the income is not required to be listed on the application. Full- Qualifying Streamline Investment Property 45% maximum DTI ratio Primary Residence 43% maximum DTI ratio o 43% DTI ratio may be exceeded provided ratio does not exceed 50%, Analysis o Borrower(s) must meet ALL of the following guidelines: Payment History No active revolving, installment or mortgage account may be presently past due and must be 0x30 in the last 12 months on all credit Seasoning Serious Seasoning Requirement Score DTI Housing Payment History Verification Reserves Serious Tradeline Requirement Minimum of 3 traditional tradelines each reporting the Tri-Merge Report with at least 12 months of acceptable payment history. The tradelines may be either open or closed with date of last activity within the last 24 months. Authorized User Accounts and Deferred Student Loans with no payment history do not meet this criterion Minimum score of 660 or greater Maximum DTI allowed not to exceed 50% - no Exception If the borrower(s) rent, a VOR is required regardless of AUS Findings If the landlord is a private individual, twelve (12) months of cancelled checks are required If the borrower(s) has no verifiable housing payment history, the loan is not eligible for a DTI ratio greater than 50% Minimum of 2 months of reserves Must be from borrower s own funds Type FHA Streamline (DTI>43% <=50%) Bankruptcy 13 2 Bankruptcy 7 4 Short Sale 4 Foreclosure 4 NOTE: Refer to Serious Seasoning Requirements section for more information regarding Borrowers with Multiple Major Derogatories as they have additional seasoning and credit requirements that is different than the table above. Existing FHA Case Number must be seasoned for 210 days from the closing date of the mortgage being refinanced Borrower must have made 6 payments on the existing mortgage within the month due prior to application. Borrowers with One Serious : Type FHA Non- Qualifying Streamline Bankruptcy 13 2 years Bankruptcy 7 2 years Short Sale 3 years Foreclosure 3 years * Borrowers with multiple major derogatories are not eligible for the credit or DTI exceptions. Borrowers with Multiple Major Derogatories For borrowers that have experienced more than one serious derogatory and were not connected but rather two separate events there are additional overlays below: In addition to the required waiting period and guidelines, the loan will be reviewed to assess the overall risk and is subject to Underwriting s discretion. Minimum FICO required 660 Ratios: 33/45% for multiple major derogatories Two Months Reserves PITI Page 5

6 Special Documentation Requirements or Enhancements Special Requirements/ Restrictions Satisfactory explanation of the multiple events is required Open traditional tradelines within the last two years are required Payment History: o No more than 2 x 30 past due in the last 24 months or no more than 1 x 60 past due in the last 24 months o No history of NSF fees on the bank statement provided. o Medical collections are excluded. Examples: 1. Borrower filed Chapter 7 and included their Mortgage loans in the bankruptcy. The Discharge is completed and the borrower moves out of residence and rents another property. The lender does not complete the foreclosure until several months later. This would be treated as one event. 2. The same example above but the borrower owns multiple properties and all properties are included in the bankruptcy but again all of the lenders take several months to complete the foreclosures, this would be treated as one event. 3. The borrower files Chapter 7 and included the mortgage in bankruptcy and does not reaffirm the mortgage. However the borrower continues to reside in the property and continues to make their mortgage payment even though did not reaffirm the debt. The borrower continues to make payments on time for one year or more but then defaults and the bank then initiates and completes a foreclosure. This would be treated as separate events because the borrower chose to continue to make payments and later defaulted. 4. The borrower does a short sale on an investment property and several months or years later files bankruptcy and abandons their primary residence. This would be treated as two separate events. Multiple Bankruptcies would be treated as separate events. The Loan Application (URLA) plus the HUD Addendum 92900A must be complete and fully executed by all borrowers prior to underwriting. An abbreviated version of the URLA is not acceptable. Evidence of valid Social Security Number is required on all loans Evidence of Refinance Authorization data and New Case Number Assignment obtained from FHA Connection (print screens and place in loan file) Check current deed or title to verify at least one borrower is listed as owner Current mortgage payoff statement must be provided Good Faith Estimate Evidence mortgage is current (mortgage history) URLA and signed HUD Addendum FHA Loan Underwriting and Transmittal Summary, HUD Form LT signed by DE Underwriter FHA Maximum Mortgage Calculation Worksheet GSA and LDP, Procurement/Non-procurement lists must be checked CAIVRS check is not required Important Notice to Homebuyer (92900B) Informed Consumer Choice Disclosure Notice Flood Certificate Copy of Existing HUD-1 Determine the amount of Upfront MIP paid, if any, and verify existing FHA case number Copy of Existing Note Verify the current information from the note: Date of note, FHA case number, loan amount, interest rate, P&I amount, and loan term. Also, verify that borrowers and property are the same on current loan and on new loan application.) Net Tangible Benefit There must be a net tangible benefit as a result of the streamline refinance transaction without an appraisal. Net tangible benefit is defined as follows: 5%reduction to the P & I of the mortgage payment plus the annual MIP OR refinancing from an adjustable rate mortgage (ARM) to a fixed rate mortgage The following table defines the permissible minimum thresholds to define net tangible benefit From To Fixed Rate Fixed Rate One-Year ARM Hybrid ARM During Fixed Period ( e.g. for 3/1 Hybrid ARM, first 3 years is fixed rate period) Hybrid ARM During Adjustable Period (Adjustable period is period when rate adjusts Reduction of at least 5% of P&I and Annual MIP New interest rate no greater than 2% above the current interest rate of the ARM Reduction of at least 5% of P&I and Annual MIP New interest rate no greater than 2% above the current interest rate of the ARM Page 6

7 annually) Deleting a Borrower Deleting a borrower is ineligible, except for certain circumstances and with supporting documentation. See Borrowers section. Adding a Borrower May be added Subordinate Financing Adding an Individual to Title May be added New secondary financing is not allowed An existing 2 nd mortgage/heloc can be subordinated, but cannot exceed the Max CLTV: FHA LTV and CLTV limits are calculated using base loan amount and do not include UFMIP Underwriting Streamline with an appraisal, the maximum CLTV including UFMIP is 100% of the new appraised value Streamline without an appraisal, the maximum CLTV including UFMIP is 125% of the original appraised value Loan must be manually underwritten by a DE Underwriter employed by Fidelity Loans are ineligible for submission to TOTAL Scorecard. Do not run through AUS. The DE must sign and use their CHUMS identification number on page 3 of the HUD Addendum 92900A and Page 1 of the FHA Loan Underwriting and Transmittal Summary. The Loan Application (URLA) plus the HUD Addendum 92900A must be complete and fully executed by all borrowers prior to underwriting. The following sections of the loan application are not required to be completed. Section IV (only the Monthly Income questions) Section V, VI (must complete assets if funds are required to close) Page 7