To access changes made in the latest LoanLibrary delivery, go to the Recent Changes Page.
CD1003
CDUG
Energy Efficient Mortgages now allow the value of the energy “savings” to be added to the calculation of the borrower’s income resulting in easier qualification at higher loan amounts.
With the expansion of the EEM underwriting guidelines, the energy efficient mortgage enhancement is now limited to conforming fixed rate products.
Investor will not accept as proof of occupancy a copy of a driver’s license.
Investor allows multiple trusts on conforming loans subject to the loan meeting additional requirements. Refer to Underwriting Guidelines for full details.
Condo and PUD Projects section have been revised to remove the obsolete reference to registration of condo or PUD projects with Investor.
Acceptable documentation to evidence receipt of spousal or child support has been updated.
CDGR
A land trust is a revocable trust that is used primarily to protect assets.
This type of trust is only allowed in the state of Illinois.
Not eligible for purchase.
The maximum for “necessary and reasonable” closing costs allowed for Texas rate and term refinances has been increased to 5%.
Non-conforming Fixed Rate Period ARM program has been updated to remove the obsolete geographic restriction excluding this program in Alaska.
The late charge for HELOCs in the State of Missouri has been modified; refer to specific product for full details.
ST1503
STUG
While the Investor does not require pre-approval of individual appraisers, it does maintain a list of ineligible appraisers.
Any appraisers identified on the list are not eligible to perform appraisal assignments, either directly or indirectly, on properties that secure loans to be funded or purchased by investor.
SS1603
SSGR
Effective immediately, Illinois Land Trusts are not eligible for processing through Fannie Mae’s Desktop Underwriter (DU).
Loan transactions involving an Illinois Land Trust must be traditionally underwritten or processed through Freddie Mac’s Loan Prospector (LP).
WO1203
WOUG
The Investor will no longer accept manufactured (mobile) homes as eligible collateral.
These properties are ineligible even if the wheels have been removed and the home has been permanently affixed to a foundation and converted to real estate under local law.
The Investor will continue to accept prefabricated and modular homes that are designed to be assembled on site and attached to a permanent foundation.
NOTE: A manufactured (mobile) home is a single or multi-width unit that is built on a permanent chassis with axles and wheels.
WOPR
WO25
The Investor will no longer accept manufactured (mobile) homes as eligible collateral.
These properties are ineligible even if the wheels have been removed and the home has been permanently affixed to a foundation and converted to real estate under local law.
The Investor will continue to accept prefabricated and modular homes that are designed to be assembled on site and attached to a permanent foundation.
NOTE: A manufactured (mobile) home is a single or multi-width unit that is built on a permanent chassis with axles and wheels.
WO32
The Investor will no longer accept manufactured (mobile) homes as eligible collateral.
These properties are ineligible even if the wheels have been removed and the home has been permanently affixed to a foundation and converted to real estate under local law.
The Investor will continue to accept prefabricated and modular homes that are designed to be assembled on site and attached to a permanent foundation.
NOTE: A manufactured (mobile) home is a single or multi-width unit that is built on a permanent chassis with axles and wheels.
WO22
The Investor will no longer accept manufactured (mobile) homes as eligible collateral.
These properties are ineligible even if the wheels have been removed and the home has been permanently affixed to a foundation and converted to real estate under local law.
The Investor will continue to accept prefabricated and modular homes that are designed to be assembled on site and attached to a permanent foundation.
NOTE: A manufactured (mobile) home is a single or multi-width unit that is built on a permanent chassis with axles and wheels.
WO26
The Investor will no longer accept manufactured (mobile) homes as eligible collateral.
These properties are ineligible even if the wheels have been removed and the home has been permanently affixed to a foundation and converted to real estate under local law.
The Investor will continue to accept prefabricated and modular homes that are designed to be assembled on site and attached to a permanent foundation.
NOTE: A manufactured (mobile) home is a single or multi-width unit that is built on a permanent chassis with axles and wheels.
WO90
The Investor will no longer accept manufactured (mobile) homes as eligible collateral.
These properties are ineligible even if the wheels have been removed and the home has been permanently affixed to a foundation and converted to real estate under local law.
The Investor will continue to accept prefabricated and modular homes that are designed to be assembled on site and attached to a permanent foundation.
NOTE: A manufactured (mobile) home is a single or multi-width unit that is built on a permanent chassis with axles and wheels.
WO34
The Investor will no longer accept manufactured (mobile) homes as eligible collateral.
These properties are ineligible even if the wheels have been removed and the home has been permanently affixed to a foundation and converted to real estate under local law.
The Investor will continue to accept prefabricated and modular homes that are designed to be assembled on site and attached to a permanent foundation.
NOTE: A manufactured (mobile) home is a single or multi-width unit that is built on a permanent chassis with axles and wheels.
WO30
The Investor will no longer accept manufactured (mobile) homes as eligible collateral.
These properties are ineligible even if the wheels have been removed and the home has been permanently affixed to a foundation and converted to real estate under local law.
The Investor will continue to accept prefabricated and modular homes that are designed to be assembled on site and attached to a permanent foundation.
NOTE: A manufactured (mobile) home is a single or multi-width unit that is built on a permanent chassis with axles and wheels.
