CONSTRUCTION-TO-PERMANENT GUIDELINES BROKER LOANS

Transcription

1 AKA USALLIANCE FEDERAL CREDIT UNION CONSTRUCTION-TO-PERMANENT GUIDELINES BROKER LOANS Available Conforming and Jumbo FIXED: 10 Year, 15 Year, 20 Year and *30 Year Programs: ARMS: 5/1, 5/5 and 7/1 (*30 year fixed to $1.5M only) Eligible States: CEMA s: MA, NY, NJ, CT, RI and NH* (*we will also consider loans in ME and PA on exception basis) We do not allow CEMA s on Construction-Perm Loans (applies to NY refi s) Build Types: Available for New Homes, Renovation/Rehabilitation and Additions Loan Limits: Conforming loans up to $424,100 and Jumbo loans $424,101 to $1,500,000** ** Loan Amounts above $1.5M are considered on a case-by-case basis with add to rate. Approval is required prior to submission. Please complete the USAlliance exception approval template and submit to Jeff Law - jlaw@usalliance.org or Kimberly London klondon@usalliance.org for approval. Occupancy: Owner-Occupied Single Family Dwellings and Owner-Occupied Second Homes only No Investor Properties Allowed. Max LTV: 80% on Primary Residences; 75% on Second Homes For Refinance Loans, The maximum LTV would be the lesser of the amount of the existing mortgage loan(s) and closing costs, plus 100% of the construction/rehab costs OR 80% for Primary Residences and 75% for Second Homes of the when complete appraised value. We will holdback 100% of the rehab/construction costs and disburse the funds based on a schedule determined by the Credit Union and the work completed. PLEASE NOTE: If land or subject property is already owned, loan is considered a Refinance. If there is no existing mortgage lien, cash out is not allowed to recoup acquisition cost. For Purchase Loans: The maximum LTV is the lesser of 80% for Primary Residences and 75% for Second Homes of the purchase price of the land or property, plus 100% of the budget OR 80%/75% as applicable, of the when complete appraised value. We will holdback 100% of the rehab/construction costs and disburse the funds based on a schedule determined by the Credit Union and work completed. Max DTI: 45% when LTV/CLTV/HCLTV is lesser than or equal to 80%. Minimum FICO: Based on the middle score reporting on Tri-Merge Credit Report.

2 Construction-Permanent Guidelines (continued page 2 of 5) Qualify Rate The Qualifying Rate for QM/ATR purposes is the max rate occurring within the first 5 years On ARM s: AFTER the first payment date. 5/1 ARMS will be qualified at Max Rates as follows: of (5/1 or 5/5 ARM Note Rate plus 2. 7/1 ARM will be qualified at Note Rate or fully indexed rate, whichever is higher. Example: As of 1/10/13 the 1 year Libor is.58 and margin is = FIR of rounded to nearest.125 = 3.00%. This would mean qual rate is Note Rate on 7/1 ARM. Qualifying Taxes: An estimate of property taxes based on the future value will be used to qualify the loan and DTI calculation. (Example: On a refinance, if the current value is $500,000 and the future value is $1M, Then $1M/$500,000 = 2. The taxes would be multiplied by 2). For a purchase, one of the comps on the appraisal can be used to estimate the future taxes). ***The Credit Union DOES NOT escrow for property taxes on Construction Loans. After the Construction Period has ended, the borrower may request to have the property taxes escrowed. Construction The Construction period will run for Three (3), Six (6), Nine (9) or Twelve (12) months, Phase: dependent upon the estimated time for work to be completed. This is a one-time close program which converts from Construction Phase to Permanent Phase based on a pre-determined date. The closing documents are drawn with the Permanent Phase conversation date. The Construction Phase is complete when this pre-determined date has been reached (in 3, 6, 9 or 12 months as stated above). At this time there will be: 1) A Certificate of Occupancy and Completion Cert*; 2) A Grant of Extension to Construction Phase; or 3) Property is not completed and no extension requested and/or extension was denied.** Extension to Construction Phase: An extension to Construction Phase will be considered on a case by case basis and require a modification to existing terms. Borrower must request an extension in writing. If granted, a fee of 1% will be charged for the extension and the modification will be produced. If an extension is requested and not approved, the remaining funds not yet disbursed will be withdrawn and will no longer be available for disbursement. If this occurs, a letter will be sent to borrower advising of such. *Please Note: If Construction Phase is completed and funds remain, the remaining balance will be applied towards the Principal amount of the Note.

