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Loan Programs

 
 
Purchase
Minimum Credit Score Maximum LTV Allowed Maximum CLTV Allowed Max DTI (Front and Back)
500-579 90.00% 90.00% 31% / 43%
580-619 96.50% 96.50% 31% / 43%
> 620 96.50% 100.00% 45% / 55%
Rate and Term Refinance
Minimum Credit Score Maximum LTV Allowed Maximum CLTV Allowed Max DTI (Front and Back)
500-579 90.00% 90.00% 31% / 43%
580-619 97.75% 97.75% 31% / 43%
> 620 97.75% 97.75% 45% / 55%
Cash-Out Refinance
Minimum Credit Score Maximum LTV Allowed Maximum CLTV Allowed Max DTI (Front and Back)
500-619 85.00% 85.00% 31% / 43%
> 620 85.00% 85.00% 45% / 45%

Maximum LTV for 2-4 unit properties with non-occupying co-borrower is 75% 

LTV is determined by the base loan amount, excluding any financed mortgage insurance

CLTV allowed is 105% for purchases, if using a Govt. Down Payment Assistance Program

A non-occupying co-borrower may not be added for qualifying purposes on cash-out refinance transactions

Geographic restriction: Cash Out Refinance is not allowed in Texas

Eligible Properties
  • 1-4 Unit Properties
  • PUDs
  • Condominium (in FHA approved projects) and site-condos
  • Doublewide Manufactured Housing (Manufactured condos are not acceptable)
Eligible Terms
  • Fixed Rate: 15, 20, 25 and 30 Years
  • Adjustable Rate: 3/1 and 5/1 – 30 years
Occupancy
  • Owner-occupied properties only
Automated Underwriting Systems
  • DU or LP Approve/Accept
  • DU or LP Refer eligible, see Manual Underwriting
Manual Underwriting
  • Ratios must conform to 31%/43%
  • AUS Refer, determined acceptable by Sun West Mortgage Company, Inc
Reserves
  • A minimum of three months of PITI reserves for 3-4 unit properties on all transactions
  • Gift and proceeds from loans are not acceptable source
 
Streamline Refinance without appraisal:
Minimum Credit Score Maximum LTV Allowed Maximum CLTV Allowed Max DTI (Front and Back)
500 NO LTV 125.00% NO MAX DTI
500-579 90.00% 125.00% 31% / 43%
580 97.75% 125.00% 31% / 43%

Maximum Loan Amount: cannot exceed the lessor the outstanding principal balance and interest due, minus applicable refund of the UFMIP, plus the new UFMIP that will be charged on the refinance or the original loan balance

LTV / CLTV: LTV cap is not applicable for non credit qualifying Streamline loans

  • * However, maximum loan amount has to meet above requirement

LTV / CLTV for FHA Streamline Refinance is based on the original appraised value reporting in FHA Connection

Streamline Refinance with appraisal:
Minimum Credit Score Maximum LTV Allowed Maximum CLTV Allowed Max DTI (Front and Back)
500-579 90.00% 125.00% 31% /43%
580 97.75% 125.00% 31% / 43%

Maximum loan amount: A credit qualifying streamline with appraisal may be used to increase the loan amount not to exceed 97.75%

LTV/CLTV: Based on new appraisal ordered in conjunction with the transaction

The maximum accessible credit limits must be used when considering HELOCs

A credit-qualifying streamline is required when:

  • * a change in the mortgage term will result in an increase in the mortgage payment of more than 20%

  • * when deletion of a borrower or borrowers will trigger the due-on-sale clause

  • * following the assumption of a mortgage that

    • - occurred less than six months previously

    • - does not contain restrictions (i.e. due-on-sale clause) limiting assumption

  • * only to a creditworthy borrower, or

    • - following the assumption of a mortgage that occurred less than six months previously

    • - did not trigger the transferability restriction (that is, the due-on-sale clause), such as in a property transfer resulting from a divorce decree or by devise or descent

Eligible Properties
  • 1-4 Unit Properties

  • PUDs

  • Condominium and site-condos

  • Doublewide Manufactured Housing (Manufactured condos are not acceptable)

Eligible Terms
  • Fixed Rate: 15 through 30 Years

  • Adjustable Rate: 3/1 and 5/1 – 30 years

Maximum Term
  • Lesser of 30 years or the remaining terms of the mortgage plus 12 years

Occupancy
  • Owner-occupied

  • Investment Properties

  • Second Homes

Mortgage Late Payments
Non-Jumbo
  • Less than 12 months = All mortgage payments on subject property must have been made within the month due

  • 12 months or more = No more than one 30 day late allowed in last 12 months

    • * All mortgage payments on subject property in last 3 months from the application date must have been made within the month due

Jumbo
  • Less than 12 months = All mortgage payments on subject property must have been made within the month due

  • 12 months or more = No late allowed in last 12 months

Note: Mortgage must remain current during application period to closing. Loan being refinanced must meet 6 months seasoning requirement.

Mortgage Only Credit Report
  • Tri-Merged Mortgage only credit report with at least one credit score is required for non credit qualifying streamline loans

  • Tri-Merged Full Credit report with at least one credit score is required for credit qualifying streamline loans

Automated Underwriting Systems
  • AUS is not applicable on streamline refinance loans

  • All loans are manually underwritten

Reserves
  • A minimum of three months of PITI reserves for 3-4 unit properties on all transactions

  • Gift and proceeds from loans are not acceptable source

Funds Required To Close
  • If funds are needed to close, the borrower must have the assets to be utilized in accordance with FHA's standards

  • When the maximum base loan amount is calculated and borrower chooses to have a base loan amount that is less than the maximum, borrower is required to come into the transaction with the difference of their own funds

  • Yield Spread Premium (YSP) cannot be used to cover the difference

    • * YSP can only be used to reduce principal balance as per HUD Guideline

Verbal Verification of Employment (VOE)
  • For non-credit qualifying refinances, at least one borrower must be employed at time of closing

  • If a VOE cannot be obtained, alternative income documentation is acceptable to support an active source of income, such as:

    • * SSA Award letter

    • * Pension letter

    • * 1099 or Tax Returns for other types of income

    • * Divorce Degree or Child Support Statement

Note: If there is any indication for recent change in employment status of the borrower (unemployed / retired during the course of loan), repayment ability of the borrower needs to be verified.

 
Eligible Transactions

Purchase

Limited Cash Out Refinance

Cash-Out Refinance

* Cash Out Refinance is NOT allowed in the state of TX. Non-cash out refinance only acceptable in Texas when the refinance is of purchase money loan

* Cash Out Refinance is NOT allowed on second home

Occupancy

Owner-occupied

Second home (only 1 unit)

Eligible Terms

15 and 30 Years Fixed

5/1 and 7/1 ARM 30 Years

Eligible Properties

1-2 Units

Condominiums

PUDs

Minimum Credit Score and Maximum LTV/CLTV Allowed
Purchase
Occupancy Type Minimum Credit Score Maximum LTV/CLTV Allowed Maximum LTV/CLTV Allowed
Owner-Occupied (1 Unit, Condos, PUDs) 700 FICO 80% / 80% Fixed Rate 75% / 75% ARM
Owner Occupied (2 Units) 740 FICO 75% / 75% Fixed Rate 65% / 65% ARM
Second home (only 1 unit) 740 FICO 65% / 65% Fixed Rate 65% / 65% ARM
Limited Cash-Out Refinance
Occupancy Type Minimum Credit Score Maximum LTV/CLTV Allowed Maximum LTV/CLTV Allowed
Owner-Occupied (1 Unit, Condos, PUDs) 700 FICO 80% / 80% Fixed Rate 75% / 75% ARM
Owner-Occupied (2 Units) 740 FICO 75% / 75% Fixed Rate 65% / 65% ARM
Second home (only 1 unit) 740 FICO 65% / 65% Fixed Rate 65% / 65% ARM
Cash-Out Refinance
Occupancy Type Minimum Credit Score Maximum LTV/CLTV Allowed Maximum LTV/CLTV Allowed
Owner-Occupied (1 Unit, Condos, PUDs) 740 FICO 60% / 60% Fixed Rate 60% / 60% ARM
Minimum Loan Amount
48 Contiguous States

1 Unit = $ 417,001.00

2 Unit = $ 533,851.00

Alaska, Hawaii, and Virgin Islands

1 Unit = $ 625,501.00

2 Unit = $ 800,776.00

Subordinate Financing

Not Allowed

AUS only (Manual UW not allowed)

Maximum Debt to Income Ratios

43.00%/43.00%

Maximum Number of Properties Financed by borrower

2 (inclusive of subject)

If borrower is self employed

6 months PITI reserves required

Maximum LTV/CLTV: 80%

Receipt of a minimum two- year self-employed income with business tax returns

Income Decrease of 10%-20%: Use most recent business tax year

Income Decrease beyond 20%: Not acceptable

Mortgage Lates

None in last 24 months on any mortgage

Third Party Originations

Not Allowed

Appraisal

Must be ordered through SWMC*

A full appraisal is required regardless of AUS findings

A One-Unit Residential Appraisal Field Review Report (Form 2000) is required if:

