ULTRA JUMBO (DU) - UJDU series FULL DOC PROGRAM

Transcription

1 ULTRA JUMBO (DU) - UJDU series The Ultra Jumbo DU option utilizes Fannie Mae Desktop Underwriter (DU) over its manual underwriting counterpart. The loan is underwritten to the more restrictive of the Ultra Jumbo (DU) overlays and the DU Findings. FULL DOC PROGRAM Owner Occupied, Single Family, PUD, Warrantable Condo Purchase and Rate/Term Refinance LTV Credit Score Max Loan MAX DTI $1.5 Mill 35% Up to - 90 >=720 $2.5 Mill 45% Up to $2.0 Mill 45% Up to $2.0 Mill 45% Up to $2.0 Mill 45% Cash-out Refinance LTV Credit Score Max Loan MAX DTI $1.5 Mill 35% $2.5 Mill 35% 85% 680 $2.0 Mill 45% $2.0 Mill 45% $2.0 Mill 45% Second Homes and Owner Occupied 2-4 Units Purchase and Rate/Term Refinance LTV Credit Score Max Loan MAX DTI $2.5 Mill 45% $2.0 Mill 45% $2 Mill 45% $2 Mill 45% Cash-out Refinance LTV Credit Score Max Loan MAX DTI $2.5 Mill 45% $2.0 Mill 45% $2 Mill 45% $2 Mill 45% Ultra Jumbo (DU) Update: 10/24/2018 1

2 PROGRAM DETAILS First-time Homebuyers Texas Equity Loans QM Status AUS Occupancy Types Transaction Types Primary residence only. Single-family, PUDs, and warrantable Condominiums only. No additional loan amount or LTV restrictions. May use LTV Matrix on page 1. Not Eligible Non-QM FNMA DU (only) with the following findings: Approve/Eligible Approve/Ineligible (for loan structure such as LTV limits, loan purpose and loan amount) year Interest-Only program should be run as a 20-year fixed loan 40-year Interest-Only program should be run as a 30-year fixed loan For underwriting guidelines not addressed, refer to the Fannie Mae Seller Guide currently in effect as of the loan application date. Eligible: Primary residence (OO); Second home (OO) Ineligible: Investment Properties (NOO) Eligible: Purchase Rate/Term Refinance Cash-out Refinance Ineligible: Land Contracts Lease Option to Buy Contract for Deed Construction Financing Loan Purpose Principal Reduction /Curtailment Cash-out Refinances - Ownership Seasoning and Establishing LTV/CLTV Purchase Rate/term Refinance Cash-out Refinance A principal curtailment to the new refinance loan at closing is allowed up to the lesser of 2% of the new loan amount or $2000 and must be clearly reflected on the Closing Disclosure. Otherwise, principal curtailment/reductions are not allowed. Minimum six months ownership seasoning required for cash-out refinance transactions. Minimum 12 months ownership seasoning to use appraised value to determine LTV/CLTV. If the ownership seasoning is less than 12 months, the lower of the purchase price or the appraised value will be used to determine the LTV/CLTV. The original purchase price must be documented. Maximum Cash-out No limit Ultra Jumbo (DU) Update: 10/24/2018 2

3 Available Terms & Description Qualifying Payment Fixed Rate Full Amortization 10, 15, 20, and 30-year fixed rate terms available Adjustable Rate Full Amortization 5, 7, and 10-year adjustable rate terms available Interest Only Full Amortization 30 and 40-year Interest Only No temporary buy downs Fixed Rate Full Amortization: Qualify using the fully amortized fixed payment. ARM Full Amortization: For ARMs with an initial fixed-rate period of five years or less, qualify at the greater of the note rate plus 2% or the fully indexed rate. For ARMs with an initial fixed-rate period of greater than five years, qualify at the greater of the note rate or the fully indexed rate. Interest Only Full Amortization: Borrowers qualify at the note rate based on fully amortizing Principal and Interest payment during the principal repayment period. Borrowers will not be qualified on the Interest Only payment amount. o 30 year Interest Only Fully amortizing mortgage loan that pays Interest- Only during the first 10 years and amortizes down over the remaining 20 years. o 40 years Interest Only Fully amortizing mortgage loan that pays Interest- Only during the first 10 years and amortizes down over the remaining 30 years. Agency Program Restrictions Negotiated criteria/variances with Fannie Mae are not eligible. Fannie Mae unique eligibility and underwriting consideration programs are not allowed, including but not limited to: HomeStyle, HARP, DU Refi Plus and Home Ready. Agency Extenuating Circumstances Borrower Eligibility Non-Occupant Co- Borrower Extenuating Circumstance guidelines for derogatory credit and flexibility are not eligible (i.e., cannot instruct DU to disregard information on credit report to receive an Approve/Eligible). Eligible Borrowers: U.S. Citizens First Time Homebuyers Permanent Resident Aliens Non-occupant co-borrowers Ineligible Borrowers: Foreign Nationals Non-Permanent Resident Aliens Inter Vivos Revocable (aka living) Trusts Note: The number of borrowers per application is limited to 4 Per DU / FNMA Policy: Allows blended ratio Ultra Jumbo (DU) Update: 10/24/2018 3

