SIERRA CLASSIC JUMBO Fixed and ARM Matrix ( 1)(10)(11) RETAIL BUSINESS CHANNEL ONLY

Transcription

1 SIERRA CLASSIC JUMBO Fixed and ARM Matrix ( 1)(10)(11) RETAIL BUSINESS CHANNEL ONLY Loan Purpose Property Type Owner Occupied Properties Minimum Credit Score (1) LTV/CLTV (2)(3)(8) Maximum Loan Amount (7) 80/80 $1,000,000 Purchase; Rate & Term Refinance (9) 1 Unit PUD Warrantable Condo 2 Unit /75 $1,500,000 70/70 $2,000, /65 $1,000, /65 $1,000, /60 $1,500,000 Cash Out Refinance (6) 1 Unit PUD Warrantable Condo /65 (5) $1,000,000 60/60 (4) $1,500,000 55/55 (4) $2,000,000 Loan Purpose Property Type Second Homes Minimum Credit Score (1) LTV/CLTV (2)(3)(8) Maximum Loan Amount (7) Purchase; Rate & Term Refinance (9) 1 Unit PUD Warrantable Condo /75 $1,000,000 70/70 $1,500,000 65/65 $2,000,000 1

2 1. Minimum Score for each borrower 2. LTV/CLTV is reduced by 5% on properties in declining markets as indicated by appraiser 3. New Subordinate financing is not permitted 4. For Cash Out Transactions, maximum cash out amount permitted is $500,000 to 60% LTV/CLTV 5. For Cash Out Transactions, maximum cash out amount permitted is $350,000 to 65% LTV/CLTV 6. To be eligible for a Cash Out refinance transaction, the loan being paid off must be seasoned for at least 6 months 7. First Time Home Buyer Maximum Loan Amount is $1,200, % Maximum LTV for all ARM and 15 years amortized products 9. The refinancing of non purchase money closed end and HELOC 2 nd liens will be considered a rate/term if they are seasoned > 12 months and there are no draws on the HELOC within the last 12 months 10.LTV maximum for borrowers with > 2 financed properties is 10% below the maximum that is otherwise applicable for the specific loan. If the borrowers can qualify with all financed properties PITI without rental income, the 10% reduction in LTV is not applicable. Borrower will be required to hold the greater of 18 months reserves or otherwise stated for the subject property & 6 months for each additional financed property in lieu of the 10% reduction. 11. Maximum DTI ratio 45% 2

3 ARM Overview: This is a variable rate mortgage, without negative amortization, whereby the interest rate and payment is adjusted in accordance with the specified index. Index: The index used to determine the adjustable interest rate is the average rate for one year U.S. dollar denominated deposits in London Markets based on quotations of major banks, known as the London Interbank Offered Rate (LIBOR) as published in the Wall Street Journal. Margin: The margin is 2.25% Interest Rate Adjustment Interest Rate & Payment change For each interest rate adjustment, the new interest rate is determined by adding the index to the margin and rounding the total to the nearest l/8 of 1% subject to the interest rate adjustment caps The initial note rate is in effect for 60 months, 84 months and 120 months respectively for 5/1, 7/1 and 10/1 ARMS. The interest rate and payment adjusts every 12 months following the initial fixed rate period. Adjustments/Caps First Adjustment Cap: At the first adjustment, the interest rate cannot be increased or decreased above or below the loan s initial interest more than 5%. Initial Adjustments: 5/1 After 5 years, 7/1 after 7 years and 10/1 after 10 years Subsequent Adjustment Cap: At each subsequent adjustment, the interest rate cannot be increased or decreased above or below the loan's interest rate for the preceding 12 months more than 2%. Lifetime Adjustment Cap: The maximum rate payable over the life of the loan is the loan's initial interest rate plus 5%. Floor: Over the life of the loan, the interest rate can never be lower than the margin. ARM Qualifying Qualifying criteria Loans must qualify with the following criteria: Conversion Feature 5/1 ARM must be qualified at the Note Rate + 2% never less than the fully indexed rate based on a fully amortizing principal and interest payment; 7/1 and 10/1 ARM must be qualified at the Note Rate based on a fully amortizing principal and interest payment. The ability to convert an ARM to Fixed Rate loan product is not available 3