WO33
The Investor will no longer accept manufactured (mobile) homes as eligible collateral.
These properties are ineligible even if the wheels have been removed and the home has been permanently affixed to a foundation and converted to real estate under local law.
The Investor will continue to accept prefabricated and modular homes that are designed to be assembled on site and attached to a permanent foundation.
NOTE: A manufactured (mobile) home is a single or multi-width unit that is built on a permanent chassis with axles and wheels.
CD0903
CD01, 02, 05, 10, 11, 15, 16, 17, 20, 28, 29, 42, 43, 44
Conforming Fixed & ARM, Non-Conforming Expanded Criteria and Non-Conforming Products
In the Transaction Section of the these products, Land Contracts have been added as acceptable .
Investor's Definition of a Second Home has been added
Underwriters must gross up the income and use the greater of 25% of the income or the borrower’ tax rate
Public Assistance guidelines have been added including unemployment and welfare.
Overtime or Bonus Income and Commission Income
VOE and Income has been updated to note clarification on documentation requirements
Construction to permanent loans has been revised to clarify that sweat equity is not an eligible source of funds.
Conforming loans do not allow cash out refinances on land contracts.
Log homes are an allowable type of “pre-fabricated” factory-built housing type and have been removed as an ineligible property type on the conforming Fast and Easy loan programs.
Appraiser's comment requirements regarding any sales/transfer activity of the property within the last 36 months, it is added, that the appraiser must include an analysis of how any current or previous agreements affect the estimated value of the property.
The mortgage insurance requirement for cash out refinances in Alaska has been removed as the maximum LTV allowed is 80% in the FNMA Expanded Approval Levels I, II, III product
The predatory lending ordinance recently passed by the city of New York has been delayed from enactment until August 15th, 2003. Investor will not purchase high cost loans subject to this city ordinance as soon as it becomes effective.
Investor will no longer purchase loans subject to the recent high cost loan legislation passed by the City of Toledo, Ohio, effective for loans funded on or after June 24th, 2003.
FNMA Flex 97, FNMA Flex 100, FHLMC Affordable Gold 97, My Community 100 Plus and Expanded Criteria Fixed-Zero Down 103%
The above State and products on this page have been updated to show that:
Loans secured by properties in West Virginia are restricted to a maximum 100% CLTV.
CD24
Loans exceeding $650,000 are restricted to major metropolitan areas.
WO1003A
WO90
Bankruptcy, Forclossure and judgments, collections and/or unpaid charge-offs requirements have been updated.
Consumer Credit Counseling Topic has been addded.
The Data Quick and 1st American Real Estate Solutions AVM products are no longer acceptable to Investor; the Solimar PASS is the only permitted AVM.
Please note that Sellers should not enter/provide a seed value* when that option is available with the Solimar PASS. Investor will not accept any valuation derived using a seed value.
*Seed value is any value provided to the AVM vendor for consideration by the model. Examples include entering an estimated market value of the subject property or neighboring property, into the AVM request. Providing value information – even when no “hit” is found by the vendor – is not allowed.
New monthly income levels and associated maximum DTI ratio will be incorporated.
Investor will no longer allow submission of a Seller’s employee loans via our Investor Web site
Employee loan submissions are not eligible for the Stated Income option or Delegated underwriting, i.e., employee loans must be fully documented and submitted to Investor for prior approval.
Investor will no longer take 2nd lien position behind a Cal-Vet loan without the proper “Consent to Encumber”.
Change N: Investor’s Stated Income Matrix has been updated as well.
SS1403
The Desktop Underwriter (DUTM) Property Inspection Waiver (PIW) is Fannie Mae technology for certain lower risk transactions that provides a property recommendation that results in an offer to waive both the property appraisal and inspection.
Fannie Mae’s property inspection waiver (PIW) is available on the following transactions:
Fannie Mae fixed rate, balloons and ARM loans,
Purchase and limited cash-out refinance transactions,
LTV/TLTVs < 90%, and
Approve/Eligible recommendations.
PIW is NOT AVAILABLE on the following transactions:
Cash-out refinance transactions,
LTV/TLTVs > 90%,
Construction-permanent transactions,
“Refer and “Refer with Caution” recommendations,
Transactions where the subject property is one of the following:
New construction that was recently completed but not yet occupied,
Cooperative units,
Manufactured housing,
2-4 unit primary residences, and
1-4 unit investment properties.
SS1303
Effective on all loans locked on or after Tuesday, July 1, 2003, Investor will impose a moratorium on Manufactured Housing. Manufactured homes will no longer be an eligible property in all states.
Modular and Panelized housing will remain eligible properties.
Note: All loans currently in the pipeline and locked prior to Tuesday, July 1, 2003 will be honored. Lock extensions will not be permitted.
WO1103
No Mortgage Loan is subject to the Provisions of the Home Ownership and Equity Protection Act of 1994 as amended or is considered a "high cost", "covered" or "predatory" loan under any applicable state, federal, or local laws or ordinances.
WO1003
WO90
2 - 4 unit properties now allowed for investment property.
Credit scores for primary wage earner have been added for investment properties.
Manufactured/Mobile homes ineligible for financing as investment property.
