. This matrix is intended as an aid to help determine whether a property/loan qualifies for certain financing. It is not intended as a replacement for FHA guidelines. Users are expected to know and comply with FHA requirements. *NOTE: This matrix includes overlays, which may be more restrictive than FHA requirements. A thorough reading of this matrix is recommended. If a topic is not mentioned, refer to FHA guidelines. These Guidelines are subject to change. Program Qualifications: Existing Endorsed FHA Fixed Rate Existing Endorsed FHA ARM At time of loan application borrower must have made 6 months consecutive payment on the FHA-insured mortgage being refinanced. Eligibility Matrix Loan Amount & LTV Limitations FHA Streamline (both full credit and non-credit qualifying) The Base Loan Amount may not exceed the current statutory loan limits, see Streamline Worksheet. The new FHA-insured mortgage may not have a term of more than 12 years in excess of the unexpired term of the existing FHA-insured mortgage. The loan must provide a net tangible benefit to the borrower. A reduction in the loan term without a net tangible benefit must be processed, underwritten and closed as a credit qualifying rate/ term refinance. Maximum 100% LTV Statutory County Limits: (https://entp.hud.gov/idapp/html/hicostlook.cfm) Secondary financing Existing 2 nd mortgage can be subordinated but no new secondary financing is allowed Refer to Section Calculating the Mortgage FHA maximum Mortgage Calculation Worksheet to be completed reviewed and signed by the DE Underwriter Refer to Section Geographic Locations/Restrictions for additional state specific restrictions or requirements. Product Description: Fixed Rate 15, 20, 25 and 30 year term; fully amortized Product Codes: FHA FHA 15 Years Streamline FHA 20 Years Streamline FHA 25 Years Streamline FHA 30 Years Streamline Product Code FHA15FS FHA20FS FHA25FS FHA30FS Eligibility Requirements: Application Appraisal Requirements Appraiser Requirements The Borrower s application must indicate their income source; however, the income is not required to be listed on the application, just the source of the income. The following sections of the loan application are not required to be completed. Section IV (only the Monthly Income questions) Section V, VI (must complete assets if funds are required to close) An appraisal is not required If an appraisal is used the Appraiser must be a 2055 appraisal and the appraisal company must adhere to the Appraiser Independent Requirements (AIR).
Assets Borrowers Calculating the New Mortgage Amount If assets are needed to close, verification of the assets is required regardless of the amount needed to close. Documentation required is as follows. Verification of Deposit or Most recent bank statement Large Deposits Any large non-payroll deposits may, at the underwriter s discretion, need to be sourced if they are determined to affect the funds to close. Borrowers may be deleted from the title on a streamlined refinance in the situations other than death. Property was transferred as a result of a divorce decree, Assumption or quit claim of interest occurred more than 6 months previously, and Remaining owner-occupant can demonstrate that he/she has made the mortgage payments (and was not delinquent) during this time; The borrower remaining must have been an original borrower on the Note and Title. This must be done as a Full-Credit Qualifying Streamline Refinance; no exception. MAXIMUM MORTGAGE CALCULATION WORKSHEETS Refer to Section Geographic Locations/Restrictions for additional state specific restrictions or requirements The maximum base mortgage cannot exceed the lower of the county loan limits or: Unpaid principal balance (includes 30 days interest charged by servicing lender for the current month) Plus the interest charged by the servicing lender when the payoff will not be received on the first day of the month, but may not include delinquent interest, late charges or escrow shortages. MINUS Unearned UFMIP (from FHA refinance Authorization or appropriate MIP Refund Schedule) PLUS New UFMIP Closing costs, pre-paid expenses and discount points, late changes and escrow shortages may not be financed into the new loan. Principal Curtailment limited to maximum $2,000 at closing and must be on the HUD-1. If the amount exceeds $2,000 then the loan must be recalculated and reapproved with new documents drawn and signed by the borrower. The principal curtailment may not be done after closing. Credit Additional Requirements Owner Occupied properties only LTV calculation is required only to determine if annual MIP is required on loans with 15-year term or less. The original appraised value is used to make this determination and is obtained using the Case Query Screen in FHA Connection Term of new mortgage is the lesser of 30 years or the un-expired term of the current mortgage plus 12 years. (This is particularly important when the term of the original loan was 15 years) New secondary financing is ineligible. No cash back to borrower permitted (incidental minor adjustment at closing not exceeding $500.00 cash back is eligible). Refinance Authorization information must be obtained at Case Number Assignment directly from FHA Connection Premium pricing is eligible Non-credit qualifying loan, the following is required. 680 minimum credit score required A Streamline, tri-merge report with Mortgage only account credit rating Mortgage payments must have been made within the month due Full-credit qualifying loan, the following is required 640 minimum credit score required A tri-merge credit report Mortgage account rating with 0x30 in the last 12 months Non-traditional credit is ineligible Rev. 7/30/2013 Page 2
