Managing FHA Loans In Point Correctly processing FHA loans emphasizing the MCAW

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Managing FHA Loans In Point –

Correctly processing FHA loans

emphasizing the MCAW

Presented By Calyx Online Training Stephen Breden

February 2008

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FHA Loans Are Different….

They are experiencing a renaissance with the

disappearance of sub-prime lending

FHA loans are not synonymous with “B paper

loans”

Conventional loan processing applies only so

far

A good foundation in FHA in general is

assumed

Basic knowledge of Point is “helpful”

We will concentrate on the correct way to

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Recent Changes

New Features - Go To “Main Panel”

and “Help

Go to “Release Notes”

Always review these notes when a

new version of Point is released

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Step 1. Starting the FHA

Purchase File

Program Steps

Open Point and start

an FHA file using a new master template

The use of templates is highly

recommended if you are going to efficiently process FHA loans and easily calculate a correct MCAW

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Important Things to

Remember

Always

start an FHA

file out from the main screen by filling out the filling out the Prospect

Information Screen first. Do not start out by going to the MCAW or GFE.

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Click on Max Loan Button

After completing basic data entry, click the

“Max Loan” button in the lower right hand

corner of the Prospect Information Screen, to compare your loan against the County loan limits as set up in your Loan Program

limits as set up in your Loan Program templates.

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Complete the Prospect

Information Screen

Complete basic information Fill in purchase amount

Do not fill in loan amount or down payment, but do fill in loan terms

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To Calculate the Statutory Loan Amount,

Click on the “Mtg Insurance” Button

Calculate the Mortgage Insurance

Premium by clicking on the MIP

button at the bottom of the Prospect Information Screen

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Calculating Both MIP Amounts

It will bring up the

following screen

allowing calculation of MIP (Mortgage of MIP (Mortgage Insurance Premium)

Click on “FHA Max

Ln” and it will

transfer the loan amount to the

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Finally…

This completes the basic data entry of the

information required for your FHA loan, including the MIP premiums, both the upfront and recurring…

upfront and recurring…

Note that FHA has a 3% “out of pocket”

requirement

This 3% may or may not be made up

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Step 2. Completing the

Good Faith Estimate

(GFE)

Go to the GFE

Screen and enter all Screen and enter all closing costs and

prepaid items, being careful to mark

items correctly as

“F” (or “S” if you tag them)

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Marking Information In

Parentheses and Showing Credits

•Putting

information in for “information for “information only”

•One way to

show the non-allowable

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Notes on FHA Allowable Closing Costs

MAY BE PAID BY BORROWER AND INCLUDED IN MORTGAGE BASIS CALCULATION

1% Origination Fee Credit Report Appraisal Fee Title Insurance

Recording, Notary & Endorsements Escrow Fee

Home Inspection (to $200)

MAY BE PAID BY BORROWER BUT NOT INCLUDABLE IN MORTGAGE BASIS

Discount Points Commitment Fees MIP Paid in cash Attorney's Fees

NON-ALLOWABLE MAY NOT BE PAID BY BORROWER IN ANY FHA

TRANSACTION

Tax Service Fees

Home Inspection (to $200) EEM Rating (to $200) MCC Application Fee Flood Certificate

Doc Preparation (if third party) Termite Inspection Repair Inspection Survey Fee FED-X (refinance) Reconveyance (Refi) Attorney's Fees Home Warranty Plan RE Commissions

Home Inspection (over $200) EEM (over $200)Lock-in Fees

These vary from region to region. Check with your local regional HUD office.

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The Best Way To Handle Non

Allowables…..

*** Many knowledgeable mortgage professionals never show seller paid non-allowable fees on the GFE at all; this is their interpretation of RESPA. This makes things MUCH EASIER if you do it this way.

In the “Good Old Days,” non

allowable closing costs could easily be this high

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Step 3. Managing Your MCAW

(Mortgage Credit Analysis

Worksheet)

It is vital that the Good Faith Estimate be

filled out correctly and that all items are

marked correctly as far as whether they are FHA Allowable (F) and prepaid finance

FHA Allowable (F) and prepaid finance charges (PFC).

Failure to correctly tag the F items will result

in an incorrect MCAW.

Failure to correctly tag the PFC items will

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Bring Up The FHA Purchase

Worksheet AKA “MCAW”

Obtained along with CAIVR clearance

Obtained after underwriting

Select Type

<<

Allowables Only Will Pull from the GFE

The four buttons at the bottom should be clicked from Left to Right, and the numbers in 5a and 5b will automatically calculate

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Bring the Data Over From

the Loan App and GFE

a. Very first thing, click the “from loan app” button on the bottom.

b. Next thing, click the “from GFE” button next to it.

