Refinance Transactions: New Maximum Mortgage Calculation
The Housing and Economic Recovery Act of 2008 revised the National Housing Act to:
Eliminate the variable loan-to-value (LTV) limits that were based on the combination of the property value and the average closing costs of the State where the property is located and
Limit the total FHA-insured first mortgage to 100 percent of the appraised value, and permit the inclusion of the upfront mortgage insurance premium (UFMIP) within that limit.
For simplicity purposes, and to eliminate any confusion in the marketplace, effective for case numbers assigned on or after January 1, 2009 the maximum LTV for most refinance transactions will be 97.75 percent. A summary of maximum LTVs is shown in the chart, along with the complete Mortgage Letter at http://portal.hud.gov/pls/portal/docs/PAGE/FHA_HOME/LENDERS/MORTGAGEE_LETTERS/2008_MORTGAGEE_LETTERS/08-40%20REFINANCE%20TRANSACTIONS%2C%20NEW%20MAXIMUM%20MORTGAGE%20CALCULATION.DOC .
A matrix comparing rates and terms, streamlined with and without appraisals, is provided at http://portal.hud.gov/pls/portal/docs/PAGE/FHA_HOME/LENDERS/MORTGAGEE_LETTERS/2008_MORTGAGEE_LETTERS/ATTACHMENT%20FOR%20ML%2008-40%20REFINANCE%20TRANSACTIONS%2C%20NEW%20MAXIMUM%20MORTGAGE%20CALCULATION.DOC .
Friday, December 26, 2008
FHA Mortgagee Letter 2008-41: Termination of FHASecure
Termination of FHASecure
While FHA will retain its standard rate-and-term refinance program for borrowers who are current on their existing mortgages, the FHASecure program under which FHA was able to insure refinance transactions for borrows delinquent on their mortgages, will terminate on December 31, 2008, as per FHA’s initial guidance. Maintaining the program past the original termination date would have a negative financial impact on the MMI Fund that would have to be offset by either substantial across-the-board single family program premium increases or the suspension of FHA’s single family insurance programs altogether.
Timing
As of December 31, 2008, FHA will not issue any new case numbers for lenders seeking to refinance borrowers into FHASecure loans. Any loans for which the lender has requested a case number and taken a loan application prior to December 31, 2008 may be processed and will be insured by FHA.
To review the complete Mortgagee Letter, go to -
http://portal.hud.gov/pls/portal/docs/PAGE/FHA_HOME/LENDERS/MORTGAGEE_LETTERS/2008_MORTGAGEE_LETTERS/08-41%20TERMINATION%20OF%20FHASECURE.DOC
While FHA will retain its standard rate-and-term refinance program for borrowers who are current on their existing mortgages, the FHASecure program under which FHA was able to insure refinance transactions for borrows delinquent on their mortgages, will terminate on December 31, 2008, as per FHA’s initial guidance. Maintaining the program past the original termination date would have a negative financial impact on the MMI Fund that would have to be offset by either substantial across-the-board single family program premium increases or the suspension of FHA’s single family insurance programs altogether.
Timing
As of December 31, 2008, FHA will not issue any new case numbers for lenders seeking to refinance borrowers into FHASecure loans. Any loans for which the lender has requested a case number and taken a loan application prior to December 31, 2008 may be processed and will be insured by FHA.