* The loan amount is greater than $625,500 and the LTV, CLTV, or HCLTV is greater than 80%

* The property is valued at $1,000,000 or more and the LTV, CLTV, or HCLTV is greater than 75%

If the Field Review results in a different opinion of value than the appraisal, the lowest of the original appraised value, the Field Review value, or the sales price (for purchases) should be used to calculate the LTV ratios

For properties in attached condo projects, the appraisal must contain two comparable sales from projects outside of the subject's project in addition to the current comparable sale requirements

Transfer of Appraisal is NOT allowed on conventional programs

Repair Escrow Holdback (Minor Repairs)

Not Allowed

 
Minimum FICO

500

Maximum DTI

Per AUS

Eligible Terms

10|15|20|25|30 Year Fixed

* 3/1|5/1 ARM

Maximum LTV

* 100% (Purchase)

* 100% (IRRRL)

* 100% REFI

Transactions

Purchase

Refinance

VA Interest Rate Reduction Refinance Loan (IRRRL)

VA (IRRRL)

Primary Residence

A tri-merge credit report is required

Most recent paystub and W2 are required

if self-employed and/or using rental income to qualify

1040's must be provided

Investment Properties

A full appraisal on Form 1004 is required

*appraisals can be ordered via standard appraisal ordering procedures

*A VA Appraisal is not required

The borrower must provide a certification and documentation that they previously occupied the property as their primary residence.

A tri-merge credit report is required

Most recent paystub and W2 are required

if self-employed and/or using rental income to qualify

1040's must be provided

If the borrower is using rental income to qualify, the loan must be documented according to standard VA Guides when using rental income to qualify:

*Document the applicant has prior experience managing an investment property

*Rental Income to be used to offset current mortgage payment only

*3-months PITIA Reserves if subject property is a SFR

*6-months PITI Reserves if subject is a multi-unit

VA IRRRL Texas

Loan amounts on VA IRRRL's in TX can be increased by up to 5% of the current 1st mortgage balance without treating the loan as an a6

*This is to account for fees on the new transaction

In the event there is a 2nd lien, a subordination agreement must be executed and recorded with our new loan amount.

A copy of the original Note is required to verify the original loan balance and the loan is not TX A6

VA Funding Fee

All VA loans require a VA funding fee

*which is calculated as percentage of the loan amount unless the Certificate of Eligibility reflects the Veteran as Exempt

The funding fee may be paid in cash or financed into the loan amount

Eligible Properties

Max number of Financed Properties is 4

Attached | Detached SFR

Attached | Detached PUD

Low/Mid/High-Rise Condos and site Condos

2-4 Unit Properties

Modular Homes (these are not considered to be manufactured and are eligible under the guidelines for 1-unit properties)

Leaseholds and properties with ground rents must be prior approved by the VA

Ineligible Properties

Co-ops

Condotels

Non-Warrantable Condos

Manufactured/Mobile homes

Hobby Farms

Bed and Breakfast Properties

Live/Work Units

Properties with manufactured on site being used as storage

Properties where farm or agricultural income from the subject property is claimed on borrowers tax returns

Properties encumbered with private transfer fee covenants

Properties which are subject to a right of redemption

Properties appraised with a property condition of C5

Land Trusts

Special Flood Hazard Area (SFHA) and either

*it is proposed/under/new construction with elevation of the lowest floor below the 100 year flood level, or

*flood insurance is not available

An area subject to regular flooding for whatever reason, whether or not it is in an SFHA

Coastal Barrier Resources System areas

Airport Noise Zone 3, if proposed or under construction

Transmission line easement involving high-pressure gas or liquid petroleum or high voltage electricity, if any part of the residential structure is located within the easement or

Areas susceptible to geological or soil instability (earthquakes, landslides or other history of unstable soils)

Income
General

Two years documentation required

A fully complete and signed 4506T for each borrower is required

*transcripts are required for the years of income being used to qualify for all loans (Except VA IRRRL's)

*the type of transcripts is determined by the required income documentation listed in the AUS

Tax return transcripts cannot be used in place of the actual tax return documents for qualification

Rental Income (1-4 Unit)

When rental income is used on the non-subject property that was NOT occupied by the borrower prior to the new loan, all of the following are required:

Cash reserves of three months PITIA

2 years signed and dated 1040s showing rental income generated by the property

Rental income on property occupied by the borrower prior to the new loan

Can be used to offset the mortgage payment on the rental property if there is no indication that the property will be difficult to rent and an UW reasonability test is completed

Cannot be used as effective income

Obtain a copy of the rental agreement

Qualifying Ratios

Fixed Rate Mortgage | Note Rate

5/1 ARMs | Note Rate



Max DTI: 60%

* For Purchase | Refi | and VA IRRRL

loans with a backend ratio greater than 41% require a statement justifying the reasons for approval, signed by the underwriter's supervisor, unless residual income exceeds the guideline by at least 20 percent

Unreimbursed business expenses should be treated as a debt obligation/liability and notated on Line 29 of the VA Loan Analysis

Revolving debt cannot be paid down to qualify

revolving debt may be paid off to qualify when proof of the debt being paid and closed prior to CTC is available

except in the case of a cash-out refinance where the debt must be closed prior to loan closing, but may be paid-off at closing with loan proceeds

Credit

A minimum of two credit scores from a tri-merged credit report are required for each borrower

Non-traditional/alternative credit is not permitted

For loans scoring Approve/Eligible or Accept, the AUS determines the acceptability of the borrower's depth of credit

For manually underwritten loans, at least one occupying borrower must meet one of the following to have an acceptable credit depth:

* Verified housing (rental or mortgage) history showing 0x30x12

* Private rentals mustbe verified with 12 cancelled checks or bank statements, each dated prior to the next due date

* The borrower has (3) trade lines that have been evaluated for at least 12 months

* These trade lines do not need to be currently active but require some activity in the last 24 months

* The borrower has (2) trade lines that have been evaluated for at least 24 months and have had some activity in the last 24 months

* Deferred student loans and Authorized User accounts are ineligible as valid tradelines

* All credit inquiries within 120 days of the credit report are required to be addressed by the customer

Short Sale

Short Sales with or without mortgage lates that were completed over one year but < 2 years will require a letter of explanation from the borrower... and supporting documentation to establish an extenuating circumstance and to confirm the short sale was not due to credit negligence or taking advantage of a declining market

Document the following on the VA Loan Analysis:

* Reasoning for accepting the credit profile and compensating factors

* The extenuating circumstance

Bankruptcy | Foreclosure

Bankruptcy

Chapter 7 must be discharged 24 months preceding application date

Chapter 13 must have been entered at least 12 months preceding application date and paid as agreed

Plan must be paid out and discharged prior to closing

Proceeds may not be used to payoff BK balance

Foreclosure

Must be discharged a minimum of 24 months preceding application date

 
Min FICO

Purchase : 680

Rate & Term Refinance : 680

Cash-Out Refinance : NOT PERMITTED

Minimum Loan Amount

$100,000

Eligible Terms

30 Year Fixed

Ineligible Programs

HPML/Section 32

Mortgage Credit Certificates (MCC)

Temporary Buy downs

Land trusts in the state of Illinois are not eligible

Leaseholds secured by Indian/Tribal lands

Eligible Transactions

Purchase

Rate & Term (Limited Cash-out) Refinance

Purchases

A purchase money transaction is one in which the proceeds are used to finance the acquisition of a property or to finance the acquisition and rehabilitation of a property

In order to determine eligibility, the following requirements must be satisfied:

* A copy of the fully executed purchase contract and all attachments or addenda is required

* Proceeds from the transaction cannot be used to give the borrower cash back

- other than an amount representing reimbursement for the borrower’s overpayment of a fee or a legitimate pro-rated real estate tax credit when real estate taxes are paid in arrears

* A Certificate of Occupancy from the applicable government authority must be retained in the loan file

- (required on all new construction regardless of whether the transaction is a construction-to-permanent loan)

Refinances (General)

Borrower(s) must meet the *Continuity of Obligation* (described below)

All refinance transactions must pass the NPF Net Tangible Benefit Test

Short pay-off (short refinances) where a new loan is originated resulting in a forgiveness of a portion of principal and/or interest on the first or second mortgage are not permitted

The refinance of a previously modified mortgage is not permitted unless 24 months have passed since the modification and the borrower has a 0x30x24 mortgage history

*Continuity of Obligation*

Continuity of obligation is met when any one of the following exists:

* At least one borrower is obligated on the new loan who was also a borrower obligated on the existing loan being refinanced

* The borrower has been on title and residing in the property for at least 12 months and has either paid the mortgage for the last 12 months or can demonstrate a relationship with the current obligor

- (relative, domestic partner, etc.)

