SINGLE-FAMILY MORTGAGE
PROGRAMS
PROCEDURAL GUIDE
5710 MacCorkle Ave., SE Charleston, WV 25304 (304) 391-8600 E-mail: [email protected] Effective: Aug 7 2014INDEX Introduction
Chapter 1 Becoming a Lender
Section 1.1 Application Agreement Packages Participating Lender Package Correspondent Lender Package Section 1.2 Participating Lender Eligibility Requirements Section 1.3 Maintaining Lender Approval
Section 1.4 Approved Lender Options and Responsibilities Section 1.5 Participating Lender Duties
Section 1.6 Lender Representations Section 1.7 Loan Warranties
Section 1.8 Participating Lender’s Compensation/Premiums Section 1.9 Participating Lender Underwriting Fees
Section 1.10 Participating Lender Non-Compliance Remedies
Chapter 2 Website
Section 2.1 Entry Codes/Passwords Section 2.2 Features
Section 2.3 Overview Chapter 3 Loan Programs
Section 3.1 Homeownership Program Section 3.2 Movin’ Up Program
Section 3.3 Secondary Market Program
Section 3.4 Down Payment and Closing Cost Assistance Loans
Chapter 4 Homeownership Program Regulatory Compliance Standards Section 4.1 Borrower Eligibility Requirements
Section 4.2 Eligible Dwelling/Residence Section 4.3 Mortgage Terms
Section 4.4 Targeted and Non-Targeted County Status Section 4.5 Income Limits
Section 4.6 Acquisition Cost Section 4.7 Recapture Provision
Section 4.8 Application and Seller Affidavits Section 4.9 Federal Tax Returns
Section 4.10 Appraisals
Chapter 5 Movin’ Up Program Compliance Standards Section 5.1 Borrower Eligibility Requirements
Section 5.4 Income Limits Section 5.5 Acquisition Cost Section 5.6 Recapture Provision
Section 5.7 Application and Seller Affidavits Section 5.8 Federal Tax Returns
Section 5.9 Appraisals
Chapter 6 Down Payment and Closing Cost (DPCC) Assistance Program Section 6.1 Homeownership and Movin’ Up Programs
Chapter 7 Processing Procedures Section 7.1 Rate Sheet
Section 7.2 Locking in a Loan Section 7.3 Change Request
Section 7.4 Lock-in Expiration Policy Section 7.5 Mortgage Insurance Section 7.6 Assumptions
Section 7.7 Power of Attorney Section 7.8 Cosigners
Section 7.9 Immigration Status
Section 7.10 Homebuyer’s Education Counseling Section 7.11 Forms
Section 7.12 Construction Loans Section 7.13 Escrow Requirements
Section 7.14 Flood Determination Certifications Section 7.15 Credit Reports
Section 7.16 Electronic Signatures Chapter 8 Underwriting
Section 8.1 Fannie Mae Guidelines Section 8.2 VA and FHA Insured Loans Section 8.3 RD Insured Loans
Section 8.4 Underwriting Options
Section 8.5 Submission of Loans for Underwriting Section 8.6 Desktop Originator
Section 8.7 Desktop Originator Process Section 8.8 Tax Returns
Chapter 9 Submitting the Credit Package Section 9.1 Credit Documents Chapter 10 Closing and Funding Process
Section 10.3 Funds Supplied Directly from Lender Section 10.4 Closed Loan Package
Section 10.5 Closing Documents Prepared by the Fund Section 10.6 Loan Delivery Late Fee
Chapter 11 Closing Documents
Section 11.1 Closing Documents
Section 11.2 Closed Loan Package Review Section 11.3 Submission of Deferred Documents Section 11.4 Deferred Documents
Section 11.5 Manufactured Home Guidelines Section 11.6 Monthly Deferred Document Reports
Section 11.7 Fees for the Late Submission of Deferred Documents Chapter 12 Appraisal Requirements
Section 12.1 Site Requirements Section 12.2 Streets
Section 12.3 Dwelling
Section 12.4 New Construction Section 12.5 Manufactured Homes Chapter 13 Quality Control
Section 13.1 Lender Notification and Response Chapter 14 Correspondent Lender
Section 14.1 Maintaining Lender Approval Section 14.2 Lender Representations Section 14.3 Services and Payment
Section 14.4 Correspondent Lender Processing Procedures Section 14.5 Rate Sheet
Section 14.6 Locking in a Loan Section 14.7 Loan Review Section 14.8 Loan Approval Section 14.9 Loan Closing Section 14.10 Servicing Chapter 15 Appendices B-1 and B-2 Chapter 16 Forms
Section 16.1 Processing Forms Section 16.2 Closing Forms
INTRODUCTION TO
THE WEST VIRGINIA HOUSING DEVELOPMENT FUND
The West Virginia Housing Development Fund (the “Fund”) is a public body corporate and governmental instrumentality of the State of West Virginia created pursuant to Chapter 31, Article 18 of the West Virginia Code to provide safe, decent, and affordable residential housing for West Virginians. The Fund offers a variety of loan programs to meet the needs of low to moderate income homebuyers, including but not limited to, the following: (1) Homeownership Program; (2) Movin’ Up Program; (3) Down Payment and Closing Cost Assistance; (4) Secondary Market Program. These loans are originated primarily through the Fund’s lending partners.
This guide is designed to provide our lending partners with the information needed to facilitate the origination, processing, underwriting and closing of our loans. The Fund reserves the right to amend this procedural guide from time to time as necessary, and will provide notification of any modification to all lenders. Amendments to this procedural guide will be made by means of program bulletins, lender memos and by the update of our website maintained guide.
This guide will be used in conjunction with the procedural guides and announcements from Fannie Mae, FHA, VA, and RD where appropriate.
Contacts and Phone Numbers
The Fund’s Website: www.wvhdf.com
Fannie Mae Selling Guide: www.efanniemae.com
Single Family Phone Numbers: 304-391-8600 or Toll Free 1-800-933-9843
Name Area Phone
David Rathbun Director of Originations 304-391-8737 Phyllis Jackson Underwriting, Funding 304-391-8736
and Deferred Documents
Bob McCarty Reservations 304-391-8726
Patti Shamblin Closing/Correspondent 304-391-8729 and Lender Relations
Julie Aliff Servicing 304-391-8712
Kristin Shaffer Legal 304-391-8670
Alicia Deligne Legal-Compliance 304-391-8650
Fax Numbers: Underwriting 304-391-8775
Correspondent/Closing/Refinance 304-391-8765 Deferred Documents 304-391-8771 Loan Servicing 304-391-8750
CHAPTER 1 BECOMING A LENDER
West Virginia Housing Development Fund (“WVHDF” or “Fund”) program loans are originated, processed, and closed by a network of approved participating lending institutions (“Participating Lenders”). The loans and servicing rights are then purchased by the Fund following settlement. The Fund may also receive program loan applications through assignment from a network of approved correspondent lending institutions (“Correspondent Lenders”) that perform certain loan origination and processing services for loans closed by the Fund. This Chapter covers the eligibility requirements and general duties for Participating Lenders. For those interested in becoming a Correspondent Lender, please see Chapter 14 for Correspondent Lender eligibility requirements and duties.