Effective with all new submissions as of July 1, 2003, Investor will apply the new criteria for calculating the CLTV on all non-purchase transactions:
For properties purchased within the last six months, the CLTV for all non-purchase transactions must be calculated using the lesser of the purchase price or current appraised value. Unless the property is located in the state of Nevada, then the borrower must have owned the property for 12 months and the CLTV will be calculated using the current appraised value.
Investor requires that any borrower with variable income (e.g., bonus, commission, overtime, etc) be considered using the guidelines and parameters for self-employed, when that variable income exceeds 50% of the borrower’s qualifying income. Sellers should keep in mind that in addition to impacting the minimum time on job to be considered stable income, the maximum CLTV may be limited.
CLTV ≤ 80%: Self-employed a minimum of two years
CLTV > 80.01 – 100%: Self-employed a minimum of three years
Our Stated Income option will only be available for 1-unit, primary residence or second home transactions.
The following are no longer eligible for Stated Income:
Investment properties
2-4 unit properties
Manufactured/mobile homes
Additionally, the parameters have been revised to all Self-employed Borrowers using Stated Income.
For both Delegated and Investor Prior Approval loans, Sellers must include a verbal verification of employment in the closed loan package for all loans/lines of credit approved under the Stated Income option.
SS1403
SS01
During a recent audit of the program, we revised the product.
We suggest you review the complete product to get the full impact of the changes made.
During a recent audit of the program, we revised the Underwriting options for the product.
We suggest you review the complete product to get the full impact of the changes made.
CD0803
Acceptable options for signing as an attorney-in-fact have been added.
Added guidelines for Employer –Provided subordinate financing.
Added guidelines for co-signed obligations.
Requirements for the verification of all sales contract deposits.
Added guidelines for appraiser licensing requirements.
Reduced documentation requirements for Self-Employed borrowers and assets verification requirements including bank statements.
Eligible Properties: Subject parcel may not have been split from a larger parcel which has agricultural use.
Subject property may not be an over-improvement.
A minimum 2years of re-established credit is required since participating in consumer credit counseling,
Clarified documentation requirements regardless of the documentation type used.
Employment gaps of more than 30 days must be explained in writing by the borrower
Maine: Prepayment penalty/reduced rate option is not allowed for ARM loans.
North Carolina: All loans defined as "high cost" are not eligible.
Pennsylvania:Clarification That prepayment options / “high cost” loans not eligible for All Programs.
Additional restrictions on prepayment penalty requirements including a matrix reflecting pre-payment penalty eligibility and ineligibility by states.
CD16, CD17, CD22, CD23, CD24, CD42
Footnote added to the “Unacceptable Properties” denoting rural properties may have exceptions that apply.
CD16, CD17, CD22, CD23, CD24
Guidelines have been added for the 80/20 financing option.
SS1203
SS30
The following AUS recommendations are acceptable:
“Approve/Ineligible” if the loan is submitted through Fannie Mae’s Desktop Underwriter (DU) and the only reason for the ineligibility is due to the following:
the loan amount, or
a message indicating that payoff of subordinate lien is only eligible if the subordinate lien was used solely to acquire the subject property
“RG1,” “RG2,” “RG3,” or “RG4” if the loan is submitted through Freddie Mac’s Loan Prospector (LP).
CD0703
CDUW
Countrywide requires a minimum of 1 credit score for all loans delivered for purchase.
Appraiser’s comments on prior sales, transfers and sales listings for the preceding 36 months are only required on the subject property, and not the associated comparable sales.
Temporary Buydowns are no longer eligible on Conforming 7 Year Balloon with 23 Yr Refi Option after 4/28/03.
ARM loans with Tax Advantage Mortgage Insurance (TAMI) require the Note to be prepared including the TAMI add-on to the interest rate. The TAMI add-on must be included on the initial interest rate, the margin, and the conversion rate (if applicable for the program)
Foreign National borrowers are eligible only under two non-conforming expanded criteria programs:
Fixed Rate: Non-Conforming Expanded Criteria, Full and Alternative Foreign Nationals and
Adjustable Rate: Non-Conforming Expanded Criteria-ARM Plan IV Foreign Nationals
CDGR
Texas Rate and Term Refinances are now subject to the following guidelines:
Prepaid items, such as escrows and interest, may be included in the new financing.
A prepayment penalty may not be added to the new loan.
CD0603
CD16, CD17, CD23, CD24
(Non-Conforming Expanded Criteria – No Ratio & NINA and ARM Plan IV No Ratio & NINA)
Secondary financing on loans submitted under No Ratio or No Income No Assets (NINA) documentation programs must be provided by an institutional lender other Investor.
Property ownership has been revised to remove the reference to No Income No Assets (NINA) programs under Second Homes in the “Allowable Number of Financed Properties” heading. Second homes are not eligible for NINA programs.
Rural property appraisals must evaluate the total lot size to be eligible for purchase.
If a property has been owned less than 12 months and the appraisal shows a substantial increase in value from the original purchase price, the appraiser should ensure the increase in value is valid.
Conforming loans with subordinate financing may provide borrowers the opportunity to qualify for higher financing options when the subordinate lien is a home equity line of credit (HELOC) against which no funds have been drawn.
