VA IRRRL Offering 5/20/14

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What is an IRRRL?

 IRRRL stands for Interest Rate Reduction Refinance Loan

 An IRRRL is a VA guaranteed loan made to refinance an existing VA guaranteed loan, generally at a lower

interest rate and with lower principal and interest payments than the existing VA loan

 IRRRLs are a true streamline product and as such only existing VA loans are eligible

 _{Available on 30, 20, 25 or 15 year fixed rate, 3/1 and} 5/1 ARM

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 IRRRLs have NO INCOME VERIFICATION

 A 2 year employment history is not required on the 1003

(except Credit Qualifying IRRRLs)

 _{HomeBridge will not verbally verify employment (except}

Credit Qualifying IRRRLs)

 IRRRLs do not require asset verification unless funds to close

exceed $500

 No Ratios

 _{No DU (IRRRLs are manual underwrites; do not run through DU)}  _{No Monthly MI}

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IRRRL Basics (continued)

 _{Funding Fee .50%}

 Cash back at closing cannot exceed $500  Escrow account mandatory

 Maximum loan term

 _{Term may not exceed the original term of the loan being} refinanced by more than 10 years, not to exceed 30 years and 32 days

 Minimum loan amount $60,000

 Maximum loan amount $1,000,000

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Loan Eligibility

 VA to VA Loans Only; county loan limits do not apply to IRRRLs

 _{Veteran re-uses the entitlement from existing VA loan}

 _{IRRRL does not impact amount of entitlement Veteran} has in use

 IRRRL Case Number Assignment from VA Portal is required from the Broker (order without requesting an appraisal)

 _{[email protected]} _{offers temporary support}

for Brokers without Portal access

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Loan Eligibility (continued)

Generally the party/parties obligated on the original loan must be the same on the new loan (and the Veteran must still own the property):

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Qualifying

The principal and interest payment on an IRRRL must be less than the

principal and interest payment on the loan being refinanced unless one of the following exceptions applies:

 _{Loan documents a benefit to the Veteran}

 Loan term reduction OR term going from ARM to Fixed

 _{Credit Qualifying required when any of the following apply:}

 PITI is increasing more than 20%  _{Conforming primary residence}

with a FICO < 640

 Spouse being removed from loan  _{High Balance primary residence}

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Qualifying - Continued

 Qualifying Quick View Eligibility Chart

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Non Eligible Transactions & Properties

The following are eligible for IRRRL transactions:

 Mortgages with less than 12 months payments made prior to the application (can be considered for exception)

 _{High Balance second home and investment properties}  High Balance 2-4 units properties

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Credit Requirements

 Conforming Loan Amounts

 A mortgage only credit report with credit scores is

acceptable unless the PITI payment is increasing by more than 20% or a spouse is being removed from the new

loan, then a tri-merge credit report is required  High Balance Loan Amounts

 Full credit report to verify no major derogatory credit in the past 12 months.

• Major derogatory credit is defined as any payment > 60 days delinquent, collections and/or judgments (excludes medical/utilities)

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Credit Requirements (continued)

_{580-599 FICO}

Credit qualifying only; refer to VA program guidelines for

complete credit qualifying guidelines

1 unit only

_{Conforming and High Balance}

_{Maximum 90% LTV/CLTV}

Minimum 2 year payment history on the loan being

refinanced with a 0x30 in the previous 24 months - Less than 2 year payment history ineligible

_{Maximum 31%/43% DTI – No Exceptions}

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Credit Requirements (continued)

_{Minimum 600-639 FICO}

Credit qualifying only; refer to VA program guidelines for

complete credit qualifying guidelines

_{1-4 unit primary residence conforming and high balance}

loan amounts

 _{Minimum 640 FICO}

 1 unit primary non-credit qualifying conforming loan

amounts

 _{Minimum 680 FICO}

 Second home and 1 unit investment property –

non-credit qualifying conforming loan amounts

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Required Submission Documentation

IRRRL submissions require the following from the Broker in addition to standard submission requirements:

 2 year employment history not required; do not show income

(except Credit Qualifying IRRRLs)

 _{Assets should not be included unless the amount of funds to close}

is > $500

 _{Liabilities should not be included with the exception of the}

mortgage loan to be paid off (except Credit Qualifying IRRRLs) from webLGY

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Required Submission Documentation (cont.)

 IRRRL Worksheet

 Located at www.homebridgewholesale.com > Forms  VA Debt Questionnaire

 _{Located at}_{www.homebridgewholesale.com} _{> Forms}  _{VA Rate Reduction Certification signed by Borrower}

 Sample available at www.homebridgewholesale.com > Forms

 Copy of existing Note/Current Mortgage Statement/Payoff

 _{When funds required to close exceeds $500, 1 month} bank statement is required

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Required Submission Documentation (cont.)

 AVM /2055/or full appraisal as required per matrix  Signed 4506T

 _{Only processed on Credit Qualifying transactions}  _{Broker completed IRRRL Worksheet VA Form 26-8923}

 This form breaks out loan amount calculation  Sample available at

www.homebridgewholesale.com > Forms

NOTE: HomeBridge VA Indebtedness Questionnaire is not required on IRRRL transactions

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Appraisal Options and Requirements

 _{Acceptable on loan amounts ≤ or equal to $417,000 ($625,500 for}

properties located in AK/HI)

 Always check the estimated value to ensure it works for the loan

parameter/LTV!