Section 1.1 Application Agreement Packages Participating Lender Package
Prospective applicants must submit an application package containing the following: 1. Application to Participate
2. Certificate of Resolution 3. Authorized Signatories 4. Loan Purchase Agreement 5. W-9
6. Direct Deposit Sign Up Form
7. List of licensed Mortgage Loan Officers and their corresponding NMLS ID number
8. Certificate of Compliance with Regulation Z
9. Mortgage Brokers Only: Audited year-end Financial Statements, certified by an independent public accountant, for the previous Two Fiscal Years
10. A complete listing of any and all suspensions, sanctions, debarments, probationary status or any other action imposed by any federal, state or local authority during the last three (3) years.
Correspondent Lender Package
Prospective applicants must submit an application package containing the following: 1. Application to Participate (Correspondent)
2. Executed Correspondent Lender Agreement 3. Certificate of Resolution
4. W-9
5. List of licensed Mortgage Loan Officers taking applications and corresponding NMLS numbers
7. Lender Information Form
The Participating and Correspondent Lender application packages are available on the Fund’s website at www.wvhdf.com. Prospective lenders must submit the appropriate application package along with all required documentation to the Fund’s Single Family Program Department, 5710 MacCorkle Avenue, SE, Charleston, WV 25304. The Fund will notify lenders of their acceptance, rejection, or status within 30 days from the receipt of the package. After review and approval, the Fund will execute and return one copy of the Loan Purchase Agreement or Correspondent Lender Agreement. These Agreements establish the principal legal obligations of the Fund and/or participants in the program. The Fund, however, is under no obligation, legal or otherwise, to do business with any entity in regard to any Fund program. The Fund reserves the right in its sole discretion to select and/or terminate its program participants.
FOR THOSE INTERESTED IN BECOMING A CORRESPONDENT LENDER REFER TO CHAPTER 14 FOR ELIGIBILITY AND RESPONSIBILITY REQUIREMENTS.
Section 1.2 Participating Lender Eligibility Requirements
To be eligible as a Participating Lender, the prospective lender must meet the following qualifications:
• Be a properly licensed and legally organized bank or savings and loan whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC), or a credit union with deposits insured by the National Credit Union Administration (NCUA); or a currently licensed West Virginia Residential Mortgage Lender or Broker
• Be approved as an originator by a private mortgage insurer acceptable to Fannie Mae or be a Federal Housing Administration (FHA), Veterans Administration (VA) or Rural Development (RD) approved mortgagee.
• Maintain a physical office located in West Virginia to which the general public may make loan application that generally meets the following requirements:
o A minimum of 250 square feet in size with an outdoor sign bearing company name.
o Accessible to the general public, including individuals with disabilities,. o At least one full time employee assigned to the office.
o A minimum of 15 posted hours per week during normal business hours, during which time the office will be open and manned. The lender must provide applicants with a telephone number where the lender can be reached during any business hours not covered by posted hours in West Virginia office.
o Computer hardware and software compatible with the Fund’s.
o Internet access to obtain rate sheet and details about the Fund’s programs as well as make loan reservations.
• Originators, Processors, Underwriters and closing employees must attend required training sessions provided by the Fund.
• Must have full-time staff with demonstrated ability and experience in single-family mortgage loan origination, processing, underwriting, closing and post-closing.
• Must have a quality control plan that meets all insurer/guarantor requirements as they apply to loans originated.
• Have a past history of satisfactory performance with the Fund, other mortgage lenders, and insurers demonstrating the ability to meet obligations of the Fund lender participation.
• Meet such other qualifications as the Executive Director shall deem to be related to the performance of its duties and responsibilities.
Section 1.4 Maintaining Lender Approval
After initial approval, participating lenders will be required to meet the following requirements to maintain their status as an approved lender:
• Provide written notice to the Fund of any major organizational changes, including but not limited to:
o Resignation or replacement of senior management personnel.
o Resignation or replacement of the Fund’s designated delegated underwriting staff.
o Mergers, acquisitions or corporate name change.
o Any reorganization, which centralizes or decentralizes a primary function (i.e., underwriting, closing or post-closing).
o Opening or closing of offices originating the Fund’s loans
• The lender must advise the Fund, in writing, of any changes to their primary business contact information including main mailing address, phone/fax numbers, email addresses and ACH account information within five (5) business days of the event.
• Advise the Fund immediately of any suspensions, sanctions, debarments, probationary status, or any other action imposed by any federal, state or local authority.
Maintain compliance with applicable State and Federal laws and regulations and the requirements of this Procedural Guide and the Loan Purchase Agreement including any subsequent amendments thereto.
Section 1.4 Approved Participating Lender Options and Responsibilities
Lender approval by the Fund will be based on the lender’s expertise and capacity to complete the required functions, as well as repurchase ability. Approved participating lenders are generally responsible for originating, processing, closing, post-closing and delivering all loans in accordance with this Procedural Guide and any other applicable guidelines referenced herein. Participating lenders with delegated underwriting authority are also responsible for underwriting.
To participate in the Fund’s loan programs, participating lenders must comply with the certifications, representations, warranties and requirements contained in the Loan Purchase Agreement, which is incorporated herein by reference, and this Procedural Guide and any subsequent amendments thereto. The Fund may immediately terminate a lender’s participation in the Fund’s loan programs if the lender fails to observe or perform any covenant, obligation or agreement in the Loan Purchase Agreement or this Procedural Guide.
Section 1.5 Participating Lender General Duties
A participating lender has the following general responsibilities:
• Ensuring compliance with all applicable state and federal laws, rules and regulations and appropriate insurer requirements.
• Ensuring compliance with the requirements in this Procedural Guide and the Loan Purchase Agreement and any subsequent amendments thereto
• Having adequate staff both in terms of numbers and experience/knowledge and facilities to originate and sell quality mortgage loans on a timely basis
• Ensuring that staff is knowledgeable in all aspects of origination, processing, underwriting, closing and selling mortgage loans as it relates to their respective job duties
• Having documented written procedures and appropriate quality control measures in place
• Protecting the Fund against fraud, misrepresentation or negligence by any parties involved in the origination process
• Communicating with each borrower all the requirements of the applicable home loan program(s), the status of the mortgage loan application and answering questions pertaining to the Fund’s programs.
Section 1.8 Participating Lender’s Compensation/Premiums
Unless otherwise stated in specific program guidelines, the participating lender may not charge or collect any fees or discount points, in excess of those stated herein. The participating lender may collect fees for reimbursement of costs incurred, such as credit reports, appraisals, or flood certification fees as applicable.
Homeownership and Movin’ Up Programs
• Origination Fee – The participating lender will be compensated an origination premium on Homeownership and Movin’ Up Program loans up to 1.5% of the first loan amount with a minimum of $1,500 upon closing/funding. The program summary in effect at the time of loan lock-in will indicate the amount paid by the loan applicant and/or the Fund. This amount is also available on the rate sheet from the day the loan was locked in with the Fund. The participating lender cannot reduce or refund this amount to the borrower without written consent from the Fund.
