These guidelines cover the new Temporary Increase in conforming loan limits for high-cost areas authorized by the American Recovery and Reinvestment Act (ARRA). Specifically, the ARRA permits loans originated in 2009 to use the higher of the current 2009 permanent high-cost area loan limits, or the temporary loan limits in place for loans originated in 2008 that were applicable to jumbo-conforming loans. These new ARRA loan limits are labeled as Temporary High-Cost Area Loan Limits and the maximum loan amount for a 1-unit SFR property is $729,750 when permitted. Note: The maximum ARRA loan limit is NOT available in all counties. County tables for the subject property s allowable loan limits have been built into the OPS system. The loan limits are also available by accessing either one of these websites: (A) https://entp.hud.gov/idapp/html/hicost1.cfm OR (B) https://www.efanniemae.com/sf/refmaterials/loanlimits/index.jsp Please follow the applicable instructions below: A. Select Fannie/Freddie from the drop down box B. Scroll down to Resources section of the page, click on View the list of loan limits, then click on the ARRA 2009 loan limits tab on the bottom of the screen. For quicker searches, use the Control + F key and enter the county name. Transaction ARRA Loan Eligibility Principal Residence Loan Property Type Max. Amount 1 LTV w/o Secondary Max. CLTV Min. Credit Score Purchase All 1-Unit 90% 2,3 $625,500 1-Unit 90% 2,3 85% 700 Rate/Term 80% 75% 700 1-Unit > $625,500 75% 70% 660 Cash-Out Refi 4 All 1-Unit 60% 55% 740 Second Home Purchase or Rate/Term Refi All 1-Unit 65% 60% 740 Cash-Out Refi All Not Permitted Investment Property Purchase or 740 All 1-Unit 65% 60% Rate/Term Refi Cash-Out Refi All Not Permitted 1 Minimum loan amount is $417,001. 2 Transactions >80% LTV where M.I. is required may have additional criteria regarding condo/pud properties, declining markets, Min. FICO, Max DTI, cash reserves, etc. Please refer to individual M.I. company requirements and MI guide section for additional details. 3 Condo s and attached PUDs > 80% LTV require a minimum 720 Credit Score. The minimum GLA for ALL condo s is 600 sq. ft- no exceptions permitted. 4 Six months minimum seasoning (six months of payments must have been made) since most recent refinance or date of purchase. All borrowers must have held title (ownership) to the subject property for a minimum of six months. Maximum Cash in Hand proceeds to borrower is $250,000. Specific topics not addressed in these guidelines default to standard Agency Fannie requirements. Last revision: 5-20-09 1
Topic Appraisal Requirements Automated Underwriting Requirements Full appraisal with interior and exterior inspection is required. Appraisals must be HVCC compliant. For all Condo s, special instructions must be given when ordering the appraisal to require two comps from projects outside of the subject property in addition to standard current comparable sale requirements. Field Review requirements- Field Reviews (Form 2000) from national approved appraisal firm are required for all of the following loan transactions: o The loan amount is $625,500 or greater and the loan-to-value/combined loan-to-value is greater than 80% o Loans with property values $1,000,000 or greater with LTV/CLTV/HCLTV 75% o If the Field Review results in a different value than the original appraisal, the lowest of the original appraised value, the Field Review value, or the sales price (for purchase transactions) must be used to calculate the loan-to-value ratios. ALL LOAN TRANSACTIONS NOT SUBJECT to Field Review requirements will require a desk review from a national approved appraisal firm. SPM Appraisal policies apply. DU will be updated in a future release to support the new limits and enforce the new guideline restrictions. DU Approve/Ineligible decisions will be permitted if the only reason for ineligibility is the maximum allowable loan limit and the loan meets the new revised Agency High Balance guidelines. o Regardless of the Approve/Ineligible findings, the maximum allowable loan limit must always adhere to the High Cost loan limit permitted for the subject property s location. DU Approve/Eligible decisions on all high balance loans must also meet the new revised Agency High Balance guidelines. DU Refi Plus section for eligibility criteria DU Refi Plus findings will be acceptable subject to the following criteria: Benefit: DU Refinance Plus transactions must provide a benefit to the borrower in the form of either: (A) Reduced monthly mortgage principal