* The loan being refinanced and the title to the property are in the name of a natural person or a limited liability company (LLC) as long as the borrower was a member of the LLC prior to transfer

- Transfer of ownership from a corporation to an individual does not meet the continuity of obligation requirement

* The borrower has recently inherited, or was legally awarded, the property

- (divorce, separation, or dissolution of a domestic partnership)

*Unacceptable Continuity of Obligation*

If the borrower is currently on title but is unable to demonstrate an acceptable continuity of obligation, or if there is no outstanding lien against the property, the loan is still eligible for delivery

The loan must be underwritten, priced, and delivered as a cash-out refinance transaction, unless the file is eligible for delayed financing

If there is an outstanding lien and the borrower has been on title at least six months, the LTV Is limited to 50% of the current appraised value

Rate & Term Refinances

Rate-Term Refinances consist of the following transaction types:

* Pay off of the current mortgage (and any purchase money seconds) to include principal balance plus accrued interest, and any required prepayment penalty, only

- Other costs such as late fees and past-due amounts may not be paid with the new loan proceeds

* Pay off of subordinate financing is permissible provided the subordinate lien meets the loan seasoning requirements

- (must be seasoned a minimum of 12 months and, if a home equity line of credit, have zero draws within the past 12 months)

* Junior liens do not have to be part of the original transaction

* Refinances where the borrower receives incidental cash-back (amounts limited to the lesserof 2% or $2,000)

* A co-owner is completing an equity buy-out due to a divorce and all of the following criteria are met:

- The property was jointly owned by all parties for at least the 12 months preceding the date of the mortgage application

- The property must be the primary residence

- A written agreement signed by all parties is required stating:

+ the terms of the property transfer

+ the disposition of the proceeds from the refinance

- The borrower who retains sole ownership of the property may not receive any cash proceeds from the refinance

Standard loan fees (e.g., closing costs on the new mortgage; prepaid finance charges, such as interest, taxes, insurance, etc.; and points) may be included in the refinance transaction

The current appraised value is used to calculate the LTV regardless of length of time the borrower has owned the subject property.



Note: For refinances in Texas, a copy of the current mortgage or note is required to determine the previous terms are not subject to Texas Section 50(a)(6)

Texas 50 (a)(6) Refinances are not permitted

Occupancy

Second home residences for 1-unit properties, including condos

Borrower Eligibility

A loan must be originated under the Foreign National program when the borrower earning the majority of the income is not eligible for a FNMA loan as described by the citizenship requirements

Foreign Nationals are a non-US Citizen with a valid passport AND valid visa

* Borrowers who are residents of countries which participate in the State Department’s Visa Waiver Program (VWP) will not be required to provide a valid visa

Evidence that the borrower is in the U.S. legally is required, however, no defined length of stay is required

All applicants should be checked against the GLOBAL PEP list

* Borrowers who are politically exposed (PEP) are ineligible

* PEP is someone who hasbeen entrusted with a prominent public function, or an individual who is closely related to such a person

All involved entities must be cleared through OFAC SND list (borrowers, sellers, employers, banks, etc.)

* Borrowers from OFAC sanctioned countries are ineligible

All applicants should be checked using World Check

MERS search to be ordered to verify no undisclosed properties in the United States

All Borrowers must complete a W8 prior to final approval

All borrowers must register for ACH prior to close

* the ACH payment must be established from a US Bank

* this account must be the same account used for the required reserves

All loans must establish an ACH debit for mortgage payments from a U.S. bank

* The ACH debit form must be signed prior to scheduling a closing

A complete copy of a voided blank check with the borrowers name and address preprinted is required



In the even the account is newly established and does not have the pre-printed information, NPF will accept that voided check along with the following:

* A complete copy of the borrower’s bank statement (all pages) that is associated with the check must be provided

* The bank statements must show the borrowers full name, address, account number (the account number should be the same as listed on the voided check) and the routing number will be verified for accuracy



Documents signed by Borrowers outside of the United States must be notarized by a U.S. embassy or consular official

* The certificate of acknowledgment must meet the standard notarial requirements and must include the embassy or consular seal



All documents must be fully translated (including all transactions on assets) into English by a certified translator

* copies of the original document and the translation will be required



No more than 4 borrowers may be party to any transaction

Ineligible Borrowers

Due to the inability to compel payment or obtain judgment, the following Borrowers are not eligible for financing:

  • * Non-Occupant Co-Borrowers/Co-Mortgagors/Co-Signers/Guarantors
  • * Politically exposed borrowers are not permitted
  • * Borrowers with diplomatic immunity or otherwise excluded from U.S. jurisdiction
  • * Borrowers whose income is not likely to continue for at least 3 years
  • * Borrowers with Visas or Passports from geographic areas with OFAC’s sanctions against them and/or borrowers listed on the Specially Designated Nationals List (SDN)
  • * Borrowers with Visa or Passports from geographic areas determined to be at high risk due to political unrest or other economic and environmental hazards
    • - at this time this restriction applies to: Russia, Venuzuela, Argentina and Ukraine

Eligible Properties

Most residential use properties are eligible

Atypical improvements are considered provided marketability has been demonstrated through the appraisal; however, they may not be eligible

Eligible Property Types include:

Attached/Detached SFRs

Attached/Detached PUDs

Low/Mid/High-Rise Condos and Site Condos

Mixed Use Properties:

For mixed use properties, originators may follow FNMA guidelines with the exception that the square footage of commercial part of the property cannot exceed 25% of the total square footage

Non-Conforming Additions/Granny or In-law Suites/Accessory Units:

Properties with accessory units, also known as Granny units, mother-in-law suites, etc., may be acceptable if all of the following criteria are met:

  • * 1 unit property
  • * Subject property is typical, common and readily-acceptable in the subject property’s market area
  • * Appraisal contains three comparable sales with similar additional accessory units
  • * Rental income from the accessory unit may not be used to help the Borrower qualify
  • * Existence of the unit must not jeopardize any future hazard insurance claim
  • * Subject property must conform to all zoning laws and/or regulations
  • * Legal non-conforming use may be acceptable provided the subject property’s current use does not adversely affect its market value and marketability
  • * Accessory unit is substantially smaller than the primary unit

Condos

All loans secured by condos originated under the Portfolio Product must be reviewed by the NPF Condo Review team prior to approval

In general, condos must meet FNMA Condo Project Manager Standards (CPM) or be FNMA/NPF Approved

If project is currently FNMA approved, a HOA Certification is still required

Non-warrantable condos are not eligible

PUDs

Planned Unit Developments (PUDs) must comply with the PUD project requirements of Fannie Mae or Freddie Mac

There are two distinct classifications for PUD projects :

  • Type E established PUD projects
  • Type F new PUD projects

Type E established PUD projects

Type E Warranty applies to established PUD projects in which the owners’ association has been turned over to the unit purchasers

This is the sole eligibility criterion for qualifying as a Type E project (manufactured homes not allowed)

Type F new PUD projects

Type F Warranty applies to new PUD projects that are still under the control of the developer

The project must meet the following eligibility criteria:

  • * The project cannot have been created by the conversion of existing buildings into a PUD
  • * The project may not include any multi-dwelling units that represent the security for a single mortgage loan
  • * The project must not be composed of manufactured homes
  • * A sufficient number of the total units in the project (or legal phase) must have been conveyed or be under contract to be sold to the purchasers in order for the lender to determine whether the presales will support the responsibilities of the homeowners association for at least two years
  • * The units must be owned in fee simple or leasehold, and the unit purchasers must have the sole ownership interest in, and right to the use of, the project’s facilities once control of the homeowners association has been turned over to them
  • * The homeowners association should complete a questionnaire so that the originator can make the appropriate determination if the Type F requirements have been met

Ineligible Properties

2-4 Unit Properties

Co-ops

Condotels

Non-Warrantable Condos

Manufactured/Mobile, Modular, or Factory Built Homes

Investment Properties

Log homes

Timeshares

Geodesic Domes, Berms, Earth homes

Properties with resale deed restrictions

Properties vested in an LLC or Corporation (title must be taken as an individual)

Properties Purchased Through Auctions

Unimproved Land and property currently in litigation

Commercial Enterprises (e.g. Bed and Breakfast, Boarding House, Hotel)

Zoning violations including residential properties zoned commercial

Properties with less than 750 square feet of living area

Properties held in a business name

Properties located in a Lava Zone

Properties located adjacent to or containing environmental hazards

 
FICO

Purchase | Rate and Term : Min 640

Streamline Refinance: Min : 620

Piolt Refinance Min : 620

Eligible Terms

30 Year Fixed ONLY

Eligible Transactions

Purchase

Rate & Term (Non-Streamlined) Refinance (Guaranteed-to-Guaranteed only)

Streamlined Refinance (Guaranteed-to-Guaranteed only)

Pilot Refinance (select states; Guaranteed-to-Guaranteed only)

Qualifying Ratios

Purchases and Rate & Term Refinances: As approved by the GUS Findings; DTI not to exceed 45%

Streamlined Refinances: Limited to manual underwriting restrictions of 29/41; no exceptions

Piolt

620-659 : 50% DTI

> or equal to 660 : 50% DTI

> or equal to 700 (125% LTV) : 60% DTI

> or equal to 700 (Unlimited) : 43%

LTV / CLTV | DTI

Purchase | Rate and Term : Max 100% / 100% | DTI not to exceed 45%

Streamline Refinance =

620-659 : 95% / 95% | 29% / 41%

Less than or equal to 660 : 100% / 100% | 29% / 41%

Less than or equal to 700 : Unlimited | 29% / 41%

Pilot Refinance=

620-659 : 95% / 95% | 50%

Less than or equal to 660 : 100% / 100% | 50%

Less than or equal to 700 : 125% / 125% | 60%

Less than or equal to 700 : Unlimited | 43%

Maximum Interest Rates

The maximum interest rate for the Rural Development Guaranteed Rural Housing Program will be based upon the Fannie Mae rate for 30 year conventional mortgages for 90-day delivery (actual/actual) plus 100 basis points…

rounded to nearest one-quarter of one percent.