Service Release Fee – All servicing rights must be sold and transferred to the Fund. A service release premium will be paid to the participating lender on Homeownership and the Movin’ Up loans. The service release premium will be reflected on the program summary, effective the date of loan lock-in, as well as the rate sheet. Service release fees are paid to the participating lender when all post-closing documents are received and accepted. The participating lender cannot reduce or refund this amount to the borrower.
“Other” allowable fees - On Homeownership and Movin’ Up loans not table funded by the Fund, a participating lender may collect from the borrower up to $370.00 for other reasonable customary charges made by the participating lender under its general residential mortgage lending policy including, without limitation, fees associated with the processing, underwriting and closing of the loan as permissible by the insuring and/or licensing agency. On loans table funded by the Fund, lenders cannot collect “other” fees.
Secondary Market
Pricing – On Secondary Market loans, the rate lock and price will indicate the amount that will be paid by the Fund. The Fund’s daily rate sheet will establish the pricing, which is all-inclusive.
Service Release Fee – All servicing rights must be sold and transferred to the Fund. The service release fee is included in the price.
On Secondary Market loans “other” allowable fees are not capped by the Fund on loans that are not table funded, but must comply with any applicable state or federal regulations/laws. Lenders cannot collect “other” fees on table funded loans.
Section 1.9 Participating Lender Underwriting Fees The fees associated with loans underwritten by the Fund are:
• On Homeownership and Movin’ Up loans, an underwriting fee of $145.00 will be imposed.
• On Secondary Market loans, an underwriting fee of $75.00 will be imposed. Section 1.10 Participating Lender Non-Compliance Remedies
Non-compliance with the Fund’s policies, procedures, program guidelines or rules and regulations may result in the following remedies: imposition of fees or penalties, the required repurchase of specified loans, suspension from any activity as a participating lender (including new reservations) or termination of program participation. The following outlines the fee structure:
• Late Delivery Fees – The Fund may impose penalties for failure by the participating lender to submit required loan documents within the required time period.
o Closed loan packages, including the complete credit package, must be submitted to the Fund within 10 calendar days of the loan closing on Homeownership, Movin’ Up and Secondary Market loans. Loan packages not received within this time frame may be subject to a late fee based on the following schedule:
11th calendar day to 30th calendar day: 1/8% of loan balance 31 days to 60 calendar days: 1/4% of loan balance Loans beyond 61 days are subject to repurchase by the
participating lender. If an extenuating circumstance exists the lender should contact the Fund to discuss other arrangements. o On Secondary Market loans delivered 11 days past the note or closing
lowest of lock-in price or price in effect the day of delivery of the loan to the Fund.
Repurchase of Loans – a repurchase request for any loan will be for an amount equal to the unpaid principal balance of the mortgage loan, plus accrued interest and costs incurred by the Fund, delivery fees and any service release premium paid to the participating lender for the loan along with any amount of the Down Payment and Closing Cost Assistance loan which also may have been provided to the borrower. The following may result in repurchasing being required:
o Non-compliance with Homeownership and Movin’ Up Program requirements.
o Non-compliance with required documentation.
o Failure to comply with federal or state laws, rules or regulations. o Misrepresentation or misstatement.
o Incorrect documents.
o Failure to provide all loan documents within required time frames. o Non-compliance or breach of the purchase agreement with the Fund.
Late deferred document fees for Homeownership and Movin’ Up loans are as follows and will be deducted from future payment of fees:
o File completed within 0-90 calendar days 0
o File completed within 91-120 calendar days .25% of loan balance o File completed within 121-150 calendar days .50% of loan balance o File completed within 151-180 calendar days .625% of loan balance o File completed over 180 calendar days .65% of loan balance
• For loans more than 180 days past closing, the lender may be requested to repurchase the loan. Repurchase requests will be mailed to the lender within 30 days of the loan reaching 180 days past closing. Under extenuating circumstances, an extension may be granted to the lender at the discretion of the Fund. There will be an extension fee due and payable by the lender at the time the extension is granted that will be equal to 25 basis points of the original loan amount. This extension will be for a period of 90 days, after which the loan will be required to be repurchased, if not complete.
Quality Control Fees
o Any Quality Control finding that requires restitution to a borrower that has not been resolved within a two week period of notification will be deducted from premiums due the lender and the Fund will reimburse the borrower any funds due.
Collection of Fees
o Any fees due the Fund from the participating lender will be deducted from the weekly payment of service release premiums.
CHAPTER 2 WEBSITE
The Fund maintains a website to assist the public in obtaining information about our programs as well as a mode of communication for our participating lenders and the reservation of loan funds. Within our website at www.wvhdf.com, information is available on our programs including interest rates, income limits, house price limits, as well as a list of lenders who participate in our programs.
Section 2.1 Entry Codes/Passwords
Some website information is protected by firewalls that require entry codes and passwords to access. There are two different codes and passwords provided to our lenders:
• Individual – any employee that a participating lender would like to have access to information on our website will be provided a code and password that will enable the employee to view our rate sheet, lender announcements and bulletins. To obtain a code and visit our website at www.wvhdf.com, click on Partner Extranet then select “Don’t have an account…” See also second slide under Section 2.3 Overview.
Your codes, once established, will be provided to you via email. If during the course of business your email address should change for any reason, the new email address will need to be provided to the Fund thru the website at “Update your Account Information” as your ability to access forgotten passwords/codes and reissue is tied to your email address that the Fund has on record.
• Lender/Broker – one code and password is provided to a Participating Lender for the Lender/Broker area when the participation agreements are completed and found acceptable. This code and password will be provided to the person submitting the participation documents and allows access to register loans, make changes and order closing funds. It is the lender's discretion as to which employees they provide this code and password.
Section 2.2 Features
• Advertising source for all Participating and Correspondent Lenders, who are listed by county for the public to contact for loan information/applications. • Rate Sheet is published on the website daily.
• Manuals and Mortgage Brochure are available in PDF format.
• Forms that are specific to the Fund are available in PDF format from our site. • Reserve funds for Homeownership, Movin’ Up, DPCC and Secondary Market
loans – it is important that you print the screens for your records as you process the reservation/lock-in.
• Make changes to previous reservations by using the Change Request form. • Request table funding on the DPCC loans for the loan closings.
• System is designed to prevent duplicate lock-ins – if borrowers are switching properties or lenders you will need to contact the Fund to proceed with registering the loan. Do not use an incorrect social security number to bypass the system features.
Section 2.3 Overview
The attached slide lay out is provided as an exhibit to guide and assist you in using our website www.wvhdf.com to conduct business.
If you don’t have a User Name and Password- click here.
Enter in your individual User Name and Password. This allows access to rates and program information
This page provides access to the procedural guide, lender memos, rate sheets, forms and funding requests by selecting the options.
