Desktop Underwriter is a registered trademark of Fannie Mae. Loan Prospector is a registered trademark of Freddie Mac. This presentation is a summary and is not complete. This information is for mortgage professionals only and should not be distributed to or used by consumers or
HARP HARP HARP
HARP – – – – DU REFI PLUS DU REFI PLUS DU REFI PLUS DU REFI PLUS
Training
Offered by…
FIRST MORTGAGE CORPORATION
JUNE 14, 2013
Introduction to the HARP – DU Refi Plus Program
DU Refi Plus Program
Purpose of the Program
Eligibility Guidelines
Underwriting Guidelines
Pricing
FMC Support
AGENDA
HARP (Home Affordable Refinance Program) was designed to assist homeowners in refinancing their mortgages – even if they owe more than the home’s current value
Goal: Provide refinancing opportunities for responsible homeowners to make their Fannie Mae mortgages
more affordable
Fannie Mae’s contribution to HARP – Refi Plus Program.
Purpose and Goal
Borrower Benefit Requirement
Expectation: Put responsible borrowers in a better position.
Borrower must be receiving a benefit in the form of at least one of the following:
•
A reduced monthly mortgage principal and interest payment
•
A reduction in the interest rate
•
A reduction in the amortization term
•
A more stable product - moving them from a risky loan
structure (ie IO or Neg Am) to a more stable product (ie fixed rate mortgage)
Purpose and Goal
Here are some of the highlights of the DU Refi Plus Program:
Borrower(s) must have an existing Fannie Mae loan with an acceptable payment history (Loan acquired before 6/1/2009)
Borrowers must benefit from the refinance
MI flexibilities, with no additional coverage required
No maximum LTV for FRM with terms up to 30 years
Limited cash-out refinances only (maximum $250 cash to borrower)
New loan must be underwritten with DU (Manual UW not allowed)
LLPA’s effectively eliminated for HARP loans with terms of 20 yrs or less; cap for other HARP loans is 75%..
Lenders can take advantage of some exceptions to standard reps and warrants
Highlights - DU Refi Plus Program
DU Refi Plus Refi Plus
(manual underwriting)
Desktop Underwriting Solution
Open to any lender using DU
Originating lender not required to be the current servicer
Retail, Wholesale, and Correspondent Channels
Manual Underwriting Solution
Lender must be the current servicer
Available through FMC DCM channel only
REFI PLUS Options
May not specifically target borrower’s whose mortgages are owned or securitized by Fannie Mae…
May solicit loans with LTV ratios greater than 80%
Must apply the same advertising and solication activities to borrowers of mortgage loans owned or securitized by both Fannie Mae and Freddie Mac
Must follow standard solication rules for loans with LTVs less than or equal to 80% (Selling Guide, B2-1.2-05)
Must use specific language outlined in the Selling Guide, B5-5.2-01
Solicitation Rules
ELIGIBILITY & UNDERWRITING
Eligibility Guidelines
Underwriting Guidelines
Property Valuation Guidelines
MI Guidelines
DU Refi Plus
Eligible Existing
Mortgage Any loan that Fannie Mae acquired prior to June 1, 2009
Ineligible Existing Mortgage
Any loan acquired on or after June 1, 2009
Certain loans subject to agreements with MI policies necessary to meet Fannie Mae minimum credit enhancement requirements, other than BPMI and LPMI
Loans with outstanding repurchase requests; loans subject to recourse
Reverse, second, and government mortgages Eligible new
Mortgage No Max LTV – FRM’s with terms up to 30 years
Ineligible new Mortgage
Mortgages with temporary interest rate buy-downs
ARMs with Initial Fixed Periods < 5 years
ARMS with potential for neg am
HomeStyle Renovation mortgages
Mortgage loans with an interest only feature
MCM loans
Eligibility Guidelines
DU Refi Plus
Loan Purpose LCOR only with payoff of existing first mortgage, financing of closing costs, and no more than $250 cash back to the borrower
New Loan Amount
The new loan amount can include:
Payoff of the Unpaid Principal Balance on the existing first mortgage
The financing of the payment of closing costs, prepaid items, and points
Cash back to the borrower in an amount of no more than $250
Tips:
DU cannot reflect borrower receiving more than $250 back on the DOT section; otherwise the loan will not be underwritten as a DU Refi Plus
Any excess funds at closing must be applied as a principal curtailment
Eligibility Guidelines
Cont’d…
DU Refi Plus
Maximum LTV NO Maximum LTV – Applies to ALL occupancy and property types
Maximum CLTV/HCLTV NO Maximum.