The eligible amount of “reasonable and necessary” closing costs allowed on rate and term refinances in Texas is limited to a maximum 3% of the new loan amount.
Seasoning requirements has been updated to clarify that the minimum seasoning requirement for HELOC draws does not apply to draws taken over the last 12 months that do not exceed $2,000 in total.
Information on the credit underwriting requirements subject to California Law SB 168 security freeze provisions has been added.
Property valuation has been updated to include the following appraiser comment requirements when using the sales comparision approach for property valuation:
1-4 Units: Report and analyze any prior sales of either the subject property or the comparable properties that occurred within the 36 months preceding the effective date of the appraisal report.
2-4 Units: Evaluation of the typical purchaser’s motivation and analysis of any current agreements of sale, option, or listing for the subject property.
The eligible amount of "reasonable and necessary" closing cost allowed on Rate and Term refinances in Texas is limited to a maximum 3% of the new loan amount.
WO0803
Investor is pleased to announce an expansion of the visa classes acceptable to Investor for both conforming and non-conforming conventional loans.
The Visa classes listed below are permitted for non-permanent resident alien and Foreign National Borrowers.
Non-Permanent Resident Alien Borrowers
A-1, A-2, A3, G-5 (Must confirm that the borrower does not have diplomatic immunity)
Foreign National Borrowers Expanded Solutions sm program only
B-1, B-2 (Eligible for Second homes only.)
O-1, O-2
P-1, P-2, P-3
Please note that a “Matricula Consular” card is an identification card issued by the Mexican Consulate and is not an acceptable substitute for the required “Green Card” or visa.
SS1103
SS30
The following updates were added to 3/1 and 5/1 ARM Product:
The minimum loan limits for the Jumbo 3/1 and 5/1 LIBOR ARMS have increased to:
$322,701 – 1 Unit
$413,101 – 2 Units
For existing properties, the appraisal must be less than 120 days old at the time of closing. A recertification of value (by the original appraiser) is acceptable up to 12 months. A new Appraisal is required after 12 months.
SS1003
Jumbo 3/1 and 5/1 Libor ARM
California Property restrictions have been removed
Automated underwriting requirements removed.
Automated underwriting requirements have been revised and clarified.
SS30
Jumbo 3/1 and 5/1 Libor ARM
Investor is allowing HELOC as acceptable secondary financing
WO0703
Texas
Investor is pleased to announce the following expansion to current product parameters for properties located in the State of Texas. The following product types with CLTV limitations are now eligible for purchase:
Home Equity Closed End Second Mortgages of Homestead up to 80% CLTV. Balloon terms are not available.
Non-Homestead Closed End Second Mortgages up to 70% CLTV (rental/investment properties)
Non-Homestead Closed End Second Mortgages up to 90% CLTV (second or vacation home)
Investor is please to be able to expand the current Texas 2nd Mortgage Product offering:
Purchase Money Closed End 2nd Mortgage up to 100% CLTV (no cash-out)
Non Cash-out 2nd Mortgage Refinances of Homestead up to 100% CLTV
The Seller must ensure that there have been no previous Home Equity (cash-out) products on the collateral. Loan must meet other credit parameters for property type, occupancy, and credit score/CLTV maximums per current guidelines. All simultaneous close transactions must meet first mortgage salability requirements.
For all Texas 2nd mortgage and Home Equity product offerings, maximum acreage is limited to 10 acres on all property types. This change will be effective May 11, 2003, on Purchase Money 2nd Mortgage and Non Cash-out 2nd Mortgage refinances of Homestead.
Reference made to Texas for maximum acreage requirement to see Geographic restrictions.
WO0603 & WO0403
Third Party Contract Underwriting continues to be an option. However, conforming conventional loans will be restricted to automated decisioning – through LP or DU only.
Manual underwriting will no longer be allowed for these transactions.
Programs eligible only for manual underwriting, and therefore no longer eligible for Third Part Contract Underwriting are:
Investor Easy-To-OwnSM 5% Down utilizing the 3/2 option
Two-unit second home transactions
Washington D.C. has passed the "Home Loan Protection Act of 2002"
Reminder - High Cost Loans are not allowed
Any loan with a Loan Score below 620, unless the loan receives an LP “Accept” or “Caution, A-minus Eligible” response.
Loans receiving a “Caution” risk rating (not A-minus eligible) from Loan Prospector.
Investor Emerging Markets National Program remains exempt from the above list of Ineligible Transactions and continues to be an option for your borrowers.
Investor will continue to purchase those conforming, conventional loans receiving an LP “Accept” or that are manually underwritten in compliance with our published guidelines.
WO22
Footnote regarding "Special Purpose Cash Out" refinance has been removed.
Footnote requiring HUD-1 Settlement Statement has been removed.
Manufactured Homes not allowed for new construction
WO26
Footnote requiring HUD-1 Settlement Statement has been removed.
WO30
Footnote regarding "Special Purpose Cash Out" refinance has been removed.
Footnote requiring HUD-1 Settlement Statement has been removed.
WO32
Footnote regarding "Special Purpose Cash Out" refinance has been removed.
Footnote requiring HUD-1 Settlement Statement has been removed.
ARM info has been updated
3-4 Units added to the acceptable properties
WO33
Footnote regarding "Special Purpose Cash Out" refinance has been removed.