This area allows lender to initiate loan reservations – an additional login and password is need to access this area which was provided at initial setup and is restricted by the lender.
CHAPTER 3
LOAN PROGRAMS – OVERVIEW AND GENERAL REQUIREMENTS
Section 3.1 General Eligibility Requirements
Loans must comply with the respective program-specific eligibility criteria set forth in Chapters 4, 5 and 6, as well as all applicable underwriting and processing guidelines set forth in Chapters 7 and 8 and any applicable federal guidelines depending on the loan type (FHA, VA, RD). In cases where the federal underwriting or eligibility guideline is stricter than that of the Fund, the federal guideline shall be followed.
The following requirements apply to all loans unless otherwise stated in program-specific eligibility criteria set forth in Chapters 3, 4, 5 and 6 of this Procedural Guide:
• The Fund will only accept Qualified Mortgages as defined under the temporary Qualified Mortgage provision of the Consumer Financial Protection Bureau’s Ability to Repay and Qualified Mortgage Rule (the Rule) (12 C.F.R. 1026.43(e)(4)) and any final rule that HUD or other federal agencies may adopt under the authority granted in 15 U.S.C. 1639c.
• Higher Priced Mortgage Loans, as that term is defined in 12 C.F.R. 1026.35, are ineligible for delivery to the Fund.
• All loans must follow the processing, underwriting and closing procedures outlined in Chapters 7, 8, 9 and 10, respectively.
• Loans must be secured by a valid first lien on the eligible dwelling or second lien for the Down Payment and Closing Cost Assistance Loans (DPCC).
• Loans must be subject to adequate insurance coverage in accordance with this Procedural Guide, the Fannie Mae’s Seller’s Guide and the requirements of FHA, VA, and RD programs, as applicable.
• Loan conditions must be satisfied.
• Proper loan closing procedures must be utilized.
• Loans must be eligible loans in accordance with the Procedural Guide, the Fannie Mae’s Seller’s Guide, and the requirements of FHA, VA, and RD programs, as applicable.
• Homeownership Program loans must comply with all requirements outlined in Chapter 4 and Appendices B-1 and B-2 of this Procedural Guide.
• Movin’ Up Program loans must comply with all requirements outlined in Chapter 5 and Appendices B-1 and B-2 of this Procedural Guide.
• Secondary Market loans must comply with Fannie Mae guidelines as set forth in the current version of Fannie Mae’s Selling Guide, available at www.efanniemae.com.
• Loans must otherwise comply with all applicable federal, state, and local laws, rules and regulations and the terms and conditions of the Loan Purchase Agreement.
Section 3.2 Homeownership Program
The Homeownership Program offers 30-year fixed rate mortgages to eligible homebuyers, providing up to 100% financing terms for qualifying applicants. These loans are processed and underwritten to Fannie Mae, FHA, VA, and USDA Guidelines as applicable. Chapter 4 provides detailed guidelines on the Homeownership Program and the requirements borrower(s) must meet in order to qualify for this program.
Section 3.3 Movin’ Up Program
The Movin’ Up Program offers 30-year fixed rate mortgages, providing up to 100% financing terms for qualifying applicants. No first time buyer restriction applies. These loans are processed and underwritten to Fannie Mae, FHA, VA, and USDA Guidelines as applicable. Chapter 5 provides detailed guidelines on the Movin’ Up Program and the requirements borrower(s) must meet in order to qualify for this program.
Section 3.4 Secondary Market Program
The Secondary Market Program provides 10 to 30-year, conventional, fixed-rate mortgages for all income levels, providing up to 97% financing for the purchase of a primary residence. This program also provides refinancing opportunities for qualified applicants. No first time buyer restriction applies and no minimum loan amount.
Secondary Market loans must be processed, underwritten and closed in accordance with Fannie Mae guidelines and loan eligibility requirements to be eligible for purchase by the Fund. Fannie Mae’s Selling Guide is available at www.efanniemae.com.
The Fund will purchase seasoned loans subject to due diligence review and a satisfactory payment history. For more detail on the purchase of seasoned loans, contact the Single Family Division for pricing and delivery procedure.
Section 3.5 Down Payment and Closing Cost Assistance (DPCC) Loans
The Fund offers low interest rate Down Payment and Closing Cost Assistance loans to aid qualified borrowers in the purchase of their home. This program is available for Homeownership and Movin’ Up program loans only under the terms outlined in Chapter 6.
CHAPTER 4
HOMEOWNERSHIP PROGRAM ELIGIBILITY STANDARDS
This Chapter covers the eligibility requirements for Homeownership program loans, which must satisfy the requirements of Section 143 of the Internal Revenue Code of 1986, as amended, and applicable treasury regulations, as well as any insurer/guarantor guidelines. The Homeownership applicant(s) must be provided the Single Family Mortgage Brochure, which outlines in detail the following sections. The Single Family Mortgage Brochure is available on our website at www.wvhdf.com.
Section 4.1 Borrower Eligibility Requirements
To be eligible for a Homeownership Program loan, the borrower(s) must meet the following requirements:
• Comply with the processing procedures and underwriting requirements in Chapters 7 and 8 of this Procedural Guide, respectively.
• All borrowers must take title to the property and meet all compliance requirements. • Be a current resident of West Virginia or intend immediately to become a resident
of West Virginia.
• Use the dwelling as an eligible single-family dwelling (see section 4.2 for definition) and not deduct any portion of the cost of the residence as a home-business expense for federal income tax purposes.
• Not use any portion of the program loan to refinance or replace an existing mortgage, except for the construction period financing which does not exceed 24 months.
• Satisfy the applicable income requirement of the Program (see Appendix B-1 Chapter 15).
• Satisfy the residence requirement of the Code. Homeownership program loans may only be made to title holders who had no ownership interest in their principal residence at any time during the three-year period ending on the date the program loan is closed. This requirement does not apply to residences located in targeted areas or where the borrower is an eligible veteran under the Heroes Earnings Assistance and Relief Tax Act of 2008. (Eligible veterans include any veteran who has not previously received financing for a home through a Mortgage Revenue Bond program.) In assuring that this requirement is met, the participating lender must obtain the following:
o Satisfactory Application Affidavit.
o Signed federal income tax returns for the preceding three years showing no deduction for mortgage loan interest or property taxes on a principal residence, and;
o Credit report from each of the areas in which any borrower has resided in the past three years.
• Ownership interest includes: • A fee simple interest.
• A joint tenancy, a tenancy in common, or a tenancy by the entirety.
• The interest of a tenant shareholder in a cooperative. • A life estate.
• A land contract, under which possession and the benefits and burdens of ownership are transferred although legal title is not transferred until some later time.
• An interest held in trust for the eligible borrower (whether or not created by the eligible borrower) that would constitute a present ownership interest if held directly by the borrower. • An interest in a factory-made housing unit.