Loan Limits Existing Jumbo-Conforming and High Balance loans are eligible
New loan is subject to loan limits in place at the of delivery
Property Types
SFRs
Condos
PUDs
2-4 Units
Eligibility Guidelines
Cont’d…
DU Refi Plus
Borrower Eligibility
An existing borrower(s) may be removed from the new loan
provided at least one of the original borrower(s) is retained on the new loan
Borrower(s) may be added to the new loan, provided the existing borrower(s) is retained
Occupancy Types
The following occupancy types are eligible for the DU Refi Plus
1- to four-unit Principal Residence
1- unit Second Home
1- to four-unit Investment Properties (NOO)
Non Occupant Co- Borrower
Allowed to be added
DU analyzes the risk factors in the loan casefile without benefit of the non-occupant co-borrower’s income and liabilities
Eligibility Guidelines
Cont’d…
DU Refi Plus
Minimum Credit Score
No Minimum Fico Score – not subject to standard fico score requirements for Fannie Mae
Current credit score required only for pricing purposes
Payment History No 60-day late in past 12 months (on any mortgage tradeline)
Payment Increase No limit on payment increase
Maximum DTI Follow DU approval
Subordinate Financing
New subordinate financing permitted only if it replaces existing subordinate financing and does not exceed existing UPB
Simultaneous refinancing of subordinate lien permitted if new loan amount does not exceed existing UPB
Underwriting Guidelines
DU Refi Plus
Mortgage Modifications
A borrower who has applied for or received a mortgage modification is eligible, as long as the borrower benefit provision and mortgage payment history are met.
• The current terms of the modified loan must be used for this comparison.
No. of Financed
Properties No limit Asset
Documentation (Ckg, Svg, CD, MM, Stocks, Bonds, Trust, Retirement, Gift, etc.)
Reserves and Assets must be verified to the extent that the DU Underwriting Findings Report requires such verification
• One recent statement showing asset balance (mo/quarter/annual)
Fannie Mae permits grant-like unsecured financing provided to the borrower through a Housing Finance Authorities Hardest Hit Funds program for the purpose of paying down the outstanding mortgage balance or closing cost assistance
Income
Minimum Income documentation – see next slide
Underwriting Guidelines
Cont’d…
Underwriting Guidelines Cont’d…
Income Type / Eligible Income
Sources Documentation Required
ALL Employment Income Verbal VOE Base Pay (Salary or Hourly)
Bonus and OT Income
One paystub
Applies to primary employment, 2ndary employment (2ndjob and multiple jobs), and seasonal income
Commission Income One paystub or One year Personal Tax return
• Applies without regard to the % of commission earnings Self-Employment One year personal tax return
• Applies to primary and 2ndary self-employment
Alimony or Child Support Copy of divorce decree, separation agreement, court order or equivalent, and one month documentation of receipt
Rental Income
Lease or one year personal tax return (Form 1007 not required)
• Applies to rental income from subject or other properties owned by the borrower
Underwriting Guidelines Cont’d…
Income Type / Eligible Income
Sources Documentation Required
Retirement and Pension
One of the following: Award letter, one year personal tax return, W-2 or 1099 form, or one month bank statement reflecting direct deposit
Social Security
One of the following: Award letter, one year personal tax return, Form SSA-1099, or one month bank statement reflecting direct deposit
All other Income – Eg., (Auto Allowance, Boarder Income, Capital Gains, Foreign, Foster, MCC, Interest Dividends, Notes Receivable, Public
Assistance, Tip, Trust, VA
Benefits, Unemployment, etc.)
UW will determine appropriate documentation. Eg., award letter or equivalent documentation or agreement, one paystub or equivalent, one year personal tax return, IRS 1099 Form, or one month bank statement reflecting direct deposit
DU Refi Plus
Property Valuation
A property fieldwork waiver is offered on certain loan casefiles
Property value representation and warranty relief available on loans with an exercised waiver
There is a $75 fee for the waiver – must be exercised by lender
Deliver with code SFC 807
Tips to remember
Types of loans eligible for waiver
Properties in Disaster areas
Use of the value provided by DU
MI requested Appraisal report with Waiver per DU
Multiple Submissions for Value
Allowable values – New Appraisal, Lender, Borrower, AVM, etc.
