E MORTGAGE MANAGEMENT, LLC 703 VA HIGH BALANCE PRODUCT GUIDELINES 4/30/2014
Mortgage Eligibility Product Code Short Description Long Description Description VF30HB 30 YR VA HB VF30HB - 30 YR VA HIGH BALANCE VA loans are guaranteed by the Veteran s Administration and are offered exclusively to veterans of the United States Military and their families. At least one borrower must be a veteran (active duty, retired or discharged, honorably or higher) of the US Military or a surviving spouse. Refer to VA Lender s Handbook, Pamphlet 26-7 (hereafter: VA Handbook) for VA underwriting guidelines. Minimum/ Maximum Loan Amount Minimum Loan Amount The minimum loan amount for high balance loans is the conventional loan limit plus one dollar. Units 1 Minimum Loan Amount 1 $417,001 2 $533,851 3 $645,301 4 $801,951 1 Refer to Geographic Restrictions in this guideline section for restrictions on properties in New Jersey. Maximum Loan Amount The maximum loan amount for VA High Balance loans is the lesser of $700,000 or the maximum guaranteed loan amount posted by VA. Refer to Maximum Entitlement in this guideline section. Fixed Terms Fixed rate loans have a term of 30 years. Interest only loan products are not offered. Last Published Date: 04/30/2014 Page 1
Mortgage Eligibility Documentation Full Documentation Income, employment and assets are stated and verified. VA Documents The following VA documents should be included in the loan file: Certificate of Eligibility (COE) Addendum to the URLA (26-1802a) Request for Reasonable Determination of Value Federal Collection Policy Notice (26-0503) Counseling Checklist for Military Homebuyers (26-0592) - active duty only Child Care Letter Statement of Nearest Living Relative VA Loan Analysis (26-6393) Master Certificate of Reasonable Value (26-1843a) Request for Verification of Benefits (26-8937) if the borrower is exempt from the funding fee. Certificate of Commitment (26-1866) VA Loan Summary Sheet (26-0286) Maximum LTV/CLTV and Maximum Mortgage Calculation 1 2 3 Transaction Type Occupancy Units 1 Maximum LTV/CLTV Standard Eligibility Requirements Purchase Primary 100/100 1-4 Refinance 2 Residence 90/90 3 Refer to Geographic Restrictions in this guideline section for restrictions on properties in New Jersey. VA does not distinguish between rate and term and cash-out refinances. CLTV on a refinance transaction is calculated using the total loan amount, not the base loan amount. Underwriting Underwriting System Submissions to Desktop Underwriter (DU ) must receive an Approve/Eligible decision. Manual underwriting is not permitted. Underwriting Method VA loans are underwritten by EMM underwriters under EMM delegated authority. External underwriting methods, such as contract underwriting, are not permitted. Occupancy Secondary Financing Primary residence Secondary financing is not permitted. Last Published Date: 04/30/2014 Page 2
Mortgage Eligibility Maximum Maximum entitlement is determined by the lesser of the following: Entitlement VA county loan limit 1, or Borrower s maximum entitlement on the COE, or 25% of the loan amount, up to a maximum of $273,656 VA guaranty plus cash/equity must be equal to the lesser of 25% of the purchase price or Notification of Value (NOV) on purchases and non-irrrl refinances. 1 Properties in counties not listed are not eligible for VA High Balance products. Click here for VA County Loan Limits. VA Guarantee/ Funding Fee A funding fee is required all VA loans unless the veteran is exempt, as verified by VA form 26-8937. The funding fee is added to the base loan amount but is not factored into the LTV. VA will not guarantee the loan without the funding fee. Type of Veteran Regular Military Reserves/National Guard Purchase Loans Down Payment Fee for Fee for Percentage First Time (%) Subsequent (%) < 5.00 2.15 3.30 5.00-9.99 1.50 1.50 10.00 1.25 1.25 < 5.00 2.40 3.30 5.00-9.99 1.75 1.75 10.00 1.50 1.50 Regular Refinance (Cash-out) Type of Veteran Down Payment Fee for First Time Fee for (%) Subsequent (%) Regular Military N/A 2.15 3.30 Reserves/National Guard N/A 2.40 3.30 Tangible Net Benefit Escrow Waiver Temporary Buydowns VA refinance transactions must follow EMM Tangible Net Benefit guidelines. Refer to 000 General Underwriting Guidelines Tangible Net Benefit for requirements. Escrow waiver is not permitted. Temporary buydown loan products are not offered. Last Published Date: 04/30/2014 Page 3