To review the complete Mortgagee Letter, go to -
http://portal.hud.gov/pls/portal/docs/PAGE/FHA_HOME/LENDERS/MORTGAGEE_LETTERS/2008_MORTGAGEE_LETTERS/08-41%20TERMINATION%20OF%20FHASECURE.DOC
FHA Keeps One FHA Secure Option for Refis
From Origination News http://originationnews.com/plus/#1230138003
FHA Keeps One FHA Secure Option for Refis
December 24, 2008
The Department of Housing and Urban Development is terminating the FHA Secure program for refinancing delinquent borrowers, but it is still keeping one option that made it easier for borrowers with second liens to refinance into a Federal Housing Administration loan. "While FHA will retain its standard rate and term refinance program for borrowers who are current on their existing mortgages, the FHA Secure program ... will terminate on Dec. 31, 2008," HUD says in a letter to FHA lenders. In a separate mortgagee letter, FHA updates its refinancing guidelines and said it will allow borrowers to re-subordinate second liens, which was an option provided under FHA Secure. FHA also has tightened its appraisal requirements on cash-out refinances where the loan-to-vale ratio is above 85%, according to Bud Carter, an FHA consultant with Potomac Partners. "FHA now requires two appraisals on cash-out refinancings above an 85% LTV, regardless of the amount of the loan," Mr. Carter said. Previously, FHA required two appraisals only if the loan amount was above $417,000.
FHA Keeps One FHA Secure Option for Refis
December 24, 2008
The Department of Housing and Urban Development is terminating the FHA Secure program for refinancing delinquent borrowers, but it is still keeping one option that made it easier for borrowers with second liens to refinance into a Federal Housing Administration loan. "While FHA will retain its standard rate and term refinance program for borrowers who are current on their existing mortgages, the FHA Secure program ... will terminate on Dec. 31, 2008," HUD says in a letter to FHA lenders. In a separate mortgagee letter, FHA updates its refinancing guidelines and said it will allow borrowers to re-subordinate second liens, which was an option provided under FHA Secure. FHA also has tightened its appraisal requirements on cash-out refinances where the loan-to-vale ratio is above 85%, according to Bud Carter, an FHA consultant with Potomac Partners. "FHA now requires two appraisals on cash-out refinancings above an 85% LTV, regardless of the amount of the loan," Mr. Carter said. Previously, FHA required two appraisals only if the loan amount was above $417,000.
Wednesday, December 24, 2008
FHA Mortgagee Ltr 2008-23: Revised Downpayment Requirements
Reminder about FHA Mortgagee Letter 2008-23 that has revised downpayment requirement as described throughout this mortgagee letter takes effect with all new FHA case number assignments on or after January 1, 2009.
September 5, 2008
MORTGAGEE LETTER 2008 - 23
TO: ALL APPROVED MORTGAGEES
SUBJECT: Revised Downpayment and Maximum Mortgage Requirements
The Housing and Economic Recovery Act of 2008 revised the National Housing Act to:
Require that the mortgagor “shall have paid, in cash or its equivalent…an amount equal to not less than 3.5 percent of the appraised value of the property….”;
Eliminate the variable loan-to-value limits that were based on the combination of the property value and the average closing costs of the State where the property is located (also known as “downpayment simplification”); and
Limit the total FHA-insured first mortgage to 100 percent of the appraised value, and require the inclusion of the upfront mortgage insurance premium (UFMIP) within that limit. This mortgagee letter provides guidance to mortgagees regarding the revised downpayment and maximum mortgage requirements for single family mortgage to be insured by FHA.
The entire Mortgagee Letter can be reviewed at http://portal.hud.gov/pls/portal/docs/PAGE/FHA_HOME/LENDERS/MORTGAGEE_LETTERS/2008_MORTGAGEE_LETTERS/08-23%20REVISED%20DOWNPAYMENT%20AND%20MAXIMUM%20MORTGAGE%20REQUIREMENTS_3.DOC
September 5, 2008
MORTGAGEE LETTER 2008 - 23
TO: ALL APPROVED MORTGAGEES
SUBJECT: Revised Downpayment and Maximum Mortgage Requirements
The Housing and Economic Recovery Act of 2008 revised the National Housing Act to:
Require that the mortgagor “shall have paid, in cash or its equivalent…an amount equal to not less than 3.5 percent of the appraised value of the property….”;
Eliminate the variable loan-to-value limits that were based on the combination of the property value and the average closing costs of the State where the property is located (also known as “downpayment simplification”); and
Limit the total FHA-insured first mortgage to 100 percent of the appraised value, and require the inclusion of the upfront mortgage insurance premium (UFMIP) within that limit. This mortgagee letter provides guidance to mortgagees regarding the revised downpayment and maximum mortgage requirements for single family mortgage to be insured by FHA.