Footnote requiring HUD-1 Settlement Statement has been removed.
ARM info has been updated
WO34
Footnote regarding "Special Purpose Cash Out" refinance has been removed.
Footnote requiring HUD-1 Settlement Statement has been removed.
ARM info has been updated
WO90
Qualifying information has been updated
Non-Occupant Co-Borrowers are not allowed
Satisfactory trade types in Credit Requirements has been updated.
Property requirements have been update.
Effective with transactions locked on and after April 7, 2003, conforming conventional loans submitted to LP that receive a response of “Caution, A-minus Eligible” will be salable to Investor.
SS0903
Investor Automated Underwriting System (AUS) policy update regarding loans not rated “Approve” or “Accept”
The following loan transactions must be referred to an underwriter for a traditional or manual underwriting decision:
Loans with recommendations other than DU “Approve” or LP “Accept”; or
Loans with recommendations indicating the loan may be “ineligible” (if the ineligibility is not acceptable on the applicable loan product).
Although these loans may be eligible for approval, they require a higher level of evaluation of the credit risk profile, which must be performed by an underwriter
Investor will no longer offer self insurance on the 5/1,7/1, and 10/1ARM option
Investor has added Radian to the current list of approved contract underwriters for the Emerging Markets National program
Investor is pleased to announce that the restriction, previously published regarding the ineligibility of Georgia conforming loans amounts under the Maximizer loan program has been lifted.
This update is for all loans with note dates on or after March 08, 2003.
Any conforming loans in the state of Georgia with a note date prior to March 08, 2003 are not eligible.
Correspondent lenders with delegated underwriting authority may underwrite and approve certain loan programs on behalf of Investor.
Correspondent lenders with Jumbo Delegated Underwriting Authority may underwrite the Key Jumbo loan program
All other AUS recommendations and other loans that do not meet the Key Jumbo AUS guidelines require traditional underwriting and are not eligible for Jumbo Delegated Underwriting by the correspondent lender
Risk grade evaluations are not acceptable if the loan is submitted through LP
Traditional Underwriting is not eligible
Traditional underwriting is not eligible.
Loans previously underwritten by Investor are not eligible for delegated underwriting.
Loans involving a 1031 Tax Exchange are not eligible for delegated underwriting.
All loans evaluated by an AUS must contain 100% data-integrity with the exception of approved tolerances outlined in the product description.
All AUS loans must be validated and documented in accordance with the product description and Fannie Mae/Freddie Mac’s AUS manuals.
All appraisals must be reviewed for compliance with Investor and FannieMae/Freddie Mac’s appraisal and property standards.
All AUS loans submitted for purchase must include a copy of the most current, complete set of AUS Findings.
It is strongly recommended that the Appraisal Review Checklist be completed by the correspondent underwriter in conjunction with a thorough review of the individual appraisal.
A completed Investor Required Data Form or a fully completed 1008 transmittal must be included in every delegated closed loan package
The State of Georgia passed legislation amending certain parts of the Georgia Fair Lending Act. (GFLA)
Some of the amendments include:
the deletion of the term “Covered Loans”
clarification that certain home loan refinance transactions are not considered “flipping” and
specifying when and against whom a borrower may assert claims and defenses for violations of the Act.
Sub-Prime Loans
As a result of these revisions, effective immediately, Investor will begin purchasing Sub-prime loans originated in the State of Georgia with a Note date of March 8, 2003, or later.
The Individual loan program will indicate the eligibility of the construction modification enhancement.
The permanent loan program criteria applies when underwriting the permanent loan
The time frame and credit score requirements for bankruptcy, foreclosure or repossession have been clarified.
The eligibility of AVM property valuations for use on equity loans has been updated to note that the minimum credit score requirement has been reduced to 620.
In addition, the maximum property value has been clarified as less than or equal to $500,000.
Non-Occupant Co-borrowers income may be used for qualifying on equity loans; however the owner occupant must qualify with debt ratios of 50% or less.
On concurrent transactions, the stricter of the first and second lien guidelines apply.
CD24
Loans under this program have been revised to update the 90/90% LTV/CLTV tier for loan amounts up to $400,000 to indicate that 2 units are eligible only to a maximum 70% LTV.
Investor has added a new heading called Underwriting Method, to the guidelines of every conventional loan program listed in the Seller’s guide.
High Cost Loans
The State of Minnesota passed a new legislation restricting the financing of point and fees.
The law prohibits the financing of “lender fees” in excess of 5% of the loan amount.
Investor will NOT purchase Subprime loans that are defined as “Home Loans” under title 7 of the Georgia House Bill 1361.
Investor will continue to purchase Non-Subprime Covered Loans
Non-Conforming Expanded Criteria (Fixed and ARM)
Conforming loan amounts are not allowed on Condotels.
Non-Conforming Expanded Criteria- Zero Down 103%
Conforming loan amounts are not allowed.
Non-Conforming Expanded Criteria ARM Plan IV
Conforming loan amounts are not allowed.
New York State law requires that the LTV be calculated by dividing the loan amount by the appraised value, regardless if the sales price is higher or lower.
If mortgage insurance is required, the standard LTV calculation must be used to determine the required percentage of coverage.
