Home Equity Line of Credit

Transcription

1 Wholesale Lending Home Equity Line of Credit The Home Equity Line of Credit (HELOC) Washington Federal provides is an openend revolving line of credit secured by a primary residence that places WAFED in either first or second lien position: Draws can be made with WAFED provided checks, on-line banking, by phone, or in person at a WAFED retail branch. As the line is paid down, the funds become available again. Only one HELOC will be permitted per property. Not available on Second Home or Non-Owner Occupied properties. Loan Type: Monthly Adjustable Line of Credit. Owner-Occupied only; not available on Second Homes or Non- Owner Occupied properties. Not available in conjunction with the All-in-One Custom Construction loan. WAFED must also have the new 1 st mortgage in addition to the HELOC if a borrower is purchasing a new home or refinancing an existing home. Term: Minimum Line Amount: Maximum Line Amount: 10-year revolving credit line with interest-only payments required monthly. After 10 years, monthly payments are due based on 15-year amortization. Balance due at the end of 25-year term. (An extension of the 10-year draw period may be offered by WAFED.) No minimum. However, if the line is under $25,000, borrower must pay for ALL third-party origination costs. $700,000 A specific credit limit will be determined in underwriting based on borrower s qualifications. A request to raise the credit limit after closing Page 1 of 8 HELOC 10/3/15

2 will require a new application. Maximum LTV and CLTV: Borrower Type: Property Type For HELOCs up to $250,000: Maximum 80% LTV/CLTV based on current appraised value. Maximum 60% LTV/CLTV based on current Tax Assessed Value (TAV) and Automated Valuation Model (AVM); whichever value is less. For HELOCs $250,001-$700,000: Loans based on TAV and AVM are not permitted; a current appraisal is always required; Maximum 80% CLTV for Combined Loan Amount (CLA) up to $700K; Maximum 75% CLTV for CLA up to $850K; Maximum 65% LTV for CLA over $850K; HELOC with WAFED is always limited to $700K maximum. Manufactured Homes: Limited to 60% CLTV of appraised value; and WAFED must have the current first mortgage or Borrower must already own the property free and clear. Refer to Manufactured Home Program Description for further details on manufactured home loan requirements. HELOCs are offered to individuals only, with the exception of closely held family trusts for estate purposes. Example of an acceptable family trust vesting is: Joe and Jane Smith, husband and wife, Co- Trustees for the Joe and Jane Smith Living Trust. No LLCs, Corporations, or any other Non-Personal Borrowing Entities are permitted. Power of Attorneys are also not permitted. Detached and attached SFRs on 10 acres or less: Owner Occupied only; Second Homes and Non-Owner Occupied not permitted; Homes listed for sale within last 12 months are not permitted; Leaseholds are not permitted; Manufactured Homes permitted only if WAFED has the current first mortgage or if borrower owns the property F&C; limited to 60% CLTV; refer to separate Manufactured Home Program Description for complete details on Manufactured Home requirements; Owner-Occupied 2-4 Family considered case-by-case. Page 2 of 8 HELOC 10/3/15

3 Fees Charged to WAFED and Borrower: HELOC Interest Rate: WAFED will not charge an origination fee for a HELOC. If broker wants to charge an origination fee, the borrower will be required to pay whatever has been agreed to at closing (see important note below). WAFED will pay for the Tax Service, Flood Determination and the AVM unless the HELOC is under $25,000, in which case the borrower will be required to pay these third-party service provider fees. WAFED will not charge any fee for Underwriting, Processing, Document Preparation or Property Inspection. If a current appraisal is required, the borrower will be required to pay that charge. The Borrower will be required to pay for all third-party services that the Broker orders. In addition to the appraisal fee, if required, this would typically include the credit report, title policy, settlement/closing fee, recording fees and hazard and/or flood insurance, if required. If the HELOC is under $25,000, the borrower will have to pay for ALL third-party services (not just those the Broker orders). Any fees that are the Borrower s responsibility will be assessed against the credit line at closing as an advance. An $85.00 annual fee to WAFED will be assessed to the equity line on each anniversary date of the line and will be waived for the first year and any year that the average balance of the line is $10,000 or more. Important Note: A borrower will not have to pay ANY origination fees or fees to third-party service providers for a HELOC over $25,000 that is obtained directly from WAFED-Retail (with the exception of the appraisal fee, if required, and escrow/closing fee). Although we are happy to provide this financing option to our approved brokers, you should be aware upfront that you will need to charge the borrower as disclosed above. HELOC Rates are provided in the WAFED HELOC Rate Matrix (Matrix), which will be provided to broker upon request: Prime = Wall Street Journal (WSJ) Prime Rate The HELOC Rates provided in the Matrix require monthly payments be made via EZ Pay (automatic payment from checking account of Borrower s choice.); Add 1% to rates provided in Matrix if borrower chooses NOT to make monthly payments by EZ Pay; An additional interest rate adjustment may apply to rates posted in Matrix if underwriting determines there are non-conforming Page 3 of 8 HELOC 10/3/15

