General Information. Assumptions. General. Assumptions take place when:

Transcription

1 General Information Amortization - Conventional 30 Year We will look at extending an applicant(s) amortization out to 30 year providing it can be supported via remaining economic life in an appraisal report completed by one our approved appraisers. Note amortizations greater than 25 years will have a rate premium of 0.10% added. Applications Applications and rates will be held for a period of 90 days from the date of initial commitment being issued. After that period they will expire and a new application must be submitted. The file will be subject to underwriting guidelines and/or product at that time. Assumptions General Assumptions take place when: A home purchaser wishes to assume the vendor's (sellers) mortgage. An addition or deletion of names on title is requested such as adding a spouse or child, or in the event of a marital split. The credit union has been notified a transfer of title has taken place; we have 90 days to qualify borrower or invoke "due upon sale" clause. How we deal with assumptions: Collateral mortgages cannot be assumed; parties involved must attend a solicitor or notary to transfer title and new mortgage documents are prepared. Valley First, a Division of First West Credit Union requires a copy of the purchase agreement or evidence of title transfer Qualify the new borrower as we would normally, but use existing terms and conditions of current mortgage New appraisal is NOT required Complete a Offer to Extend mortgage and renewal document Would provide Solicitor or Notary handling the transaction a payout statement without a penalty Require/obtain proof of Fire Insurance showing First West Credit Union as first loss payee

2 Bridge Financing Bridge Financing (sometimes referred to as Interim Financing) occurs when an applicant requires short term financing to purchase a property where the closing date of the purchase occurs prior to the closing date of the sale of an existing property, from which net sale proceeds are to be used for the purchase. The loan may be secured by an inter alia mortgage on the property being purchased and the property being sold when the purchase of the new property is completing first, but there is no firm sale on the existing property. Due diligence must be completed to ensure a binding sale is in place on the existing property and that the sale proceeds less closing costs will be enough to repay the Bridge Financing being requested in full. Where an applicant(s) require short term funds to complete a transaction we will charge a minimum 50 bps to 100 bps application fee based on the strength of the application presented. These applications will be viewed on a case by case scenario. Child Tax Credits Will not use as income Co-op Housing First West Credit Union has no appetite for the Co-op housing market due to the extended marketing period that is often required to affect a sale as well as the lack of increase in property value. Debt Service Ratios Maximum gross debt service (GDS) ratio will be 35% and total debt service (TDS) will be 40% or the maximum allowed by underwriting guidelines of either Genworth Financial or CMHC. Equity mortgages do not require debt servicing to be calculated. Maximum Gross Debt Service Ratio (GDS) 35% Used to calculate debt servicing capacity relating to residence Includes rent (including pad, site rental or lease payments) Includes mortgage payment Includes property taxes and 50% confirmed strata fees. Heating costs (for conventional or high ratio applications) must either confirm heating costs by obtaining 1 year average OR complete a calculation based on confirmed live able sq footage of home using 0.75 cents per 10 sq feet. Example: 1100 sq foot home/10 equals 110 x 0.75 = $82.50 monthly heat to be used in debt servicing ratios

3 In cases where a member lives at home or shares rent a minimum Nominal Rent will need to be incorporated in the debt service calculations. All applications must have a figure of $500 included as Shelter Costs for debt service calculations. The only exception to this will be in the case where the applicant has/have clear title ownership of their residence and you have included property tax and strata fees ( if applicable ) in your calculations. Maximum Total Debt Service Ratio (TDS) 42% Includes all GDS Calculations Includes all payments for other lending facilities. ie. loans/mortgages showing or not showing on the credit bureau. Includes Alimony and Child Support payments All Credit Card "payments" are to be calculated at 3% of the balance outstanding. For student loans that do not include a payment amount on the credit bureau, use 1% payment All non-mortgages secured lines of credit $5,000 + are required to qualify based on Prime +3.00% interest only on the limit. Lines of credit less than $5,000 need to be treated the same as a credit card at 3% of the balance outstanding. All mortgage secured home equity lines of credit are to qualify at Prime + 3% blended payments based on the authorized limit over a 30 year amortization. Note: If the payment automatically defaults into the application from Equifax, then lenders are to use the higher of. Example: A line of credit reporting on Equifax with a limit of $10,000 and if the payment on the bureau is showing $ The $ payment would be used for debt service calculations as it's higher than interest only. The qualifying interest rate used to calculate the total debt service ratio will be determined as follows: CMHC and Genworth Insured Mortgages For new loans with a fixed rate term of five years or more, the qualifying interest rate will be the contract rate. For loans with a fixed rate term of less than five years and for all variable rate mortgages, the qualifying interest rate is the greater of the contract rate, or the 5 year posted rate. For multi-component mortgages, each component must be qualified using the greater of the contract rate, or the 5 year posted rate.