4 Ineligible Income Illegal income or assets Ownership in a business that is federally illegal Restricted Stock Units (RSUs) Foreign Income Full Income Documentation Alimony Income Alimony Liability Business Debt in borrower s name Maximum DTI Income Documented Per DU Findings. (i.e. UW may need to refer to FNMA Seller Guide in certain situations such as borrower working for a relative.) Can be used per FNMA policy Per FNMA policy can be deducted from income Must be counted unless documented that business pays as per FNMA policy Max DTI up to 45% - See Matrix on Page 1 for specifics. 35% DTI over 90% LTV Purchase RT. 35% DTI over 85% on Cash Out. ULTRA Jumbo Manual program allows 50% DTI up to 80% LTV, with min. 720 FICO Residual Income Residual income calculation not required Application Date used for Credit Grade Criteria The borrower s initial application date will be used to determine the seasoning for prior bankruptcy, loss mitigation, foreclosure events, etc. Credit & minimum Trade line Requirements Borrower Credit Eligibility A borrower(s) without an established credit history is ineligible. A valid and usable score is one that is generated based on credit history and credit patterns that accurately reflect the borrower s history. It should contain at least: o A minimum of two FICO scores reported by 2 of the three credit bureaus. o Three established open and active trade lines reported on the credit report: One reported for a minimum of 24 months All active in the last 12 months (defined as last activity within 12 months of credit report date) One with a minimum $2,500 high credit balance (not to be confused with credit limit) Lower of both scores for all borrowers Borrower eligibility requirements apply to all properties currently or previously owned by the borrower. For example, mortgage housing history, loss mitigation, foreclosure, etc. Inclusive of all liens regardless of lien position. Mortgage/ Housing History 0X30 in the past 12 months Borrowers without a primary mortgage or rent history in the last 12 months are Ineligible. This includes situations where the borrower may have received a rent holiday, payments lapsed due to divorce/separation, or other instances where the most recent 12-month housing history is not consecutive and complete. At least one of the borrower(s) must have a fully documented, recent, consecutive, 12-month primary housing history. In addition: Mortgage/housing payment history on any property, regardless of the occupancy or lien status, is considered mortgage/housing history for grading purposes. A copy of the title or credit report must document the free and clear status. Ultra Jumbo (DU) Update: 10/24/2018 4

