Home Possible Conforming Fixed

Transcription

1 Home Possible Conforming Fixed Home Possible Matrix with Mortgage Insurance Guideline Overlays: PURCHASE & RATE TERM REFINANCE Occupancy Units FICO/Score LP LTV/CLTV Primary Residence /97 Primary Residence /95 Primary Residence /80 Program Matrix Notes: 1. For LTVs > 80, the type of mortgage insurance may be restricted, refer to Mortgage Insurance. Product Detail AUS LPA Accept Non-traditional credit is not allowed. Ability to Repay/Qualified Mortgage Rule Amortization Type Appraisals Assets Product Guidelines ECOM will purchase only Safe Harbor Qualified Mortgages as defined under HUD and the Dodd- Frank Wall Street Reform and Consumer Protection Act. Fixed Rate ECOM approved AMC. Minimum Borrower Contribution for Purchase Transactions Fixed Number of Units 80% LTV Minimum Borrower Contribution > 80 and 95% LTV Minimum Borrower Contribution > 95% LTV Minimum Borrower 1 0% 0% 0% 2-4 0% 3% NA Acceptable Assets Personal gifts, gifts Minimum borrower contribution from own funds MUST be met before other acceptable sources of funds are permitted 05/27/2016 Home Possible Program Summary Page 1 of 10

2 Product Detail Borrower Eligibility Product Guidelines All borrowers must have a social security number U.S. citizens LP/LPA: Non-owner occupied transactions cannot close in the name of a Trust Permanent resident aliens, with proof of lawful permanent residence Non-permanent resident alien: o No restriction on LTV, occupancy type, or transaction type. o A valid social security number is required. However, a social security card may not be used as evidence of employment eligibility. o All non-permanent resident aliens must provide evidence of a valid, acceptable visa or EAD as listed within documentation requirements below. o When utilizing an acceptable visa, a copy of the unexpired visa and a copy of passport must be included in the loan file. The following are acceptable visa classifications: A Series (A-1, A-2, A-3) E Series (E-1, E-2) Treaty Trader G series (G-1, G-2, G-3, G-4, G-5) H-1, Temporary Worker L-1, Intra-Company Transferee TN, NAFTA visa TC, NAFTA visa o I-797 documents can be utilized in lieu of a VISA if it meets the following criteria: I-797 evidences an approval for an acceptable VISA class The approval term is not expired Visa extension is current with an end date that meets ECOM Home Loans policy. o Employment Authorization Documents are permitted as long as the meet the following criteria: If the borrower has <2 years within the US, a copy of a Passport used to enter the country and a copy of the I-94 issued by the USCIS are required. If the borrower has > 2 years within the US, a copy of the current and previous EAD cards are required. o If the authorization for temporary residency status will expire within 3 months or if it is set to expire, confirmation from USCIS that employer has re-filed petition of extension is required. If there are no prior renewals, proof of a three-year continuance must be determined, based on information from USCIS. o An individual classified under Diplomatic Immunity, Temporary Protected Status, Deferred Enforced Departure, or Humanitarian Parole is not eligible. o Non-permanent residents must be employed in the U.S. if income is used to qualify. o If a non-permanent resident alien is borrowing with a U.S. citizen, it does NOT eliminate or reduce any documentation requirements. o ITIN s are not allowed Credit Any debt not reported on the credit report must be documented as being repaid in a satisfactory manner. Credit report inquiries: follow AUS. Must pay off any existing judgments or tax liens. 05/27/2016 Home Possible Program Summary Page 2 of 10

3 Derogatory Credit Waiting Periods are as determined by AUS. Extenuating circumstances are allowed with a DU approve/eligible. Manual underwriting is not allowed. Derogatory Event Bankruptcy Ch Bankruptcy Ch.13 Multiple Bankruptcy Foreclosure Deed-in-Lieu of Foreclosure, Pre foreclosure Sale, Short Sale, Mortgage Debt Charge Off LP/LPA Waiting Period 4 years 2 years from discharge date 4 years from dismissal date 5 years 7 years Per LP/LPA Documentation Down Payment Requirements Down Payment Assistance Employment/Income Verification Escrow Holdbacks FICO/Credit Score Full As determined by LP Not allowed. Per LP. Not allowed. 620 regardless of LP findings Financing Concessions Financing concessions for primary residences and second homes must be within the following allowable percentages: o 9% of value with LTV/CLTV ratios less than or equal to 75% o 6% of value with LTV/CLTV ratios greater than 75% up to and including 90% o 3% of value with LTV/CLTV ratios greater than 90% High Cost / High Priced Not allowed 05/27/2016 Home Possible Program Summary Page 3 of 10