Marksman Notes
Streamlined Refinances

Select the "USDA Rural Housing" loan program and "Streamline w/ Credit, w/o Appraisal" as the loan purpose

Pilot Refinances

Select the "USDA RD Pilot Program" loan program and "Streamline w/ Credit, w/o Appraisal" as the loan purpose

Ineligible Programs

The refinance of a USDA Direct loan

Rural Energy Plus

Energy Efficient Mortgages

Non-Credit Qualifying Streamlines

Investment properties

Texas A6 loans

Loans with HPML or Section 32 are not eligible (Streamline Refinances classified as HPML will be eligible with FULL income documentation)

Mortgage Credit Certificates (MCC's) are not permitted

Funded Buy-downs (Temporary Buy-downs)

Construction to Permanent (CTP) Financing where the original not is modified is not eligible

Non-Arm's Length Transactions

Dual roles on a Transaction are not permitted (An NPF originator cannot have another real estate related position for any loan)

Previously Modified loans (refinances)

Loan Limits

Maximum Loan Amount : $417,000

Purchases and Rate & Term Refinances:

may include principal balance of loan

the onetime up-front guarantee fee

accrued interest

eligible closing costs

lender fees

eligible loan purposes

Streamlined Refinances:

may include principal balance of loan

the onetime upfront guarantee fee

Pilot Refinances:

may include principal balance of loan

the onetime up-front guarantee fee

accrued interest, eligible closing costs

lender fees

eligible loan purposes

Refinance

Properties that were eligible at the time of origination that have since become ineligible are grandfathered in and still eligible for refinance

Refinances must be Guaranteed-to-Guaranteed; the refinance of a Direct loan is not eligible

The refinance of a modified mortgage is not permitted

A Net Tangible Benefit Worksheet must be completed on ALL refinance transactions

*The borrower's new rate must be 100 basis points below the current interest rate

Cash-Out Refinance

Not permitted

Any incidental cash back on the HUD must be applied as a principal reduction

Borrower Eligiblity

All borrowers must have valid and verifiable Social Security Numbers

valid driver's license

state-issued ID or passport

Other forms of taxpayer identification are not allowed

Borrowers must be either U.S. Citizens or be lawful permanent or non-permanent residents of the United States

A non-U.S. citizen, who is lawfully residing in the U.S. as a permanent or a nonpermanent resident alien, is eligible for a mortgage on the same terms as a U.S. citizen

There can be no more than 4 borrowers per loan

Occupancy

Primary residences (1-4 unit properties)

Ineligible Borrowers

Co-Signers/Guarantors

Non-Occupant Co-borrowers

Limited Partnerships, Corporations and LLC's

Non-Revocable Trusts or Guardianships

Foreign Nationals

Borrowers with Diplomatic Immunity

Employees/Principals/Owners NPF Third Party Originators; related parties (family members) are eligible so long as they are not employed, in any capacity, by the submitting broker/correspondent

Individuals on the LPD/GSA exclusionary lists

Eligible Properties

Property must be located in a rural area as defined by the local USDA office:

http://eligibility.sc.egov.usda.gov

Attached/Detached SFRs

Attached/Detached PUDs

Low/Mid/High-Rise Condos and site Condos

Modular Homes (these are not considered to be manufactured and are eligible under the guidelines for 1-unit properties)

Deed Restricted Properties

All deed restricted properties must be reviewed and approved by legal prior to loan approval

Shared Driveways

Shared driveways must have a recorded easement. Private streets must have recorded easements or be maintained by an HOA.

Outbuildings

For a property to be deemed as eligible collateral, it cannot be used as a farm or may not be improved with farm service buildings

The agency considers a farm service building to be any structures used in farming operation, which may include buildings to house workers, livestock, machinery or crops

Service buildings can include, but are not limited to, livestock barns and shelters, machinery and storage buildings, buildings and facilities for crop storage and special purpose buildings such as grain silos

If the property was previously or currently used as a farm, it is deemed ineligible

In addition, whether or not the appraiser has valued any of the above mentioned service buildings, the property is deemed ineligible

Condos

Typically, condominiums are eligible IF the approved lender can document their permanent case file

Also certify to Rural Development that the project is approved by Fannie Mae, Freddie Mac, HUD, or VA

The project only needs to be eligible or approved with one of those four entities in order to be eligible for a Guaranteed loan

Maximum number of Financed Properties

Borrowers typically may not own any additional real estate

Multiple Mortgages to the Same Borrower

Borrowers typically may not own any additional real estate

New Penn Financial will not finance more than one loan to a borrower obtaining an USDA loan

Ineligible Properties

Properties not located in an eligible rural area

Leasehold properties

Multi-unit Properties

Co-ops

Condotels

Non-Warrantable Condos

Manufactured/Mobile homes

Hobby Farms

Bed and Breakfast Properties

Live/Work Units or Mixed Use Properties

Unique properties, including log homes, earthern homes and underground properties

Properties that pose a health or safety hazard

Properties with manufactured on site being used as storage

Properties with shortened future economic life of the property making a long-term mortgage impractical

Properties with excessive acreage (25 acres +); loans secured by properties with >10 acres will require a desk review in addition to the required full appraisal

Properties where farm or agricultural income from the subject property is claimed on borrowers tax returns

Properties encumbered with private transfer fee covenants

Properties which are subject to a right of redemption

Properties appraised with a property condition of C5 or worse

Appraisals

Appraisals are required on Purchases and Rate & Term (Non-Streamlined) Refinances

Appraisal must be ordered by an FHA roster appraiser

All appraisals must be ordered and processed in compliance with Appraiser Independence Requirements (AIR)

Appraisal must be completed by a Certified FHA appraiser from an NPF approved AMC

a copy of the appraiser's license must be included in all funded loan files

Re-use of an appraisal from a previously closed transaction is not permitted

Income

Full income documentation of all adult household members is required

adjusted income must not exceed eligibility limits as determined by the USDA

Four income definitions are used:

* Annual Income- The income of all adult household members

* Adjusted Annual Income- The household's annual income minus certain qualified household deductions

* Qualifying Income- Adjusted annual income compared to established income limits to determine eligibility of the household for the SFHGLP

* Repayment Income- The stable and dependable income used to calculate debt ratios and determine whether the applicant(s) can afford the home

Income Documentation

A fully complete and signed 4506-T for each borrower is required

* Tax return transcripts are required for all adult household members to fully verify total household income

* Tax return transcripts cannot be used in place of the actual tax return documents for qualification

Marital Status and dependent information must be verified from the 4506-T

Income from Unemployed Adult Household Members

If any adult member of the household is not presently employed but there is a recent history of such employment, that person's income must be considered in the calculation of annual household income

If the person involved is not presently employed and does not intend to resume employment in the foreseeable future, or if interest assistance is involved, during the term of the Interest Assistance Agreement, the applicant(s) and the person involved must sign a statement to such

Income from Full-Time Students

Income from Full Time Students is included in the Household Income

* if the student lives or proposes to live in the dwelling at any time during the coming 12 months or the property listed is the student's permanent address

only the first $480 of earnings should be counted in the HHM

Rental Income

Rental Income received for a property owned and retained by the applicant may be acceptable in limited circumstances

Income must be documented


Childcare and Dependent Care Deductions
Child Care Deduction

Private/relative provided care must include evidence of payment

Anticipated care for non-attending children/ unborn child is ineligible

Child support and private tuition paid for kindergarten through minor children up to 12 years of age is ineligible

Preschool "tuition" (prior to Kindergarten) is Eligible

Dependent Deduction

Full time college students (age 18 and up) may provide documentation from school to support address

Unborn children are not household members

Custodial parents (per IRS Publication No. 502) are allowed to claim the child as a household member

Credit

A tri-merge credit report is required

All credit inquiries within 120 days of the credit report are required to be addressed by the customer

A minimum of two credit scores are required for each borrower

At least one applicant whose income or assets are used for qualification must have at least three historical trade line payment references that have existed for at least 12 months to establish a credit reputation and validate the credit score


Liabilities
INSTALLMENT DEBTS WITH LESS THAN 6 PAYMENTS

Accounts with less than 10 payments remaining may be excluded from the DTI at the underwriter's discretion

