A. First Time Homebuyers Mortgage Loan Program:
Agency Staff performs income underwriting and any tax compliance underwriting on these Mortgage Loans. However, the Participating Lender is responsible for gathering all income and credit documentation and verifications for all adults who will be living in the Borrower’s primary residence and forwarding that documentation to the Agency. Such documentation must be sent per the applicable document checklist. In addition, the Participating Lender is responsible for performing or obtaining all other underwriting and pre-closing requirements of this Guide.
B. NJHMFA Homeward Bound Program:
NJHMFA Homeward Bound Program Mortgage Loans are underwritten, closed and funded according to NJHMFA’s standard procedures as outlined in this Guide and the Mortgage Purchase Agreement. Any exceptions to standard procedures for this program are noted in this section. Mortgage Loans must also comply with the guidelines of the respective Federal government agency insuring or guaranteeing the Mortgage Loan (FHA, USDA or VA).
Use form HMFA 99 for submitting the Underwriting File.
C. NJHMFA Stay at Home Program – FHA Insured Mortgage Loans:
1. The new FHA insured Mortgage Loan can include the outstanding principal balance (from the payoff statement) plus odd day’s interest, minus the applicable refund of the UFMIP, plus the new UFMIP, up to a maximum amount of 97.75% of the original appraised value. One month of annual MI for the current payment due on the existing loan may also included.
2. An itemized calculation of the new loan amount should be written or typed on the payoff statement from the current servicing lender and included with the Purchase Package submitted in accordance with the document checklist.
3. Participating Lenders must follow FHA’s Guidelines in effect at the time of loan application for the streamline refinance per the HUD Handbook 4155.1, Chapter 3, Section C and Chapter 6, Section C.
D. Stay at Home Program - VA Interest Rate Reduction Refinancing Loan (IRRRL) Guidelines:
The new Mortgage Loan can only include the existing VA loan balance, fees and charges permitted by VA, and the VA funding fee.
E. Police and Firemen’s Retirement System Mortgage Loan Program (PFRS):
1. The Participating Lender is responsible for the processing and underwriting of these Mortgage Loans. Approvals must follow Fannie Mae DU guidelines. The Mortgage Loan must have an Approve/Eligible recommendation. Participating 5-10
Lenders are responsible to clear the DU conditions prior to loan submission to the NJHMFA. All other DU recommendations are not eligible. The NJHMFA will not provide prior approvals. The Participating Lender must:
a. Verify the eligibility of each Borrower through an addendum to the Verification of Employment. Verification from the employer is good for four (4) months. If the Mortgage Loan does not close within four (4) months of the date of the employer verification, the Participating Lender must secure a new employer certification. There is no flexibility on this certification.
b. The Participating Lender must attach the form for verification of membership in Police and Firemen’s Retirement System to the VOE and ensure that it is completed in its entirety, and updated as required, by the Borrower’s employer.
c. Make all disclosures as and when required under applicable law.
d. Ensure that all Mortgage Loans with LTV ratios in excess of 80.1% have the appropriate private mortgage insurance.
i. Coverage is required as follows:
95.01% to 97% LTV 35% coverage for a 25 year to 30 year term
95.01% to 97% LTV 30% coverage for under 25 years 90.01% to 95% LTV 30% coverage regardless of term 80.01% to 90% LTV 25% coverage regardless of term ii. Loans with LTV of 80.0% or less are not required to carry mortgage insurance.
iii. Private Mortgage Insurance companies must be Fannie Mae approved.
e. Ensure that the appropriate insurer approves all condominium projects and that documentation of this approval is contained in the loan file.
f. Obtain an appraisal, containing a written certification signed by two persons from the same appraisal company, which shall set forth the opinion of the signatories as to the value of the land and the improvements thereon. Failure of an appraisal to meet this requirement will make the Mortgage Loan ineligible for purchase.
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2. Secondary Financing:
a. Secondary Financing is allowed on purchase money Mortgage Loans as per Fannie Mae Guidelines.
b. Secondary Financing is not allowed on refinance Mortgage Loans.
F. NJHMFA 100% Financing Program:
(NJHMFA Originated - Not available for Participating Lenders) 1. Guidelines:
a. Applicants at the time of Mortgage Loan application must provide evidence of the greater of $800 or the required prepaid escrows as their own assets, plus the required application fee.
b. Qualifying ratios for all 100% Program Mortgage Loans are 28/36 unless : i. The applicant is making a down payment toward the purchase of the
Property of at least 10% and these funds are from their own assets;
ii. Applicant has demonstrated an ability to devote a greater portion of income to basic needs like housing expenses, which means rent for the previous 12 months is equal to or greater than the proposed housing expense;
iii. Applicant has accumulated savings of at least six (6) months PITI remaining after closing AND maintained a good credit history; or
iv. Applicant is debt free.
2. Originations:
The NJHMFA 100% Financing Program is limited to NJHMFA origination and the Mortgage Loans will be underwritten by NJHMFA staff and signed by the Underwriter, Underwriting Manager, Underwriting Supervisor, Director or Assistant Director of Single Family, and any Chief or the Executive Director.
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Chapter 6
RATE LOCK POLICY AND PIPELINE MANAGEMENT