Credit Credit Report EMM requires a full, three credit bureau tri-merge report or a residential mortgage credit report for all borrowers. Joint reports should be used only for married co-borrowers. Non-traditional credit is not permitted. Credit Score EMM requires that each borrower have a minimum of two credit scores. Use the middle score of three scores or the lower score of two scores of the lowest scoring borrower. Minimum eligible credit score is 640. Housing Payment History Major Derogatory Credit Mortgage or rental history of 0x30 is required for the lesser of the last 12 months or the life of the loan. Short sale waiting period- If the loan was current at the time of the short sale, a minimum of two years must have elapsed from the short sale completion date to the Note date for the subject transaction, If the loan was delinquent at the time of the short sale, a minimum of three years must have elapsed from the short sale completion date to the Note date for the subject transaction. Refer to the VA Handbook for guidelines regarding other derogatory credit. Borrower Borrower Eligibility Borrower(s) may be an honorably discharged veteran, active duty service member, unmarried surviving spouse, Reservist or National Guardsman. The following types of borrowers are permitted: U.S. Veteran Unmarried surviving spouse of a U.S. Veteran Refer to VA Handbook, Chapter 2 for additional information regarding borrower eligibility Ineligible Borrowers The following borrower types are not eligible: Surviving spouse that is remarried Divorced spouse of a veteran Veterans with a dishonorable discharge designation Non-occupant co-borrower All trust types, including inter vivos revocable trusts Last Published Date: 04/30/2014 Page 4
Income Qualification Qualifying Rate Qualifying rate is equal to the Note rate. Debt Ratio Maximum DTI is 50%. Employment Documentation A verbal verification of employment (VVOE) with no reference to income is required for salaried or commissioned borrowers. If the employer does not indicate the probability of continued employment on the VOE, then no additional information is required. A two-year employment history is required. Income Documentation Refer to VA Handbook for income documentation requirements. Assets Reserves Reserves are generally not required; however DU may require reserves for higher risk loans. Reserves required by DU must be verified. If borrower owns other residential investment properties, a minimum of three months of PITIA reserves are required. Reserves used as a compensating factor must be verified. Cash-to-Close Asset Verification Real Estate Owned The borrower or spouse must have funds sufficient to cover: closing costs or points that are the borrower s responsibility and are not financed in the loan, and down payment, if any, and the difference between the sales price and the loan amount, if the sales price exceeds the reasonable value established by VA Assets required to close, if any, must be verified. Refer to VA Handbook for asset verification requirements. The maximum number of financed residential properties a borrower may have is four. Borrowers with five or more financed residential properties are not eligible for financing with EMM. 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. Last Published Date: 04/30/2014 Page 5
Property Property Valuation Required Appraisal A VA appraisal ordered through the VA Portal is required. Every appraisal must be ordered as a Lender Appraisal Processing Program (LAPP) appraisal. EMM issues the Notice of Value. 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. The property is assumed to be eligible for VA financing because the original loan was approved and guaranteed as a VA loan. 1 Ineligible Properties Although the VA will guarantee loans on the following property types, they are not eligible for financing with EMM: Manufactured homes Co-ops Life estates for Specially Adapted Housing VA Indian Leasehold properties Properties with non-permitted or illegal additions (on a refinance, this includes those made since the original loan was guaranteed) 1 Refer to Geographic Restrictions in this guideline section for restrictions on properties in Florida and New Jersey. Geographic Restrictions New Jersey Two- to four-unit properties are not eligible. Texas Texas (a)(6) loans, regardless of whether or not the current loan contains a cash-out provision. IRRRLs are the only eligible refinance transactions in Texas. Last Published Date: 04/30/2014 Page 6