4 Topic Criteria ***Note: Topics not addressed in this product guide default to standard SPM policies or FannieMae guidelines if not addressed*** Appraisal Requirements Appraisal must be AIR compliant. Full appraisals (with interior and exterior inspections) required. Drive bys, or other reduced appraisals are not eligible. Appraisal requirements are as follows: o Loan amounts $1,000,000 = One full appraisal Loan amounts >$1,000,000 = Two full appraisals. Age of appraisal may not exceed 120 days from Note Date. (updates/certifications of value are NOT permitted) All appraisal reports are subject to prior investor approval regardless of loan amount. The appraisal prior approval process consists of the following summary of progressive requirements: (No lock needed to submit appraisal for prior approval) o Step #1: Appraisal valuation must fall within negative 10% value range of the investor supported AVM and/or the data supplied must support results yielded o Step #2: (Only applies if step 1 AVM requirements are not met): Investor validates data through vendor process utilizing GEO competent appraiser and realtor with market knowledge within 25 miles of subject. Review includes evaluation of all the data supplied in the appraisal as well as the data supplied by a local Broker and opine on a value which will yield a tolerance to the original appraised value. Appraiser s compliance with FIRREA and USPAP is also included within this validation. o Step #3: (Only applies if step 2 valuation requirements are not met): Field Review is ordered by investor SPM is also required to order a Field Review. Must be from an approved appraisal review company listed in P&P Valuation is reconciled. All applicable SPM appraisal policy requirements apply. 4

5 Assets/ Documentation Eligible sources of funds include standard liquid assets fully disclosed by Borrower and verified by UW as stated in documentation topic o Verification of liquidation of assets (if applicable) is required whenever funds are needed to close o Stocks, Bonds & Mutual Funds (Up to 70%) may be used for both funds to closing & reserves. o Vested Retirement accounts(up to 60%) may be used for both funds to close & reserves. Documentation to include liquidation of funds for closing, and accessibility/ability to liquidate of funds for reserves. o Business funds may be utilized ONLY for down payment (not reserves) and all of the following criteria must be met: Borrower must be 100% owner of company Letter from business accountant is required confirming that the withdrawal will not be negatively impact the business UW must complete FNMA comparative analysis 1088 and FNMA Solvency/Liquidity Test to be included in the loan file. Gifts from relatives are allowed, however borrower are required a minimum 5% own funds contribution. Complete documentation to include gift letter, donor ability, transfer of gift funds, and borrower receipt. Ineligible sources of funds include: Gift funds from Non Relatives Gift of Equity, Grant funds, Pooled funds, Builder profits, Employer assistance assets. Assumable Reminder: All assets should be disclosed on loan application (not just funds needed for closing). Asset evaluations are vital considerations for this loan product and Underwriter must verify all assets. Not assumable Automated Underwriting/ Approval Automated underwriting is not permitted. Manual underwriting is the only method available. Investor prior Underwrite option is not available. SPM is fully delegated. o UW authority: delegated to $650,000 o OPS manager s signature required for loans $650,001 to $1,000,000. o OPS manager underwrite required for loans > $1,000,000. Corporate 2 nd signature will be required 5

6 Topic Criteria ***Note: Topics not addressed in this product guide default to standard SPM policies or FannieMae guidelines if not addressed*** Borrower Eligibility Eligible Borrowers: U.S. Citizens Permanent Resident Aliens Non Permanent Resident Aliens: Must have an unexpired passport from their county of citizenship containing INS form 1 94 which must be stamped Employment authorized. An Employment Authorization Card along with a copy of the Petition for Non Immigrant Worker (form I 140) in file. The borrower (s) must have a minimum of 5 years residency, with the likelihood of employment continuance for at least 3 years. Owner Occupied only, Single Family & Condo Only H1Band H2B Visas are accepted Visa must have a minimum remaining duration of 3 years Borrowers with diplomatic immunity of A1, A2, or A3 Visas are ineligible 70% LTV/CLTV Maximum Intervivos Revocable Trust vestings are permitted. First Time Homebuyer permitted see section on First Time Homebuyers for full details and restrictions In eligible Borrowers: Borrowers who own >4 financed properties Foreign Nationals Irrevocable or Blind Trust Non occupant Co Borrowers. Any type of business vestings such as: Partnerships, LLC s, or Corporations are also prohibited. Condo Condo projects with < 10 units are not eligible Condo project must be warrantable to FNMA Full Project Reviews required either PERS or CPM Streamline project reviews as not allowed 6