Section 4.2 Eligible Dwelling/Residence
The term “eligible single-family dwelling” means real property and structures affixed thereto located in the State of West Virginia which will be used by an eligible borrower as a principal residence for one family and be of a type designed primarily for residential housing. This term includes condominiums, 1-4 unit buildings and dwellings on which construction has commenced (provided no permanent mortgage loan has been closed) and the term of any construction loan, bridge loan, or other temporary financing does not exceed 24 months. If the home is designed for occupancy by two, three, or four families, it must have been occupied as a residence for more than five years before the date of the execution of the mortgage and the borrower must occupy one unit.
The land appurtenant to a residence shall be considered as part of the residence only if such land is typical for the area and reasonably maintains the basic livability of the residence and does not provide, other than incidentally, a source of income to the mortgagor.
In no instance can the land exceed five acres without obtaining a waiver. The waiver request must be accompanied by the appraisal utilizing comparables of similar acreage and the residence has to be connected to a septic tank. (Example: The residence is located on five or more acres of land, none of the comparables utilized are similar in acreage, and the appraiser cannot establish a need for five or more acres for the subject property, then the property would not be eligible for a Homeownership loan and the waiver would not be issued.)
The dwelling must not be used in trade or business, as investment property, rental property, or as a recreational property. Except in the case of the rental of units in a two, three, or four-unit residence, the residence will not be used in a trade or business which qualifies the borrower to deduct any portion of the cost of the residence as a business expense on federal or state income tax returns. No more than 15% of the total area of the residence can be used in a trade or business except in rental of two to four unit homes.
The dwelling must be structurally sound, functionally adequate, in compliance with all applicable zoning requirements, housing codes, and the standards set forth by the Fund in the Appraisal Requirements in Chapter 12.
The acquisition cost of the dwelling must meet the applicable purchase price requirement of the program as defined in Chapter 15, Appendix B-2.
The term “dwelling” or “residence” does not include property such as appliances, furniture, etc., which under applicable local law is not a fixture. Loan proceeds may not be used to purchase furniture or other personal property.
The term “dwelling or “residence” includes factory-made housing (manufactured and modular), which is to be permanently fixed to real property. Whether factory-made housing is permanently fixed to real property will be determined by the facts and circumstances of each particular case. Titles or the properly recorded DMV-2-TR are required on manufactured units (doublewides but not modular). When titles are retained the Fund’s lien must be recorded and the title is treated as a deferred document.
New manufactured (doublewide) homes and new or used modular homes are eligible for Homeownership program loans. However, new or used singlewide mobile homes do not qualify for Homeownership program loans.
Section 4.3 Mortgage Terms
Refer to the daily rate sheet for the current mortgage terms available on Homeownership loans. Generally, the terms range up to 30-year mortgages with rates subject to change on a daily basis. There is NO minimum loan amount. Maximum loan amount is controlled by the House Price Limits from Appendix B2, required down payment and compliance with this guide. The loan must be secured by a valid first lien on the eligible single family dwelling being financed.
Section 4.4 Targeted and Non-Targeted County Status
Each county has been designated as a targeted or non-targeted county based on economic circumstances within the county. The targeted counties have been identified as areas
with chronic economic distress or an area with a high percentage of low-income families. In targeted counties only, borrowers could have had principal residence ownership interest within the last three years and be eligible. In non-targeted counties, the borrower does not qualify for the program if they have had a principal residence ownership interest (see Section 4.1 for ownership interests) within the last three years. On Appendices B-1 and B-2 (Chapter 15), counties have been separated by their targeted and non-targeted status.
Section 4.5 Income Limits
Applicable income limitations for each county are set forth in Chapter 15, Appendix B-1. The federal regulations governing program income limits are to determine eligibility and projected income for the next twelve months from the date of closing. For compliance income calculation purposes, Household Income is the gross annual income for all adults that intend to occupy the home within one year from loan closing based on information available the day of loan closing. All sources of income must be included, except for income received by persons under the age of 18 or income of dependants above 18, who are enrolled as a full-time student in a continual education program such as undergraduate or technical school. Supporting documentation for the income calculation is required. For this program it is mandatory that all borrowers qualifying for the loan take title to the property. Annualized gross income is determined by multiplying gross monthly income by 12 for all parties as outlined above. Gross monthly income is the sum of monthly gross pay, reflected on a pay stub with at least 30 days of year-to-date earnings, plus any additional income from: overtime, part-time employment, bonuses, dividends, interest, royalties, pensions, VA compensation, net rental income, etc., and other income (such as alimony, child support, public assistance, sick pay, social security benefits, unemployment compensation, income received from trusts, and income received from business activities or investments, workers’ compensation, and disability insurance).
For self-employed persons, income is the total of income shown on the last year’s personal tax return plus depreciation. A year-to-date profit and loss statement is needed if the application is dated 120 days or more after the tax year. In the cases of “S” corporations, income used on their tax schedules must be included in addition to all requirements listed for self-employed borrowers.
When the income documentation indicates that any applicant has reduced the number of scheduled work hours and/or has resigned a job merely to qualify under the income limitations for the program, the loan will be rejected.
Section 4.6 Acquisition Cost
Each county has a specified sales price limit (Chapter 15, Appendix B-2) referred to as “acquisition cost” which is the cost of a completed residential unit. No portion of the proceeds of the Homeownership loan can be used to acquire appliances, furniture, or other personal property not permanently affixed to the residence. When a sales contract or the appraisal references personal items, the down payment amount needs to cover the value of the personal items to ascertain that Homeownership dollars are not financing these items. The Fund has established a value of $50 per used appliance (i.e., stove, refrigerator, washer, dryer) remaining with the property. In the event that the property is a newly constructed home with appliances, then the actual invoice must be used for the value. Personal property other than appliances will need to have a value established by a qualified person with the file containing documentation to support how the value was derived. The acquisition cost of a residence does NOT include:
• Usual and reasonable settlement and financing costs.
• The imputed value of services performed by the purchaser or members of his/her family, which include only the purchaser’s spouse, brothers and sisters, ancestors, and lineal descendants in construction or completing the residence: or
• The cost of land owned by the purchaser(s) for at least two years before the date on which the construction of the residence begins.
Section 4.7 Recapture Provision
A Homeownership loan is funded from proceeds of tax-exempt bonds, which allows a lower interest rate. If the home financed by a Homeownership loan is sold or otherwise disposed of during the first nine years of ownership, even though the Homeownership loan may have previously been paid off, this benefit may be partially recaptured in the form of a higher federal income tax for the year in which the home is sold. The recapture only applies, however, if the home is sold at a gain and the borrower’s income increases above a specific level. Within 90 days after closing the borrower will receive additional information needed to calculate the recapture tax upon sale of the home.
The Recapture Provision requires that an amount determined to be the subsidy provided by a Homeownership loan (but not in excess of 50% of the gain) be recaptured on the disposition of the house. The recapture amount would increase over the period of ownership, with full recapture occurring if the house were sold at the end of the fifth year. The recapture amount declines ratably to zero with respect to sales occurring in years six through nine, and at no time would the recapture amount exceed the original loan amount times .0625. In the case of assisted individuals whose incomes are less than prescribed amounts, some of the subsidy or the entire subsidy is excluded from recapture at the time of disposition. The applicant(s) should be referred to a tax advisor or the Internal Revenue Service if they have specific tax questions including calculation of the
recapture. Information is also available on Internal Revenue’s website, (use “recapture” in the search query).