4 characteristics with borrower (credit, income, etc.) or property qualifications; Add.25% to rates posted in Matrix for Manufactured Home; The HELOC Interest rate cannot be locked in; The HELOC interest rate will adjust on the 1 st of every month based on the current WSJ Prime Rate; The HELOC Interest Rate Cap is 17.99% and Floor Rate is 3%. Loan Payments to WAFED: EZ Pay/Automatic Payment: Draws: Checks: Monthly interest-only payments are billed on the 1 st and due on the 25th with a minimum payment required equal to the total of the interest for the period, plus any unpaid fees, charges, and past due amounts. If the monthly payment is not received by the 25th day of the month, a late charge of $25 will be assessed 15 days after the due date. After the initial revolving period of 10 years, monthly Principal & Interest payments are due based on a 15-year amortization schedule. The Interest Rate adjusts on the 1st of every month. Additional principal payments may be made at any time. If EZ Pay method is chosen (automatic payment from checking account of Borrower s choice) an interest-only payment will be drawn on the 20th of every month (for the initial revolving period of 10 years). Interest rate will be 1% higher if monthly payments are NOT made by EZ Pay method. The Payment Processing Charge that WAFED normally charges when EZ Pay is not chosen does not apply to HELOC s and will not be charged. Borrower may make additional payments to principal at any time. No initial disbursement to borrower is required (other than to pay for third-party service fees that are the borrower s responsibility). Draws from line can be made with WAFED-provided checks, on-line banking, by phone, or in person at any WAFED retail branch. WAFED reserves the right to reject checks or withdrawal requests that exceed the predetermined credit limit. Monthly interest-only payments are billed on the 1 st and due on the 25th with a minimum payment required equal to the total of the interest for the period, plus any unpaid fees, charges, and past due amounts. If the monthly payment is not received by the 25th day of the month, a Page 4 of 8 HELOC 10/3/15

5 late charge of $25 will be assessed 15 days after the due date. After the initial revolving period of 10 years, monthly Principal & Interest payments are due based on a 15-year amortization schedule. The Interest Rate adjusts on the 1st of every month. Additional principal payments may be made at any time. Billing Statements: Underwriting Requirements: Title Insurance: Monthly billing statements will be mailed unless there is no balance owing, in which case a quarterly statement is mailed. WAFED must have the new 1 st mortgage in addition to the HELOC if a borrower is purchasing a new home or refinancing an existing home. Borrower must be occupying the property as their primary residence. If HELOC is being used to purchase subject property or to pay off an existing lien, borrower must qualify using maximum line amount at 17.99% amortized over 180 months. If HELOC is not being used to purchase subject property or to pay off an existing lien, and line will not be drawn on at closing, borrower must qualify using an interest-only calculation based on the maximum amount of credit line at 8.5% or the current HELOC interest rate according to the WAFED HELOC Rate Matrix, whichever rate is greater; The total debt-to-income ratio (DTI), including the HELOC payment, cannot exceed 43%. 3 Day Right of Rescission will always apply. If a new appraisal is NOT required (due to the ability to rely on the tax assessed value and AVM or an older appraisal on an existing WAFED loan), a WAFED property inspection will be required at no charge. Refer to How to Determine Property Value below to see if a new appraisal is required. Broker is required to order the required policy according to WAFED title policy requirements. The policy-type depends on several factors including loan amount, state, lien position, etc. Borrower is required to pay the title premium at closing: If new HELOC is a First Mortgage Regardless of the Loan Amount All States Order a Full ALTA Title Policy Normal title endorsements required, same as for a Deed of Trust/Mortgage: ALTA Extended; Address and Environmental Protection Endorsement and, if applicable, Condominium, PUD and/or Manufactured Home Endorsement. Paid for by the borrower. Page 5 of 8 HELOC 10/3/15

