FHA Streamline Offering 8/15/14

Transcription

1 FHA Streamline Offering 8/15/14

2 Streamline Basics All FHA to FHA refinances are eligible for a Streamline offering Streamlines can be structured with or without an appraisal and with or without credit qualifying LTV limits are shown on the maximum mortgage calculation slides; however, the CLTV is limited to 125% in all instances LTV is calculated off of the Base Loan Amount Loans that have been previously modified are eligible provided the loan meets all Streamline requirements. HUD allows the outstanding balance of a modified loan to reflect amounts that were previously added to the loan balance to facilitate loss mitigation as long as the new loan amount meets HUD guidelines 2

3 Streamline Basics (continued) Owner Occupied only Eligible Properties: SFR PUD attached or detached Condos Condos not on FHA approved list are eligible but must be packaged as Streamline without appraisal FHA approved condos are eligible for with or without appraisal option Condos without HO6 are acceptable 3

4 Streamline Basics (continued) Non Credit Qualifying requires 12 month mortgage payment history on subject property 0 X 30 Mortgage rating past 24 months or since inception on subject property Credit Qualifying requires Borrower to have made a minimum of 6 payments on the loan being refinanced AND a minimum of 210 days has passed since the closing date of the mortgage being refinanced Loan being refinanced seasoned less than 12 months: 0 X 30 in months 7-12 Loan being refinanced seasoned greater or equal to 12 months: 1 X 30 in previous 12 months AND 0 X 30 in the 3 months preceding application 4

5 Loan Amount Calculation Tips When paid off all FHA loans will require 30 days of interest to be collected at closing To avoid an additional months worth of interest, FHA Streamlines are required to fund by the last business day of the month (can fund before this day) HUD permits borrowers to finance up to 60 days interest into the new FHA streamline provided it is itemized on the payoff demand HUD permits borrowers to finance up to 2 months of annual MIP payments into the new FHA streamline Streamlines are payoff sensitive If mortgage payments are made and posted, loan amounts are required to be recalculated Brokers should check with closing agent to see if in receipt of updated demand to avoid delays and rework of loan amount 5

6 Loan Amount Calculation Tips (continued) Since interest is paid in arrears it is important to pay close attention to payoff demands Examples: Loan due for April 1st payment will show interest from 3/1 to 3/31 on payoff demand (30 days interest) Loan due for March 1st payment will show interest from 2/1 to 3/31 on payoff demand (60 days interest) 6

7 Maximum Mortgage Calculation with Appraisal The max mortgage calculation will be the lesser of the two calculation approaches below: Calculation #1 Unpaid principle balance You can include current month s payment You can include the 30 day closing per diem interest You can include up to 2 months annual MIP Payments You cannot include delinquent payments, late charges and/or escrow shortages Less UFMIP Refund Plus closing costs & prepaid (ONLY IF CREDIT QUALIFIED WITH AN APPRAISAL) You cannot include discount points. Any discount points must be paid in cash or lender credit. Calculation #1 Current Appraised Value X % Plus new UFMIP NOTE: THE ABOVE ADDITIONS CANNOT BE INCLUDED IF THE LOAN IS A NON-CREDIT QUALIFIED LOAN OR A CREDIT QUALIFYING WITHOUT APPRAISAL. CLOSING COSTS CAN ONLY BE INCLUDED FOR CREDIT QUALIFYING STREAMLINES WITH AN APPRAISAL. Plus new UFMIP REGARDLESS OF THE 2 CALCULATIONS, THE BASE LOAN AMOUNT CAN NEVER EXCEED THE CURRENT COUNTY LIMIT OR PRIOR LOAN AMOUNT 7

8 Maximum Mortgage Calculation Without Appraisal Unpaid principal balance OK to include current month s payment OK to include up to 2 months annual MIP payments NOT OK to include delinquent payments, late charges and/or escrow shortages Less UFMIP refund Plus new UFMIP Closing costs CANNOT be financed Be sure to check FHA Connection for value used on original appraisal High Priced loans not eligible Base loan amount can never exceed previous loan amount 8

9 Sample Calculation: Financing 30 Days Interest In this example the mortgage payment for the month the loan is closing in has been paid and is a NCQ without an appraisal with new UFMIP being financed Loan funding in January and borrower has made January payment Demand reflects interest due from 1/1/-1/31 9

10 Sample Calculation: Financing 30 Days Interest To calculate max loan amount in this example: Take UPB per demand (NOT payoff amount) $170, Add allowable interest per demand $ Add allowable annual MIP payments $ Less UFMIP refund per Refinance Authorization $ Total = Base Loan Amount** $170,525 Add new UFMIP $2981 Total=Total Loan Amount $173,506 **Always round down base loan amount to nearest dollar 10

11 Sample Calculation: Financing 60 Days Interest In this example the mortgage payment for the month the loan is funding in has not been paid and will be paid through the closing. The calculation approach can be used for a CQS or NCQS with an appraisal. Loan funding in Jan. and borrower has not made Jan. payment Demand reflects interest due from 12/1-1/31 11

