National Homebuyers Fund With Second Mortgage Investor 38 Retail Only

Transcription

1 National Homebuyers Fund With Second Mortgage Investor 38 Retail Only This program is temporarily suspended. New lock requests will not be accepted effective 6/22/15. Revisions Date Revisions 3/11/15 Updated Section 10-E14 Property Eligibility 4/6/15 Updated Section 10-E9 new link for Income Limits. 5/29/15 Added Section 10-G Closing 6/4/15 Updated Section 10-D1 Disclosing/Information and Section 10-D2 Locking the Loan 10-A Overview National Homebuyers Fund (NHF) offers the NHF FirstDown program in multiple states, and the NHF Access program in California. These programs provide financing up to 99.5% with an FHA first mortgage and a 3% second mortgage. The programs are designed to increase homeownership opportunities to low-to-moderate income individuals and families. First Mortgage Corporation is the servicer. The most current program guidelines and forms can be found at SNMC is delegated to underwrite the first and second mortgage. 10-B General 10-B1 Eligible States Arizona California Colorado Idaho Nevada New Mexico Oregon Texas Utah 10-B2 Product Codes F-NHF30-38 National Homebuyer Fund FHA 30 year mortgage program NHF-2ND National Homebuyer Fund second mortgage program 10-B3 LTV/CLTV Maximum 96.5% LTV / 99.5% CLTV. The CLTV is based on a NHF 30-year fixed rate FHA mortgage and a NHF 15-year fixed rate second mortgage. 10-B4 Loan Type FHA Purchases, Owner Occupied Only SNMC Page 1 June 4, 2015

2 10-B General (cont d) 10-B5 Loan Term 30 Year Fixed Rate only 10-B6 Maximum Loan Amount Follow FHA county loan limits. 10-B7 Electronic Signatures First Mortgage Corporation will allow electronic signatures that comply with FHA s Mortgagee Letter B8 Down Payment Assistance Down Payment Assistance from the NHF second mortgage can be used to fulfill the borrower s required equity contribution, closing costs, Loan Level Price Adjustments, and upfront mortgage insurance premium. SNMC Page 2 June 4, 2015

3 10-C Second Mortgage Program NHF FirstDown and Access 2nd The second mortgage must be entered into Encompass and disclosed. 10-C1 Loan Term 15 Year Fixed Rate, Fully Amortizing 10-C2 Maximum Loan Amount Up to 3% of the lower of the sales price or appraised value. 10-C3 Use of Funds Proceeds may be used for down payment, closing costs, price adjustments, and upfront or single premium MI. No cash back to the borrower from the second loan proceeds. Any overage over POCs (Paid Outside Closing) must be used to reduce principal balance. Any overage over $500 results in redraw of loan documents. 10-D Processing 10-D1 Disclosing/Information Both the 1 st and the 2 nd are to be entered into Encompass. A complete Initial Disclosure package is required for both the 1 st and the 2 nd along with any and all applicable Re-Disclosures (regulatory, program, state specific, etc.). Intent to Proceed (needs to be signed or proof it was delivered). NHF Funding Commitment Notice will be required in every file but not necessary for submission. The NHF Funding Commitment Notice can be found on the First Mortgage Corporation (FMC) website. Once inside the website, under Products, choose FirstDown and complete the fill able document. This commitment notice is necessary to be in compliance with FHA s secondary financing transactions and ONLY applies to the NHF FirstDown Program. Allowable Fees to disclose on the 1 st : o No Max Origination Restriction however, must be reasonable and customary. o Underwriting Fee: Refer to the Branch Manager since this fee varies depending on the Region. o o Buyer or Seller Discounts Allowed. A $350 underwriting fee may be charged in addition to SNMC s Underwriting Fee (for the 2 nd mortgage). Required fees on the 2 nd : o Per Diem Interest. o Applicable Escrow and Title Fees. 10-D2 Locking the Loan Once the loan has received a Cleared to Close from Underwriting, the Loan Officer will lock the loan through Optimal Blue for both the 1 st and 2 nd Mortgages. 10-D3 Miscellaneous There are income and Acquisition limits for this program. See Income Section for more information. SNMC Page 3 June 4, 2015

4 10-E Underwriting All loans must meet the following investor requirements, as well as SNMC guidelines and FHA guidelines. Loans must be run through DU/Total Scorecard. LP approvals are not permitted. Manual underwriting is allowed; see Section 10-E10 for Manual Underwriting Requirements. FHA Back To Work program is not allowed with the NHF program. The borrower is required to have a minimum contribution of.5%. The minimum contribution can be from the borrower s own funds or it can be a gift from a family member (follow HUD 4155 guidelines.) The following must be reflected on the FHA Loan UW and Transmittal Summary: National Homebuyers Fund, Inc. EIN is E1 4506T Requirements IRS tax transcripts will be required for the most recent two years. 10-E2 Assets Checking/Savings Gift funds follow HUD 4155 guidelines 401(k) loans Grants 10-E3 Assumability The first mortgage is assumable per FHA guidelines. 10-E4 Borrower Eligibility Purchase of owner-occupied primary residences only. No first-time homebuyer requirement. Borrower may own other properties which must meet FHA requirements. Non-occupying co-borrowers/co-signers are not allowed. Homebuyer education is required. The MGIC homebuyer course is acceptable. 10-E5 Buydowns Buydowns are not allowed. 10-E6 Credit Score At least one borrower on the transaction must have a minimum 620 credit score with AUS approval. For manual underwriting credit scores, see Section 10-E E7 DTI Max DTI regardless of AUS: 45% for credit scores of % for credit scores of 660+ For manually underwritten loans, ratios over 43% must meet FHA manual underwriting debt ratio guidelines. See ML E8 Gift Funds Gift funds are allowed from family members. Follow HUD 4155 guidelines. SNMC Page 4 June 4, 2015