4 Home-buyer Education and Counseling Overview At least one borrower must complete the pre-purchase home-buyer education and counseling. If all the buyers are the first time homebuyers. All education, collection, and counseling efforts must comply with the requirements of applicable federal and state laws, including the Equal Credit Opportunity Act, the Fair Debt Collections Practices Act, and the Fair Credit Reporting Act. An individual is to be considered a first-time home buyer if he/she is purchasing a principal residence and has had no ownership interest (sole or joint) in a residential property during the three-year period preceding the date of the purchase of the subject property. In addition, a displaced homemaker or a single parent may also be considered a First-Time Homebuyer if the individual had no ownership interest in a residential property during the preceding three-year period other than an ownership interest in the marital residence with a spouse. If a displaced homemaker or a single parent solely owned the marital residence, or solely or jointly owned a second home or investment property, the individual may not be considered a First-Time Homebuyer. Standards for Pre-Purchase Home-buyer Education and Counseling To ensure quality and consistency, the pre-purchase home-buyer education and counseling must meet the standards defined by the National Industry Standards for Homeownership Education and Counseling or those of comparable quality as established by other organizations. Counseling and education sessions that adhere to these standards are deemed acceptable. 05/27/2016 Home Possible Program Summary Page 4 of 10

5 Providers of Pre-Purchase Home-buyer Education and Counseling All pre-purchase home-buyer education and counseling must be provided by a third party that is independent of the lender. Mortgage insurance companies can provide counseling, without regard to whether they provide mortgage insurance coverage for the particular transaction. The HUD.gov and National Industry Standards for Homeownership Education and Counseling websites provide contact information for organizations that provide Homebuyer education and counseling. Freddie s CreditSmart program is allowed. Proof that the borrower has completed all of the following Modules must be included in the file: Module 1 (Your Credit and Why It is important), Module 2 (Managing Your Money), Module 7 (Thinking Like a Lender), Module 11 (Becoming a Homeowner), and Module 12 (Preserving Homeownership: Protecting Your Investment). Face-to-face group education and counseling is recommended; however, telephone and online counseling is also permitted from eligible providers. These types of sessions should cover the same topics as face-to-face sessions, even though they typically provide individual borrower counseling without a group or classroom education session. Free online counseling is available through Freddie Mac and MGIC. If the provider charges a fee, the fee and provider for the Home Buyer Education and Counseling must be disclosed on the initial GFE in block 6. In general, education sessions (group or classroom) should cover the following topics: o Readiness for homeownership; o Budgeting and credit; o Selecting a home; o Obtaining a mortgage; and o Maintaining a home. Home-buyer counseling sessions (individual sessions) should generally provide a personalized assessment of the borrower s financial position and readiness for homeownership. This includes an analysis of the borrower s credit history and current financial situation. Evidence of Completion of Pre-Purchase Home-buyer Education and Counseling Evidence of completion of the home-buyer education session must be documented in the individual loan file by a certificate or letter from the counseling provider. (See forms attached) Landlord Counseling Landlord counseling is required for borrowers purchasing two-, three-, or four-unit properties. Prior to closing, all borrowers must participate in a landlord counseling program conducted by a recognized community counseling organization. Refer to the Providers of Pre-Purchase Home-buyer Education and Counseling above. Evidence of completion of the home-buyer education session must be documented in the individual loan file by a certificate or letter from the counseling provider. 05/27/2016 Home Possible Program Summary Page 5 of 10