Employment / Income Non-Credit qualifying loans Verification of Employment Salaried Verbal Verification of Employment Self-employed Verification of business through third party source Retirement and/or Social Security Award letter Income The Borrower s application must indicate their income source; however, the income is not required to be listed on the application. Form 4506-T is not required Escrow Holdback Escrow Waivers Financing Types Internet Links Mortgage Insurance Multiple Major Events Occupancy Prepayment Penalty Processing Property Types Full-credit qualifying loans Standard 2 years of income documentation required Form 4506-T is required Ineligible Ineligible Properties listed for sale in the last 6 months are eligible as follows. Property has been taken off the market on or before the application date. Borrower provides written confirmation of the intent to occupy if a primary residence. To access Mortgagee Letters, National HOC Reference Guide, HOC Letters, Handbooks, go to: HUD Forms, Handbook & Mortgagee Letters Mortgage Insurance is required on all loans. Refer to the Fidelity Bank FHA Mortgage Insurance Matrix for details on UPMIP and monthly MIP) The section of the Act under which the loan will be insured determines the mortgage insurance to be used. Sections 203b, and 234c (Condos) Up Front MIP (UFMIP) is required Monthly MIP is required Borrowers reflecting multiple major derogatory events are subject to additional seasoning and credit requirements. See Serious Seasoning Requirements section below. Primary Residence A borrower who has re-occupied an investment or second home within 12 months from the application date is ineligible. Not permitted. However, if refinancing and the payoff check for the existing loan is not received by the servicing lender by the first day of the month, the lender may collect interest on the existing loan through the end of the month. Streamline Eligible 1 unit only o PUDs o Modular Pre-Cut/Panelized housing o Condos (including site condos) do not require condominium project approval Ineligible 2-4 units Condo Hotels Co-ops Manufactured Homes Properties located within designated Coastal Barrier Resource System (CBRS) areas Rev. 7/30/2013 Page 3
Qualifying Rate and Ratios Qualify at Note Rate Non-Credit Qualifying Streamline Ratios are not calculated The Borrower s application must indicate their income source; however, the income is not required to be listed on the application. Full-Credit Qualifying Streamline Primary Residence 43% maximum DTI ratio o 43% DTI ratio may be exceeded provided ratio does not exceed 50%, o Borrower(s) must meet ALL of the following guidelines: Credit Payment History Analysis No active revolving, installment or mortgage account may be presently past due and must be 0x30 in the last 12 months on all credit Seasoning Serious Seasoning Requirement Credit Score DTI Housing Payment History Verification Reserves Serious Credit Tradeline Requirement Minimum of 3 traditional tradelines each reporting the Tri-Merge Credit Report with at least 12 months of acceptable payment history. The tradelines may be either open or closed with date of last activity within the last 24 months. Authorized User Accounts and Deferred Student Loans with no payment history do not meet this criterion Minimum score of 660 or greater Maximum DTI allowed not to exceed 50% - no Exception If the borrower(s) rent, a VOR is required regardless of AUS Findings If the landlord is a private individual, twelve (12) months of cancelled checks are required If the borrower(s) has no verifiable housing payment history, the loan is not eligible for a DTI ratio greater than 50% Minimum of 2 months of reserves Must be from borrower s own funds Type FHA Streamline (DTI>43% <=50%) Bankruptcy 13 2 Bankruptcy 7 4 Short Sale 4 Foreclosure 4 NOTE: Refer to Serious Seasoning Requirements section for more information regarding Borrowers with Multiple Major Derogatories as they have additional seasoning and credit requirements that is different than the table above. Existing FHA Case Number must be seasoned for 210 days from the closing date of the mortgage being refinanced Borrower must have made 12 payments on the existing mortgage within the month due prior to application. Type Borrowers with One Serious : FHA Streamline (Non-Credit Qualifying) FHA Streamline DTI>43% to <=50%) exception* Bankruptcy 13 2 years 2 years Bankruptcy 7 2 years 4 years Short Sale 3 years 4 years Foreclosure 3 years 4 years * Borrowers reflecting multiple major derogatory events are not eligible for DTI Exception Borrowers with Multiple Major Derogatories from separate events: For borrowers that have experienced more than one serious derogatory and were not connected but rather two separate events, there is an additional one year of seasoning required that is applied to the most recent derogatory event as well as additional credit requirements below. The matrix below includes the one additional year of seasoning required. Rev. 7/30/2013 Page 4