6 Loan Amount of $50,000 or less All states except Idaho Order a Current Owner Title Search from Southwest Financial Services, Ltd. No title endorsements required; Paid for by the borrower. Loan Amount of $50,000 or less Idaho only Order a Lot Book Report from approved title companies; check with local Wholesale Department for which title companies are approved; No title endorsements required; Loan Amount greater than $50,000 to $100,000 All states except New Mexico Order a Junior Title Policy (aka Limited Policy ) from title companies you regularly use for title services. No Endorsements required Loan Amount greater than $100,000 to $250,000 All states except New Mexico and Oregon Order a Junior Title Policy (aka Limited Policy ) from title companies you regularly use for title services; No title endorsements required. Loan Amount over $50,000 to $250,000 New Mexico Only Order a Full ALTA Title Policy Normal title endorsements required; Loan Amount greater than $100,000 to $250,000 Oregon only Order a Standard Title Policy ; No title endorsements are available, thus not required. Loan Amount greater than $250,000 All States Order a Full ALTA Title Policy ; Normal title endorsements required, same as for a Deed of Trust/Mortgage: ALTA Extended; Address and Environmental Protection Endorsement and, if applicable, Condominium, PUD and/or Manufactured Home Endorsement. How to Determine Property Value: If HELOC is $250,000 or less: Manufactured Homes require a current appraisal to determine value; limited to 60% CLTV. Broker to order and fee paid by borrower. If property is not a Manufactured Home and CLTV is 60% or less, the lesser of current Tax Assessed Value (TAV) or Automated Valuation Model (AVM) can be used in lieu of a current appraisal. If this method is used to determine value, WAFED will order and pay fees associated. A satisfactory WAFED Property Inspection will also be required at no cost. Page 6 of 8 HELOC 10/3/15

7 A current appraisal is required any time the TAV and AVM requirements above cannot be met. If HELOC is $250,001-$700,000: A current appraisal is required; cannot exceed 6 months of age. Broker to order and fee paid by borrower. If existing 1 st Mortgage is with WAFED and it is less than 6 months old, you may be able to use the appraisal in WAFED loan file, subject to underwriting approval. A satisfactory WAFED property inspection is required at no cost. Required Compliance Disclosures: Mortgage Insurance: Property Tax Status Research Fee: Flood Certification: Reserves aka Impounds: Cancellation Fee: At time of application: The Broker is required to provide the Borrower the Federal Reserve published booklet titled What You Should Know About Home Equity Lines of Credit. (If you do not have this booklet, we can supply it for you.) At time of receiving the Loan Submission Package: WAFED will provide the following additional disclosures: WAFED Form LO367: Home Equity Line of Credit Disclosure WAFED Form LO325: Privacy, USA Patriot & Fact Act Notice Housing Counselors List And the following forms will be required for completion by borrower(s) prior to underwriting: Continuation of Income Certification (WAFED form: Requires borrower to complete, sign, and return.) IRS Form 4506T: Required if tax returns are used to calculate any or all of borrower s income used to qualify. Not required. Not required if there is a 1st mortgage with any Lender. If a 1st mortgage does not exist, Tax Service is required. WAFED will order and pay for the charge associated. Required on every HELOC regardless of whether or not there is a 1 st mortgage with any Lender, including WAFED. WAFED will order and pay for the charge associated. Not applicable. If any third-party service provider fees are paid by WAFED at origination, a $500 Cancellation and Reconveyance Fee will be collected if the line is cancelled within the first three years. The Page 7 of 8 HELOC 10/3/15

8 Cancellation and Reconveyance Fee will be waived if the line is refinanced into a permanent WAFED loan. Programs, interest rates, fees, terms and conditions are subject to change without notice. This information is intended for mortgage and real estate professional use only and should not be distributed or shown to consumers or other third parties. If you have received this information from Washington Federal directly by fax or and no longer wish to receive information, please contact us immediately. Washington Federal NMLSR Company # Page 8 of 8 HELOC 10/3/15