Section 4.8 Application and Seller Affidavits
A completed Application Affidavit executed by each eligible borrower, and a Seller Affidavit executed by the seller(s), must be delivered to the Fund. These forms are included in the Single Family Mortgage Brochure and are available online at www.wvhdf.com. The borrower must receive the brochure in its entirety, and then complete the affidavit as required.
In instances where the number of dependents shown on the loan application (1003) does not match the number to occupy the house shown on the Application Affidavit, the discrepancy needs to be documented on 3b of the Application Affidavit by listing the names of the person(s) who are going to occupy the residence and their relationship to the borrower.
Section 4.9 Federal Tax Returns
For non-targeted counties, executed copies of the last three years’ federal income tax returns are to be included in the credit file. Any documentation used to confirm tax information ( i.e., tax transcripts from IRS), must be signed by the borrower(s). IRS tax forms (1040, 1040A, 1040EZ) are to be signed on the signature line provided. For borrowers who were not required to file a federal income tax return for any of the three years, a completed Income Tax Affidavit (WVHDF form) is required stating the reason tax returns were not filed with IRS.
Loans submitted for approval after April 15 must be accompanied by the previous year’s federal tax return. Extensions for the filing of the tax return with the IRS are not acceptable. When the previous year’s federal tax return is available prior to April 15, it should be included in the loan package as one of the three years’ returns.
See Chapter 8, Section 8.8 for additional information pertaining to tax returns as it relates to income calculations.
Section 4.10 Appraisals
An appraisal completed on Form 1004 or Form 1004C, with all attachments, is always required on the Homeownership Program regardless of an automated system requirement. In no instance can the first loan amount exceed the appraised value. Refer to Chapter 12 for additional appraisal information.
CHAPTER 5 MOVIN’ UP PROGRAM COMPLIANCE STANDARDS
This Chapter covers the requirements for loans originated pursuant to the Fund’s Movin’ Up Program, which accomplishes the specific objective of providing funds for long-term mortgage financing of residential housing to qualified persons. Through the Movin’ Up Program, the Fund increases the availability of funds for housing by purchasing loans from participating lenders that meet these requirements and otherwise comply with the eligibility, underwriting and processing standards set forth in this Procedural Guide, as well as any applicable insurer/guarantor guidelines.
Section 5.1 Borrower Eligibility Requirements
• Comply with and meet the requirements of Chapter 7, Processing Procedures and Underwriting in Chapter 8.
• All borrowers must take title to the property and meet all compliance requirements as outlined in this Chapter.
• Be a resident or intend immediately to become a resident of West Virginia.
• Use the dwelling as an eligible single-family dwelling (see section 5.2 for definition) and not deduct any portion of the cost of the residence as a home-business expense for federal income tax purposes.
• Not use any portion of the program loan to refinance or replace an existing mortgage, except for the construction period financing which does not exceed 24 months.
• Satisfy the applicable income requirement of the Program (see Appendix B-1 Chapter 15).
Section 5.2 Eligible Dwelling/Residence
The term “eligible single-family dwelling” means real property and structures affixed thereto located in the State of West Virginia which will be used by an eligible borrower as a principal residence for one family and be of a type designed primarily for residential housing. This term includes condominiums, 1-4 unit buildings and dwellings on which construction has commenced (provided no permanent mortgage loan has been closed), and the term of any construction loan, bridge loan, or other temporary financing does not exceed 24 months. If the home is designed for occupancy by two, three, or four families, the borrower must occupy one unit.
The dwelling must be structurally sound, functionally adequate, in compliance with all applicable zoning requirements, housing codes, and the standards set forth by the Fund in the Appraisal Requirements in Chapter 12.
The acquisition cost of the dwelling must meet the applicable purchase price requirement of the program as defined in Appendix B-2 in Chapter 15.The term includes factory-made housing (manufactured and modular), which is to be permanently fixed to real property. Whether factory-made housing is permanently fixed to real property will be determined by the facts and circumstances of each particular case.
New manufactured (doublewide) homes and new or used modular homes are eligible for Movin’ Up Program loans. However, new or used singlewide mobile homes do not qualify for Movin’ Up Program loans.
Titles or the properly recorded DMV-2-TR are required on manufactured units (doublewides but not modular). When titles are retained the Fund’s lien must be recorded and the title is treated as a deferred document.
Section 5.3 Mortgage Terms
Refer to the daily rate sheet for the current mortgage terms available on Movin’ Up loans. Generally, the terms range up to 30-year mortgages with rates subject to change on a daily basis. There is NO minimum loan amount. Maximum loan amount is controlled by the House Price Limits from Appendix B2, required down payment and compliance with this guide. The loan must be secured by a valid first lien on the eligible single family dwelling being financed.
Section 5.4 Income Limits
Applicable income limitations are set forth in Chapter 15, Appendix B-1. Income limits are to determine eligibility and project income for the next twelve months from the date of closing. For compliance income calculation purposes, Household Income is the gross annual income of all parties executing the note and/or taking title to the property. Supporting documentation for the income calculation is required. For this program it is mandatory that all borrowers qualifying for the loan take title to the property.
Annualized gross income is determined by multiplying gross monthly income by 12 for all parties as outlined above. Gross monthly income is the sum of monthly gross pay,
reflected on a pay stub with at least 30 days of year-to-date earnings, plus any additional income from: overtime, part-time employment, bonuses, dividends, interest, royalties, pensions, VA compensation, net rental income, fair market rent of retained properties, etc., and other income (such as alimony, child support, public assistance, sick pay, social security benefits, unemployment compensation, income received from trusts, and income received from business activities or investments, workers’ compensation, and disability insurance).
For self-employed persons, income is the total of income shown on the last year’s personal tax return plus depreciation. A year-to-date profit and loss statement is needed if the application is dated 120 days or more after the tax year. In the cases of “S” corporations, income used on their tax schedules must be included in addition to all requirements listed for self-employed borrowers.
When the income documentation submitted indicates that any applicant has reduced the number of hours scheduled to work and/or has resigned a job merely to qualify under the income limitations for the program, the loan will be rejected.
Section 5.5 Acquisition Cost
Each county has a specified sales price limit (Appendix B-2) referred to as “acquisition cost” which is the cost of a completed residential unit. The acquisition cost of a residence does NOT include:
• Usual and reasonable settlement and financing costs.
• The imputed value of services performed by the purchaser or members of his/her family, which include only the purchaser’s spouse, brothers and sisters, ancestors, and lineal descendants in construction or completing the residence: or
• The cost of land owned by the purchaser(s) for at least two years before the date on which the construction of the residence begins.