5 Bankruptcy History Multiple Bankruptcies Loss Mitigation Chapter 7 and 11: 4 years from discharge or dismissal date to application date. Chapter 13: 2 years from discharge date to application date. 4 years from dismissal date to application date. Loans to borrowers with multiple bankruptcies are ineligible regardless of the age of the bankruptcy or whether it was discharged or dismissed. The following are not considered as multiple bankruptcies: o When a Chapter 13 rolls into a Chapter 7 bankruptcy o When individual borrowers each have filed separate bankruptcies o Bankruptcies discharged greater than 15 years ago If a foreclosure is included in the bankruptcy, each event is treated separately for credit grade determination. Four years prior to the application date Prior loss mitigation includes Deed-in-lieu, Pre-Foreclosure, Short Sale, NOD, Short Refinance, Charge-off and Modification Foreclosure History Adverse Credit Tax Payment Plans Uniform Commercial Code (UCC) Filing 4506-T and Tax Transcripts Foreign Income & Assets Borrower Required Funds Gift Funds Business Assets Reserves Seven (7) years from completion date to application date All delinquent credit that will impact title, including delinquent taxes, judgments, charge-off accounts, tax liens and mechanic's liens, must be paid off prior to or at closing. Tax repayment plans must be paid off prior to or at closing. UCC filings are not allowed. Any that exists must be terminated and removed at closing Required per DU income type used for qualifying If most recent year s tax transcript for the income used to qualify is not available for a self-employed borrower who has filed taxes, the income may be verified by one of the following: o Officially stamped return by the IRS o Evidence that the return was electronically received (must reflect refund or amount owed to IRS) Foreign Income is NOT allowed Foreign Assets may be used as a source of funds to close as allowed per FNMA requirements A minimum down payment of 5% of the borrower s own funds is required for any purchase transaction. Gift Funds: Per FNMA cannot be used to pay down or pay off debt. Business Assets Acceptable per FNMA policy. Per FNMA DU Findings Eligible Property Types Single Family Residence (attached and detached) PUDs (attached and detached) 2-4 Units Fannie Mae warrantable condominiums (low, mid, and high-rise) Ultra Jumbo (DU) Update: 10/24/2018 5

6 Flipped Properties A flip transaction is when the property is being resold within 180 days of its acquisition by the current seller. Flip transactions are not permitted unless one of the following conditions are met: o Property obtained through inheritance o Property that is part of a settlement in a divorce agreement o Property that is part of an employer relocation program o Property acquired by the lender or servicer as a result of foreclosure or Deed in Lieu of foreclosure o Property that has been substantially improved by verified renovations since the property was acquired by the property Seller in which any increase in sales price over the property seller s acquisition costs is representative of the market Ultra Jumbo (DU) Update: 10/24/2018 6

7 Ineligible Property Types Mixed Use Properties including, but not limited to: o Properties that have been modified to accommodate home businesses, such as catering, in-home day care, animal boarding facilities, or auto repair Unimproved land Rural properties Agricultural and agriculturally zoned, including properties such as working farms or ranches Properties with more than 20 acres Properties located on Indian/Native American Tribal land Bed and breakfast properties Properties not suitable for year-round occupancy regardless of location Boarding houses & group homes Properties not readily accessible by roads that meet local standards Manufactured and mobile homes Condo-hotels Condo conversions less than three years from completion Co-operatives Time share units/projects Motel conversions Non-warrantable condominiums Properties with resale restrictions such as retirement or senior communities with age restrictions Properties with any type of litigation Properties that do not have full utilities installed to meet all local health and safety standards including, but not limited to: A continuing supply of potable water A public sewer or certified septic system Public electricity Natural or LP gas Properties appraised "subject to" without a Completion Certificate (FNMA Form 1004D or FHLMC Form 442) Properties appraised as is that are incomplete and/or that required significant repairs Properties with square footage < 700 feet (eligible with 2 acceptable comparables that are within 100 square feet of subject property) Unique housing types: includes earth, geodesic, and log homes Property condition ratings of C5 and C6 Properties zoned commercial, industrial, or business (where highest and best use is commercial, industrial, or business) Any property with health & safety, habitability, or structural issues Multi-family > 4 units Properties in Hawaiian lava zones 1 and 2 as determined by the U.S. Geological Survey Hawaiian Volcano Observatory Properties located in declining markets (as determined by the appraisal, or other third-party valuation performed on the subject property) Ultra Jumbo (DU) Update: 10/24/2018 7

