Program Summary A Conforming High Balance Conventional loan with increased loan size limits, featuring a 30-year and 15-year fixed interest rate for the term of the loan. Loan Term & Program Category Loan Term 30-year fixed 15-year fixed Program Category Conf High Balance Fixed 30 yr Conf High Balance Fixed 15 yr Transaction Type Purchase Rate/term Refinance Cash-out refinance Delayed Financing exception: Borrowers who purchased the subject property within the last six (6) months may be eligible for a cash-out refinance if all of the following requirements are met: The original purchase transaction was an arms-length transaction. Original purchase transaction documented by HUD-1 Settlement Statement confirming no mortgage financing was used to obtain the property. Title must confirm there are no existing liens on the property. The source of funds for the purchase transaction are documented. If the source of funds used to acquire the property was an unsecured loan or a loan secured by an asset other than the subject property, the HUD-1 for the refinance transaction must reflect that all cash-out proceeds be used to pay down the loan used to purchase the property. Any payments remaining on the original loan must be included in the DTI calculation for the new loan. The new loan amount can be no more the actual documented amount of the borrower s initial investment in purchasing the property plus the financing of closing cost, prepaid fees, and points on the new mortgage loan. All other cash-out refinance eligibility requirements must be met. Occupancy Owner-occupied primary residences Second homes Investment properties Documentation Type Full/alternative documentation only. 01/16/14 Page 1 of 6
Loan Limits Minimum loan amounts must be greater than noted below: Units Must be greater than One-Unit $417,000 Two-Unit $533,850 Three-Unit $645,300 Four-Unit $801,950 Maximum loan amount are determined by the applicable MSA property area. Based on the zip code, AUS will identify the county in which the subject property is located and will apply the maximum loan limits for each Conforming High Balance case file. If AUS is unable to identify the county, AUS will default to a maximum loan amount of $417,000. The link below can be utilized to manually check the loan limit for a specific county. http://www.fhfa.gov/webfiles/25796/fullcountyloanlimitlist2014_he RA-BASED_FINAL_FLAT.xlsx Maximum LTV/CLTV Purchase and Rate/Term Refinance 2,4 Property Type Minimum Credit Score LTV/CLTV 3 HCLTV 1,3 Primary Residence 1 unit 660 75/75% 75% 1 unit 700 80/80% 80% 1 unit 720 90/90% 90% 2-4 units 740 75/75% 75% Second Home 1 unit 740 65/65% 65% Investment 1 unit 740 65/65% 65% 2-4 units 740 65/65% 65% 1. If the secondary financing is a HELOC (HCLTV), the loan amount plus the total credit line amount cannot exceed the HCLTV. 2. Rate/Term refinances require a minimum of 120 days seasoning. Non-purchase junior liens not permitted. 3. CA only: When LTV is greater than 80% a minimum 720 credit score is required. 4. Reduce maximum LTV by 5% if there is subordinate financing. Cash-out Refinance 2 Property Type Minimum Credit Score LTV/CLTV HCLTV 1 Primary Residence 1 unit 740 60/60% 60% 1. If the secondary financing is a HELOC (HCLTV), the loan amount plus the total credit line amount cannot exceed the HCLTV. 2. Minimum 6 months seasoning from purchase. 01/16/14 Page 2 of 6
Eligible Properties Attached/detached SFRs Attached/detached PUDs Low- and high-rise attached condominiums Detached condominiums 2-4 unit properties Ineligible Properties Geographic Restrictions Manufactured housing, cooperatives, non-warrantable condominiums and leaseholds are not allowed. Eligible properties are limited to those states where the company is currently authorized to originate loans. Illinois Land Trusts are not eligible Georgia Power Leaseholds are not eligible Massachusetts: o o Massachusetts subprime loans are not eligible Maximum DTI is 45% unless all borrowers have a credit score of 720 or greater and the maximum LTV is 80%. Eligible Applicants Foreign Nationals are not allowed Trailing wage earner income not allowed Automated Underwriting System Credit All loans must be underwritten through DU or LP. Loan must receive DU recommendation of approve for eligibility or a LP recommendation of accept for eligibility. Manual underwriting is not allowed. LP is not eligible in properties located in Massachusetts. Non-Traditional credit is not allowed. All borrowers must have a credit score. Determining Credit Scores: If two FICO scores are obtained, the applicant s representative FICO score is the lower score. If three FICO scores are obtained, the applicant s representative FICO score is the middle score. If one FICO score is obtained, that score is used as the applicant s representative FICO score If there is more than one applicant, the score from the applicant with the lowest representative FICO scores is used. Derogatory Credit Letters of Explanation Mortgage/Rental History: Payment history of 0x60 last 12 months. Credit reports that reflect derogatory information require a satisfactory written explanation from the applicant explaining the reason(s) for the adverse credit. Letters of explanation must be in the applicant s own words, handwritten or typed, with applicant s signature(s). Bankruptcy: None allowed last 4 years 5 years if more than one filing within the past 7 years Satisfactory re-established credit required 01/16/14 Page 3 of 6