Section 5.6 Recapture Provision
The recapture provision does not apply to the Movin’ Up Program. Section 5.7 Application and Seller Affidavits
The Application and Seller’s Affidavits are not required for the Movin’ Up Program. Section 5.8 Federal Tax Returns
Tax Returns are required as per FNMA guidelines as they relate to repayment calculations only (i.e. self-employed, commissioned income)
See Chapter 8, Section 8.8 for additional information pertaining to tax returns as it relates to income calculations.
Section 5.9 Appraisals
An appraisal completed on Form 1004 or Form 1004C, with all attachments, is always required on the Movin’ Up Program regardless of an automated system requirement. In no instance can the first loan amount exceed the appraised value. Refer to Chapter 12 for additional appraisal information.
CHAPTER 6
DOWN PAYMENT AND CLOSING COST (DPCC) ASSISTANCE
The Fund offers a Down Payment and Closing Cost (DPCC) Assistance Program to aid borrowers in the purchase of their home. This loan closes in the name of the Fund and our trustees are used on the Deed of Trust (See Chapter 11 - Closing Documents) and must be secured by a valid second lien position on the eligible dwelling. This program is available with the Homeownership and Movin’ Up loans under the terms outlined below. Section 6.1 Homeownership and Movin’ Up Program
The Down Payment and Closing Cost (DPCC) Assistance Program, in conjunction with the Homeownership and Movin’Up Programs, offers the borrower the following terms and conditions for this loan:
• Refer to the daily Rate Sheet for loan amounts and terms. • The combined loan to value not exceeding 103.00%.
• For LTV/CLTV determination, use the DU Findings which follows FNMA guidelines of truncating to two decimal places and rounding up to the nearest whole percentage.
• Payment amount is included in the ratios for repayment. • Loan is not assumable.
• Loan must be paid in full if the property is refinanced or sold.
• Funds are to be applied first towards any standard closing cost that the borrower is obligated to pay and then any remaining balance can be applied as down payment. Funds used as down payment can also be considered the borrower’s funds to cover personal property on the Homeownership Program.
• Borrowers can be reimbursed for approved items that they have paid outside of closing. Approval is at the Fund’s sole discretion.
• Any unused proceeds are to be returned to the Fund with the closing package in the form of a check to be applied as a principal reduction to the Down Payment and Closing Cost (DPCC) Assistance loan.
• Standard FNMA documents are to be used for the Note and Deed of Trust.
• It is mandatory that the Fund provide the funds for this loan at the closing table. Loan proceeds must be requested from the Fund by 9:30 a.m. the business day prior to the loan closing. The loan has to be approved and cleared for funding by an Fund underwriter prior to the funding request being processed in our office. • Note that this program requires a Good Faith Estimate, initial and final Truth In
Lending, and a HUD-l Settlement Statement with the Fund named as the lender. The deed of trust recording fee is the only fee that should be reflected on the HUD-1 Settlement Statement.
CHAPTER 7
PROCESSING PROCEDURES
Loans originated and processed under the Fund’s Homeownership, Movin’ Up, and Secondary Market Programs are to follow Fannie Mae’s Selling Guide and Announcements, or when appropriate FHA, VA, RD’s or the private mortgage insurance guidelines. Consideration of specific program requirements within this guide needs to be given as loans are processed. Fannie Mae maintains their Selling Guide at www.efanniemae.com
Homeownership loans must also comply with Chapter 4 of this procedural guide. Movin’ Up loans must comply with Chapter 5 of this procedural guide.
Special programs that provide down payment gift funds (i.e., HOPE 6, Federal Home Loan Bank…) should be submitted to the Fund for approval prior to taking loan applications structured with this type of assistance.
The Fund’s Down Payment and Closing Cost (DPCC) Assistance Program (see Chapter 6) can be used towards the borrowers’ required down payment on Homeownership and Movin’ Up loans. The borrower must provide any down payment required to meet private mortgage insurance requirements not covered by the Down Payment and Closing Cost Assistance Program from their own funds or a permissible source.
Refer to Chapter 11, Closing Documents, for additional information on items required to be included in closed loan files, some of which include hazard policy, termite inspection, well and septic inspections, etc.
Section 7.1 Rate Sheet
Each business day a rate sheet is generated by the Fund that provides information on the program rates and terms available for that day. It is emailed to participating lenders after 9:00 a.m. and is also available on our website at www.wvhdf.com. From 7:30 a.m. to 9:30 a.m. there is a blackout period for locking in loans. The blackout period allows for administrative time to update the rate sheet with current information and email the data to the lenders. The rate sheet will indicate the price that the Fund is paying for a loan, who is responsible for the origination/discount fees on Homeownership and Movin’ Up loans, and the service release premium on Homeownership and Movin’ Up loans. Current available loan amounts and terms for the Down Payment and Closing Cost Assistance Program are also available on the rate sheet. Note that on secondary market loans the price listed on the rate sheet includes the service release premium.
• Secondary Market Loans
o Off-sheet pricing is available upon request by the lender.
o Lenders are to be aware of Loan Level Price Adjustments imposed by Fannie Mae that effect final price paid (i.e., credit scores, cash out refinance, investment and manufactured units).
Section 7.2 Locking in a Loan
To reserve funds for a borrower, at the time of application the lender completes the registration process on our website using rates and terms available from our rate sheet for that day. See Chapter 2 for guidance on accessing and use of our website. To lock in a loan a fully executed sales contract (with the exception of new construction, which requires a construction contract and any supporting documents) is required. As you register the loan on our website you will want to maintain copies of the completed registration along with your confirmation that the lock-in was accepted which will appear the following business day. If inaccurate information was used in the registration process for rate, term, or price, the status of the loan will be marked as rejected and the lender will be notified of the problem so corrections can be made using the Change Request procedure.
It is permissible to “Float” a loan, which allows you to register a loan without committing to a rate or price. To float the loan, as you register you will indicate a rate of .0001 and a price of 99.99. The loan has to be locked prior to receiving an “approval to fund” or making a request for table funding.
If during the lock-in procedure you receive a message indicating that the social security number for your borrower has already been used, contact the Loan Origination staff at the Fund for further direction. Use of incorrect social security numbers to bypass the computer’s security system is unacceptable.
Section 7.3 Change Request
Anytime a loan has been locked in with errors the lender will need to complete the Change Request form on our website (see Chapter 2) to correct the errors. Some examples of these types of errors would include adding or deleting a borrower, correcting the loan amount or sales price. This form will be transmitted electronically to the Fund, reviewed and approved, then faxed back to the participating lender. Note that the changes you make using the Change Request form do not reflect in the borrower information viewable on our website.
A change in property constitutes a cancellation of the original lock-in and a new reservation being completed at current rates available. In this instance you will need to notify the Fund that you want to lock another property for a borrower so that our website is unlocked to allow a new lock-in for your borrower.
If a loan is cancelled for any reason after the registration process you will need to notify the Fund by using the Change Request form – complete the basic information and under “Other” indicate that the loan is cancelled along with reason.