6 Post-purchase Early Delinquency Counseling (EDC) (see forms attached) Post-purchase early delinquency counseling must be provided regardless of the property type. Post-purchase early delinquency counseling, which is provided the first time the borrower is delinquent, must remain available for any delinquency that occurs during the seven years following the date the mortgage is originated. EDC identifies the reason(s) a borrower is unable to make timely mortgage payments and works with the borrower to successfully resolve these issues. Unlike traditional mortgage collection efforts, EDC should address broader financial issues, such as family money management and budgeting. All borrowers must sign a Borrower s Authorization for Counseling form that authorizes mortgage servicers to refer them to a third-party counseling agency or mortgage insurer for early delinquency counseling, should such counseling ever become necessary. The Borrower s Authorization for Counseling may be signed at loan closing or earlier in the application process. Fees Fees may be charged to the borrower for counseling and/or education; however, all fees must be fair, reasonable, and commensurate with the level of services provided. The borrower must be advised of the amount of fees prior to the delivery of any service. Additional Resources The home-buyer education and landlord counseling requirements, as applicable, may not be waived under any circumstances. The U.S. Department of Housing and Urban Development (HUD) sponsors housing counseling agencies throughout the country. Borrowers can search for counseling providers by state and view the types of counseling sessions available by accessing HUD s website at HUD.gov. Income Borrower Income Limits and Calculations In determining whether a mortgage is eligible under the borrower income limits, the income from all of the borrowers who will be listed on the mortgage note must be counted, to the extent that the income is considered in evaluating creditworthiness for the mortgage loan. The same methodology used in determining income eligibility for Home Possible must be used in reporting Monthly Income on the Eligibility for a Home Possible loan compares the borrower s income to the applicable area median income (AMI) for the property s location. The AMIs used to determine borrower income eligibility are provided to Freddie Mac by its regulator, the Federal Housing Finance Agency (FHFA). The Area Median Incomes (AMIs) used by Freddie Mac are available on The AMIs, including the high-cost areas limits, are implemented into LP. The income used to qualify the Borrower converted to an annual basis must not exceed 100% of the area median income or the percentages (income multipliers) in the designated 05/27/2016 Home Possible Program Summary Page 6 of 10

7 high-cost areas listed below. There is no income limit if the subject property is located in an Underserved Area as indicated by State County Income Multiplier California All Counties 140% Rental Income Calculations on Two to Four- Unit Properties Refer to Conforming Rental Income guidelines for LP. Boarder Income The rental payments that any borrower receives from one or more individuals who reside with the borrower (but who are not obligated on the mortgage debt and may or may not be related to the borrower) may be considered as acceptable stable income when qualifying for a one-family property, in an amount of up to 30% of the total gross income that is used to qualify the borrower for the mortgage if: o The individual(s) has lived with (and paid rent to) the borrower for the last 12 months. o The boarder can provide appropriate documentation to demonstrate a history of shared residency (such as a copy of a driver s license, bill, bank statement, etc., that shows the boarder s address as being the same as the borrower s address). o The boarder can demonstrate (such as copies of canceled checks) the payment of rental payments to the borrower for the last 12 months. Payment of rent by the boarder directly to a third party is not acceptable. o The Borrower must attest, by affidavit executed at application, to the: Source of the rental income Fact that the person providing the rental income has resided with the Borrower for the past year and intends to continue residing with the Borrower in the new residence for the foreseeable future 05/27/2016 Home Possible Program Summary Page 7 of 10

8 Interested Party Contributions Non-arm s length transactions are purchase transactions in which there is a relationship or business affiliation between parties to the transaction such as family members, employer/employee, or principal/agent. This relationship may influence the transaction; therefore, at a minimum, Ecom requires the following: These transactions include, but are not limited to: o Family sales or transfers. o Corporate sales or transfers. o Borrowers employed in the real estate or construction trades who are involved in the construction, financing, or sale of the subject property. o Some transactions involving principals or a lender or other vendor (such as an appraiser, settlement agent, or title company) who is involved in the lending process of the subject property. Non-arm s length sales transactions are generally permitted for primary residences. However, if the borrower is purchasing from a builder who is buying his or her existing residence, the transaction is not eligible for financing. Purchase of second homes and investment properties are not eligible for financing. Transactions must be fully disclosed as non-arm s length and require close examination to ensure the equity position is not compromised. A non-arm s length transaction is not permitted if the subject property is in foreclosure or a Notice of Default has been filed. Non-arm s length transactions require full documentation for assets and income, regardless of the AUS findings. (i.e. 2 years for income and 2 months for assets). The file must include all of the following documentation: o o o o Copy of the canceled earnest money check to verify payment to the seller. Verification that the borrower is not now on title and has not been on title within the past 24 months. Payment history for the existing mortgage (verification of seller s mortgage) on the subject property must be obtained. It must show that the loan is paid current and has no pattern of delinquency within the past 12 months. Borrower must provide a written explanation stating the relationship to the seller and the reason for purchase. o The transaction must make sense and it must be apparent that the borrower will occupy the property as a primary residence. A full appraisal must be obtained regardless of the AUS findings. The appraiser must be informed of the non-arm s length transaction and address whether or not the market value has been affected by the relationship of the parties. Lien Position First Maximum Loan Amount Conforming limit Minimum Loan Amount $150,000 05/27/2016 Home Possible Program Summary Page 8 of 10

