Conforming DU Refi Plus (HARP 2)
Investor 04 – Retail Only
SNMC will accept loan submissions for the Home Affordable Refinance Program - HARP 2. These loan submissions will be subject to the current FNMA guidelines, however all HARP 2 loans are subject to the following restrictions.
Revisions
Date Revisions
5-18-15 Updated Section 4.5-A Overview
4.5-A Overview
The DU Refi Plus program is a rate/term refinance available to responsible borrowers who have lost equity in their homes and are unable to refinance under existing loan programs. The first lien being refinanced must be currently securitized by Fannie Mae. This program is only eligible for the refinance of first liens that closed before June 1, 2009. You can determine if the mortgage is owned by FNMA by checking the following website Fannie Mae Loan Lookup. Loans must have application dates on or before December 31, 2016.
Any guideline not addressed in this chapter will follow standard C-F30 loan guidelines.
4.5-B Eligible Properties
1-4 unit properties
Warrantable Condos (low and high rise)
PUDs
Owner occupied, 1-unit second homes, and investment properties
4.5-C Ineligible Properties
Condo hotels
Mobile/Manufactured housing
Non-warrantable condos
Co-ops
Log homes
Leasehold Property
4.5-D Doc Type
Full
4.5-E LTV/CLTV Parameters – Fully Amortized
Rate-Term Refinance
Occupancy Units LTV CLTV Minimum FICO
Primary ¹ 1 - 4 ≤ 300% Unlimited 620 ² ³
Second Home 1 ≤ 300% Unlimited 620 ² ³
Investment 1 - 4 ≤ 300% Unlimited 620 ² ³
¹ For loans with mortgage insurance, see Section 4.5-M Mortgage Insurance
² See Max DTI/FICO restrictions in section 4.5-I Underwriting
³ With DU approval Important Notes:
Debt ratio not to exceed 50% with DU approval.
All loans with an LTV over 105% require a 2nd review and sign off from an underwriter who currently has second signature authority.
4.5-F Product Codes
Conventional:
C-F15RP-04*
C-F20RP-04
C-F30RP-04
High Balance:
C-F30HB-RP-04
4.5-G Maximum Loan Amount
Conforming Loan Amounts:
Number of Units Continental U.S. Alaska and Hawaii
1 Unit $417,000 $625,500
2 Units $533,850 $800,775
3 Units $645,300 $967,950
4 Units $801,950 $1,202,925
4.5-G1 High Balance Loan Amounts
Maximum conforming loan amounts can be found at FNMA Mortgage Limits. Select Fannie/Freddie under the Limit Type and then select CY2014 under Limit Year.
All borrowers must have a FICO score
Maximum 45% DTI
Non-occupant co-borrower: Occupant borrower debt to income ratio not to exceed 43%, total debt to income ratio not to exceed 45%.
4.5-H Term
Conforming: 15, 20 and 30 year term Conforming High Balance: 30 year term
4.5-I Underwriting
Loans must be run through DU and must receive an Approve/Eligible finding. Expanded Approvals are not eligible. Minimum FICOs are listed in the matrix above. Minimum FICO requirement listed above must be met regardless of AUS approval. The DU findings must show the following:
This loan case file was underwritten according to the DU Refi Plus expanded eligibility guidelines offered on certain limited cash-out refinance loan case files where the borrower’s existing loan is identified by DU as a Fannie Mae loan. This loan case file must be delivered with Special Feature Code 147.
DU determines if the borrower(s) and the subject property is a match to an existing eligible FNMA loan. A successful match is required in order for the loan casefile to be eligible.
As a clarification, there are two programs: Refi Plus (manual underwrite) and DU Refi Plus (DU). Refi Plus transactions are not allowed.
The transaction must benefit the borrower in the one of the following:
A reduced principal and interest payment
A more stable loan product (e.g. ARM to fixed-rate mortgage).
A reduction in interest rate
A reduction in amortization term
The underwriter should address the benefit to the borrower on the approval. Extension of amortization period is not considered a “more stable product”. DU does not make the determination that the DU Refi Plus transaction will benefit the borrower; the lender must determine this outside of DU.
Cash out is not permitted on this product. Rate/term refinance only. The maximum cash back to borrower cannot exceed $250.00.
4.5-I1 Borrower Eligibility
Standard conforming guidelines apply.
An existing borrower may be removed from the new loan provided that at least one of the original borrowers is retained on the new loan. A borrower may be added to the new loan, provided the existing borrower is retained.
The existing mortgage and the new DU Refi Plus mortgage loan do not have to represent the same occupancy. The occupancy of the subject property may have changed by the time of the new mortgage transaction. Because the loan represents existing risk, there is no requirement that the occupancy has stayed the same.
