MSF LENDING GUIDE GENERAL

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1 Announcement 08-16C Guideline Updates and Changes Effective Immediately for all loans: The following areas of Mortgage Solutions guidelines have been updated. All changes and additions appear in red. MSF LENDING GUIDE GENERAL Multiple overlays have been removed. Agency guidelines should be followed in all cases where the Lending Guide is silent. The following table has been updated and overlays have been removed: Age of Documents Type of Document Ownership & Encumbrance 14 days Payoff Statement on FHA Streamline 30 days Self-Employment Verification 30 days Survey 180 days Title and Closing Protection Letter 90 days Verification of Mortgage (VOM)/Verification of Rent (VOR) 30 days Length of Validity to Note Date Borrower Eligibility Conflict of Interest MSF will not allow loan officers to originate loans for a member of their family If the borrower is a licensed loan originator, the loan can be originated by another licensed LO in the same office, however the loan will be subject to full QC audit Broker owned escrow companies are ineligible Transactions in which the loan originator and Realtors are employees and/or independent agents for the same company are not permitted Appraisal Requirements All PDF appraisals must be first-generation reports Ineligible Properties Properties with a cistern Page 1 of 5

2 Credit Credit Inquiries All inquiries reported on the credit report within 120 days must be explained in writing, regardless of AUS response Credit Scores A minimum of one credit score is required for all borrowers Delinquent Federal Debt If the borrower is currently delinquent on any federal debt, government mortgage, Title I Loan, Federal student loan, SBA loan, Federal taxes or has a lien against the property for debt owed to the United States, the borrower is ineligible until the delinquent account is brought current or satisfied Restructured (Modifications) Loans Document if the existing mortgage(s) being refinanced have ever been modified via copy of promissory note and current mortgage statement or credit supplement Documentation not required on a FHA cash out refinance Verification of Rent (VOR) When program guidelines require a VOR and if borrower has non-arm s length relationship with landlord, then twelve months canceled checks required in addition to the VOR Income 4506T Transcripts must be ordered/processed by MSF (non-delegated only) Title Six month chain of title required The following passages have been updated as shown: Manufactured Home The manufactured home must be built in compliance with the Federal Manufactured Home Construction and Safety Standards that were established June 15, 1976, as amended and in force at the time the home is manufactured; and additional requirements that appear in HUD regulations at 24 C.F.R. Part 3280 Compliance with these standards will be evidenced by the presence of both a HUD Data Plate and the HUD Certification Label If the original or alternative documentation cannot be obtained for both the Data Plate/Compliance Certificate and the HUD Certification Label, the loan is not eligible for delivery The HUD Data Plate/Compliance Certificate is a paper document located on the interior of the subject property that contains, among other things, the manufacturer s name and trade/model number The Data Plate includes pertinent information about the unit, including a list of factory-installed equipment The HUD Certification Label, sometimes referred to as a HUD seal or tag, is a metal plate located on the exterior of each section of the home As an alternative to the original HUD Certification Label, the lender may be able to obtain a verification letter with the same information contained on the HUD Certification Label from the Institute for Building Technology and Safety (IBTS) A duplicate HUD Data Plate/Compliance Certificate may be available from IBTS or by contacting the In-Plant Primary Inspection Agency (IPIA) or the manufacturer Manufactured name, model number, serial number, year manufactured, length and width to be completed on appraisal or IBTS certification required ( unknown or n/a is not acceptable) Page 2 of 5

3 Appraiser to provide photo of HUD tags; or if photos of tags not available, then appraiser to state source of HUD tag information The unit must not have been previously installed or occupied at any other site or location, except from the manufacturer or the dealer s lot as a new unit Verification not required for FHA/HUD Real Estate Owned (REO) Division sales The manufactured home must be a one-unit dwelling unit that is legally classified as real property The towing hitch, wheels, and axles must be removed. The dwelling must assume the characteristics of site-built housing The borrower must own the land on which the manufactured home is situated in fee simple No single-wides Minimum 600 sq. feet One unit only At least 3 comparables must be manufactured and support value Comparable sales must have closed within the last six months In rural areas comparable Sales may exceed six months, but never exceed twelve months Appraiser must provide acceptable comment(s) for comparable(s) that exceed six months Property Taxes New Construction: Property taxes for new construction properties must be calculated based on 0.75% of the fully assessed property value or sales price, whichever is greater New construction properties in California calculate based on 1.25% of the sales price - In addition to any Mello-Roos taxes or other special assessments as applicable New construction properties in Texas calculate based on 2.25% of the sales price Borrowers must sign new construction tax estimate disclosure at closing In lieu of using the percentage calculation above the 0.75% in areas other than California & Texas, other acceptable documentation that may be used to calculate the property taxes are: A statement of the estimated property taxes from the county assessor, or A statement of the estimated property taxes from the title/escrow agent handling the transaction Existing Construction: Purchases in California are calculated based on 1.25% of the sales price In addition to any Mello-Roos taxes or other special assessments as applicable Other acceptable documentation that may be used to calculate the property taxes are: - A statement of the estimated property taxes from the county assessor, or - A statement of the estimated property taxes from the title/escrow agent handling the transaction All other states would use the amount listed on the tax certificate or title commitment MSF LENDING GUIDE CONFORMING Credit Score Determined by AUS findings & PMI company with a minimum of 620 Properties in fair condition are not acceptable, even if the escrowed repairs will bring the property to Page 3 of 5

4 Ineligible Programs MyCommunity Mortgages (MCM) (Program no longer available) Rent Loss Coverage Rent loss insurance covering at least six months rent is required for the subject investment property when rental income is being used for qualification MSF LENDING GUIDE FHA Properties in fair condition are not acceptable, even if the escrowed repairs will bring the property to Total Scorecard (AUS) AUS response required for all loan types except Streamline Refinances MSF LENDING GUIDE USDA Properties in fair condition are not acceptable, even if the escrowed repairs will bring the property to Guarantee Fees See chart below: The upfront Guarantee Fee may be calculated in two ways depending on whether the fee will be financed The annual Guarantee Fee may vary depending on the date of the Conditional Commitment Upfront Guarantee Transaction Upfront Guarantee Annual Guarantee Fee NOT Type Fee Financed Fee Financed Purchase Transactions and Rate and Term with Conditional Commitments issued on or after October 1, 2014 Purchase Transactions and Rate and Term with Conditional Commitments issued on or after October 1, 2015 Multiply the loan amount by 2.00% and round to the nearest cent Multiply the loan amount by 2.75% and round to the nearest cent Multiply the total including the financed fee by 2.00% and round to the nearest cent Multiply the total including the financed fee by 2.75% and round to the nearest cent 0.50% of the total 0.50% of the total Page 4 of 5

5 MSF LENDING GUIDE VA Properties in fair condition are not acceptable, even if the escrowed repairs will bring the property to Page 5 of 5