The entire Mortgagee Letter can be reviewed at http://portal.hud.gov/pls/portal/docs/PAGE/FHA_HOME/LENDERS/MORTGAGEE_LETTERS/2008_MORTGAGEE_LETTERS/08-23%20REVISED%20DOWNPAYMENT%20AND%20MAXIMUM%20MORTGAGE%20REQUIREMENTS_3.DOC
Tuesday, December 23, 2008
Conventional Underwriting: Genworth Mortgage Insurance
Message from Genworth Mortgage Insurance:
Genworth Mortgage Insurance will make the following changes for all MI applications received on or after January 17, 2009.
These changes supersede previously issued Genworth-approved program exceptions and apply regardless of submission channel (including EXCEL® and EasySubmit®) or Automated Underwriting System (AUS) recommendation or decision.
Loans originated by a Broker Third Party Mortgage Originator will be subject to the following Third Party Originated Lending Restrictions in addition to our standard guidelines:
• Maximum Loan to Value = 90%
• Minimum Credit Score = 720
• Occupancy = Primary Residence Only
• Purpose = Purchase
• Property Type = 1 Unit - Single Family Dwelling, Manufactured Home, Condominium, or Co-op Unit
• Ineligible in Declining/Distressed Markets
We, Genworth, define a Broker Third Party Origination as a loan for which any of the loan origination or processing functions, including taking the loan application and ordering documents, processing and for which all underwriting and final loan approval are performed by an entity other than the entity closing, funding or ordering the MI (the Insured).
We, Genworth, will be updating our online application to facilitate the identification of loans originated by a third party.
Genworth's Underwriting Guidelines will be updated to include these changes and will be posted to our website at mortgageinsurance.genworth.com by January 17, 2009. Please distribute this information to the appropriate contacts within your organization.
Contact your Genworth representative or the ActionCenter® at 800 444.5664 for additional information.
Genworth Mortgage Insurance will make the following changes for all MI applications received on or after January 17, 2009.
These changes supersede previously issued Genworth-approved program exceptions and apply regardless of submission channel (including EXCEL® and EasySubmit®) or Automated Underwriting System (AUS) recommendation or decision.
Loans originated by a Broker Third Party Mortgage Originator will be subject to the following Third Party Originated Lending Restrictions in addition to our standard guidelines:
• Maximum Loan to Value = 90%
• Minimum Credit Score = 720
• Occupancy = Primary Residence Only
• Purpose = Purchase
• Property Type = 1 Unit - Single Family Dwelling, Manufactured Home, Condominium, or Co-op Unit
• Ineligible in Declining/Distressed Markets
We, Genworth, define a Broker Third Party Origination as a loan for which any of the loan origination or processing functions, including taking the loan application and ordering documents, processing and for which all underwriting and final loan approval are performed by an entity other than the entity closing, funding or ordering the MI (the Insured).
We, Genworth, will be updating our online application to facilitate the identification of loans originated by a third party.
Genworth's Underwriting Guidelines will be updated to include these changes and will be posted to our website at mortgageinsurance.genworth.com by January 17, 2009. Please distribute this information to the appropriate contacts within your organization.
Contact your Genworth representative or the ActionCenter® at 800 444.5664 for additional information.
Conventional Loan Files: PMI Mortgage Insurance
Message from PMI Mortgage Insurance:
In order to continue our efforts to adapt to recent and anticipated trends in the mortgage market, PMI is making eligibility and guideline changes effective February 1, 2009.