Multiple Financed Properties
There is no limit to the number of financed properties.
4.5-I Underwriting (cont’d) 4.5-I2 Credit
Standard conforming guidelines apply. For significant derogatory credit events for DU Refi Plus loans, lenders are not required to comply with the waiting period and re-establishment of credit requirements.
DU will issue a message when a significant derogatory credit event is identified that indicates the loan is eligible for delivery regardless of when the event occurred. DU will not require the payoff or satisfaction of a judgment shown on the credit report.
Mortgage Payment History Requirements: The borrower(s) cannot have any mortgage delinquencies in the most recent six month period, and no more than one 30-day delinquency in months 7 – 12.
Mortgage Modifications: A borrower who has applied for or received a loan modification is eligible to refinance under DU Refi Plus, subject to the following:
The borrower benefit provision must be met. The terms of the modified loan (trial or permanent) must be used for this comparison. If the borrower was previously in a trial period plan, but denied a permanent modification, the current terms of the loan must be used for this purpose.
The borrower must meet DU’s mortgage delinquency policy in Section B3-5.3-09 of FNMA’s Selling Guide.
4.5-I3 Income
Income to be documented according to DU findings; however W-2(s) for previous year for each salaried borrower are required regardless of AUS findings.
4.5-I4 Ratios
Debt ratio not to exceed 50%.
4.5-I5 Assets/Reserves
Asset and reserves are to be documented according to DU findings.
4.5-I6 Subordinate Financing
Any existing subordinate financing must be re-subordinated and may not be included in our new loan.
o Existing subordinate financing must meet all standard conforming guidelines
No new Subordinate Financing is allowed
4.5-I7 Higher Priced Loan Requirements
Because DU is unable to determine if a DU Refi Plus loan is either a higher-priced mortgage loan or a higher-priced covered transaction under Regulation Z, the lender must make this determination. If the lender does determine that the loan is either a higher-priced mortgage loan or a higher-priced covered transaction, the loan must have a representative credit score of 620 or more and a debt-to-income ratio of 45% or less in order to be eligible.
4.5-J Property
4.5-J1 Condo and PUD Projects
The lender is not required to perform a review of condo projects or PUD’s.
The lender must represent and warrant that the property is not a condotel, co-op hotel or motel, houseboat project, or a timeshare or segmented ownership project.
For assistance in determining whether the project is a condotel, co-op hotel or motel, see B4-2.1-02, Ineligible Projects in FNMA’s Selling Guide.
4.5-J2 Properties Listed For Sale
Properties must not be listed for sale and they must not have been listed at the time of application.
4.5-K Appraisal
Appraisal requirements are required as per the DU findings. If the DU Refi Plus Property Fieldwork Waiver (PIW) is offered:
Re-submit the loan casefile using the estimated value if provided by DU or
Exercise the waiver using the value entered by SNMC (whether based on SNMC’s estimate, the borrower’s estimate, or another value obtained for the property).
The value should be the same throughout the loan file. No new appraisal is required. If an appraisal has been ordered, it must be included in the file and the value must be used regardless of whether it is lower or higher than the value returned by DU. If the value is higher, any discrepancy between the appraised value and the value from DU must be justified by the underwriter. If no value is returned by DU, the value from the appraisal must be used.
If a Property Fieldwork Waiver (PIW) is not offered on DU:
Obtain an appraisal (as indicated in the DU Findings)
A full appraisal is required, regardless of DU findings, under the following circumstances:
Property is located in a disaster area
4.5-L Opt Out
DU offers the ability to distinguish between a regular C-F30 rate term and a DU Refi Plus. In Encompass, go to
“Services”, then to “Request Underwriting”. In the “Submit to DU on EPass” box, go to the bottom and click on the drop down box under “Product Description”, then choose “LCOR”.
4.5-M Mortgage Insurance
Mortgage insurance will be waived on loans with LTVs greater than 80% if the existing Fannie Mae loan had an original LTV less than or equal to 80% LTV. In other words, if the previous loan did not need mortgage insurance, the new loan doesn’t need mortgage insurance. DU will issue the following message to indicate this waiver: “Mortgage insurance is not required for this DU Refi Plus loan casefile”.
Mortgage insurance is allowed up to 300% LTV/CLTV and must be locked with Investor 04. For further
4.5-N Ineligible Scenarios
Loans that receive an “ineligible” recommendation
Interest Only
Refi Plus transactions (manual underwrite)
Texas 50(a)(6) Mortgages
4.5-O Temporary Buydowns
Not allowed
4.5-P Impound Accounts
Escrow waivers are not permitted on LTV’s over 80%. California properties may waive escrows up to 90% LTV.
4.5-Q Assumability
Not assumable.
4.5-R Prepayment Penalty
Not allowed