4 Multi Component mortgages, each component must be qualified using the applicable criteria above. All advances under the Creditmaster product fall under multicomponent. Home Equity Lines of Credit from other institutions need to qualify based on Prime % Blended payments on the limit using a 25 year amortization. Home Equity Lines of Credit authorized by Valley First, a Division of First West Credit Union need to qualify based on the 5 year contract rate over 25 years. Max Amortization is 25 years. Conventional Mortgages (maximum LTV 80%) All Primelines, variable rate and fixed rate mortgages on residences authorized by Valley First need to qualify based on the 5 year contract rate. Blended payments using a 30 year amortization. Home Equity Lines of Credit from other institutions need to qualify based on Prime % Blended payments on the limit using a 30 year amortization. The maximum LTV will be up to 80%. Mortgages with LTV higher than 80% will need to qualify based on CMHC/Genworth guidelines (no Exceptions). Exceptions to Debt Service Ratios LTV Exception Property Beacon(s) / Credit Valuation Income Verification TDS > 40% At least 1 borrower > 720 Appraisal only No exception from matrix Urban properties only BUT < 42% No borrower < 650 In a branch service area No past bankrupts GDS > 35% At least 1 borrower > 720 Appraisal only No exception from matrix Urban properties only No borrower < 620 BUT< 39% In a branch service area No past bankrupts

5 Down Payment Verification We will accept one or more of the following for confirmation of down payment: Copy of current bank statement Copy of current investment portfolio statement Gift letter & confirmation of available funds (from family member only) Copy of unconditional sales contract on existing property Copy of disbursement from solicitor/notary on existing property (at discretion of underwriter) Heat Calculations Heating costs (for all mortgages conventional and insured) calculated at.75c per 10 sqft IE: 1500 sqft home / 10 sqft x.75c = $ monthly heating cost High Risk areas The following areas are deemed to be a higher risk and therefore require the coverage by either Genworth or CMHC. By partnering with either insurer, it helps to mitigate our risk while still providing financing options to residing in the area: Big White Mount Baldy Olalla Hedley Princeton Summerland Road (back way) Paul Lake Savona Beaverdell Westwold Falkland Monte Lake Cherryville Regal Ridge Fintry

6 Interalia Mortgages General Procedures An Interalia Mortgage is a mortgage registered over two or more properties. Common scenarios for Interalia mortgages include: o Bridge financing if the sale of a member s home closes after the purchase of their new home (over 30 days.) o Purchasing an additional property and requires the equity in their home to finance the down payment. Interalia mortgages are not available for CMHC/Genworth mortgages. Process the same as for any residential mortgage. Instructions to Solicitor must clearly state to register a mortgage over both or all properties. Lending Areas Armstrong Merritt Summerland Barriere Oliver Vernon Chase Osoyoos Westbank (First Nations) Cherryville Peachland West Kelowna Enderby Penticton Kamloops Princeton Kelowna Revelstoke Keremeos Salmon Arm Lumby Sicamous We require in branch signings, therefore applicant(s) must attend prior to funding. Those areas listed above that are underlined, indicates we do not have branches located there. Applicants will have to attend a branch that is the closest to the subject property Leased Land Developments Leases must be fully prepaid and be on the Credit Union s approved list. Years remaining on the head lease must be twice the amortization period of the mortgage to reflect the declining security values the lease nears the terms end. This information along with the approved loan to values can all be found on the approved list.

7 Mobile Homes Valley First broker centre will only entertain mobiles on own land and charge a 1% rate premium. 25 year amortization maximum. Power of Attorney A power of attorney (POA) is a written authorization to represent or act on another's behalf in private affairs, business, or some other legal matter. The person authorizing the other to act is the principal, grantor, or donor (of the power), and the one authorized to act is the agent, done, or attorney. The practice of using a POA at the very initial stage of a mortgage or any loan transaction should not be entertained. Currently in British Columbia there is no registry in place that manages POA's, therefore the Credit Union runs a real risk that the POA has been revoked or does not have borrowing authority. Pre-Approvals Pre-approvals: we will accept these files. During peak times, we treat these files as rate holds only unless stated in the notes section by the submitting broker. We will communicate these peak times via . Private Sales We are open to entertaining these types of sales, however more due diligence will be applied and an appraisal is the only method of confirming value. Property Valuation Owner Occupied Single Family Home Strata Unit Mobile Home: (must be affixed to a foundation on freehold property) Hobby Farms, Country Home, Home w/ acreage Rental / Investment Single Family Home 80% of the first $1,000m, 60% of 80% of the first $1,000m, 60% of 80% of the first $500,000, 50% of 80% of the first $1,000m, 50% of 75% of the first $1,000m, 60% of Max Amort 30 years Max Amort 30 years Max Amort 25 years Max Amort 30 years Max Amort 30 years