* if the monthly payment exceeds $100/m, the payment must be included in the ratios

You cannot pay down a debt to fewer than 10 payments to exclude from the DTI

REVOLVING DEBT

Revolving debts are not eligible for omission from the borrower's ratios

Revolving Accounts reported on the credit report with no payment must be included in the DTI by using the greater of 5% of the balance or $10

The verified current statement amount due may also be used

If there is no balance, no payment is required to be included in the DTI

Revolving debt cannot be paid down to qualify, but may be paid off (with proof of funds) and closed prior to CTC

DEFERRED STUDENT LOANS

Even if student loans are shown as deferred, they must be included in the ratios

The greater of 1% of the outstanding loan balance or the verified, fixed payment reflected on the credit report should be used as the payment in the DTI calculation

ITEMS PAID OUTSIDE OF CLOSE (POC) WITH A BORROWER'S CREDIT CARD

If the borrower(s) pay for the application fee/closing costs/appraisal with their credit card and the new charges are not reflected in the credit report balance, these debts must be included in the balance and the payment due must be recalculated

The new payment must be used in calculating the DTI

CONTINGENT LIABILITIES

Obligations that are the ex-spouse's as evidenced by a divorce decree may not be excluded from the ratios based solely on a divorce decree

Twelve months proof the other party is paying is required

 
FICO | LTV

Fixed Rate : 620+

Max DTI : 65%

Mortgage History : Per AUS

Primary & Second home LTV / CLTV : Unlimited / Unlimited

*Investor : 150% / 150%



ARM : 620+

Max DTI : 65%

Primary & Second home LTV / CLTV : 105% \ 105%

Investor : 105% / 105%

Qualifying Ratios

DTI Calculations are based on:

  • Fixed Rate Mortgage = Note Rate
  • 5/1 ARMS = Greater or the Fully Indexed Rate of the Note Rate + 2%
  • 7/1 and 10/1 = Greater of the Fully Indexed Rate or the Note Rate

Ineligible Programs

Interest Only loan programs

Mortgage Credit Certificates (MCC)

Temporary Buydowns

Land trusts in the state of Illinois are not eligible

Leaseholds secured by Indian/Tribal lands

Homestyle/Homepath Renovations

Eligible Terms

10 | 15 | 20 | 25 | 30 YEAR FIXED

5/1 | 7/1 | 10/1 ARM

Maximum Loan Amount

The total of the Unpaid Principal Balance + Closing Costs + Prepaid Items + Points

Eligible Transactions

Rate & Term (Limited Cash-out) Refinance of eligible properties

Cash-back to the borrower may not exceed $250

Refinance

The refinance of a modified mortgage is permitted

all other mortgage history requirements must be met

Continuity of Obligation must be met

A Net Tangible Benefit Worksheet must be completed on all DURP loans

Cash-out Refinance

Not permitted

cash back to the borrower may not exceed $250

Payoff Demands

Payoff demands are required to ensure the current lien is paid in full prior to closing

The expiration date of the payoff demand must be reviewed

A loan may not move to closing if the payoff will expire prior to funding

If the payoff demand contains an expiration date, the underwriter must verify the date is after the funding date

If the payoff demand does not contain an expiration date, the underwriter must verify a per diem amount is listed

The per diem should be applied to the payoff amount to cover proceeds through the funding date

It can be used for an unlimited number of days; unless otherwise specified in the payoff letter



A payoff is considered expired when:

  • * The document instructs the associate to void after a specified date
  • * The interest accrued amount on the statement signals the borrower will be past-due when the new loan funds
    • -The borrower must make a mortgage payment prior to closing to avoid a late payment on the credit
    • -The borrower must provide evidence the payment has been made and the updated payoff demand must reflect that a payment has been made

Subordinate Financing

Resubordination of existing subordinate financing is allowed up to the program maximum

New subordinate financing and payoff of existing subordinate financing with loan proceeds is not allowed

Payoff of existing subordinate liens from the borrower's own funds is allowed, but must be completed prior to the loan being cleared for closing

A copy of the Note for the Subordinate lien is not required

Borrower Eligibility

All borrowers must have valid and verifiable Social Security Numbers

valid driver’s license

state-issued ID or passport

Other forms of taxpayer identification are not allowed

Borrowers must be either U.S. Citizens or be lawful permanent or nonpermanent residents of the United States

A non-U.S. citizen, who is lawfully residing in the U.S. as a permanent or a nonpermanent resident alien, is eligible for a mortgage on the same terms as a U.S. citizen

There can be no more than 4 borrowers per loan

Occupancy

Primary residences (for 1-4 unit properties)

Second home residences (for 1-unit properties)

Non-Owner Occupied/Investment (for 1-4 unit properties)

Maximum # of Financed Properties

Borrowers financing their Primary Residence may have up to 10 properties (financed or free & clear)

Borrowers with greater than 4 financed properties must have a minimum 12 month history of landlord experience (the agencies may require additional experience)

Borrowers financing a second home or investment property may have a maximum of 4 financed properties

* The borrower may not own more than 10 total properties

* When financing a second home or investment property, the primary residence should be considered in the financed property total (if it’s not free and clear)

These limitations apply to the borrower’s ownership in one-to four unit properties or mortgage obligations on such properties and are cumulative for all borrowers

This limitation includes properties financed abroad

These limits may be exceeded, as permitted by the agencies, with a second sign from Underwriting

Multiple Mortgages to the Same Borrower

NPF will finance no more than 4 properties for any one borrower

NPF limits its maximum exposure to one borrower at $1.5M

Maximum of 2 financed units in a single condo project or PUD

Eligible Properties

Attached/Detached SFRs

Attached/Detached PUDs

Low/Mid/High-Rise Condos and site Condos

2-4 Unit Properties

Modular Homes (these are not considered to be manufactured and are eligible under the guidelines for 1-unit properties)

Mixed Use Properties

For mixed use properties, originators may follow FNMA guidelines with the exception that the square footage of commercial part of the property cannot exceed 25% of the total square footage

Deed Restricted Properties

All deed restricted properties must be reviewed and approved by legal prior to loan approval and must adhere to FNMA requirements

Condos

Project reviews are not required, but confirmation that the property is not:

* Condo-Hotel / Motel

* Co-Op Hotel / Motel

A DU Refi Plus HOA Cert must be completed

Ineligible Properties

Co-ops

Condotels

Non-Warrantable Condos

Manufactured/Mobile homes

Bed and Breakfast Properties

Live/Work Units not meeting the standards of a Mixed Use Property

Properties with manufactured on site being used as storage

Properties with excessive acreage (25 acres +)

loans secured by properties with >10 acres will require a desk review in addition to the required full appraisal

Properties where farm or agricultural income from the subject property is claimed on borrowers tax returns

2nd home where the borrower generates any significant rental income from renting subject out – insignificant income ok

Properties / Land held in a life estate

Properties encumbered with private transfer fee covenants

Properties which are subject to a right of redemption (permitted in retail)

Properties appraised with a property condition of C5 or worse

Income

Follow AUS Findings with one exception - VOE’s as standalone documentation are not permitted

Unemployment benefits may only be used as qualifying income for seasonal employees

* otherwise unemployment benefits are not considered qualifying income

A fully complete and signed 4506T for each borrower is required

Verification of Employment

With the exception of instances where the borrower is employed by a relative or participant to our loan transaction, follow agency guidelines

In instances where the borrower is employed by a relative or participant to our loan transaction the following documentation must be obtained:

* Standard Program Guides

* Borrower's signed and completed personal federal income tax returns for the most recent two-year period

* Verbal Verification of Employment

* YTD paystub documenting at least 30 days of income

* W2s for the most recent two years

Current income reported on the pay stub may be used if it is consistent with W2 earnings report on the tax returns

If the tax returns do not include W2 earnings or income is substantially lower than the current pay stub, further investigation is needed to determine whether income is stable

High Priced Mortgage Loans (HPML)

High Priced Mortgage Loans (HPML) will be permitted if the borrower is able to qualify with full income verification and escrows (escrows cannot be waived on HPML)

Additionally, Per FNMA, a 620 FICO and maximum 45% DTI is required if the loan is classified as a HPML

Process to Add or Remove Borrowers

Existing borrowers may be removed from the new loan or new borrowers added

Adding Borrowers

Adding a borrower to a loan at any time during the loan process, unless the loan has received an adverse credit decision, is acceptable

When this occurs a new RESPA package will be sent out and cool off period will be 7 days

File should be submitted back to UW for review of additional borrower’s information

Removing Borrowers

Removing a borrower from a loan is allowed only in the following scenarios:

* No credit decision has been made on the loan and borrower expresses desire to withdraw their name from the application

* Loan has been approved with both borrowers as submitted and one borrower

In both of the above scenarios - Request in writing from borrower should be submitted to NPF supporting their desire to withdrawn their name from the application

Detailed notes should also be placed in the file to eliminate any possible confusion with the file