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Important Things to

Remember

There are buttons on the bottom of the

screen called “From Loan App” and “From GFE.” Click these buttons to automatically

transfer information from the loan application transfer information from the loan application and GFE directly into the MCAW (worksheet). You may also review a file from here if you are processing rather than originating a file from the very beginning.

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Other MCAW Be Carefuls….

Continue to fill out any Required Adjustments, Repairs,

and improvements in their appropriate fields.

If you follow the three step procedure outlined in

class, you will not have to use the “Lock” buttons or keep track of seller paid costs – only the “allowable” class, you will not have to use the “Lock” buttons or keep track of seller paid costs – only the “allowable” seller paid costs will appear and they will automatically transfer to the MCAW.

You must manually input numbers from the three

custom blank lines on the bottom of the GFE to

include any Earnest Money, etc. that are indicated on your GFE. They will not transfer automatically like the rest of the GFE. This is an ideal place to indicate non allowable closing costs, and who pays them, as an offsetting debit and credit.

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Item 12h….

FHA GFE from Button at Bottom of Regular GFE – Numbers Entered as a “minus” to

Lock total here from bottom of GFE – Entered as a “plus” number here

<<<

Be careful that Cash Earnest Money is in the right box. Manually move the number to the right box if it pulls over into Assets Available

as a “minus” to Indicate Credit

Where Pulled Into MCAW Line 12h

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Important Things to

Remember – Back to the GFE

Be sure that you

have entered the Minimum

“Required Cash “Required Cash Investment” on the GFE Total Cash to Close Section when doing an EEM or 203(k)

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Important Things to

Remember

If the loan includes non-married

Co-Borrowers, you will not see correct ratios until combining all of the Borrower’s information in the special “Combined Mortgage Credit

Analysis Worksheet”. First, complete the Analysis Worksheet”. First, complete the individual MCAWs for the individual

Borrowers.

After the individual MCAWs are filled out for

all Borrowers, then Click on “Forms > FHA/VA > Combined FHA WS PUR”. The combined

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Refinance Notes

FHA Refinances are very similar but have a different worksheet

inside of Calyx.

From the Prospect Information Screen, choose your refinance

type as either No Cash-Out Refi or Cash-Out Refi and enter the appraised value, interest rate and term. (You do not need to enter the initial loan amount; it will automatically calculate on enter the initial loan amount; it will automatically calculate on the FHA Refinance Worksheet). (Note that there are four types of Refinance, and must be so indicated from the drop down list on the Refinance Worksheet MCAW, when you get there).

You should enter your payoff now in the liabilities section of the

1003

Enter the MIP numbers and calculate the loan amount, just as

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Enter the MIP Numbers Then

FHA Max Loan

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Important Note on the UFMIP

Your Up-Front

Mortgage Insurance Premium will not be calculated

correctly

calculated

correctly

until the maximum loan amount has been generated on the MCAW.

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To Continue

Complete the GFE as with the Purchase

transaction.

Since there is no seller, we do not have

to consider seller paid items as we

would on a purchase.

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Finally

For the most part, the remainder of

your transaction will look very similar to the FHA Purchase.

On a streamline refinance, you may

mark all closing costs as

“allowable;” you will then not have to manually adjust the loan amount to manually adjust the loan amount to balance the FHA GFE, Details of Transaction, and MCAW, for zero cash out of pocket

On a streamline with appraisal or

regular refinance, you may mark all fees as allowable, with rare

exception.

Make a note in the comments

section on the bottom of the MCAW that marking prepaids as allowables is permissible per HUD on

streamline refinances with an appraisal, or regular refinances.

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Other Refinance Notes

For a Regular Refinance, the borrower will

have to pay for closing costs out of pocket. The amount will appear as cash to close on the 1003 Details of Transaction.

For a Cashout, consult your FHA Underwriter;

the rules are somewhat complex, and should be considered on a case by case basis. Basic rules for pulling data into the MCAW still

apply. The loan amount should calculate correctly, as for other types of FHA loans.

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Conclusion – Other Resources

Go to the Calyx help section in your

manual

The HUD website

Other schools that emphasize FHA

training

Check back with your instructor by

email when changes occur in the

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Addendum

Concerning Gift Funds

Assets and liabilities screen

(1003 Page 2)

When entering the assets, be

sure to use the dropdown list next to the “From VOD button” next to the “From VOD button” when using the FNMA loan app for automated submission to indicate the account type. This is also the appropriate place to record gift funds. If the

dropdown list is not used, Fannie Mae will recognize the entries as other non-liquid

assets rather than liquid assets, resulting in incorrect figures.

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Gift Funds Continued……

For the regular 1003, you will have to enter this number manually and For the regular 1003, you will have to enter this number manually and indicate in the description box that it is gift funds.

Gift funds require careful handling if you are not to get into problems over the seasoning requirement.

Managing FHA Loans In Point Correctly processing FHA loans emphasizing the MCAW