When there is an existing subordinate lien it may now be paid off as part of a rate/term refinance when evidence the proceeds were used entirely for the purchase or improvement to the subject property.
Home Loan Protection Act of 2002
The District of Columbia passed the “Home Loan Protection Act of 2002” to establish protections for consumers by defining and placing restrictions on “Covered Loans”. Sellers are reminded that Investor does not purchase “High Cost” loans under HOEPA, or under any state or local predatory lending law.
The minimum loan amounts are revised as follows:
$322,701 – 1 Unit
$413,101 – 2 Units
$499,301 – 3 Units
$620,501 – 4 Units
On construction to permanent loans where the transaction will be treated as a cash-out refinance, the LTV will be based on one of the following: if the lot has been owned less than 12 months, the LTV will be based on the lessor of appraised value or acquisition costs, or if the lot has been owned for 12 months or more, the LTV will be based on the appraised value.
As a result of Fannie Mae’s new definition of a limited cash-out refinance, loans that are submitted through DU may receive an ineligibility message stating that the loan is ineligible as a limited cash-out refinance due to the dollar amount of the cash-out exceeding the lessor of 2% or $2,000.
This ineligibility is acceptable, since the program guidelines for a limited cash-out refinance allow the borrower to get up to 2% cash back.
All collections, judgments and liens reflected on the credit report must be paid in full regardless of the AUS recommendation.
For LP transactions, lender funded temporary buydowns, offered through premium pricing, are not allowed on limited cash-out (rate/term) refinance transactions.
For non-AUS and DU transactions, the maximum trailing co-borrower income is 100% if the trailing coborrower’s income does not exceed 33% of the total qualifying income. If the trailing co-borrower’s income exceeds 33% of the total qualifying income, a maximum 50% of the income may be used for qualification.
For DU construction-to-permanent transactions, a single (one-time) closing must be entered in DU as “Construction” and be processed as a purchase transaction. A two-time closing must be entered in DU as “Construction-Permanent” and be processed as a refinance transaction (limited cash-out or cash-out).
Construction-to-permanent (CP) loans processed through DU cannot be used to finance the repair or rehabilitation of an existing dwelling. These transactions MUST be traditionally underwritten or processed through DU as a regular cash-out refinance transaction.
For non-AUS, DU and LP transactions, refinance mortgages that involve the refinance of subordinate liens that were not used in whole to purchase the subject property, regardless of seasoning, (including home improvement, HELOC, and second mortgages obtained for the purpose of taking equity out of the property) will be considered cash-out refinances.
For non-AUS, DU and LP transactions, spousal buyouts may continue to be treated as limited cash-out (rate/term) refinance transactions.
For non-AUS, DU and LP transactions, a Notice of Approval or application to change status is sufficient evidence of lawful U.S. residency for non-permanent resident alien borrowers.
For LP transactions, student loans are counted in the debt ratio, even if deferred.
For DU transactions, if a retirement account allows for withdrawals ONLY in connection with the borrower’s employment termination, retirement, or death, the retirement funds may not be used.
Pay-off of the current mortgage (principal balance plus accrued interest only; other costs such as late fees and past-due amounts may not be paid with the new loan.
If the first Mortgage is a HELOC it must have been open for at least 12 months and total draws in the past 12 months may not exceed 2% of the first mortgage amount.
Pay-off any subordinate mortgage lien that has been open to at least 12 months.
Total draws in the past 12 months on subordinate liens being paid off or paid down may not exceed 2% of the new first mortgage amountt.
Standard loan fees
Incidental cash to the borrower not to exceed 1% of the principal balance of the new loan amount.
Investor will no longer offer a Special Purpose Refinance Option. These transactions must now comply with the criteria for either a rate/term or a cash-out refinance
Investor will consider transactions meeting the following criteria.
Pay-off of the current mortgage (principal balance plus accrued interest only; other costs such late fees and past due amounts may not be paid with new loan).
If the first mortgage is a Home Equity Line of Credit – must verify that loan was used in its entirety to acquire the subject property.
Pay-off of any subordinate mortgage lien that was used in its entirety to acquire the subject property.
Standard loan fees
Incidental cash to the borrower not to exceed the lesser of $2,000 or 2% of the principal balance of the new loan amount.
All installment debt is to be included in the borrower’s monthly debt payment if there are more than 10 months of payments remaining at the time of underwriting, including installment debts (e.g. education loans) that are in a period of deferment or forbearance.
Investor has adopted the term Loan Score to refer to the overall credit score applicable to a specific loan as determined using the “middle/lower, then lowest” credit score selection methodology.
Investor has more clearly defined Significant Inaccurate Credit as outlined in their NewsFlash 11/14/02, addressing how to decide whether inaccurate credit may be considered “significant”.
As most Wells Fargo Funding conventional programs require compliance with a minimum Loan Score of at least 620*, these guidelines are an important aspect of the risk decisioning process when the borrower disputes information on his credit report.
Trust certifications in lieu of an Attorney’s Opinion Letter have just become available in the following states.
Delaware
Idaho
Nevada
Tennessee
Iowa
Minnesota
Oregon
Nebraska
Trust Certifications continue to be acceptable for properties in California.