9 Mortgage Insurance Mortgage Insurance is required if the LTV exceeds 80%. Mortgage Insurance Coverage Requirements on or after delivery on June 7, 2016 LTV Range Term % % % % 1 >20 years 12% 25% 25% 25% % LTV only allowed on 1 unit properties. Number of Financed Properties The borrower may not have an ownership interest in any other residential dwelling at the time of loan closing. Occupancy Primary Residence Program Codes and Terms Fixed HP30 HPA30 Property Types Single Family (Detached, Attached) PUD (Detached, Attached) Condominium Warrantable (Detached, Attached) 2-4 Units Ratio As determined by LPA (Max 50%) Recently Listed Properties No Cash-Out Transaction - The subject property must not be currently listed for sale. It must be taken off the market on or before the application date. Borrowers must confirm their intent to occupy the subject property (for principal residence transactions) Rental Income Calculation Follow LP guidelines Reserves LP will determine the reserve requirement. 1-unit None required 2-4 units Two months Tax Transcripts Tax transcripts are required for the most recent year of income submitted in the file. W2 transcripts are allowed for salaried borrowers. Generally, when the documentation used to verify income is from the same calendar period as the tax transcript, the information must match exactly. However, if the income documentation is from the current calendar year and the transcript is from a prior year, there can be acceptable variances. If this variance exceeds 20%, document the rationale for using current income. If tax transcripts are not available (due to a recent filing) a copy of the IRS notice showing No record of return filed is required along with documented acknowledgement receipt (such as IRS officially stamped tax returns or evidence that the return was electronically received) from the IRS and the previous year s tax transcript. A 4506-T, signed at application and closing, is required for all transactions per LP guidelines. 05/27/2016 Home Possible Program Summary Page 9 of 10

10 Transaction Types Purchase Rate/term Refinance Eligible States CA / GA / MD / VA 05/27/2016 Home Possible Program Summary Page 10 of 10

11 Freddie Mac Single Family / Single-Family Seller/Servicer Guide / Single-Family Seller/Servicer Guide / Exhibits, Forms, Glossary and Directory / Exhibits / Exhibit 20: Homeownership Education Certification (06/01/08) Exhibit 20: Homeownership Education Certification (06/01/08) Borrower's Name: Property Address: Mortgage Lender: Counseling Provider: Trainer's Name: (typed) (signature) : The Trainer certifies that the Borrower named above has completed the following Homeownership Education Program: [Insert Name of Program]

12 BORROWER AUTHORIZATION FOR COUNSELING Name(s): Lender: Property Address: : If I fail to make any monthly mortgage payment as agreed, I understand that the servicer of my mortgage loan may refer me to a third-party counseling organization or a mortgage insurer, w hich w ill advise me about finding w ays to meet my mortgage obligation. I hereby authorize the servicer to release information to such third-party counseling organization or mortgage insurer, and request that the counseling party contact me. I further hereby authorize the third-party counseling organization or mortgage insurer to make a recommendation about appropriate action to take w ith regard to my mortgage loan, w hich may assist the servicer in determining w hether to restructure my loan or to offer other extraordinary services that could preserve my long-term homeow nership (0505 ) VM P M ortgage Solutions, Inc. (800) /0 5