Final Value Used
Waiver expiration date – 120 days
Waiver not offered
Underwriting Guidelines
Cont’d…
DU Refi Plus
Condo / PUD Project Review
No new project review
Must confirm property is not condo hotel/motel
Lender must confirm hazard, flood and liability insurance per Selling Guide
Condo / PUD Delivery Codes
V – Condo
E - PUD
Underwriting Guidelines
Cont’d…
Refinance Solution for LTV’s Greater than 80%
Refinancing opportunities for loans Fannie Mae currently holds or has guaranteed
MI coverage flexibility for loans with LTV’s greater than 80%
Original Loan LTV ratio Existing MI Coverage MI Coverage for New Loan
=< 80% None Not required
> 80%
None Not required
Yes
Current level of MI coverage or Standard coverage (Not available via Wholesale)
MI Flexibility
Other Items to note…
Accurate Property Address
An accurate property address is critical to determining if the subject
property address on the loan casefile matches a subject property address for an existing Fannie Mae loan.
Significant
Derogatory Credit Events
Must comply with the waiting period and re-establishment of credit requirements for significant derogatory credit underwritten through DU Converting DU Refi
Plus to Refi Plus Manually
underwritten loan
A FMC serviced Fannie Mae loan that meets all requirements, but cannot get a DU approval, may be done as a Refi Plus loan provided it meets the Refi Plus manually underwritten guidelines
Final DU
The final DU submission must have the DU Refi Plus message.
If its no longer on a subsequent submission including the final, it will not be eligible to be delivered as a DU Refi Plus
DU DOT section
Enter only the balance of the first mortgage being paid off with the new refinance on line d section of the application
Miscellaneous
PRICING
Interest Rates and Allowable Fees
Pricing and Delivery Requirements
Sample HARP Rate Sheet
DU Refi Plus
Interest Rates Interest Rates available on the FMC Rate Sheet effective Wednesday, June 19, 2013
Origination Fees No max required - Follow new HUD RESPA rules
Rebate/Discount Pricing
See FMC rate sheet
Allowable Fees Must be reasonable and customary and fully disclosed to the borrower in accordance with all agencies, federal, state and local laws
Follow FMC rules on limitation of fees for FHA loans
Pricing and Delivery Requirements
DU Refi Plus
Pricing
HARP loans with terms:
=< 20 years: NO LLPA’s or AMDC
> 20-year terms: LLPA’s and AMDC capped at 0.75%
2% for NOO
All others: See Pricing Matrix on Rate Sheet
Special Feature Codes (SFCs)
Use code 147 for DU Refi Plus
807 if DU Refi Plus property fieldwork waiver is exercised
Use code SFC 118 if Community 2
ndis the subordinated 2
nd
Plus all other applicable SFCs
MI Delivery Requirement
Deliver MI Absence Reason “NO MI Based on Original LTV” for all loans with LTV’s over 80% and NO MI coverage
Pricing and Delivery Requirements
Sample “HARP” Rate Sheet
Wednesday,
JUNE 19, 2013
TARGET ROLL OUT DATE
FMC SUPPORT
WEB SITE
Go to FMC websites for:
1. RATE SHEET
2. TRAINING MATERIALS 3. GUIDELINES
4. FORMS
5. CALCULATORS 6. TOOLS
7. MARKETING
TRAININGS
First Mortgage offers FREE Weekly ONLINE Trainings
See June Training schedule for upcoming trainings
Trainings for June, 2013:
• 6/6: FMC Product Overview
• 6/12: CHF ACCESS
• 6/14: HARP – DU Refi Plus Roll Out
• 6/18: HARP – DU Refi Plus Repeat Training
SUPPORT
Retail:
Contact Loan Help Wholesale/Correspondent:
Contact your FMC A/E For help with your:
• Scenarios
• Pricing / Fees
• Guidelines
• Loan Submissions
• Trainings
On behalf of First Mortgage, thank you for joining today’s training and we hope the information
provided will help you build your business!
The main purpose of First Mortgage Corporation’s (FMC) training documents is to assist real estate and mortgage professionals in developing entry-level competence with loan programs.
While FMC staff, employees, contractors and contributors take care to ensure the accuracy of the content of training documents, FMC makes no warranties as to the accuracy of the information contained within these materials.
Furthermore, every user of this material uses it understanding that he or she must still conduct his or her own original legal research, analysis and drafting. In addition, every user must refer to the relevant legislation, case law, administrative guidelines, rules and other primary sources.
FMC specifically disclaims any liability for any loss or damage any user may suffer as a result of information contained within this training material.
While the information contained in FMC’s training material addresses guidelines and issues surrounding mortgage programs, these materials do not constitute legal advice. All non-legal professionals are urged to seek legal advice from a lawyer.