5 10-E Underwriting (cont d) 10-E9 Income Qualify the borrower based on qualifying (repayment) income, not on household income. Only income used for qualifying is considered in order to meet the program income limits. For example: Income that s input in DU to see if the borrower qualifies for the loan. Income used by underwriting to calculate debt-to-income ratios to qualify the borrower for the loan. Underwriting should not ignore any income documented in the file that the borrower receives on a consistent basis, and meets FHA income guidelines (e.g. 2+ year history); it can be used towards the program qualifying income limit. This includes retirement income, overtime income, bonus income, etc. If using income to qualify the borrower for repayment (DTI), use it towards the program qualifying income limit to determine eligibility for the program. Borrowers must meet the income limits found here: imits%20-% pdf Amended tax returns are acceptable only if the return reflects that the borrower had income reported via W2 or 1099 that was not reported on the original return. Borrowers who are in a repayment plan to the IRS for less than 3 years will be reviewed and considered on a case-by-case basis. Borrowers who are in a repayment plan to the IRS for 3 years or more are generally ineligible for financing. For income derived solely from commissions, the borrower must have 3 months cash reserves over and above their required investment. Qualifying Income Example Husband, wife, 2 children, and Grandma will be moving into the home (5 people). Who has earned income? o The husband and wife work, both with 2+ year history. o The son works part-time with 6 month history. o Grandma receives Social Security income with 2+ year history. Who s going on the loan? o Husband o Wife o Son Whose income is used to qualify for the loan? o Use only the income from the husband and wife. o Do not use income from the son because he doesn t have the 2-year history required to be effective income. Do not use Grandma because she s not going on the loan. SNMC Page 5 June 4, 2015

6 10-E Underwriting (cont d) 10-E10 Manual Underwriting Requirements Minimum credit score is 620 for manual underwrites. Follow ML and the following guidelines. Non-traditional credit is not allowed. Each borrower must have at least one valid credit score. Verification of rent is required by providing 12 months of cancelled checks, or a VOR from a property management company, or a credit supplement showing the property management company verified the rent. If the borrower lived with a family member, the borrower must provide a signed budget letter. Note: A rental reference from a management company with payment history for the most recent 12 months may be used in lieu of 12 months of cancelled checks. A letter of explanation is required for all inquiries and all derogatory credit regardless of the date. The explanation must make sense and be consistent with other credit information in the file. The borrower s credit history cannot include a late payment within the past 12 months on any account. Borrowers with an abundance of poor credit history cannot provide alternative credit to compensate for past poor credit. 10-E11 Mortgage Insurance Follow standard FHA MIP. 10-E12 Occupancy Owner occupied only. 10-E13 Prepayment Penalty There is no prepayment penalty. 10-E14 Property Eligibility Single Family Residences PUDs FHA Approved Condos 2 Units 640 Minimum FICO No Manufactured Homes No HUD REO Properties No Energy Efficient Mortgages No Mortgage Credit Certificates (MCCs) No Unique Properties: earth houses, geodesic homes, log homes, dome homes 10-E15 Purchase Price Limits There are no Purchase Price limits. SNMC Page 6 June 4, 2015

7 10-E Underwriting (cont d) 10-E16 Required Documentation The NHF Access/FirstDown program requires one loan file except for the following additional documents for the second mortgage: Initial and Final 1003 for the NHF Access/FirstDown second with 8.25% and 3% LTV Initial and Final GFE with 8.25% interest rate; 3% loan amount Initial and Final TIL for the second Initial Intent to Proceed for the second Estimated HUD-1 for the second NHF Secondary Financing Notice 10-E17 Reserves No reserves are required with DU approval. For manual underwrites, 1 month PITI is required. 10-E18 Seller Contributions Seller contributions are allowed up to 6%. 10-F Program Fees 10-F1 Allowable Fees Must be reasonable and customary and fully disclosed to the borrower in accordance with all agencies, federal, state and local laws. Follow the investor s rules on limitation of fees for FHA loans. 10-F2 Fees on Second Mortgage $350 is added to SNMC s Underwriting Fee for the first mortgage. 10-F3 Origination Fees There s no maximum restriction on origination fees. Follow QM and HUD RESPA rules. 10-G Closing 10-G1 Drawing Closing Documents Documents are drawn through Encompass or IDS. o Closer MUST make sure the product code, and all terms of loan match between the conditional approval, Encompass and IDS. 10-G2 Cash Back at Closing Borrower cannot receive cash back at closing unless documented as a verified deposit (i.e. cleared earnest money). SNMC Page 7 June 4, 2015