Section 7.4 Lock-in Expiration Policy
All loans must close by the expiration date and the closed package is to be delivered within ten (10) business days of loan closing. If the expiration date falls on a non-business day for the Fund, the lock will expire on the next non-business day. For loans that do not close within the lock-in period, the following procedures will be followed to establish a new rate and price:
• All expired loans will be automatically converted to a cancelled status.
• The loan can be relocked at any time after the expiration date by submitting a change request form based on availability of funds.
• The extension/relock cannot exceed 30 days.
• The rate and price will be calculated on a relock based on the worst case scenario utilizing the current rate sheet or the rate sheet the day of the original lock-in. In the case where loan terms are unacceptable to the borrower or lender then the lock-in can go to a float status for at least 30 days and then the current rate sheet at that time can be utilized. For Secondary market lock-ins an exception may be made to the above policy by contacting the Fund. If an exception is made, the lock at that point will become a mandatory delivery and not a “best-effort”. If the loan is not delivered under a mandatory delivery, a non-delivery penalty will be assessed based on market conditions.
• Relock option is available before the expiration date of the loan, but is a case-by-case basis.
Section 7.5 Mortgage Insurance
Conventional loans that exceed 80% loan-to-value (LTV) based on the lesser of sales price or appraised value must carry private mortgage insurance coverage provided by a Fannie Mae approved company. Acceptable providers are listed on Fannie Mae’s website at www.efanniemae.com. This insurance is obtained under the participating lender’s name and then assigned to the Fund. The mortgage insurance commitment must indicate that the MI company performed a manual underwrite of the entire loan file. In
addition, all FHA, VA, or RD loans are required to have the appropriate default insurance as provided by those agencies.
• Homeownership and Movin’ Up conventional insured loans require the following coverage amounts: o 95.01% - 97.00% LTV 18% coverage o 90.01% - 95.00% LTV 16% coverage o 85.01% - 90.00% LTV 12% coverage o 80.01% - 85.00% LTV 6% coverage o 0% - 80.00% LTV 0% coverage
Note that special programs that may be offered from time to time can require higher coverage amounts, which will be disclosed in the program summaries provided as available.
• Secondary Market conventional insured loans follow the higher coverage amount requirements from the Desktop Underwriting findings for required coverage or Fannie Mae Selling Guide.
When the loan-to-value ratio on a conventional loan with MI coverage is scheduled to reach (or actually reaches) 80% of the property’s “original value” or value obtained from a currently acquired appraisal and the borrower has paid 12 consecutive monthly payments, the private mortgage insurance may be cancelled at the borrower’s request. The “original value” is the appraised value at the time of consummation of the loan. The borrower must make his or her request for cancellation in writing to the Loan Servicing Department, have a “good payment history,” and if required provide evidence that the property has not declined in value or been encumbered by a subordinate lien. “Good payment history” means that, for the 12 months prior to the cancellation date, the borrower has not been more than 30 days late in any payment, and for the 12 months prior to that year, the borrower has not been more than 60 days late in any scheduled payment.
Section 7.6 Assumptions
For Homeownership and Movin’ Up loans, a purchaser who qualifies as an eligible borrower may assume a program loan only upon the prior written approval of the Fund. (Loans insured by RD are not assumable.) The Fund reserves the right to deny any and all assumptions at any time at its sole discretion, or to permit assumptions subject to higher interest rates or other conditions. A loan assumption, without the Fund’s prior approval, is a default and may result in the acceleration of the loan.
Secondary Market loans and Down Payment and Closing Cost (DPCC) Assistance loans are not assumable.
Customers who are interested in assuming an eligible loan should be referred to the Fund’s Direct Origination Department for loan processing and closing.
Section 7.7 Power of Attorney
Power of Attorney documentation is acceptable when a borrower(s) is unavailable to execute the loan documentation. The Power of Attorney along with an explanation of why the borrower(s) is unable to execute the documents or attend the closing should be submitted to the Fund for review and approval prior to closing. The approved Power of Attorney must be recorded, along with the closing documents. A copy of the recorded Power of Attorney document will be required as a deferred document.
Power of Attorney forms for the seller need to be cleared with the Closing Attorney who will be providing the Title Policy.
Section 7.8 Cosigners
The Fund does not accept cosigners on its loan programs. In the instances that FHA, VA or RD may accept cosigners, the Fund’s policy of no cosigners will prevail.
Section 7.9 Non-U.S. Citizen Borrower Eligibility
Follow the Fannie Mae Selling Guide for processing loans when the borrower(s) is a non-U.S. citizen. The lender must make a determination of the non-non-U.S. citizen’s status based on the circumstances of the individual case, using documentation it deems appropriate. Lenders are required to certify that the non-U.S. citizen borrower is legally present in this country.
Section 7.10 Homebuyer’s Education Counseling
Homebuyer’s Education Counseling is required on conventional loans under the Homeownership and Movin’ Up programs. On government insured loans, follow the insurer’s guidelines for counseling requirements.
Specialized programs may require counseling and will be noted in the program summaries, as they are made available. The program summary will indicate if classroom participation is required to satisfy the counseling requirement. The classroom instruction is to be provided by an approved Fund nonprofit agency or the private mortgage insurance company.
Section 7.11 Forms
Each Homeownership, Movin’ Up and Secondary Market loan must be executed on forms approved by the Fund, and by Fannie Mae, FHA, VA, and RD where appropriate. The forms specific to the Fund are available on our website at www.wvhdf.com. Note the importance of a complete loan application (1003) with proper income breakouts (wage/overtime/bonus) and the identification of manufactured units. The Lender Checklist (PR-36A) provides submission order, and forms required for loan processing. An appraisal completed on Form 1004 or 1004C will always be required, regardless of the Desktop Underwriter findings.
Section 7.12 Construction Loans
For construction to permanent loans the loan file needs to be accurately documented with total acquisition cost by a turn-key construction contract utilizing a licensed contractor. A copy of the construction note, HUD-1 Settlement Statement and the deed are required to be submitted.
Under the Homeownership or Movin’ Up Program, a borrower cannot roll other expenses into the construction loan (closing costs, payoff of other debt, etc.) above the acquisition cost and can only payoff the construction loan that is structured with short-term financing and no permanent financing rollover language.
On both the Homeownership and Movin’ Up Programs, when the deed is already in the borrowers name the borrowers cannot occupy the home until the permanent financing with WVHDF is closed due to being considered a refinance transaction with Right of Rescission documentation required.
Section 7.13 Escrow Requirements
All Homeownership and Movin’ Up loans are required to have established escrow accounts for the payment of hazard insurance, real estate taxes, private mortgage insurance, and flood insurance if applicable to the loan.
Secondary Market loans are required to have established escrow accounts for the payment of hazard insurance, real estate taxes, private mortgage insurance, and flood insurance if applicable to the loan unless a waiver has been granted at the time the loan was underwritten. The borrower has to qualify for the waiver with an LTV at or below 70%, have 6 months reserves after the loan closing and pay a waiver fee of .25% of the loan amount. To receive the waiver the lender is to submit a waiver request form along with the completed Waiver of Escrow Payments and Disclosure form. The waiver fee