3 Construction-Permanent Guidelines (continued page 3 of 5) **If Construction has not been completed and no request for extension was received (or request for extension has been denied) borrower will be in default and any remaining funds will not be released and/or applied to Principal amount. Interest Rates: Payments: This is a one-time close program (Construction-Perm), therefore rate is based upon product and term selected by Borrower. Loan closes under selected program/rate and Interest Rate remains the same throughout all Phases of Construction to Permanent conversion/life of loan. All Program Rates are available through our website at Construction Phase - During the Construction Phase, payment is based on an Interest-Only Payment, calculated on the Advanced Amount. Permanent Phase - Upon completion of Construction Phase, loan converts to Permanent Phase and Payment converts to full P&I payment. Additional Fees: (including Broker Comp) Borrower is responsible for all Closing costs, including the following add l fees: USAlliance charges one-half point (.50) Origination fee to Borrower on all Construction-Permanent Loans. Six (6) Title run-downs and Six (6) Inspection Fees will be included as part of the closing costs. THIS MUST BE DISCLOSED WITHIN THE TITLE CHARGES. Broker Compensation Broker Comp is Borrower Paid on C to P loans, there is no Lender Comp Fee Paid on these transactions. The Brokers may charge up to one point (1.00) Origination Fee with a Maximum Cap on Comp to Broker of $20, (which is outlined in the main Broker Contract between Broker Partners and USAlliance). Loan Disclosures: ALL LOAN DISCLOSURES ARE GENERATED BY LENDER the Broker is PROHIBITED from generating disclosures on loans submitted to USALLIANCE. Appraisal * 1 Appraisal required for loans up to $1,000,000; Requirements: * 2 Appraisals required for loans exceeding $1,000,000; Please note: Appraisals are ordered by USAlliance, as Lender, through our AMC and must meet the Credit Union s Appraisal Policy. Appraisals will be completed based upon Final Plans and Specifications. If two appraisals are required, the Credit Union generally utilizes the lowest appraised value. Builder Doc Requirements: The builder is required to provide the following documentation: 1) Contractors Insurance - Minimum of $1,000, Liability Coverage and Worker s Compensation Insurance as required by Law. Note: Borrower(s) and subject address should be listed as an additional Certificate Holder;

4 Construction-Permanent Guidelines (continued page 4 of 5) 2) Contractors License - Builder shall provide a copy of a valid Builders License appropriate for the work to be completed, as determined by State Law; 3) Permits - Proper permits must be in place for work to be done before any construction funds are advanced; 4) Contractor Questionnaire - A contractor s questionnaire must be completed to include financial information & subcontractors (USALLIANCE) will provide form); 5) Construction Contract - Fully executed contract from builder and borrower; 6) Copy of Complete Plans and Specifications and Materials Listings Required: 7) Itemized Budget of Construction Costs; 8) Understanding Construction to Permanent Loans document to be signed by Broker and Borrower. The Builder will be fully reviewed to determine if they are properly insured and licensed, and have the expertise required for the work to be completed. A search of the Better Business Bureau for the state they are licensed is recommended. Cash Reserves: Insurance: Primary Residences 2 months; Second Homes 6 months. The Credit Union will be listed as first mortgagee on the homeowners insurance and the Borrower must provide an insurance binder prior to closing, with dwelling coverage equal to replacement cost of completed dwelling or an amount sufficient to cover the total loan amount. In addition, the Borrower is required to carry Increased Liability Coverage or Builders Risk Insurance of at least One Million ($1M). Title Insurance: Lenders title insurance up to the total amount of the loan or up to the amount of the initial advance with title policy endorsements for each advance. Underwriting: Jumbo loans are underwritten manually utilizing FNMA Guidelines and Underwriting principals; however we also apply common sense to our Underwriting process. We evaluate all aspects of the loan and consider compensating factors in our underwriting analysis and approval process. We are able to be more flexible at times, especially when dealing with unique loans/scenarios, as we Portfolio most of our Jumbo loan products. For adjustable rate loans, the qualifying rate used will be the same qual rate required by FNMA for the particular ARM program. For ARM loans with terms of 5 years or less, we

5 Construction-Permanent Guidelines (continued page 5 of 5) will use a qualifying rate of the note rate plus 2% or the fully indexed rate, which ever is greater. ARM loans of 7 years or greater will be qualified at the note rate. Exceptions: Any Exceptions to Policy require Approval by Senior Management prior to loan submission. Broker must submit the Exception Approval Template for consideration and if approved, rate adjustment may apply. Please Note: This Program is not offered to Builders directly, the loan must be obtained by the Borrower who will be Owner-Occupying the Property as their Primary Residence or Second Home. This Program is available for the purpose of building a new residence or rehabilitating and/or modifying existing residence. USAFCU 11/2017