In order to continue our efforts to adapt to recent and anticipated trends in the mortgage market, PMI is making eligibility and guideline changes effective February 1, 2009.
The changes are as follows:
-Maximum 95% LTV for all loans, including affordable housing programs.
-Cash-out refinances and second homes are no longer eligible for insurance.
-Properties located in Alaska, New Mexico, New York, Rhode Island and Washington will be subject to a minimum credit score requirement of 700 until the Departments of Insurance (DOIs) in these states approve PMI's rate filing for rates effective 10/1/08. Please visit http://click.pmiemail.com/?ju=fe27157475660075701379&ls=fdf11572756d01797d1c7975&m=fef71074756d03&l=fec316797162027c&s=fe1f15767c670675711d76&jb=ffcf14&t= for updated rate sheets and rate filing state status.
PMI's Distressed Markets Policy will be updated as follows:
-Minimum credit score established for MSA/MSADs designated Level 1 and 2
-Borrowers who have nontraditional credit are no longer eligible
-The entire states of Arizona, Florida and Nevada are now designated Level 2 and must meet the following additional criteria:
Minimum 720 credit score
Maximum $417,000 loan amount
Maximum 45% DTI
Maximum 90% LTV
-Attached housing is no longer eligible in the Florida MSA/MSADs listed below (this includes condominiums, attached PUDs, co-ops, 2- to 4-units, townhomes, and rowhouses):
Bradenton-Sarasota-Venice, FL
Deltona-Daytona Beach-Ormond Beach, FL
Fort Lauderdale-Pompano Beach-Deerfield Beach, FL (MSAD)
Miami-Miami Beach-Kendall, FL (MSAD)
Naples-Marco Island, FL
Orlando-Kissimmee, FL
Pensacola-Ferry Pass-Brent, FL
West Palm Beach-Boca Raton-Boynton Beach, FL (MSAD)
-The Quick App option will no longer be eligible for mortgage insurance submissions.
-We, PMI, have updated our Guidelines at a Glance; Alaska/Hawaii Guidelines; Distressed Markets Policy, List and Charts; Streamlined Refinance Guidelines; and Construction-to-Permanent Guidelines to reflect the changes effective February 1, 2009. You can access these documents here .
Clarification for Condominiums and Condominium Conversions
-PMI's condominium project eligibility requirements are for existing projects only and pre-sale requirements have been removed.
-The condominium conversion requirements have been changed to:
Resales of converted condominium units are eligible for insurance if:
All units have been previously sold to individuals other than the developer, and the project has been turned over to the HOA, and all other condominium project eligibility requirements have been met.
If you have any questions, please visit http://click.pmiemail.com/?ju=fe2e157475660075701c71&ls=fdf11572756d01797d1c7975&m=fef71074756d03&l=fec316797162027c&s=fe1f15767c670675711d76&jb=ffcf14&t=.
Thursday, December 11, 2008
2009 FHA Maximum Mortgage Limits
FHA has released Mortgagee Letter 2008-36 2009 FHA Maximum Mortgage Limits announcing the new county limits for calendar year 2009. The mortgage limits are effective for loans that have a final credit approval on or after January 1, 2009 or for those transactions that did not close by 12/31/08.
Click here to review Mortgagee Letter 2008-36 in its entirety.
Attachment I -- FHA Loan Limits for Areas AT CEILING AND ABOVE
Attachment II -- FHA Loan Limits for Areas BETWEEN CEILING AND FLOOR
Click here to review Mortgagee Letter 2008-36 in its entirety.
Attachment I -- FHA Loan Limits for Areas AT CEILING AND ABOVE
Attachment II -- FHA Loan Limits for Areas BETWEEN CEILING AND FLOOR
Wednesday, December 10, 2008
FHA: Offsetting Mortgage Payments
You can no longer offset your existing mortgage payment on primary residence with just a lease agreement. The existing mortgage payment must be included in the debt/ratios unless you meet one of the following exceptions: Relocation OR Sufficient Equity in Vacated Property (75% or less). At this time we are only accepting a 2055 to verify equity.
