Managing FHA Loans In Point Correctly processing FHA loans emphasizing the MCAW Presented By Calyx Online Training Stephen Breden February 2008 Email: steve3030@msn.com
FHA Loans Are Different. They are experiencing a renaissance with the disappearance of sub-prime lending FHA loans are not synonymous with B paper loans Conventional loan processing applies only so far A good foundation in FHA in general is assumed Basic knowledge of Point is helpful We will concentrate on the correct way to complete an FHA file through to the MCAW
Recent Changes New Features - Go To Main Panel and Help Go to Release Notes Always review these notes when a new version of Point is released The new MCAW has now appeared!
Step 1. Starting the FHA Purchase File Program Steps Open Point and start an FHA file using a new master template The use of templates is highly recommended if you are going to efficiently process FHA loans and easily calculate a correct MCAW
Important Things to Remember Always start an FHA file out from the main screen by filling out the Prospect Information Screen first. Do not start out by going to the MCAW or GFE.
Click on Max Loan Button After completing basic data entry, click the Max Loan button in the lower right hand corner of the Prospect Information Screen, to compare your loan against the County loan limits as set up in your Loan Program templates.
Complete the Prospect Information Screen Complete basic information Fill in purchase amount Do not fill in loan amount or down payment, but do fill in loan terms
To Calculate the Statutory Loan Amount, Click on the Mtg Insurance Button Calculate the Mortgage Insurance Premium by clicking on the MIP button at the bottom of the Prospect Information Screen
Calculating Both MIP Amounts It will bring up the following screen allowing calculation of MIP (Mortgage Insurance Premium) Click on FHA Max Ln and it will transfer the loan amount to the Information Screen
Finally This completes the basic data entry of the information required for your FHA loan, including the MIP premiums, both the upfront and recurring Note that FHA has a 3% out of pocket requirement This 3% may or may not be made up solely with the down payment
Step 2. Completing the Good Faith Estimate (GFE) Go to the GFE Screen and enter all closing costs and prepaid items, being careful to mark items correctly as F (or S if you tag them)
Marking Information In Parentheses and Showing Credits Putting information in for information only One way to show the nonallowable closing costs
Notes on FHA Allowable Closing Costs MAY BE PAID BY BORROWER AND INCLUDED IN MORTGAGE BASIS CALCULATION MAY BE PAID BY BORROWER BUT NOT INCLUDABLE IN MORTGAGE BASIS NON-ALLOWABLE MAY NOT BE PAID BY BORROWER IN ANY FHA TRANSACTION 1% Origination Fee Credit Report Appraisal Fee Title Insurance Recording, Notary & Endorsements Escrow Fee Home Inspection (to $200) EEM Rating (to $200) MCC Application Fee Flood Certificate Doc Preparation (if third party) Termite Inspection Repair Inspection Survey Fee FED-X (refinance) Reconveyance (Refi) Discount Points Commitment Fees MIP Paid in cash Attorney's Fees Home Warranty Plan RE Commissions Home Inspection (over $200) EEM (over $200)Lock-in Fees Tax Service Fees These vary from region to region. Check with your local regional HUD office.
The Best Way To Handle Non Allowables.. *** Many knowledgeable mortgage professionals never show seller paid non-allowable fees on the GFE at all; this is their interpretation of RESPA. This makes things MUCH EASIER if you do it this way. In the Good Old Days, non allowable closing costs could easily be this high
Step 3. Managing Your MCAW (Mortgage Credit Analysis Worksheet) It is vital that the Good Faith Estimate be filled out correctly and that all items are marked correctly as far as whether they are FHA Allowable (F) and prepaid finance charges (PFC). Failure to correctly tag the F items will result in an incorrect MCAW. Failure to correctly tag the PFC items will result in an incorrect TIL.
Bring Up The FHA Purchase Worksheet AKA MCAW Obtained along with CAIVR clearance Select Type Obtained after underwriting << Allowables Only Will Pull from the GFE The four buttons at the bottom should be clicked from Left to Right, and the numbers in 5a and 5b will automatically calculate
Bring the Data Over From the Loan App and GFE a. Very first thing, click the from loan app button on the bottom. b. Next thing, click the from GFE button next to it.
Important Things to Remember There are buttons on the bottom of the screen called From Loan App and From GFE. Click these buttons to automatically transfer information from the loan application and GFE directly into the MCAW (worksheet). You may also review a file from here if you are processing rather than originating a file from the very beginning.