8 Strata up to 4 doors 75% of the first $1,000m, 60% of Max Amort 30 years Recreational Dwelling on Serviced Land: 70% of first $500,000, 50% of Max Amort 25 years Current adjudication requirements specify the following as the required valuation method for loans up to specific LTV limits: LTV > 65%: Appraisal dated within the last 12 months required from authorized appraiser LTV up to 65%: Landcor Valuator at a cost of $100. Picture of property is required LTV up to 60%: BC Assessment is acceptable. Picture of property is required Maximum mortgage amount is $3,000,000 Lending values for financing are based on the house and 10 acres, should the property be a hobby farm or include fruit trees or have a vineyard, appraiser is to report as if the land were bare Appraisals are to be ordered via Solidifi Valuation Services Minimum size for properties: 600 sq ft for condo/apartments and 900 sqft for SFD or Row housing. Properties that fall under those requirements may be looked at on a case by case scenario and will be required to be covered by either Genworth Financial or CMHC Interalia s can be entertained providing Valley First sits in first position Properties will not be considered if they are held within a rental pool, a company, be fractional interest or if the property is a hotel/resort. Requirements of Funding All new applicants must attend one of our branches, prior to funding, to sign necessary documentation. MLS sales require a copy of the PDS. Private sales are accepted, property inspection and full appraisal are required Spouses, Common-law or Partners If there is either a spouse, common-law or partner that resides in the subject property and they are not on title, this party is not required to be on the mortgage providing the main applicant qualifies for financing. In a situation where the other party is required, they can be included as a Guarantor rather than being added to the title. Income, should one party have a signed separation agreement, the payee may deduct the payment and reduce their income on an application by the set amount. If the Guarantor/Indemnitor is required to debt service the mortgage, ILA is mandatory regardless of the relationship. If the primary borrower can qualify on their own with no income assistance from the Guarantor/Indemnitor, ILA may be waived.

9 Strata Properties A Strata Form B is required for all new purchases. All strata lending requires one of the following documentation to be reviewed to determine if there are any concerns with water ingress, structural repair issues, special assessments or pending legal action: The last 2 years of the Annual General Meeting (AGM) minutes or any Special General Meeting minutes held within the last 2 years. Current copy of Strata Fire Insurance policy listing full replacement cost coverage. Copy of the current Strata Form B. Copy of the current summarized Depreciation Report. Transfers/Switch An open or penalty mortgage can be transferred any time provided the borrower (mortgagor) is prepared to pay the appropriate interest penalty and transfer fees associated with the transfer. A closed mortgage can only be transferred on its due date, unless the original lender (mortgagee) consents otherwise. Underwriting Criteria The Credit Union s current lending guidelines, procedures, and interest rates apply to all mortgages transferred in. Acceptance of mortgage transfers from other financial institutions is limited to the following: CMHC and Genworth insured first mortgages on owner-occupied single family dwellings (prime residences) in the Credit Union (branch) trade area. Conventional first mortgages on owner-occupied single family dwellings (prime residences) located within the boundaries of the City, Town, or Village. Normal processing will be done with the loan application with respect to credit checks, GDS, TDS, appraisal and loan approval. Interest rates applicable will be the current rates in effect at time of approval. Copies of the mortgage and renewal agreements, if applicable, are to be obtained from the member and examined for completeness and legality. Most mortgages will have been prepared by recognized lawyers/notaries. If there is any doubt as to the quality

10 and legality of the mortgage, the opinion and legal advice of the Credit Union solicitor will be sought. If the member qualifies and the documents are in order, a renewal agreement is to be completed and signed by the mortgagor(s)/guarantor(s) (Refer to exhibit viii). The Credit Union s standard renewal notice may be utilized for this purpose. Due consideration is to be given to terms and conditions taking into account the remaining amortization of the mortgage. A letter of authorization is to be forwarded to the mortgagee requesting pay out balances, related costs and execution of transfer of mortgage. Costs, in addition to the principal balance of the mortgage, (e.g., interest, transfer fees, penalty, etc.) are the responsibility of the member and must be paid by the member. They cannot be added to the mortgage.