12 Sample Calculation: Financing 60 Days Interest To calculate max loan amount in this example, take the LOWER of the following calculations (subject to county limit): Calculation One: Take UPB per demand (NOT payoff amount) $107, Plus closing costs and prepaids $ Add Allowable interest per demand $ Add up to 2 months annual MIP payments $ Less Applicable UFMIP refund $ Total=Base Loan Amount $111,395 Calculation Two: Take Current Appraised Value $130,000 Multiply by 97.75% (130,000 X 97.75%)= $127,075 Total=Base Loan Amount $127,075 **Use Lower of Two calculations ($111,395) and add new UFMIP** $111,395 plus UFMIP $1946 =Total Loan Amount $113,341 12

13 FICO Requirements Credit score requirements are now determined by state for non-credit qualifying Streamlines Mortgage only credit report with credit score on subject property only 680 minimum FICO required in following states NCQ: Alabama, Arkansas, Connecticut, Delaware, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Mississippi, Missouri, New Jersey, New Mexico, New York, Oklahoma, South Carolina, Tennessee, and Utah 13

14 FICO Requirements 660 minimum FICO required in following states NCQ: Alaska, Arizona, California, Colorado, District of Columbia, Florida, Georgia, Hawaii, Idaho, Kansas, Maine, Michigan, Minnesota, Montana, Nevada, New Hampshire, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Rhode Island, Texas, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. Credit qualifying Streamlines 580 Minimum FICO required regardless of state Full tri-merge credit report required 14

15 FICO Requirements Credit Qualifying Streamlines with FICOS Maximum 90% LTV/CLTV Maximum 31%/43% DTI No Exceptions Maximum applies to both ratios individually IE: If the DTI is 34%/42% the loan is ineligible VA Standard Residual Income requirements apply 15

16 Non Credit Qualifying Option Non credit qualifying streamlines do not permit closing costs to be financed into the loan (with or without an appraisal) While the NCQ option is available with or without an appraisal, the benefit to having an appraisal is the ability to exceed county loan limits on the total loan amount Loan cannot be High Priced loan Credit history outside of mortgage being paid off is not evaluated Mortgage history requires 0 X 30 last 24 months or since loan inception with minimum 12 month payment history on subject property A borrower can never be deleted on a Non Credit Qualifying option Streamline 16

17 Non Credit Qualifying Requirements 1003, Ratios, Credit & AUS Do not include employment, income, liabilities or assets on 1003 (unless assets required to close) No ratios -income is not listed Mortgage only credit report on subject required; all Borrowers must have FICO Mortgage history requires 0 X 30 in past 12 months or since loan inception Minimum 12 month payment history on subject property Manual underwrite only-do not submit DU Basics Asset verification is only required if assets are required for closing 2 month bank statement required Maximum mortgage limited to UPB and new UFMIP. Closing costs cannot be financed into the new loan Loan cannot be a High Priced loan 17

18 Credit Qualifying Option Closing costs cannot be financed into the loan without an appraisal A credit qualifying streamline is the same as a regular refinance for borrower qualification. The only difference is the ability to do the loan with or without an appraisal and CLTV to 125% If Borrower not receiving benefit of CLTV or reduced MIP loan should be structured as regular FHA rate/term refinance with DU If Borrower benefiting from CLTV or reduced MIP can be structured as Credit Qualifying with Appraisal Max DTI 31%/43% unless compensating factors required by HUD are met Refer to FHA Program Guidelines for detailed underwriting guidelines and acceptable HUD Compensating Factors Deletion of a Borrower is acceptable under the Credit Qualifying Option with or without appraisal 18

19 Credit Qualifying Requirements 1003 & AUS The 1003 must be fully completed, including employment, income, assets and liabilities Loans are qualified similarly to a rate/term Manual underwrite only-do not run DU Credit, Income & Assets Credit Full credit report All borrowers must have a FICO Loan being refinanced seasoned < 12 mo 0 x 30 IN MONTHS 7-12 Less than 6 mo seasoning not eligible Loan being refinanced seasoned 12 mo or more 1 X 30 in past 12 months AND 0 X 30 in 3 months preceding application Income & Asset Standard income documentation No reserves required unless funds to close needed (2 months bank statements) 19

20 Net Tangible Benefit Streamlines must meet the net tangible benefit requirement per HUD guidelines Reductions in term are eligible provide the loan also meets the net tangible benefit requirements A copy of the existing Note and payment coupon from servicer is required with loan submission to document benefit 20

21 Net Tangible Benefit Guide 21

22 Closing Tips Cash Back Max cash back to borrower is $500 (no exceptions) Principal reductions permitted up to 1% of loan amount Use of POA Closings permitted with POA Insurance Requirements Streamlines without appraisal only require insurance for loan amount Streamline condos do not require HO6 insurance Funding Into Month When necessary, Streamlines can be considered on a case by case basis to fund into the month as an exception. These are available on a extremely limited basis due to loan amount sensitivity. 22