Other MCAW Be Carefuls. Continue to fill out any Required Adjustments, Repairs, and improvements in their appropriate fields. If you follow the three step procedure outlined in class, you will not have to use the Lock buttons or keep track of seller paid costs only the allowable seller paid costs will appear and they will automatically transfer to the MCAW. You must manually input numbers from the three custom blank lines on the bottom of the GFE to include any Earnest Money, etc. that are indicated on your GFE. They will not transfer automatically like the rest of the GFE. This is an ideal place to indicate non allowable closing costs, and who pays them, as an offsetting debit and credit.
Item 12h. FHA GFE from Button at Bottom of Regular GFE Numbers Entered as a minus to Indicate Credit Where Pulled Into MCAW Line 12h Lock total here from bottom of GFE Entered as a plus number here <<< Be careful that Cash Earnest Money is in the right box. Manually move the number to the right box if it pulls over into Assets Available
Important Things to Remember Back to the GFE Be sure that you have entered the Minimum Required Cash Investment on the GFE Total Cash to Close Section when doing an EEM or 203(k) transaction.
Important Things to Remember If the loan includes non-married Co- Borrowers, you will not see correct ratios until combining all of the Borrower s information in the special Combined Mortgage Credit Analysis Worksheet. First, complete the individual MCAWs for the individual Borrowers. After the individual MCAWs are filled out for all Borrowers, then Click on Forms > FHA/VA > Combined FHA WS PUR. The combined numbers will then appear in this worksheet.
Refinance Notes FHA Refinances are very similar but have a different worksheet inside of Calyx. From the Prospect Information Screen, choose your refinance type as either No Cash-Out Refi or Cash-Out Refi and enter the appraised value, interest rate and term. (You do not need to enter the initial loan amount; it will automatically calculate on the FHA Refinance Worksheet). (Note that there are four types of Refinance, and must be so indicated from the drop down list on the Refinance Worksheet MCAW, when you get there). You should enter your payoff now in the liabilities section of the 1003 Enter the MIP numbers and calculate the loan amount, just as you would for an FHA purchase
Starting an FHA Refinance
Enter the MIP Numbers Then FHA Max Loan
Important Note on the UFMIP Your Up-Front Mortgage Insurance Premium will not be calculated correctly until the maximum loan amount has been generated on the MCAW.
To Continue Complete the GFE as with the Purchase transaction. Since there is no seller, we do not have Since there is no seller, we do not have to consider seller paid items as we would on a purchase.
Finally For the most part, the remainder of your transaction will look very similar to the FHA Purchase. On a streamline refinance, you may mark all closing costs as allowable; you will then not have to manually adjust the loan amount to balance the FHA GFE, Details of Transaction, and MCAW, for zero cash out of pocket On a streamline with appraisal or regular refinance, you may mark all fees as allowable, with rare exception. Make a note in the comments section on the bottom of the MCAW that marking prepaids as allowables is permissible per HUD on streamline refinances with an appraisal, or regular refinances.
Other Refinance Notes For a Regular Refinance, the borrower will have to pay for closing costs out of pocket. The amount will appear as cash to close on the 1003 Details of Transaction. For a Cashout, consult your FHA Underwriter; the rules are somewhat complex, and should be considered on a case by case basis. Basic rules for pulling data into the MCAW still apply. The loan amount should calculate correctly, as for other types of FHA loans.
Conclusion Other Resources Go to the Calyx help section in your manual The HUD website Other schools that emphasize FHA training Check back with your instructor by email when changes occur in the procedure for doing FHA refinances.
Addendum Concerning Gift Funds Assets and liabilities screen (1003 Page 2) When entering the assets, be sure to use the dropdown list next to the From VOD button when using the FNMA loan app for automated submission to indicate the account type. This is also the appropriate place to record gift funds. If the dropdown list is not used, Fannie Mae will recognize the entries as other non-liquid assets rather than liquid assets, resulting in incorrect figures.
Gift Funds Continued For the regular 1003, you will have to enter this number manually and indicate in the description box that it is gift funds. Gift funds require careful handling if you are not to get into problems over the seasoning requirement.
Glossary MCAW the FHA Purchase Worksheet in Calyx Point, also know as the Mortgage Credit Analysis Worksheet in the FHA world
Different Types of Refinance MCAW per the Dropdown List There are different rules for the four types of FHA Refinance. For a Streamline with Appraisal, you may tag all closing costs including Pre-Paids with an F, since HUD will allow you to finance all closing costs.
Final Thoughts For handout go to http://fha.3030.org As of the date of this handout, radical changes are about to occur with FHA loans from HUD Go back to the above website to see additional information as it becomes available Spb Feb 2008