FNMA s HomeReady Program

Transcription

1 FNMA s HomeReady Program (rev. 6/30/2016) Presented by J.J. Sawicki, CMP Merrimack Mortgage Co. LLC

2 Overview Help meet the diverse needs of today s buyers with FNMA s enhanced affordable lending program, HomeReady. This program is designed for creditworthy, low- to moderate-income borrowers, with expanded eligibility for financing homes in designated low-income, minority, and disaster-impacted communities. HomeReady lets you lend with confidence while expanding access to credit and supporting sustainable homeownership. Product features designed to align with today s buyer demographics and support sustainable homeownership.

3 Home Ready Key Features Key Features: Up to 97% financing (1 unit purchase) No minimum borrower contribution (1 unit properties); use flexible sources of funds for down payment and closing costs. Gifts, grants and cash on hand are allowed Homeownership counseling through Framework is required by at least one borrower

4 Terms 30 year fixed rate product 1-4 family primary residence, condos and PUDs Primary residence Purchase and rate term refinances Use 30HRM or 30HRM-AF product codes

5 Flexibilities Non-occupant co-borrowers are allowed up to 95% LTV. Income is used for qualifying and is subject to the applicable income limits. Max 43% DTI for occupying borrowers Will consider income from a non-borrowing household member! Non-borrower income must equal at least 30% of the borrower s qualifying income used in the transaction. Income from more than one non-borrower household member may be considered! Non-borrower must document their income and must sign a statement of intent to reside in the property for a minimum of 12 months (FNMA Form 1019)

6 Borrower Income Eligibility No income limit: Properties in low income census tract (31% of census tracts in the US) 100% of AMI: Properties in high-minority census tracts and designated disaster areas (20% of census tracts in the US) 80% of AMI: All other properties (49% of census tracts in the US) DU will confirm Income Eligibility

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13 Income flexibilities Boarder and rental income is allowed as an exception Rental income from 2-4 unit properties per FNMA guidelines Boarder Income Boarder must have shared residence for at least 12 months Documentation of the income must be provided for at least 12 months and will be averaged over 12 months Can be allowed up to 30% of the qualifying income 1 unit properties only

14 New Feature! Non-Borrower Income Non-borrower household income can be considered as a compensating factor when the DTI is >45% up to a max of 50% Non-borrower income is not used as qualifying income and is not considered when calculating the ratios The non-borrower will not be listed on the application. You will enter this income in DU The following requirements apply: Non-borrower income must equal at least 30% of the total monthly qualifying income used by the borrower. Income from more than on non-borrower household member may be considered Non-borrower income must adhere to FNMA guidelines. Verbal VOEs and tax transcripts are not required Non-borrowers may be relatives or non-relatives Non-borrowers must sign a statement of intent to reside with the borrower for a minimum of 12 months Boarder or rental income from a non-borrower is not included

15 Non-borrower income scenario

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18 Assets - Cash On Hand Cash on hand - Acceptable for downpayment, closing costs and/or prepaid items. Must verify and document that the borrower customarily uses cash for expenses and that the amount saved is consistent with the borrower s previous payment practices. Cash On Hand is now an option in DU s Asset drop down. Cash on hand cannot be used for reserves

19 LTVs # Units Purchase and Rate/Term Minimum downpayment required from borrower s personal funds 1 unit 97%* 0% 2 unit 85% 3% 3-4 unit 75% 3% Minimum downpayment from borrower s personal funds only applies to purchase transactions A gift or a grant may be used for the borrower s own minimum contribution for a 1 unit property * If LTV > 95%, purchase only allowed

20 Mortgage Insurance LTV Coverage % 25% % 25% % 25% % 12% Initial and one time MI premiums may be paid by the seller If the subject is a 2-4 unit property, MI auto cancels at mid point, not 78% LTV

21 Homeownership Counseling One borrower must obtain Homeownership Counseling through Framework The cost for the counseling is $75 and must be disclosed on the LE A certificate will be provided upon completion and must be provided Post purchase homeownership support offered for the life of the loan through Framework Landlord education required for 2-4 unit. This will not be done through Framework

22 Underwriting DU Approve/Eligible required Minimum 620 FICO required for 1 unit Minimum 640 FICO required for 2-4 units If paying off revolving debt to qualifying, account must be closed Full appraisal required Secondary financing is not allowed The payment on the credit report (or 5% of the balance if payment not stated) will be used to qualify, regardless of the number of months remaining Max 50% DTI with documented non-borrower household income as a compensating factor. Otherwise, max DTI is 45% The borrower cannot have ownership interest in another property at the time of closing. This does not apply to non-occupant co-borrowers

23 Non-traditional credit At least one borrower must have traditional credit and a credit score and receive an Approve/Eligible through DU If each borrower does not have 3 traditional tradelines with a 12 month history, you may supplement with alternative credit

24 Pricing Standard LLPAs waived with an LTV above 80% and a 680 FICO or greater. For loans outside of these parameters, the standard LLPAs apply, BUT there is a cumulative cap of 1.50%! Pricing is better than or equal to standard loan pricing

25 Additional LLPAs for loan size on AF product

26 So how do products compare? FHA Conventional Home Possible HomeReady FICO LLPAs up to -1.5 No cap on LLPAs No cap on LLPAs No LLPAs > 80 with a Outside of those parameters, -1.5% cap UFMIP of 1.75% More underwriting restrictions More underwriting restrictions Flexibilities in underwriting Monthly MIP for life of loan ( ) Standard MI Reduced MI but only through June 30th Slightly reduced MI at > 95% LTV Pricing is very good Pricing is similar to HomeReady Pricing quite a bit worse Pricing very good. Compared to Conventional base pricing

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30 DU - Things to know! HomeReady: In the Government Info tab in DU, under the Community Lending Product, you will select HomeReady from the drop down to flag your loan under this product and enter the FNMA Community MSA. If the loan is not eligible for the HomeReady Product, the DU findings will issue a message specifying this as the reason Assets: On the Assets screen, you may select Cash on hand in the drop down, if applicable Non-borrower income: This must be selected as a second source of income in the Income screen with Income Type of Non Borrower Household Income in the drop down, if applicable

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33 Links HomeReady Resources: HomeReady Census Tract Lookup: com/homeready/ Geocode Mapping System: aspx Customizable Marketing materials: com/singlefamily/homeready-outreach-materials Framework Homebuyer Counseling: com/framework

34 DISCLAIMER: Presentation for Industry Professionals only, not intended to be distributed to consumers. Subject to underwriting approval. Terms and conditions subject to change without notice. Information accurate as of date published. Licensed by the New Hampshire Banking Department, Rhode Island Licensed Lender, and Licensed by the New Jersey Department of Banking and Insurance