and interest payment OR (B) More stable loan product Eligibility: Must receive Approve/Eligible recommendation. (NO exceptions) Occupancy: Owner-Occupied only Credit Requirements: _ 0 x 30 day Mortgage late history in the past 12 months. A Pay-off demand is required in the file to document the current servicer and current status of mortgage history. _ Bankruptcy discharge must reflect at least 48 months since discharge. Multiple Bankruptcies in the last 84 months are not allowed _ Foreclosure: 84 months since discharge Income doc waivers: Not eligible, minimum income doc requirements are: (A) Salary/Bonus/Overtime: One current paystub and a verbal VOE (B) Commission/Self-Employed: One year s federal income Tax Return. Note: All income must be validated with processed #4506 Appraisal Requirements: A full appraisal report is required. Please refer to the SPM P&P for complete appraisal requirements. Continued on following page Last revision: 5-20-09 2
Bankruptcy/Foreclosure Borrower Contributions/Gift funds Borrowers Eligibility Credit Documentation Declining/Soft Markets DU Refi Plus- Continued from previous page Vesting: Borrowers on the DU Refi Plus transaction must be the same Borrowers on the current loan being refinanced. Additional Borrowers may be added to the new loan, providing that ALL of the original Borrowers remain intact. Subordinated financing: _ New subordinate financing and payoff of existing subordinate financing with loan proceeds is not allowed. _ Payoff of existing subordinate liens from the borrower's own funds is allowed. _ Re-subordination of existing subordinate financing is allowed. _ DU Refi Plus loan case files will not be subject to a maximum allowable CLTV or HCLTV ratio. Properties: o o Properties listed for sale within the past six months are ineligible Condo or PUD properties: A project review is not required. We will, however, continue to be required to represent and warrant that the property is not in a condominium or cooperative hotel or motel. Manual Process for Condo Project Review Type Code: The Project Review Type Code V must be indicated on the 1008 Loan Transmittal. Please Note: Since this code is not listed on the 1008, the Underwriter must HANDWRITE in the Project Review Type Code V. Underwriting: All other standard conventional requirements and AUS overlays including maximum number of financed properties, manufactured housing restrictions and seasoning on recently listed properties will also apply to DU Refi Plus loans Bankruptcy is measured from date of discharge or dismissal date. (Follow DU findings) Borrowers with previous Foreclosure/Deed-in-lieu history are not eligible for Cash Out refinance transactions. Owner-occupied: Borrower must have minimum 5% of own funds in transaction unless LTV/CLTV is 80% LTV/CLTV Investment Property and Second Home: Gift funds are NOT allowed. Eligible: U.S. citizens, Permanent and Non-Permanent resident aliens only. (All Borrowers must have valid Social Security Numbers) In-eligible: Trusts, Non-occupant Co-borrowers, Partnerships, Corporations. or Foreign Nationals. All Borrowers must meet credit score criteria stated in matrix. Follow AUS finding. Note: Documentation waivers are NOT permitted, follow SPM policy. LTV reductions for properties located in declining markets are NOT required for LTVs 80% LTV. Where the LTV is > 80% and M.I. is required, please follow the M.I. requirements stated in M.I. topic Declining/Soft markets are identified as follows: o Appraisal indicates declining market OR o Property location listed on applicable M.I. company s declining market website for LTV s > 80% Please note: The property valuation must be well supported and all appraisal requirements stated in these guides strictly adhered to. Delegated Underwriting Underwriters are delegated to $650,000 Loan amounts > $650,000 require a Second Signature from the Branch Operations Manager Last revision: 5-20-09 3