Due to the Georgia Fair Lending Act, conforming loan amounts are no longer eligible for the Maximizer loan program effective with all new loan applications dated on or after Thursday, January 30, 2003. This restriction is only applicable to properties with conforming loan amounts in the State of Georgia.
The amount of incidental cash back to the borrower on rate/term refinance transactions for non-conforming loan amounts is now 1% of the new loan amount.
CW00 - CW14 (conforming)
CW15 - CW17; CW20 - CW39 (non-conforming)
When applied towards the borrower’s down payment, the gift fund requirements have been revised to include the CLTV limits for loans with secondary financing. The entire down payment may be gift funds for owner occupied or second homes (subject to loan program eligibility), if the LTV (or CLTV for loans with secondary financing), is 80% or less.
CW22
State Income Stated Assets (SISA)
The debt ratio guidelines for manually underwritten loans submitted under Stated Income Stated Assets (SISA) documentation have been revised to a maximum 50%. However, loans underwritten through CLUES may be approved up to a maximum 55% debt ratio.
CW23
No Ratio
Manufactured housing is no longer eligible
CW24
No Income No Assets (NINA)
Program has been updated to remove the reference to maximum 50/50% LTV/CLTV under $500,000 loan amount.
A limited project review exempts a lender from having to determine if the condominium project meets Fannie Mae or Freddie Mac standard eligibility requirements.
If the project warranty requirements state within the specific loan program “Standard Fannie Mae or Freddie Mac”, then a limited review is eligible subject to all other limited project review criteria. This option now includes some Non-conforming loan programs.
Inter Vivos Trusts has been updated to remove the requirement that the trust must be recorded.
Factory-Built Housing has been revised to include the following updates for loans secured by manufactured housing:
Clarification that the value must be determined using construction-to-permanent guidelines when the payoff includes the lot with improvements.
Expanded requirements for non-conforming expanded criteria conforming loan programs.
Cooperatives have been revised to clarify that the maximum LTV is 75% for a cash out refinance loan secured by a cooperative. Cash out refinances are only eligible with an acceptable CLUES or DU recommendation.
Refinance transactions has been updated to clarify that if a first lien is a rate and term refinance, but cash out is received from the concurrent secondary financing, the first lien may remain classified as a rate and term refinance.
High Costs Loans in the State of Michigan (effective now) and the City of New York (effective 2/20/03) not eligible for Purchase.
The restriction has been eliminated prohibiting fixed period ARM loans secured by properties in Alaska for non-conforming, non-conforming expanded criteria, and non-conforming expanded criteria conforming loan balance programs.
Borrowers may now finance up to a 90% CLTV when the loan or line of credit will be in first lien position.
Investor will implement a screening process review for compliance with the provisions of the Georgia Fair Lending Act and Investor’s policy to not originate or purchase and “high-cost home loans”. All “covered loans” will be reviewed.
All conforming conventional loans with all of the following characteristics will be subject to compliance screening prior to purchase: Georgia property, primary residence, purchase or refinance, 1-4 family dwelling, including manufactured home, and Mortgage amount not exceeding Fannie Mae’s single family conforming loan size limit, currently at $322,700.
Transaction meeting the above criteria well be reviewed for compliance with Georgia’s “High Rate-APR” test as well as the “High Cost Points and Fees” test.
As part of the screening process, the following will be required:
An acceptable Statement of Borrower’s Benefits completed and executed by the borrower(s) on all home loan refinance mortgages,
A Right to Choose Attorney disclosure executed by the borrower(s) if the Seller excludes the attorney’s fee from the “High Cost” calculation. This disclosure is required for both purchase and refinance transactions.
Investor will not purchase any mortgage used to refinance an existing loan that meets Georgia’s criteria for a “special mortgage” and that closed within the past 5 years if the borrower loses one or more benefits of the “special mortgage” in the refinance.
“Special Mortgages” include those loans originated, subsidized, or guaranteed by or through a state, tribal, or local government or non-profit organization.
Conforming Rate and Term Refinances (or “limited cash-out”) now include:
The pay off of the outstanding principal balance of an existing second lien that was used entirely to purchase the subject property.
Cash proceeds in an amount no more than the lesser of 2% of the balance of the new loan amount or $2,000.
To be considered a Rate and Term Refinance:
The subordinate financing included in payoff must be documented to have been a purchase money second.
A copy of the final HUD-1 from the purchase or the title report is acceptable documentation.
Manufactured Homes have been added to the “Acceptable Properties” Section
Added Maximum LTV/CLTV of 85%/85% for loan amount up to $500,000 with a credit score of 660.
Added Maximum cash out of $100,000 for a loan amount of up to $500,000 with LTV/CLTV of 50%/50% with a credit score of 660.
Maximum Loan Amount Increase and other related revisions
Maximum loan amount has been increased to $2,000,000 for purchase and rate and term refinances on owner-occupied properties (with restrictions).
Secondary financing is only allowed on loan amounts less than or equal to $1,000,000.
Maximum loan amount increased to $1,500,000 when all the borrowers are non-permanent resident aliens.
Appraisal requirements for loan amounts greater than $1,000,000 require a field review.
Loans with prepayment penalties are limited to a maximum $1,000,000 loan amount.