7 Credit Residential Mortgage Credit Report or tri merged in file from all three repositories is required. Credit Report is good for 90 days, from application to closing Mortgage or Rental History must be 0x30 over prior 24 months Rental history evidence by Institutional VOR or 24 months proof of payment Borrowers cannot pay off debt within 90 days of the credit report to qualify for the loan. o UW should closely review loan file information along with credit report on transactions at or nearing 45% DTI. Borrowers with consumer debts paid off or installment debts paid down to 10 months within 90 days of credit report, as they may have been counseled to do such in order to qualify for the loan. Activity within 90 days of the credit report on revolving and installment debt can be excluded from the calculations if the account is closed to further use & there is evidence in the file the account was closed prior to the date of the application. Cash out proceeds may not be used to pay down debt to qualify for the loan. All properties reflected in the file must be considered in overall risk. This includes properties owned by a nonpurchasing spouse. Loans without overall risk clearly documented are not allowed. This applies in all states and not just community property states. Qualifying Credit Score: is determined as follows: All Borrowers on loan transaction must meet minimum FICO requirements The representative credit score for each Borrower is the median of the three scores (or lesser of two, if only two scores are returned); the representative score for the loan is that of the Borrower with the lowest representative score. Minimum trade line requirements. Regardless of the FICO score, EACH BORROWER INDIVIDUALLY & SEPARATELY MUST MEET minimum trade line requirements are as follows: 1. Minimum of three open trade lines that have a 24 month history, 2 of the trade lines must have had activity within the last 6 months. This must be at the time of U/W as well as closing. Current mortgage opened less than 24 months may be combined with prior mortgage on same property. Authorized User accounts may not be used to meet minimum trade line requirements but we must use the debt against the borrower to qualify If a borrower can t meet the minimum of 3 tradelines, but IF EACH BORROWER INDIVIDUALLY has a minimum of 1 open tradeline with 12 months or more reporting, it could be considered without exception if the borrower meets the following criteria: 1. 8 or more tradelines reported with at least one being a mortgage tradeline and have a minimum of 7 years established credit history Note: FICO and minimum trade line criteria listed above must be met for each Borrower on the loan. Adverse credit: Borrowers whose credit histories include any of the following are not eligible for this product: o Any mortgage lates within the past 24 months regardless if relative to subject property or other properties owned o Bankruptcy (any type) o Foreclosure o Deed in Lieu or Short Sale o Any loan modification (regardless if accompanied by satisfactory mortgage payment history) will render the loan ineligible for this product. Judgments, Liens and Collections: o All judgments or liens affecting title must be paid o Non title charge offs and collection exceeding $1,000 (either individually or in aggregate) must be paid o Borrowers with a history of collection accounts must be required to pay off derogatory accounts. 7

8 Contribution by Others Conversion Of Primary Residence Declining Market Document ation Standard FannieMae Departing residences, regardless if converted to investment, 2 nd home, or listed for sale requires a minimum of 30% equity Conversion of Current Principal Residence to a Second Home Both the current and proposed Mortgage Payments must be used to qualify the borrower for the new transaction Documented Equity of 30% or more reserves required of 2 months PITI on both properties (subject & current residence) Conversion of Current Principal Residence to Investment Property Documented Equity of 30% or more, 75% of the gross rental income may be used if the following is documented: Fully Executed Lease Agreement Security Deposit from tenant, and Bank statement showing the deposited Security Funds 2 months PITI reserves on current residence Documented equity of at least 30% in the current residence is confirmed using a full appraisal report obtained from a National Approval Appraisal firm dated no more than 60 day from Note Date A 5% reduction from allowable LTV is required for all properties located in a declining market as identified in the appraisal report. The Declining Market list is no longer applicable and has been removed from the website. Age of documentation (except appraisal report) may not exceed 90 days from Note date. Please refer to Appraisal topic for document age requirements. Full income documentation required. Assets: Full Asset Documentation is required for both funds to close and reserves. For most asset types, this would include all pages of the most recent two months statements or the most recent quarterly statement. 2 months most recent consecutive bank statements or Internet Printouts covering a full 60 days of activity (containing all credit & debits w/running balance) teller stamped certifying printout. Explain and document source of funds for large deposits following FNMA guideline >25% of monthly qualifying income pay particular attention to multiple deposits of $9000 $9999 Minimum 2 years verified employment is required for all Borrowers: Continuous employment with same employer or in the same industry o SPM verbal policy requirements applies o Wage Earner/Salaried requires: Most recent full 30 day system generated paystub reflecting YTD earnings Two year s W 2 s 8