 _{Max LTV when using an AVM is 125%}

 _{A standard deviation of ≤ or equal to 18 must be received}  _{If the standard deviation is > 18 a 2055 is required}

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Appraisal Options and Requirements

 Loans with 2055 will have max LTV of 125%

 _{2055 is required to be completed by HomeBridge approved} AMC

 Loans with loan amount ≥ $417,000 ($625,500 in AK/HI) will require a

 Full appraisal must be from HomeBridge approved AMC  _{Max LTV is 100%}

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How To Order a CoreLogic GeoAVM™

 Brokers not signed up with CoreLogic can contact Brian Keysor at [email protected] to establish account

 Go to www.realquest.com

 _{Enter your user name and password}

 _{From the menu on the left side of the screen, under}

“Report Summary” select “AVMs” as the report option; select “AVM Cascade”, then “GeoAVM™ Core” (1)

 Type in the property address and zip code.  _{Click on “Submit Request”}

 _{On the Report Summary screen, the address will appear. (2)}  Click on the “Get” button, next to “AVM Cascade” to

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How to Read AVM Results

GeoAVM™ will run 4 valuation models at one time and will return results for the AVM with the highest score:

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How to Read AVM Results

Note the Estimated Value, Confidence Score and Standard Deviation on the final AVM report:

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Maximum Base Loan Amount < $417,000

Maximum Base Loan Amount will be the lesser of the following two calculations:

Unpaid Principal Balance (current at time of closing)  PLUS Allowable VA Closing Costs

 PLUS VA Funding Fee (if applicable)

 PLUS up to 2 points to obtain rate reduction (discount) Appraised value X 125%

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Maximum Base Loan Amount > $417,001

Maximum Base Loan Amount will be the lesser of the following two calculations:

Unpaid Principal Balance (current at time of closing)  PLUS Allowable VA Closing Costs

 PLUS VA Funding Fee (if applicable)

 PLUS up to 2 points to obtain rate reduction (discount Appraised Value (FULL appraisal required)

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Calculating Maximum IRRRL Loan Amount

Assuming using an AVM with Appraised Value Less Than Existing Loan amount plus allowable costs:

Appraised Value $100,000 X 125% = $125,000 Existing VA Loan UPB $145,000 Allowable Costs $3,000

_________ $148,000 Max loan amount is $125,000 (lesser of two)

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Calculating Loan Amount (continued)

Assuming using an AVM with Appraised Value higher than Unpaid Principal plus allowable costs:

Appraised Value $100,000 X 125%= $125,000 Existing VA loan UPB $114,000 Allowable Costs $3,000

_________ $117,000 Max loan amount is $117,000 (lesser of two)

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Fees and Charges

VA allows the following fees and charges:

 1% origination fee based on total loan amount. Fees determined by

VA as unallowable cannot be charged to the Borrower OR

 1% unallowable fees based on the total loan amount. An origination

fee cannot be charged to the Borrower OR

 Blend of loan origination and unallowable fees based on total loan

amount can be charged to the Borrower. Blend cannot exceed 1% of total loan amount.

 Since there is no origination fee charged, the Borrower can pay up to

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Unallowable Fees

The following fees be charged if a 1% origination fee is charged:

 _{Lender’s Appraisal}

 _{Closing/Settlement or Escrow Fee}  Doc Prep or Notary Fees

 Conveyance or Trustee Fee

 Underwriting Fee or Commitment Fee  _{Interest Rate Lock Fee}

 _{Postage/Mail Fees}  Tax Service Fee

 Attorney services other than title work  Loan application/Processing Fee

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Allowable Fees

 _{The following fees} _{be charged to the Borrower if} applicable:

 Loan Origination Fee

 Reasonable Discount Points  _{Appraisal Fee}

 _{Credit report Fee (actual)}

 Title examination/Title Insurance Fees  Recording fees and taxes

 Flood determination

 _{Federal Express/Express mail fee}  _{Closing Protection letter fee}

 VA Funding Fee

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Fee/Charge Calculation Examples

Loan Amount $200,000 Loan Origination $2000 Un-Allowable Fees $595

 In this example the Borrower is paying a 1% loan

origination fee. Therefore the Borrower is not able to cover the un-allowable fees

 The lender will be responsible for covering the un-allowable fees of $595 via a lender credit

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Fee/Charge Calculation Examples (continued

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Loan Amount $150,000 Loan Origination $0

Un-Allowable Fees $595

 In this example the Borrower is not paying a loan

origination fee. The Borrower is able to cover the un-allowable fees up to 1%

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Fee/Charge Calculation Examples (continued

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Loan Amount $300,000 Loan Origination $2000 Un-Allowable Fees $595

 In this example the Borrower can cover the loan origination fee and the unallowable fees since the total is less than 1% of the loan amount

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Closing Tips

 For VA IRRRLs, a general or military POA is acceptable if Veteran signed initial application and disclosures

 _{Alive and Well statement required if Veteran not at closing}  _{Maximum principal reduction is 1% of the loan amount}

 Funding into the month with an interest credit is allowed  Prior months payment must be made

 Existing IRRRL payoffs do not require full months worth of interest to be paid off (unlike FHA)

 _{For AVM option, insurance coverage only required for loan} amount

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VA Resources

VA Resources include:  www.va.gov

 _{Under Veteran Services click Home Loans}  _{Lender’s Handbook is available}

 http://benefits.va.gov/benefits  Veterans Information Portal

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VA IRRRL Forms

 IRRRL Forms (located under FORMS on website): Federal Collection Policy Notice

HUD/VA Addendum to URLA Loan Summary

Interest Rate Reduction Worksheet Verification of VA Benefits

 _{(N/A if exempt from funding fee)} IRRRL Worksheet

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