8 Properties Currently Listed for Sale/Listed Past Six Months Warrantable Condominiums Transferred Appraisals Escrow Holdbacks Continuity of Obligation Vesting Properties that are listed for sale at the time of application are not eligible. Refinance transactions on properties that have been listed with six months of the application date are acceptable with the following: Rate/Term Refinance: Primary residence and second homes only Documentation to show cancellation of listing on or before the application date Letter of explanation form the borrower detailing the reason for cancelling the list Cash-out Refinance: Primary residence and second homes only Documentation to show cancellation of listing on or before the application date Letter of explanation form the borrower detailing the reason for cancelling the listing A maximum CLTV of 80% or the program maximum, whichever is less Must be Fannie Mae warrantable. Non-warrantable condominiums are not allowed. HOA certification form required Condo review types and documentation requirements are aligned to FNMA policy. o Condo review for detached units can be waived and limited review can be performed for condos eligible for limited reviews Limited Condo Review Per DU No litigation of any kind regardless of amount or liability amount, is allowed. Follow FNMA guidelines (Other than litigation) Detached Condo s follow FNMA guidelines Not allowed Not allowed For refinance transactions, there must be a continuity of obligation. This occurs when at least one of the borrowers or members of a Limited Liability Company (LLC) or corporation on the existing loan being refinanced is on the new refinance transaction secured by the subject property. The member must have a controlling or majority ownership in the LLC or corporation. When an existing lien will be satisfied as a result of a refinance transaction, the following apply: At least one borrower held title to the subject property for the most recent sixmonth period. The file must contain documentation evidencing that the borrower has been making the mortgage payments, including any payments for secondary financing. The borrower has recently inherited, or was legally awarded, the property (divorce, separation or dissolution of a domestic partnership). Loans with an acceptable continuity of obligation may be considered either a cash-out or rate/term cash-out refinance as described in this chapter. Note: The transfer of ownership from an LLC or corporation to an individual does not meet the continuity of obligation requirement. Individuals, Family/Living Trusts, revocable trusts only Ultra Jumbo (DU) Update: 10/24/2018 8

9 Non-Arm s Length Transactions Delayed Financing E-Signatures Not allowed Examples of non-arm s length transactions include, but are not limited to the following: Relatives: Relatives are individuals related by blood, marriage, adoption, or legal guardianship. The definition also includes domestic partners and fiancés. Transactions between an individual and relatives are considered nonarm s length. o Parents purchasing and financing a property for a child who then wants to refinance to pay off the parents. o A financing transaction between relatives. Employer/Employee o A purchase and sale transaction between an employer and an employee. A financing transaction between the borrower and their employer. Landlord/Tenant A purchase and sale transaction between a landlord and tenant. o A financing transaction between a landlord and tenant Home Builders o Purchase transactions where the borrower is the owner of, or is employed by the homebuilder who has constructed the subject property. o Transactions where the principals of construction companies are involved in the sale and financing of the subject property, with the exception of qualifying builder-owned lending operation transaction. Real Estate Brokers/Agents: A transaction where the borrower or a relative of the borrower is a licensed real estate broker or agent employed in the real estate industry and is involved in the financing or sale of the subject property, regardless of whether they receive a sales commission. o o o Acting as the property seller s listing agent on the subject property Acting as both the listing agent and as the seller agent (dual representation) Employed by the Galton Funding Seller acting as the loan officer or broker Note: A transaction where the borrower acts as his/her own real estate agent (buyer s agent) in the purchase of a property will be considered arm s length. Third Party Service Vendors: A transaction where the borrower is also a principal of a third-party vendor, such as a settlement agent, escrow company, title company, appraisal company, or credit reporting company providing such service for the subject loan. Owner Financed o Not Allowed The payoff of a loan currently financed by the seller of the subject property. The following documents are not allowed to be electronically delivered or signed: o Final/Closing Documents o Notarized Documents Any transaction involving the use of a Power of Attorney will not be permitted to use an esignature The Seller is responsible for determining that the documents have been properly signed by all parties (as is the case with non-electric documents) per Fannie Mae. Ultra Jumbo (DU) Update: 10/24/2018 9