Removing a borrower from a loan is NOT allowed in the following scenarios:

* Loan is declined by underwriting

- In this scenario the loan would need to be adversed and a new application would need to be taken with only the 1 borrower

Exceptions

Any exceptions to the above rules or scenarios not explained above should be submitted to NPF Compliance for review

 
Purchase

580-619

Max LTV : 96.50%

Max CLTV : 96.50%

Max DTI : 31% / 43%



> 620

Max LTV : 96.50%

Max CLTV : 96.50%

Max DTI : 45% / 55%



Purchase Transactions mortgage basis, lesser of:

"As-is value plus rehabilitation cost" or "purchase price plus rehabilitation cost", OR

110% of after-improved value (100% for condominiums including site-condos

Rate and Term Refinance

580-619

Max LTV : 97.75%

Max CLTV : 97.75%

Max DTI : 31% / 43%



> 620

Max LTV : 97.75%

Max CLTV : 97.75%

Max DTI : 45% / 55%



Refinance Transactions mortgage basis, lesser of:

Existing debt plus rehabilitation cost plus prepaid and closing cost, OR

97.75% of "as-is" value plus rehabilitation costs, OR

110% of after-improved value (100% for condominiums including site-condos)

Maximum LTV for 2-4 unit properties with non-occupying co-borrower is 75% (FHA 4155.1 2.B.3.d). LTV is determined by the base loan amount, excluding any financed mortgage insurance.

FICO Restrictions

680 FICO Score if either:

rehabilitation amount is greater than 40% of loan amount calculated at after improved value

rehabilitation includes additions and utility replacement and/or reconditioning

Eligible Properties

1-4 Unit Properties

PUDs

Condominium (in FHA approved projects) and site-condos

Doublewide Manufactured Housing (Manufactured condos are not acceptable)

Eligible Terms

Fixed Rate: 15, 30 Years

Occupancy

Owner-occupied properties only

Automated Underwriting Systems

DU or LP Approve/Accept

DU or LP Refer eligible, see Manual Underwriting

Manual Underwriting

AUS Refer, determined acceptable by Sun West Mortgage Company, Inc

Ratios must conform to 31%/43%

Reserves

A minimum of three months of PITI reserves for 3-4 unit properties on all transactions

Gift and proceeds from loans are not acceptable source

Subordinate Financing

Not Allowed

Loan Amount Limitations

Non-Streamline 203(K):

Repairs allowed up to 50% of the loan amount

(For repair amount constituting more than 40% of loan amount, max. LTV will be 100% calculated at after improved value.)

Streamline 203(K):

The maximum rehab amount is $35,000 and will include at least:

2 Inspection Fee draws

2 title updates

a 15% contingency reserve

Types of Repairs that are eligible for a 203(K) loan

Non-Streamline 203(K):

Roof replacement

health and safety hazard mitigation

landscaping required to mitigate drainage or erosion issues

aesthetic landscaping when appraiser verifies that the value increases the dollar-for-dollar cost

sidewalk/driveway repair necessary for home access

major repair of termite damage

drywall/insulation replacement

most repairs which require permits

finishing basements

Egress window wells for basements will be admissible

Streamline 203(K):

Cosmetic Repairs such as financing purchase/installation of new appliances

patching holes

replacing doors

painting

lead paint abatement

new counters, cabinets, windows

carpet (subfloor repair requires Non-Streamline 203(K)

repair/installation of HVAC

weatherization

minor repair of termite damage

The property should be inhabitable at the time of loan closing

For Doublewide Manufactured Housing, only non-structural repairs or additions are allowed

Requirement of Home Inspection

A complete home inspection is required for all REO and vacant properties and for properties with repair amounts exceeding $15,000

REO and vacant properties are eligible under streamline 203(K)

* underwriter may advise about requirement of consultant depending on the scope of work

Home inspectors may not be an interested party, including the 203(K) consultant

The Inspector must be approved by The American Society of Home Inspectors (www.ashi.org) or National Association of Home Inspectors, Inc. (www.nahi.org).

203(K) Consultant & Contractors

SWMC must approve the use of all parties involved, including the consultant and contractor as applicable

203(K) Self-Help

Not allowed

Exclusions on a 203(K) loan

Streamline 203(K):

Upfront draws are only available for documented material costs (with receipts or invoices)

If the contractor is bonded, documenting material cost is not required to obtain an upfront material draw

* Draws may not exceed 50% of the total rehabilitation amount

* If no draw is required, contractor must provide certification that no initial draw is necessary and that he/she has available funds to complete the cost of rehabilitation

Sun West currently does not offer FHA 203(K) in the state of TX

Supplemental Origination Fee

1.5% of Rehabilitation Amount or $350, whichever is greater, must be charged.

Additional Forms and Work Exhibits Requirements

Consultant, if applicable:

Specification of Repairs and Work Write-up exhibits must itemize material and labor costs

Consultant's Identity of Interest

Master Draw Request (HUD 9746a)

Contractor

Work Write-up exhibits must itemize material and labor costs

Completed IRS-W9

License, E&O and/or Liability Insurance valid until rehabilitation is completed

Contractor Profile Form

Information for Contractors form

Homeowner and Contractor Agreement

Evidence of Assets or Sufficient Lines of Credit (VOD, Bank Statements, Credit lines etc.) to reasonably cover cost of material for rehabilitation

Draw request time line is taken into consideration

Not required when initial draw is provided on 203(K) streamline, see ‘Exclusion on 203(K) loan’ section above.

Borrower

Borrower Identity of Interest Certification must be signed and dated by borrower(s)

203(K) Borrower Acknowledgement must be signed, dated and completed by borrower(s)

Conference call with borrower to be completed by SWMC

FHA Flips are not acceptable with the 203(K) loan

LandSafe Title is not acceptable as the title company

 
Eligible Transactions

Purchase

Limited Cash Out Refinance

Occupancy

Owner-occupied

Eligible Terms

10, 15, 20 and 30 Years Fixed

Eligible Properties

1 Unit only

  • * Home must be built no earlier than the year 2000
  • * Manufactured Condos are not allowed
  • * Rural Properties are not allowed
  • * Leasehold properties not allowed

Minimum Credit Score and Maximum LTV/CLTV Allowed

Purchase

Min FICO : 620 +

Max LTV / CLTV : 80% / 80%

Limited Cash-Out

Min FICO : 620 +

Max LTV / CLTV : 80% / 80%

Maximum Loan Amount

48 Contiguous States

For 1 Unit = $ 417,000.00

Alaska, Hawaii Virgin Island

For 1 Unit = $ 625,500.00

Subordinate Financing

Not Allowed

AUS only (Manual UW not allowed)

Maximum Front and Back Ratio

Purchase

FICO 625+ = 45 / 45

Limited Cash Out Refinance

FICO 625+ = 45 / 45

Property Flip Waiver

Not Allowed

Max. Number of Properties Financed by borrower

4 (Four) properties.

Max. Number of N/O/O Properties Financed

1 (One) per borrower

If borrower is Self Employed

6 month’s PITI reserves required

Receipt of a minimum two- year self-employed income with business tax returns

Income Decrease of 10%-20%: Use most recent business tax year

Income Decrease beyond 20%: Not acceptable

No mortgage lates in last 24 months on any mortgage

Collection Accounts

Housing-expense related collection accounts within 24 months NOT Allowed

Other collections (including medical) is subject to UW discretion on the file

Third Party Originations

Not allowed

Repair Escrow Holdback (Minor Repairs)

Not Allowed

Property Inspection Waivers

Not Allowed

 
Youngest Borrower Age Eligibility

62 years and above

Minimum Credit Score

Not Applicable

Min. Loan Amount

$20,000.00

Max. Claim Amount

$625,500.00

For HECM Purchase it is the lower of the $625,500, the Appraised Value and the Purchase Price

Occupancy

Owner Occupied Primary Residence

States Allowed

Loans are accepted in all states except IL, UT, VT, MA, NC, and GA

Property Type

1-4 Unit

Condos

Manufactured Homes (Single Wides NOT allowed)

PUDs

Special Interest or pricing for Manufactured Homes and Log Homes may apply

Properties located in Coastal Barrier Resource System are ineligible

Counseling Requirement

HUD Approved HECM Counselor

Eligible Transactions

Purchase

Refinance

HECM Purchase is not allowed in TX

Additional Requirement for Non HECM to HECM Refinance

In case of Non HECM to HECM refinance loans, the following two documents will be required:

  • * A copy of the Final HUD-1 (Settlement Statement) for the existing lien attached to the subject property
  • * If the existing lien attached to the subject property is a Home Equity Line of Credit (HELOC), then a copy of the most recent HELOC statement or its equivalent

The loan will not meet the guidelines outlined if:

  • * The existing lien attached to the subject property is less than 12 months old as verified from the Final HUD-1 (Settlement Statement)
  • * The borrower has received more than $500 cash at closing or through cumulative draws prior to the date of the initial HECM loan application 