See Mortgagee ltr. 2008-25 for full details.
Ruth Martinez
Sr. Underwriter
See Mortgagee ltr. 2008-25 for full details.
Ruth Martinez
Sr. Underwriter
Fannie Mae DU Version 7.1
During the weekend of December 13, 2008, Fannie Mae will implement Desktop Underwriter® (DU®) Version 7.1. This release will support specific policy changes described in the following Selling Guide Announcements, as well as other changes described below:
- Announcement 08-08, Mortgage Eligibility and Pricing Updates for Desktop Underwriter and Manually Underwritten Loans
- Announcement 08-16, Bankruptcy, Foreclosure, and Conversion of Principal Residence Policy Changes; and Revised Property Value Representation and Warranty Requirements
- Announcement 08-18, Updated Adverse Market Delivery Charge and Flow Business Pricing Requirements
- Announcement 08-22, Miscellaneous Eligibility, Policy, and Pricing Updates
- Announcement 08-27, Permanent High-Cost Area Loan Limits
You can see the complete set of Fannie Mae Release notes at
https://www.efanniemae.com/sf/guides/duguides/pdf/current/rndodu71.pdf .
12/10/2008: What Topic Would You Like to See?
Post your comments about any underwriting subject you'd like to discuss.
Note: please DO NOT post a comment about a specific file. Those type of comments should be directed to the individual underwriter via normal communication channels.
Note: please DO NOT post a comment about a specific file. Those type of comments should be directed to the individual underwriter via normal communication channels.
Thursday, December 4, 2008
USDA Urgent Announcement
From: Lambright, Allen - McKinney, TX [mailto:Allen.Lambright@tx.usda.gov]
Sent: Thursday, December 04, 2008 2:27 PM
Subject: Urgent Eligibility Issue
As our program grows in North Texas, I am finding more and more instances where our on-line eligibility map has not kept up with local communities growth.
The most notable and controversial area is the northern portion of Tarrant County. The City of Ft Worth has grown into some of the open country that was once considered eligible. If a property is paying city of Ft. Worth taxes, it is not in an eligible area. We cannot make exceptions.
Please, please pay close attention to this when originating loans in Tarrant County. My staff will be working this issue and re-drawing the Tarrant County map in the near future.
Unfortunately, this will result in a more conservative approach to our eligibility line in Tarrant County. My staff may ask for tax data for any property that appears in question. Again, if the tax data shows the client is paying City of Ft. Worth, City of Denton, City of Lewisville, Flower Mound, Sherman, Denison, Dallas, Rowlett, etc, the property will not be considered eligible, regardless of the website determination.
I apologize in advance for any issues this may cause. If I can be of service, please call.
Allen M. Lambright Area Director USDA Rural Development 1406 E North McDonald McKinney, Texas 75071 Ph: - 972.542.0081x4 Cell: - 972-489-2556 Fax: - 972.542.4028 www.rurdev.usda.gov
Sent: Thursday, December 04, 2008 2:27 PM
Subject: Urgent Eligibility Issue
As our program grows in North Texas, I am finding more and more instances where our on-line eligibility map has not kept up with local communities growth.
The most notable and controversial area is the northern portion of Tarrant County. The City of Ft Worth has grown into some of the open country that was once considered eligible. If a property is paying city of Ft. Worth taxes, it is not in an eligible area. We cannot make exceptions.
Please, please pay close attention to this when originating loans in Tarrant County. My staff will be working this issue and re-drawing the Tarrant County map in the near future.
Unfortunately, this will result in a more conservative approach to our eligibility line in Tarrant County. My staff may ask for tax data for any property that appears in question. Again, if the tax data shows the client is paying City of Ft. Worth, City of Denton, City of Lewisville, Flower Mound, Sherman, Denison, Dallas, Rowlett, etc, the property will not be considered eligible, regardless of the website determination.