10 Power of Attorney Taxes and Hazard Insurance Maximum Loans to One Borrower (Investor max financing overlay) Purchase and Rate Term ONLY. Must be Specific POA. Cash Out Not Allowed. The appropriate amount of hazard insurance is determined as the lesser of: 100% of the insurable value of the improvements with replacement cost coverage, as established by the property insurer, or the unpaid principal balance of the first and second mortgage (sufficient coverage for the new combined loans); OR The combined unpaid principal balance of the first and any secondary financing, as long as it equals the minimum amount required to compensate for any damage or loss on a replacement cost basis, typically 80% of the insured value of the improvements. If it does not, then coverage that does provide the minimum required amount must be obtained. The aggregate dollar amount of all loans currently sold and/or serviced to the designated servicer may not exceed $4M. There is no limit to the number of loans that can be submitted for the same borrower. Rather, the maximum number of loans to one borrower is limited by the aggregate dollar amount of the total loans currently sold and/or serviced by the investor. The number of loans to one borrower in any single market area is limited to two. The term single market area refers to the physical location of the property, meaning two or more homes owned by the same borrower within a several block radius, defined neighborhood, or lending area. FIXED RATES: 30, 15yr fixed available Fully Amortized Loan Terms ADJUSTABLE RATES: 5/1 ARM 7/1 ARM 10/1 ARM Initial Fixed Rate terms (months) Periodic Caps 2/2/5 5/2/5 Periodic Rate Change (months) 12 months Index 12 Month Libor Lifetime Cap Start Rate + 5% Lifetime Floor Start Rate Margin See Rate sheet Look Back Period 45 Days Qualifying Rates: 5/1 ARM - Borrowers qualify at the higher of the fully indexed rate or the initial note rate plus the periodic adjustment (2%).* 7/1 & 10/1 ARMs - Borrowers qualify at the higher of the fully indexed rate or the initial note rate.* Ultra Jumbo (DU) Update: 10/24/

11 Interest Only Loan Terms Mortgage Insurance Minimum Loan Amount Program Codes Fully amortizing mortgage loan that pays interest only during the first 10 years and amortizes down over the remaining years. FIXED RATES: Terms: 30, 40yr interest only available Qualifying Rate: Borrowers qualify at the note rate based on fully amortizing Principal and Interest payment during the principal repayment period. Borrowers will not be qualified on the Interest Only payment amount. During IO payment period (10 years) any additional payment over IO will be applied to principal and new IO payment we be calculated. ADJUSTABLE RATES: Caps, index, margin & look back periods see fully amortized section (above) 10/1 ARM IO - 30 YR 10/1 ARM IO - 40 YR Term Amortization term Qualifying Rates: Borrowers qualify at the higher of the fully indexed rate or the initial note rate using the fully amortizing Principal and Interest payment during the principal repayment period. Borrowers will not be qualified on the Interest Only payment amount.* Mortgage insurance is not required or permitted. $1.00 above regular conforming limits Fixed Period 40 year 30 year 15 year Fully Amortized UJDU30 UJDU15 Interest Only UJDU40io UJDU30io Adjustable 5/1 7/1 10/1 (30yr term) 10/1 (40yr term) Fully Amortized UJDU5/1 UJDU7/1 UJDU10/1 Interest Only UJDU10/1io3 UJDU10/1io4 Ultra Jumbo (DU) Update: 10/24/

12 Appraisal Requirements 1 Full Appraisal 1 if Combined Loan Amount <= $1.5M 2 Full Appraisals 1 if Combined Loan Amount > $1.5M 2 o Two (2) appraisals must be disclosed on initial disclosures on initial LE. Condominiums require an HOA certification form Property Inspection Waiver (PIW) not allowed Third Party Review Requirements Desk Review required on all transactions. Mega Capital Funding will administer the ordering and processing of Desk Review. Cost of $150 must be disclosed at registration on initial Loan Estimate, and collected at closing. Desk Review Process If the DESK REVIEW returns a value that is 10% of the Appraised Value 3 or the purchase price, the lower of the Appraised Value or purchase price can be used to establish the LTV/CLTV. If the DESK REVIEW returns a value that is "Indeterminate" or > 10% of the Appraised Value 3, a Clear Capital Broker Price Opinion (BPO) and Clear Capital Value Reconciliation of Three Reports must be ordered. The reconciled value determined by Clear Capital will be used to determine LTV/CLTV. If the Clear Capital DESK REVIEW returns a value that is greater than the Appraised Value 3, the Appraised Value will be used to determine LTV/CLTV. 1. Full Appraisal refers to a Uniform Residential Appraisal Report (URAR). This includes a FNMA 1004 and FHLMC The DESK REVIEW will be completed on lower of the two appraisals 3. The Appraised Value is the value determined from the original appraisal(s) obtained by MCFI. Ultra Jumbo (DU) Update: 10/24/