In such case, the loan will be declined

Subordinate Financing

NOT Allowed

Acceptable Type of Ownership

Fee Simple

Leasehold (lease for no less than 99 years that is renewable, or under a lease having a remaining term of not less than 50 years beyond the 100th birthday of the youngest borrower)

* If property is leasehold then a letter executed by a licensed attorney confirming that the lease meets all HUD leasehold guideline

Life Estate

Bankruptcy

If the borrower is involved in an active bankruptcy at the time a HECM is being originated, approval from the Trustee must be obtained in order to proceed

Origination Fees

The loan origination fee limit will be the greater of $2,500 or two percent of the maximum claim amount of the mortgage

up to a maximum claim amount (MCA) of $200,000

plus 1% of any portion of the maximum claim amount that is greater than $200,000

The total amount of the loan origination fee may not exceed $6,000

Special Fees

No UW Fee

Only a Doc fee of $115 ($215 for Texas; No Doc fee is charged for California)

Cash Out on Short Pay-Off

Not Allowed

Interest Rate Type

Fixed

Single Disbursement Lump Sum payment options paid at closing

Re-disclosure for Increasing Margins / Interest Rate

Interest Rate Increase is Permissible only if:

The most recent GFE disclosed does not show that the rate is locked

The borrower is sent a re-disclosed TIL showing the change in the APR

Mortgage Insurance Premium (MIP)

 If initial disbursement at closing and during the first 12 month disbursement period is less than or equal to 60%, then initial MIP is 0.50% and annual MIP is 1.25%

If initial disbursement at closing and during the first 12 month disbursement period is greater than 60%, then initial MIP is 2.50% and annual MIP is 1.25%

Initial Disbursement Limit

Greater of sixty percent (60%) of the Principal Limit

or the sum of Mandatory Obligations plus ten percent (10%) of the Principal Limit

Disbursements must not exceed Net Principal Limit or Principal Limit

Non Borrowing Spouse

 HECM loans with non-borrowing spouse must comply with all FHA’s requirements

requirements are:

* The non-borrowing spouse does not have to be 62 years old

-A non-borrowing spouse, who is less than 62 years old, is acceptable to be on the HECM loan provided the borrower meets the HECM eligibility of 62 years of age

* The principal limit will be based on the age of the younger of the borrower and the non-borrowing spouse

-so if the borrower is 62 years old and the non-borrowing spouse is 55 years old, the principal limit will be based on the age of the non-borrowing spouse

* The non-borrowing spouse must attend the HECM Counseling Session along with the borrower and sign and date the HECM Counseling Certificate

* A proof of date of birth of the non-borrowing spouse must be submitted along with the application package

The borrower and the non-borrowing spouse must sign the certifications

Non Borrowing Residents

The correspondent should speak to the Non Borrowing children to discuss the implications of not putting their name on the loan

* The entire conversation should be thoroughly documented

The correspondent should speak to the Non Borrowing Resident to discuss the implications of not putting their name on the loan

* The entire conversation should be thoroughly documented

 Any person, who has quit claimed his/her interest in the subject property in the immediate six months prior to the date of application, must attend the HECM Counseling Session and sign and date the certificate

They also must sign “Notice to Non Borrowing Spouse or Resident” and “Ownership Interest Disclosure”

Property Seasoning requirements

If the borrower purchased the property in less than or equal to 12 months from the *case assignment date*, then we will take the lower of the current appraised value or the original purchase price

if the difference between the Current Appraised value and the Original Sale Price is less than 15%, we can use the current appraised value for the loan transaction and would not consider the Original Sales price

A request for waiving the seasoning overlay may be placed with SWMC management if supporting documentation is submitted

The funds to cover the short fall between the net principal limit and the mortgage payoff must be properly sourced if the Original Sales price is considered

Property Flipping Waiver (Purchases)

90 day flips are not allowed on HECM Purchase Loans as the waiver does not apply to HECM purchases

Only current owners of record may sell properties that will be financed using FHA-Insured Mortgage

Any re-sale of a property may not occur 90 of fewer days from the last sale to be eligible for FHA financing

For re-sales that occur between 91 and 180 days where the new sale price exceeds 100% of the previous sale price, FHA will require additional documentation validating the property value

HECM – HECM Refinance

 HECM to HECM refinance must provide the borrower with a minimum of 5 times the HECM to HECM refinance benefit factor 

* difference between new and existing principal limit should be at least 5 times the sum of closing cost and servicing set asides

Servicing Fee

$0 to $30

 
Youngest Borrower Age Eligibility

62 years and above

Minimum Credit Score

Not Applicable

Min. Loan Amount

$20,000.00

Max. Claim Amount

$625,500.00

For HECM Purchase it is the lower of the $625,500, the Appraised Value and the Purchase Price

Occupancy

Owner Occupied Primary Residence

States Allowed

Loans are accepted in all states except IL, UT, VT, MA, NC, and GA.

Property Type

1-4 Unit

Condos

Manufactured Homes (Single Wides NOT allowed)

PUDs

Special Interest or pricing for Manufactured Homes and Log Homes may apply

Properties located in Coastal Barrier Resource System are ineligible

Counseling Requirement

HUD Approved HECM Counselor

Eligible Transactions

Purchase

Refinance

HECM Purchase is not allowed in TX

Additional Requirement for Non HECM to HECM Refinance

In case of Non HECM to HECM refinance loans, the following two documents will be required:

  • * A copy of the Final HUD-1 (Settlement Statement) for the existing lien attached to the subject property
  • * If the existing lien attached to the subject property is a Home Equity Line of Credit (HELOC), then a copy of the most recent HELOC statement or its equivalent

The loan will not meet the guidelines outlined if:

  • * The existing lien attached to the subject property is less than 12 months old as verified from the Final HUD-1 (Settlement Statement)
  • * The borrower has received more than $500 cash at closing or through cumulative draws prior to the date of the initial HECM loan application 

In such case, the loan will be declined

Subordinate Financing

NOT Allowed

Acceptable Type of Ownership

Fee Simple

Leasehold (lease for no less than 99 years that is renewable, or under a lease having a remaining term of not less than 50 years beyond the 100th birthday of the youngest borrower)

* If property is leasehold then a letter executed by a licensed attorney confirming that the lease meets all HUD leasehold guideline

Life Estate

Bankruptcy

If the borrower is involved in an active bankruptcy at the time a HECM is being originated, approval from the Trustee must be obtained in order to proceed

Origination Fees

The loan origination fee limit will be the greater of $2,500 or two percent of the maximum claim amount of the mortgage

up to a maximum claim amount (MCA) of $200,000

plus 1% of any portion of the maximum claim amount that is greater than $200,000

The total amount of the loan origination fee may not exceed $6,000

Special Fees

No UW Fee

Only a Doc fee of $115 ($215 for Texas; No Doc fee is charged for California)

Cash Out on Short Pay-Off

Not Allowed

Interest Rate Type

Monthly Adjustable (ARM)

Re-disclosure for Increasing Margins / Interest Rate

Not Allowed on loans underwritten by SWMC

Mortgage Insurance Premium (MIP)

 If initial disbursement at closing and during the first 12 month disbursement period is less than or equal to 60%, then initial MIP is 0.50% and annual MIP is 1.25%

If initial disbursement at closing and during the first 12 month disbursement period is greater than 60%, then initial MIP is 2.50% and annual MIP is 1.25%

Initial Disbursement Limit

Greater of sixty percent (60%) of the Principal Limit

or the sum of Mandatory Obligations plus ten percent (10%) of the Principal Limit

Disbursements must not exceed Net Principal Limit or Principal Limit

Non Borrowing Spouse

 HECM loans with non-borrowing spouse must comply with all FHA’s requirements

requirements are:

* The non-borrowing spouse does not have to be 62 years old

-A non-borrowing spouse, who is less than 62 years old, is acceptable to be on the HECM loan provided the borrower meets the HECM eligibility of 62 years of age

* The principal limit will be based on the age of the younger of the borrower and the non-borrowing spouse

-so if the borrower is 62 years old and the non-borrowing spouse is 55 years old, the principal limit will be based on the age of the non-borrowing spouse

* The non-borrowing spouse must attend the HECM Counseling Session along with the borrower and sign and date the HECM Counseling Certificate

* A proof of date of birth of the non-borrowing spouse must be submitted along with the application package

The borrower and the non-borrowing spouse must sign the certifications

Non Borrowing Residents

The correspondent should speak to the Non Borrowing children to discuss the implications of not putting their name on the loan

* The entire conversation should be thoroughly documented

The correspondent should speak to the Non Borrowing Resident to discuss the implications of not putting their name on the loan

* The entire conversation should be thoroughly documented

 Any person, who has quit claimed his/her interest in the subject property in the immediate six months prior to the date of application, must attend the HECM Counseling Session and sign and date the certificate

They also must sign “Notice to Non Borrowing Spouse or Resident” and “Ownership Interest Disclosure”

Property Seasoning requirements

If the borrower purchased the property in less than or equal to 12 months from the *case assignment date*, then we will take the lower of the current appraised value or the original purchase price

if the difference between the Current Appraised value and the Original Sale Price is less than 15%, we can use the current appraised value for the loan transaction and would not consider the Original Sales price