I apologize in advance for any issues this may cause. If I can be of service, please call.
Allen M. Lambright Area Director USDA Rural Development 1406 E North McDonald McKinney, Texas 75071 Ph: - 972.542.0081x4 Cell: - 972-489-2556 Fax: - 972.542.4028 www.rurdev.usda.gov
DU Update: Vebal VOE
The Desktop Underwriter income documentation option of obtaining a Verbal VOE as the only verification of income will be eliminated with the DU update to DU 7.1 scheduled for next weekend (12/13 - 12/14).
Alethes will update all outstanding approvals as to the final date we will accept those DU findings with only a Verbal VOE as we get this information from our investors.
It is possible that resubmissions after DU's update to 7.1 will continue to give out the option for only a Verbal VOE. This will not be acceptable except as outlined in a future announcement.
Alethes will update all outstanding approvals as to the final date we will accept those DU findings with only a Verbal VOE as we get this information from our investors.
It is possible that resubmissions after DU's update to 7.1 will continue to give out the option for only a Verbal VOE. This will not be acceptable except as outlined in a future announcement.
Friday, November 28, 2008
Underwriting Tip: Sales Contract
Please be sure the Sales Contract submitted to underwriting is the most up-to-date.
One of three loans I underwrite does not have the correct information and it slows the entire process down when we have to re-underwrite the file due to changes. These changes, too many times, causes us to have to re-run DU and 25% of the time the file moves from an Approved/Eligible to a Manual underwrite.
Ruth
One of three loans I underwrite does not have the correct information and it slows the entire process down when we have to re-underwrite the file due to changes. These changes, too many times, causes us to have to re-run DU and 25% of the time the file moves from an Approved/Eligible to a Manual underwrite.
Ruth
Thursday, November 27, 2008
AUS Tip: Property Type
Many times I recieve a file for AUS input and it does not have the "Property Type" marked on the 1003.
Without knowing the Property Type I can't complete the file and many times the processor or loan officer is not immediately available to give me this information.
So, please be sure and mark the correct Property Type when you send me your Calyx Point file.
Erin
Without knowing the Property Type I can't complete the file and many times the processor or loan officer is not immediately available to give me this information.
So, please be sure and mark the correct Property Type when you send me your Calyx Point file.
Erin
Tuesday, November 25, 2008
Underwriting Tip: Try to send all the conditions in at one time
It helps when a processor sends all the conditions in at one time. This not only helps with that loan, but with the entire shop's ability to turn our more loans.
Plus, everytime an underwriter picks up a file, there is more of a tendancy to "look" at it again. I know that when I was a loan officer that I wanted the underwriter to pick up the file as few times as possible.
Kelley
Plus, everytime an underwriter picks up a file, there is more of a tendancy to "look" at it again. I know that when I was a loan officer that I wanted the underwriter to pick up the file as few times as possible.
Kelley
Monday, November 24, 2008
Underwriting Tip: Number your conditions
The less an underwriting has to look through the file, the quicker and easier it will be for her/him to get your conditions cleared.
Numbering your conditions to correspond with the Underwriting Action sheet helps tremendously. In fact, when I recognize a file from a processor that I know numbers her conditions.....well, it just feels good to see the professionalism.
Ruth
Numbering your conditions to correspond with the Underwriting Action sheet helps tremendously. In fact, when I recognize a file from a processor that I know numbers her conditions.....well, it just feels good to see the professionalism.
Ruth
Wednesday, October 1, 2008
Underwriting: 4506T / Review of IRS Transcripts
Effective October 1, 2008, Alethes Wholesale requires a completed and signed 4506T for all borrowers on all loan programs. The 4506T will be submitted to the IRS for all available transcripts; W-2 (if applicable) and Tax Returns. The review of these transcripts will be part of the underwriting process.
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