Clarification of the minimum 2 year “same business, same location employment requirement for self-employed borrowers.
The requirements for using rental income to qualify the borrower on investment properties has been clarified for conforming loans under "occupancy" and "determining capacity".
The list of eligible gift donors has been updated to include both domestic partner and fiance/fiancee.
Clarification that copies of the trust must be obtained that clearly designates revocability of the trust.
Condo and PUD projects have been revised to clarify eligible programs for condotels.
Cooperatives has been revised to update the following conforming loan guidelines:
Purchase and Rate/Term - LTVs greater than 90% may be eligible with loans underwritten only through Investor AUS or DU.
Cash Out Refinances - Not allowed for manually underwritten loans.
The minimum con-conforming loan amount has been updated to $322,701.
Information on calculating LTV ratios when using financed single premium mortgage insurance has been added.
Conforming rate and term refinances with new subordinate financing that are underwritten through Investors AUS or DU, will no longer reclassify the first lien as cash out.
Credit scores has been revised to add in additional clarification on the use of non-traditional credit reports.
Spousal buyouts and home improvements transactions may no longer be treated as limited cash- out (rate/term) refinance transactions. These loans MUST be processed as a cash-out refinance transaction. This applies to non-AUS, DU and LP loans.
Properties originally purchased with cash are no longer eligible to be treated as either purchase or limited cash-out (rate/term) transactions. Properties originally purchased with cash must always be processed as a cash-out refinance transaction. This applies to non-AUS, DU and LP loans.
Minimum Appraisal requirements for agency loans submitted through Loan Prospector have been added.
The amount of incidental cash back borrowers may receive on a Non-Conforming rate/term refinance has been updated. HUD-1 Settlement Statements for these transactions may now reflect cash to the borrower of up to 1% of the new loan amount (effective immediately).
As most Non-Conforming refinances will benefit from this change, it’s available immediately for those loans. However, for those few non-conforming loans that will be negatively impacted, for example transactions with loan amounts less than $200,000 registered under our Limited Doc/VOA option or Expanded Solutions program, this policy change will be effective for registrations on and after January 15, 2003.
NOTE: Incidental cash out on conforming conventional rate/term refinances continue to be limited to the lesser of $2,000 or 2% of the new loan amount. Refer to Underwriting guidelines
Updated LTV/CLTV restrictions for High-Rise Condos on Purchase, Rate/Term, and Refinances have been announced.
Agency cash-out refinance transactions, secured by owner occupied, homestead properties in the state of Texas, are acceptable as long as they are originated under limited cash-out refinance guidelines. Investor has defined acceptable Agency cash-out refinance transaction guidelines for Texas.
LandSafe’s Appraisal Review Analysis (LARA): Purchase transactions submitted on non-conforming NINA programs will allow the use of LandSafe’s Appraisal Review Analysis in lieu of a full field review.
Manufactured Homes are no longer eligible.
Loan Amounts, Ratios and Eligible Transactions sections of the guidelines have been updated to add clarification.
Occupancy: Guidelines for investment properties have been expanded.
Mortgage Insurance:The definition of Maximum Total Loan Amount for financed single premium mortgage insurance (FSPMI) has been updated.
Refinance Transactions: Clarification that draws not exceeding an “aggregate” amount of $2,000 are exempt for the 1 year seasoning requirement on the payoff of a HELOC junior lien for a rate and term refinance.
The eligible programs for consolidation, extension and modification (C&E) loans have been updated.
Determining Capacity: Guidelines have been updated to clarify that the borrower must have a two year history of managing rental property if the income is to be used to qualify the borrower.
Automated Underwriting systems:Updated information for the procedures and the dates for AUS support of new loan limits have been announced.
High Cost Loans:Guidelines for the State of Maryland have been added.
Expanded approval programs: Loans secured by properties in New Jersey are no longer restricted to LTVs less than or equal to 97%.
FNMA 97% and MyCommunity 100 Plus
Guidelines have been updated to refer lender to Fannie Mae’s web site for “FannieNeighbors” locations.
Prepayment Penalty Option: Prepayment penalty option restrictions have been updated for Colorado, Georgia, Illinois & Louisiana.
The lowest score among all borrower's scores is the credit score for the loan.
Flexibility in offsetting an unacceptable credit history of one borrower with good credit history of the other borrower is no longer an option.
All borrowers on the loan must have acceptable credit, regardless of whether their income and /or assets are needed for qualifying.
All borrowers on the loan must have acceptable credit, regardless of whether their income and /or assets are needed for qualifying.
Investor is revising their requirements on the treatment of revolving credit for the calculation of long-term debt and qualifying ratios.
Investor will now accept loan submissions based on Fannie Mae and Freddie Mac's new increased loan limits.
AUS applying new loan limit.
Investor has clarified their guidelines for manually underwritten mortgages and the verification of housing payment histories, both mortgage and rental.
Acceptable documentation has been specifically outlined.
Investor will now consider certain refinance transactions to be “Special Purpose Cash-out” rather than rate/term refinances.
The Conforming loans change is only in terminology.
Non-conforming loans this will result in an LTV limitation to 90% or the maximum allowed for the loan amount. Guidelines for classification have been established.