Bankruptcy 13 Bankruptcy 7 Short Sale Foreclosure FHA 3 years 3 years 4 years 4 years Special Documentation Requirements or Enhancements Special Requirements/ Restrictions Additional requirements for Borrowers with Multiple Major Derogatories: o In addition to the required waiting period and guidelines, the loan will be reviewed to assess the overall risk and is subject to Underwriting s discretion. o Minimum FICO required 680 o Max DTI 45% o Satisfactory explanation of the multiple events is required o Borrower must possess a 100% clean payment record history since the most recent major derogatory event and the application date. Any derogatory credit of any kind (any installment/revolving late payments, collections, tax liens, including a history of NSF fees found on bank statements) would result in a denial. No exceptions regardless of circumstance The Loan Application (URLA) plus the HUD Addendum 92900A must be complete and fully executed by all borrowers prior to underwriting. An abbreviated version of the URLA is not acceptable. Evidence of valid Social Security Number is required on all loans Evidence of Refinance Authorization data and New Case Number Assignment obtained from FHA Connection (print screens and place in loan file) Check current deed or title to verify at least one borrower is listed as owner Current mortgage payoff statement must be provided Good Faith Estimate Evidence mortgage is current (mortgage history) URLA and signed HUD Addendum FHA Loan Underwriting and Transmittal Summary, HUD Form 92900-LT signed by DE Underwriter FHA Maximum Mortgage Calculation Worksheet GSA and LDP, Procurement/Non-procurement lists must be checked CAIVRS check is not required Important Notice to Homebuyer (92900B) Informed Consumer Choice Disclosure Notice Flood Certificate Copy of Existing HUD-1 Determine the amount of Upfront MIP paid, if any, and verify existing FHA case number Copy of Existing Note Verify the current information from the note: Date of note, FHA case number, loan amount, interest rate, P&I amount, and loan term. Also, verify that borrowers and property are the same on current loan and on new loan application.) Net Tangible Benefit There must be a net tangible benefit as a result of the streamline refinance transaction without an appraisal. Net tangible benefit is defined as follows: o 5%reduction to the P & I of the mortgage payment plus the annual MIP OR o refinancing from an adjustable rate mortgage (ARM) to a fixed rate mortgage The following table defines the permissible minimum thresholds to define net tangible benefit From To Fixed Rate Fixed Rate One-Year ARM Hybrid ARM During Fixed Period ( e.g. for 3/1 Hybrid ARM, first 3 years is fixed rate period) Hybrid ARM During Adjustable Period (Adjustable period is period when rate adjusts annually) Reduction of at least 5% of P&I and Annual MIP New interest rate no greater than 2% above the current interest rate of the ARM Reduction of at least 5% of P&I and Annual MIP New interest rate no greater than 2% above the current interest rate of the ARM Rev. 7/30/2013 Page 5
Subordinate Financing Deleting a Borrower o Deleting a borrower is ineligible, except for certain circumstances and with supporting documentation. See Borrowers section. Adding a Borrower o May be added Adding an Individual to Title May be added New secondary financing is not allowed An existing 2 nd mortgage/heloc can be subordinated, but cannot exceed the Max CLTV: FHA LTV and CLTV limits are calculated using base loan amount and do not include UFMIP Underwriting Streamline with an appraisal, the maximum CLTV including UFMIP is 100% of the new appraised value Streamline without an appraisal, the maximum CLTV including UFMIP is 125% of the original appraised value Loan must be manually underwritten by a DE Underwriter employed by Fidelity Loans are ineligible for submission to TOTAL Scorecard. Do not run through AUS. The DE must sign and use their CHUMS identification number on page 3 of the HUD Addendum 92900A and Page 1 of the FHA Loan Underwriting and Transmittal Summary. The Loan Application (URLA) plus the HUD Addendum 92900A must be complete and fully executed by all borrowers prior to underwriting. The following sections of the loan application are not required to be completed. o Section IV (only the Monthly Income questions) o Section V, VI (must complete assets if funds are required to close) Rev. 7/30/2013 Page 6