9 Documentation EEM Escrow Holdbacks Exceptions First Time Homebuyers o Self employed requires: Documented continuous ownership in same business for minimum of 2 full years Personal tax returns for most recent 2 years Business tax returns for most recent 2 years o 25% or more ownership in a company: Requires 2 years tax returns Due to the liability implications incurred by a General Partner, any K 1 reflecting Borrower s General Partnership interest (regardless of %) will require accompanying business returns and analysis. o Commissioned/Bonus Income: Requires complete 2 year s tax returns o Reminder: The 1084 Cash Flow Analysis must be completed in its entirety for any and all applicable businesses. The analysis for each separate business should be clearly identified on the form. o Audited P&L s and Balance Sheets required where Fannie Mae accepts audited or unaudited at u/w discretion. Any dissolved businesses require satisfactory evidence of dissolution and verification of no outstanding liabilities. IRS #4506 transcript validating the most recent two tax years are required for all loan transactions o All Business Returns and Personal returns must be validated o Another fully executed #4506 T must be obtained at closing. Currently the investor is requesting the following in lieu of validated 2012 individual & business returns: 1. CPA Audited Profit & Loss and Balance Sheet for 2012 or 2. Profit & Loss and Balance Sheet for 2012 (all business ) AND 3. CPA Letter stating income is consistent or increasing from 2011 due to..(whatever contributing factor supports the increased earnings), and the expenses remained consistent or directly proportionate to increased earnings. AND 4. Supporting documentation to support the P&L and Balance Sheet (i.e. Sales Tax Qtrly Returns, New Long Term Contract, W 2 s, 1099 s, Business Bank Statements, Quarterly Tax payment ) 5. Validated 2010 and 2011 both personal and business returns. Energy Efficient Mortgages (EEM s) are not permitted. Not permitted Exceptions to these product requirements are not available First Time Homebuyer is an individual that has not had a Residential Mortgage Loan and/or owned a home in the past 3 years Maximum Loan Amount $1,200,000 Loan Amounts up to $1,000,000 require 12 months verified PITI reserves Loan Amounts $1,000,000 $1,200,000 require 18 months verified PITI reserves On joint loans, if 1 borrower is a First Time Homebuyer then the First Time Homebuyers restrictions apply to the transaction Payment Shock requirements apply 9

10 Geographic Restrictions Housing History Interest Only Feature LTV calcs (Refinance) Loan Transactions Geographic restrictions apply. Please refer to Geographic restriction table. Note: Texas (a)(6) and loan transactions in the state of Ohio are not eligible. Mortgage or Rental History must be 0x30 over prior 24 months! Rental history evidenced by Institutional VOR or 24 months proof of payments Not available Owned less than 12 months: Based off lower of purchase price or appraised value Owned greater than 12 months: Based on appraised value Purchase: Arms length bona fide transactions only. Rate/Term Refi: o If owned less than 12 months, LTV must be based on lower of appraised value or original sales price plus the cost of any documented improvements. If the value has increased greater than 15%, photographs of improvements are required. o Owned > 12 months, LTV is based on current appraised value. HUD 1 or Deed must be provided to verify ownership o Non Purchase Money Closed End or Private Party seconds over 12 months can be paid off and considered R&T o For a Private Party second the following documentation is required The lien must be properly recorded Fully executed Note/Deed must be legible, verbal agreements are not acceptable. Must be seasoned at least one year. Acceptable mortgage history must be documented with cancelled checks (no lates) Subject to modifications, forgiveness of debt and short pay off restriction policy in the P&P. The underwriter is responsible to perform due diligence and make a prudent u/w decision. o HELOC: Loan (in First or Second position) may be considered Rate/Term if there has not been any activity/draws within last 12 months. The HELOC must be paid (if there is an outstanding balance) and closed. Reminder: Just paying off the balance will NOT close the HELOC! Multiple Properties Owned Borrowers owning > 2 financed properties up to a maximum of 4 financed properties including subject property are subject to the following requirements: LTV reduction is 10% below the maximum otherwise applicable for the specific loan Minimum 18 months verified PITI, unless higher reserve level required as stated in matrix. Does not include multifamily (>4 units) or Commercial unless borrower is personally liable in which they then would be included in the count for financed properties If the borrower(s) can qualify with all financed properties PITI without rental income, the 10% reduction in LTV is not applicable. Borrower will be required to hold the greater of 18 months reserves or otherwise stated for the subject property and 6 months for each additional finance property in lieu of the 10% reduction. All properties reflected in the file must be considered in overall risk. This includes properties owned by a nonpurchasing spouse. Loans without overall risk clearly documented are not allowed. This applies in all states and not just community property states. You do not use the income or rent loss on these properties owned by the non borrowing spouse. 10

