UNDERWRITING Secondary Financing
Transcript of UNDERWRITING Secondary Financing
UNDERWRITINGUNDERWRITINGSecondary FinancingSecondary Financing
U.S. Bank Home MortgageU.S. Bank Home Mortgage
MRBP DivisionMRBP Division
Master ServicerMaster Servicer
• FHA – 203b, 221 (d) (2) 203k• VA • USDA/RD • Fannie Mae
MyCommunityMortgage Suite of Products(97/100/Community Solutions/HomeChoice)Fannie Mae Community HomebuyersFannie 97Fannie 3/2HFA Home
Section 8Prior to Closing a Section 8 loan?Lenders should treat the monthly subsidy as
income in determining the homebuyer’s qualifying ratios and program income
?The Lender must show the Section 8 Voucher Assistance Program on the 1008
Section 8Post Closing a Section 8 loan?We recommend that the Lender work with a Public Housing
Agency and subsidy provider. The Lender must submit a contactsheet, including the Agency information, with every Section 8 loan file.
? The Lender must have on file with the Master Servicer, an executed copy of a specific agreement for the purchase of Section 8 servicing rights.
? The Subsidy Agent must execute the “Section 8 Homeownership Subsidy Program Agreement” with the Master Servicer.
Contact: Sheryl Krocek – Production Coordinator (216) [email protected]
Manufactured Housing
?Manufactured Homes(MH) are permitted in the program subject to FHA, VA and Program Guidelines.
?M.H. Housing Dealers who buy and sell manufactured homes, must observe the property flipping rules established by HUD.
?Manufactured homes must meet specific size and structural requirements, remain permanently affixed to a foundation, and betaxed as real estate.
? Fannie Mae’s financing for manufactured homes is not currently eligible for the FHFC’s program.
Fannie Mae References– Fannie Mae Selling Guide, Chapter X section 304 –
Community Lending– Fannie Mae Guide to Desktop Underwriting– Fannie Mae website www.efanniemae.com
FHA References– Guide – 4155.1 rev 5– FHA website www.hud.gov
Other References– Allregs www.allregs.com– VA www.homeloans.va.gov– USDA-RD www.rurdev.usda.gov
?Credit Underwriting is the responsibility of the originating lender. U.S. Bank Home Mortgage (Master Servicer) does not re-underwrite your loans.?All loans are subject to internal and agency
audits.?Underwriters should make sound credit
decisions, assure data integrity, and include all necessary documents in support of the underwriting decision.
?All loans should be underwritten in compliance with the most current underwriting guidelines for FHA, VA, Rural Housing and Fannie Mae, Freddie Mac.?The loan file must comply with the Bond
program guidelines for income limits, sales price limits, property types, locations and program parameters.
?The following automated systems are approved for use with conventional loans in the bond programs-Fannie Mae loans (DU)-FHA loans (DU or LP)
?If manual underwriting is necessary, full documentation is required?Other customized systems are not acceptable for
loan approval
APPRAISALS?Full appraisal reports are preferred.?Correspondent Lenders, sponsored by the Master
Servicer, are required to submit full appraisals.?Form 2055 or 2075: is acceptable as long as the
appraiser has completed an interior, and exterior inspection for DU approved loans.
Down Payment Assistance Programs (DPA)?Make sure the funding source for the DPA program is stated
in the source of funds section of the 1003?Example: Florida Housing Finance Corporation
Dade County Community Dev. Corp.?Make sure the DPA program meets FHA and Fannie Mae
requirements and is approved by the Master Servicer ?Write the loan product, down payment source, and amount
on the 1008 (loan transmittal), or mortgage credit analysis worksheet (MCAW)
?Make sure DU recommendations are documented in the loan file?Remember to follow the Bond Program guidelines?Make sure the Fannie Mae DU loans are evaluated
through the Community Lending Modular (free submission)?Make sure the Homebuyer Counseling Certificate
is included in the file (Note: Everyone who signs the note is required to attend counseling)
445118088
•Section 8MCM Community•Community Second Mortgages•Bond Loans
359•HFA Home (Manual Underwrite)
074•Fannie 3/2
121•Fannie 97
061•Fannie Mae Community Homebuyers 95%
222•MCM Community HomeChoiceOption(ManualUnderwrite)
325•MCM Community HomeChoice Option ( DU Approval)
481•MCM Community Solutions (Manual Underwrite)
480•MCM100 – Loan with LTVs above 97%, up to 100%
460•MCM 97 – Loans with LTVs of 97% and below
? Quicker Approval? Wavier of Reps and Warrants? Reduced documentation? Possible higher ratio? Possible lower credit scores? EA I & EA II approve/eligible?Nontraditional credit, require only three lines of nontraditional
credit? 30% qualifying income from occupying co-borrower with no
credit history? Boarder income permitted per Fannie Mae’s
guidelines
? Loans sold to the Master Servicer will go against the Master Servicer’s MCM commitment and not the originating lender.