Topic Eligible Property Types Eligible Terms First Time Homebuyers Geographic Restrictions Homebuyer Education Interest Only Feature Interested Party Contributions Ineligible Products/Features, or Transaction Types Max. DTI Max. # of Financed properties Max. Loan Amount Requirements 1-Unit Attached/Detached SFRs, Attached/Detached PUDs Low-Rise/High-Rise Condos o Full Project Review Required o Limited Review not eligible o All Condo s require two comps from projects outside of the subject project in addition to standard current comparable sale requirements. o ALL Condo s require minimum 600 square feet GLA (no exceptions) o Condo s and attached PUDs > 80% LTV require a minimum 720 Credit score Refer to Appraisal Requirements for condo comp requirements. 30 or 15 year Fixed. Interest Only Option, or ARM products not available. No additional restrictions required. Geographic restrictions apply. Please refer to Geographic restrictions table posted in the Underwriting tab on the SPM website. Not Required Not available for this product Maximum is 3% for Primary Residences and Second Homes regardless of LTV/CLTV, and 2% for Investment properties. Manufactured Homes or Coops, 2-4 Unit properties. Relocation mortgages, Temporary Buy-downs. Balloons, Fixed Rate assumable mortgages, Home-style products incl. Construction to Perms, Interest Only, or MCM. Borrowers that are party to a lawsuit Determined by Underwriter and AUS system for loan transactions 80% LTV. LTVs of 80.01-90% are subject to individual M.I. companies restrictions The maximum number of financed properties a borrower may have is limited to four, including the borrower s principal residence. This applies to all occupancy types. High cost maximum loan amounts may not be available in all areas. The loan limits are available by accessing the websites posted on page 1 of the guides. Max. SPM loans Maximum two loans in a 12 month period. Minimum Loan Amount Minimum loan amount is $417,001 Mortgage Insurance Note: Individual M.I. companies may have different policies regarding loan size, LTV/FICO, Condo/PUD and other Underwriting Policy limitations. Due to the variances between the companies, as well as their constant changes, they cannot be captured in the matrices. SPM overlays prevail. Borrower paid MI required. Reduced MI is NOT eligible. Lender Paid (LPMI), Hybrid M.I. (HPMI) or Financed borrower-purchased MI not permitted. Coverage Requirements: 85.01-90% LTV: 25%, 80.01-85.00 LTV: 12% Underwriters are responsible to ensure the M.I. certificate is in file and both M.I. company s guidelines and SPM s guidelines are met. Continued on following page Last revision: 5-20-09 4
M.I. topic-continued from previous page Radian M.I.: o Pursuant to a Radian guideline change effective for certificates obtained 5/15/09 and after, loans with DTI s > 41% are no longer eligible. o Six months cash reserves required regardless of AUS findings o For Radian s general Platinum guidelines (new term, formerly known as Proficient Lender): http://www.radian.biz/mortgage/platinumprogram.aspx Note: While Radian has eliminated Declining Market restrictions, other M.I. companies may still have those policies in place. Always consult specific M.I. company s guidelines for their individual eligibility criteria. However, while you must refer to the individual M.I. companies guidelines for specific eligibility criteria, the SPM guidelines, Policies & Procedures still apply as we have overlays to the M.I. requirements. Mortgage Credit Certificates Non-occupant Co-Brw. Qualifying Rate Reserves Subordinate financing Temporary Buydowns Texas 50(a)(6) Trailing Spouse Transactions Note Rate Loans 80% LTV: Generally O/O and SH = 2 months and Investment = 6 months PITI is required, but are determined by DU/ findings Loans > 80% LTV: See Radian M.I. requirements Conversion policy reserve requirements also apply if present residence is converted to rental or Second Home. Follow base product Not Eligible Purchase Mortgages Rate and Term Refinances (Limited Cash Out) o Hud-1 settlement statement(s) required from any transaction within past 6 months. If previous transaction was a cash-out or if it combined a first and non-purchase money subordinate into a new first, loan to be coded cash out. If new transaction combines a first and non-purchase money subordinate into a new first loan, it is considered cash out. o Pay off of the existing first mortgage o Pay off existing subordinate liens that were used in whole to acquire the subject property o Closing costs and prepaids. o Cash out limited to the lesser of 2% of the principal amount of the new loan or $2000. Cash Out Refinance Transaction o Primary Residence Only o All borrowers must have held title (ownership) to the subject property for a minimum of six months o Six months minimum seasoning (six months of payments made) since most recent refinance or date of purchase is required. o $250,000 Cash in Hand limitation applies ONLY to the actual cash net proceeds provided to the Borrower at closing. (E.G. Debts paid at close of escrow whether secured or unsecured do not count towards the limitation) Last revision: 5-20-09 5