Foreclosure: None allowed last 7 years Satisfactory re-established credit required Credit Cont. Pre-foreclosure/deed-in-lieu/short sale: None allowed in the last four (4) years Maximum LTV is 90.00% Satisfactory re-established credit required Judgments, Garnishments and Liens: Open judgments, garnishments and outstanding liens must be paid off at or prior to closing Documentation of the satisfaction of these liabilities, along with verification of funds sufficient to satisfy these obligations must be provided. Collections: As determined by AUS unless otherwise noted: must meet Agency guidelines. IRS Form 4506-T Qualifying Ratios A 4506-T is required. As determined by AUS, but in no case shall exceed the maximum DTI outlined in the table below. Occupancy/Transaction Max DTI Primary Residence Rate/Term and Purchases 50% 1,2 Second Home and Investment 50% Cash Out 50% 1. For loans with non-occupant co-borrowers, the occupant borrower s qualifying ratios cannot exceed 35%/43%. 2. For properties in the state of MA, maximum DTI is 45% unless all borrowers have a credit score of 720 or greater and the maximum LTV is 80%. Contributions The following maximum percentages will apply according to transaction type: 6% of the lesser of the property s sales price or appraised value, if the loan-to-value/combined loan-to-value ratio for a mortgage secured by a principal residence or second home is over 75% through 90%; 3% of the lesser of the property s sales price or appraised value, if the loan-to-value/combined loan-to-value ratio for a mortgage secured by a principal residence or second home is over 90%; 2% of the lesser of the property s sales price or appraised value, regardless of the loan-to-value/combined loan-to-value ratio, for a mortgage secured by an investment property. Any contributions exceeding the limitations must be deducted from the sales price. The loan-to-value/combined loan-to-value is then based on the lesser of the adjusted sales price or the appraised value. 01/16/14 Page 4 of 6
Reserves Reserve requirements are as follows: Primary Residence 1 Second Home 2 Investment 2 As determined by AUS 2 months PITI 6 months PITI 1. When rental income from a 2-4 unit primary residence is used to qualify, six months reserves are required. 2. 2 months reserves are required on each additional financed property Assets Down Payment / Source of Funds Gift Funds Subordinate Financing Appraisal Seasoning LTV / CLTV Calculation Non-Occupant co-borrower: Assets that are jointly owned by occupant and non-occupant co-borrowers can be included in the 5% minimum borrower contribution requirement (when applicable), Minimum borrower contribution of 5% required if loan-to-value is greater than 80%. Minimum borrower contribution of 5% required if loan-to-value is greater than 80%. Allowed. If loan-to-value is less than or equal to 80% then no gift restrictions. If greater than 80% the minimum borrower contribution must be met. Gifts not allowed on investment properties. Allowed. Refer to the Maximum LTV/CLTV section of the program highlights. One full appraisal is required, with an interior inspection. A field review is also required for loan amounts > $625,500 and LTV/CLTV/HCLTV > 80% or the property value is > $1 million and LTV/CLTV/HCLTV > 75%. Rate/Term Refinance: Minimum 6 months seasoning required if previous refinance was cash out refinance; < 6 months seasoning must treat as cash out refinance. Payoff of junior liens not used to purchase property will be treated as a cash-out refinance. Refinance of existing mortgage that has had a short refinance or been restructured not allowed. The LTV/CLTV is based on the current appraised value for rate/term and cash-out refinances. 01/16/14 Page 5 of 6
Mortgage Insurance Standard Mortgage insurance coverage is required. Borrower paid MI only. Term LTV Coverage <= 20 Years > 20 Years 95.01 97.00% 90.01 95.00% 85.01 90.00% 80.01 85.00% 95.01 97.00% 90.01 95.00% 85.01 90.00% 80.01 85.00% 35% 25% 12% 6% 35% 30% 25% 12% Approved MI Companies: Essent Guaranty Radian Mortgage Assurance MI company restrictions may apply which require more restrictive eligibility &/or financing parameters. Maximum Loans to one Borrower Maximum Financed Properties Escrow Holdbacks Temporary Buydowns The number of properties financed to one Borrower is limited to the lesser of a total of $2,000,000 or a maximum of four (4) with one being their primary residence. Maximum four (4) financed properties including the subject property. Not allowed at this time. Not permitted. Refinance Transactions Must meet Agency continuity of obligation requirements; refer to Agency guidelines. 01/16/14 Page 6 of 6