?Loans entered into DU under Community Lending is a free submission. This will apply only for the first entry into Community Lending.
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? Borrower must contribute a minimum of $500 of their own funds into the loan transaction, remaining may come from other Fannie Mae approved sources)?One Unit Single Family Owner-Occupied property?DU will select the appropriate MCM loan type?DU is preferred because if you get an approval the
lenders receive Fannie Mae’s reps and warrants
? Manual underwriting must be approved by US Bank Home Mortgage, MRBP Division, Underwriting Manager.?For Information on how to originate Fannie Mae Loans
in the Bond Program if you are not currently an approved Fannie Mae lender or if you are approved, but do not have all the products in DU. Please Contact US Bank Home Mortgage, MRBP Division, Production Coordinator, Sheryl Krocek. ?Lenders must attend the US Bank Home Mortgage,
MRBP Division web training on the MCM products prior to originating MCM loans.
? Amortized? Silent? Soft?Deed Restrictions?Deferred
DefinitionDefinition??Any financing that creates a lien against the Any financing that creates a lien against the
property is considered secondary financing property is considered secondary financing and and not a giftnot a gift, even if it is a "soft" or , even if it is a "soft" or "silent" second (i.e., has no monthly "silent" second (i.e., has no monthly repayment provisions), or has other features repayment provisions), or has other features forgiving the debt.forgiving the debt.
Documents Required for ApprovalDocuments Required for Approval??Copy of the second mortgage (DPA) program Copy of the second mortgage (DPA) program
descriptiondescription??Copy of any applicable promissory notes, deeds, riders Copy of any applicable promissory notes, deeds, riders
and other legal documentationand other legal documentation??Complete the Fannie Mae second mortgage loan Complete the Fannie Mae second mortgage loan
checklistchecklist
Note: Note: Catastrophic languageCatastrophic language is required for CLTVs greater is required for CLTVs greater than 100% !than 100% !
? If non-profit, provide copy of the letter of designation from IRS and the federal tax I.D. number.
? Must have a document that discloses the loan amount, and describes the terms of repayment. This document must be given to the borrower at application and a signed copy included in the loan file.
? Originating Lenders are responsible for the review per agency guidelines prior to closing.Submit the information to:
US Bank Home MortgageMRBP Division, Product Development Manager
QQ --Can we use the down payment assistance for the entire amount of Can we use the down payment assistance for the entire amount of the borrower’s down payment?the borrower’s down payment?
AA -- Fannie MaeFannie Mae will allow the entire down payment to come from an will allow the entire down payment to come from an approved down payment source as long as the borrower makes theirapproved down payment source as long as the borrower makes theirminimum contribution. minimum contribution. FHAFHA will only allow the funding to cover all of the down payment will only allow the funding to cover all of the down payment when the funds come from a Federal, State and local agencies or when the funds come from a Federal, State and local agencies or nonnon--profits considered instrumentalities of the government and the lprofits considered instrumentalities of the government and the lien ien must be in the name of the governmental entity. must be in the name of the governmental entity. Approved nonApproved non--profits will be listed on HUD’s approved list profits will be listed on HUD’s approved list –– check check regional HUD Homeownership Center (HOC)regional HUD Homeownership Center (HOC)
QQ -- If the second is provided by a If the second is provided by a nonnon--profitprofit that that is is not a governmental entitynot a governmental entity and the borrower is and the borrower is getting getting an FHA an FHA loanloan is the borrower is the borrower required to required to make a cash investment from their own fundsmake a cash investment from their own funds??
AA -- Yes, FHA requires the borrower to make a Yes, FHA requires the borrower to make a cash investment of at cash investment of at least 3 %least 3 % of the acquisition of the acquisition cost.cost.(see mortgagee letter 98(see mortgagee letter 98--29)29)
QQ -- May we use more than one source of assistance May we use more than one source of assistance financing?financing?
AA –– Yes, as long as the use of multiple liens is Yes, as long as the use of multiple liens is approved by the Housing Agency and Master approved by the Housing Agency and Master Servicer. The other funding entities must also give Servicer. The other funding entities must also give approval to move into 3rd or 4th position. approval to move into 3rd or 4th position.
(All program documentation must be submitted to the Master (All program documentation must be submitted to the Master Servicer)Servicer)
Q -Is a gift letter required if the funds have been gifted by a non profit or instrumentality of government ?
A - Yes, When gifts are provided by a nonprofit or municipality through a down payment assistance program (DAP), the same basic rules regarding documentation of gifts apply. The lender must obtain evidence from the donor (agency) of the amount of funds being provided, as well as evidence that no repayment by the borrower is required. Evidence of the actual transfer of funds can be shown as a transaction on the HUD-1.(see mortgagee letter 00-28)
Any questions related to Underwriting please contact: USBHM-MRBP Division’s
Underwriting Manager
Rita ConnellyPhone: 216-475-8251
• E-Mail Address: [email protected]
Presenter: Shermaine WeathersbyProduct Development ManagerU S Bank Home MortgageMRBP [email protected]