11 Non Occ Co Borrower Not permitted Non Arms Length Pmt Shock Property Eligibility Properties For Sale A Non Arms Length transaction is one where there is a relationship or business affiliation between the Buyer and Seller, or Buyer/Seller/Borrower and the Loan Agent or Buyer/Seller/Borrower and Originator in the loan transaction. NAL applies to BOTH Purchase and Refinance Transactions Non Arms Length transactions as described herein are not eligible. AIT considered on case by case basis Payment shock cannot exceed 250% for First Time Home Buyers and Borrowers with < 5 years job history and consistent earned income. Borrower who sold their home within the last 180 days, use the prior mortgage payment for purposed of payment shock calculation. If the home is owned free and clear, use the prior mortgage payment. A copy of the HUD 1 for the sold home or proof of payoff is required when using the prior mortgage payment Refinance transactions are excluded Eligible Properties: SFD with less than 10 acres sites, PUDs FNMA Warrantable Condo s (Full project review required CPM or PERS no streamline review allowed). Condo projects > minimum 10 units. Unpermitted additions: Appraiser must comment that any unpermitted addition is typical for the area and will not adversely affect the property value. Second Home: Must be located in resort area and location at least 50 miles from primary residence Ineligible Properties: Non warrantable Condo s Condo projects < 10 units, Manufactured Housing, Condo tels, Mobile Homes Properties that are atypical for the area Mixed Use Properties Log Homes Properties with >10 acres. Hobby Farms Multi unit properties (3 4 unit primary residences & 2 4 unit second homes) For Refinance transactions, the property may NOT have been listed For Sale within the past 6 months of loan application date. A FULL 6 months must have elapsed between loan application date and listing date. 11

12 Refinance Cash Out Refinance Rate & Term Reserve Requirement For Cash Out Transaction, maximum cash out amount of $500,000 to 60% LTV/CLTV, Fico 720 For Cash Out Transaction, maximum cash out amount of $350,000 to 65% LTV/CLTV Fico 720 Maximum Cash Out amounts includes any amount above recorded lien payoffs. (i.e. debt payoff) The loan being paid off must be seasoned for at least 6 months. Properties that had been offered for sale must be delisted 6 months prior to the application date Properties owned < 12 months, use the lesser of the original purchase price or new appraised value The refinancing of non purchase money closed end & HELOC s 2 nd liens will be considered a rate/term refinance if they are seasoned >12 month and there are no draws on the HELOC within the last 12 months Properties that had been offered for sale must be delisted 6 months prior to the application date Properties owned < 12 months, use the lesser of the original purchase price or new appraised value Limited cash out will be lesser of 1% or $10,000 Reserve requirements are tiered in accordance to loan amounts. The reserves are based on the subject property only, unless otherwise stated. Gift funds or Business funds may not be utilized for reserves. Reserves Primary Residence Loan Amount Required Reserves First Time Homebuyer Up to $1,000,000 6 months PITI 12 months PITI $1,000,0001 $1,500,000 9 months PITI 18 months PITI $1,500,001 $2,000, months PITI Not applicable Reserves Second Home Loan Amount Required Reserves Up to $1,000, months PITI $1,000,001 $1,500, months PITI $1,500,001 $2,000, months PITI Borrower has > 2 financed Properties 18 months PITI, unless reserve higher reserves level required as per Loan Amount Secondary Financing Texas(a)(6) Temporary Buy downs Vesting New Secondary Financing is not permitted. Existing Secondary Financing may be subordinated subject to maximum parameters stated in matrix. Texas (a) (6) loans are not permitted. Not Permitted Individual borrower fractional interest percentage allowed. All borrowers must sign the Security Instrument and Note and will be equally obligated. The title company will have to approve and insure such vesting. 12