A request for waiving the seasoning overlay may be placed with SWMC management if supporting documentation is submitted

The funds to cover the short fall between the net principal limit and the mortgage payoff must be properly sourced if the Original Sales price is considered

Property Flipping Waiver (Purchases)

90 day flips are not allowed on HECM Purchase Loans as the waiver does not apply to HECM purchases

Only current owners of record may sell properties that will be financed using FHA-Insured Mortgage

Any re-sale of a property may not occur 90 of fewer days from the last sale to be eligible for FHA financing

For re-sales that occur between 91 and 180 days where the new sale price exceeds 100% of the previous sale price, FHA will require additional documentation validating the property value

HECM – HECM Refinance

 HECM to HECM refinance must provide the borrower with a minimum of 5 times the HECM to HECM refinance benefit factor 

* difference between new and existing principal limit should be at least 5 times the sum of closing cost and servicing set asides

Servicing Fee

$5 to $35

 
Minimum Credit Score

660+

Eligible Transactions

Purchase

Limited Cash-Out Refinance (LCOR)

Geographic restriction: Not allowed in Texas

No cash back to the borrower is allowed

Occupancy

1-4 unit primary residences

1 unit second homes or investor properties

Eligible Terms

15- and 30-year Fixed Rate

5/1 and 7/1 ARM 30 years

Eligible Properties

May be a unit in an eligible PUD or condo

* When the security property is a unit in a condo or PUD, the work must be permissible under the bylaws of the homeowners’ association

* One for which the homeowners’ association has given written approval for the renovation work

* The renovation work for a condo or PUD unit must be limited to the interior of the unit, including the installation of fire walls in the attic

Manufactured homes are not permitted

Maximum LTV/CLTV Allowed

The LTV ratio calculation differs based on the applicable transaction type:

* For a purchase money transaction, the LTV ratio is determined by dividing the original loan amount by the lesser of the “as completed” appraised value of the property

* For a refinance transaction, the LTV ratio is determined by dividing the original loan amount by the “as completed” appraised value of the property

Maximum ratios are as follows:
Principal Residence

1 Unit = 95% / 95% Fixed Rate | 90% / 90% ARM

2 Unit = 85% / 85% Fixed Rate | 75% / 75% ARM

3 and 4 Unit = 75% / 75% Fixed Rate | 65% / 65% ARM

Second Home

1 Unit = 90% / 90% Fixed Rate | 80% / 80% ARM

Investment

1 Unit (Purchase) = 85% / 85% Fixed Rate | 75% / 75% ARM

1 Unit (Limited Cash-Out Refi) = 75% / 75% Fixed Rate | 65% / 65% ARM

Maximum - Loan Amount
48 Contiguous States

1 Unit = $ 417,000.00

2 Unit = $ 533,850.00

3 Unit = $ 645,300.00

4 Unit = $ 801,950.00

Alaska and Hawaii

1 Unit = $ 625,500.00

2 Unit = $ 800,775.00

3 Unit = $ 967,950.00

4 Unit = $ 1,202,925.00

Approval

DU Only (Manual Underwriting Not Allowed)

Maximum Number of properties financed by borrower

4 (four) for second home and investment property

Subordinate Financing

Not Allowed

Bankruptcy, Foreclosures & significant derogatory credit events

As per DU

Collection Accounts

As per DU

Mortgage Lates

As per DU

Appraiser's Condition and Quality of Construction

The appraisal report for a HomeStyle Renovation Mortgage must provide an “as completed” appraised value that estimates the value of the property after completion of the renovation work

The plans and specifications (noted below) must be used by the appraiser in the development of his or her opinion of the “as completed” value of the property

The cost of renovations is limited to 50% of the “as completed” appraised value of the property

When a HomeStyle Renovation mortgage is used to finance energy-related improvements, a Home Energy Rating Systems (HERS) energy rater must prepare a written energy report

Renovations

There are no required improvements or a minimum dollar amount for the repairs

Repairs or improvements must be permanently affixed to the real property and add value to the property

Any major rehabilitation’s or repairs which include any structural repairs, foundation repair or addition to home is not allowed under this program

Renovation work must be completed no later than 12 months from date the mortgage loan is delivered

Self help is not allowed

Renovation-related costs that may be considered as part of the total renovation costs include:

property inspection fees

costs and fees for the title update

architectural and engineering fees

independent consultant fees

costs for required permits

Other documented charges, such as fees for energy reports, appraisals, review of renovation plans, and fees charged for processing renovation draws

An amount for sweat equity may not be factored into the renovation costs

Contractor’s Requirements

All renovation work must be performed by a licensed contractor of the borrowers choosing

The lender may not choose the contractor or refer the borrower to any one specific contractor

The lender may require the borrower to obtain a completed Contractor Profile Report (Form 1202) from the contractor that he or she has selected

The reimbursement is limited to the cost of materials or the cost of properly documented contract labor (sweat equity may not be reimbursed)

Plans and Specifications

The plans and specifications must be prepared by a registered, licensed, or certified general contractor, renovation consultant, or architect

The plans and specifications should fully describe all of the work to be done and provide an indication of when various jobs or stages of completion will be scheduled

The plans and specifications of the repairs should be used to evaluate the quantity, quality, and cost of the renovation work that is to be done and to determine the amount of financing that will be available

Before approving any change a borrower wants to make to the original plans and specifications, borrowers need to submit a HomeStyle Change Order Request (Form 1200)

Underwriting

Fannie Mae underwriting guidelines should be followed

DU Approve/Eligible recommendations only and guidelines to be followed per DU

When the HomeStyle Renovation mortgage is used to finance energy-related improvements, borrowers are required:

* to obtain an energy report to identify recommended energy improvements to the property

- and the estimated cost savings associated with those improvements

HomeStyle Renovation Maximum Mortgage Worksheet (Form 1035), should be used for calculating the maximum loan amount

The cost of renovations is limited to 50% of the “as completed” appraised value of the property

To ensure that the borrower understands all of the terms of a HomeStyle Renovation mortgage, HomeStyle Renovation Consumer Tips (Form 1204) should be signed by borrower

* as a checklist for the key facts that need to be disclosed to the borrower

* the borrower’s signature will serve as an acknowledgement of his or her understanding of these facts

When a loan is secured by a second home or an investment property, Fannie Mae limits the number of residential properties the borrower may currently be financing to four properties, including his or her principal residence

Joint ownership in residential real estate is considered the same as total ownership of an individual property

The four-property limit applies to any combination of ownership in one- to four-unit properties

 
Minimum Credit Score

740

Eligible Transactions

Purchase

Limited Cash Out Refinance

Cash-Out Refinance

* Only if within 6 months of purchase and all delayed financing exception requirements are met

Excludes DU Refi Plus and Refi Plus Mortgage

Occupancy

Second Home (only 1 Unit)

Investment Property ( 1-4 Units)

If subject property is owner occupied then it will follow guideline of conventional fixed loan program

Eligible Terms

10, 15, 20 and 30 Years Fixed

Eligible Properties

1-4 Units

Condominiums

PUDs

Max LTV / CLTV
Purchase and Limited Cash-Out Refinance

1 Unit = 70% / 70%

2-4 Unit = 65% / 65%

Cash-Out Refinance

1 Unit = 65% / 65%

2-4 Unit = 60% / 60%

Max Loan Amount
48 Contiguous States

1 Unit = $ 417,000.00

2 Unit = $ 533,850.00

3 Unit = $ 645,000.00

4 Unit = $ 801,000.00

Alaska and Hawaii

1 Unit = $ 625,000.00

2 Unit = $ 800,775.00

3 Unit = $ 967,950.00

4 Unit = $ 1,202,925.00

Subordinate Financing

Not Allowed

Approval

DU only (Manual UW not allowed)

Max. Number of Properties Financed by borrower

10 (including borrower's principal residence)

If borrower is Self Employed:

6 months PITI reserves required

Maximum LTV/CLTV: lesser of 80% or as per matrix above

Receipt of a minimum two- year self-employed income with business tax returns

Income Decrease of 10%-20%: Use most recent business tax year

Income Decrease beyond 20%: Not acceptable

Bankruptcy or Foreclosures

None in the past 7 years

Mortgage Lates

None in the last 12 months

Collection Accounts

Housing-expense related Collection accounts within 24 months NOT Allowed

Other Collections (including Medical) is subject to UW discretion on the file

PITI Reserves

As per DU for loan case files submitted to DU plus

Additional 6 months reserves for each second home or investment property

Rental Income

Proposed rental Income from subject property may only be used if borrower has history of managing properties for past 2 years evidenced by most recent 2 years tax returns

Rental income may only be considered in qualifying income when a borrower documents two years receipt of rental income as documented by the borrower's U.S. Tax Returns

Tax Returns

A completed and signed IRS Form 4506-T is required for every borrower on the loan application

Tax transcripts validated from the IRS are required prior to closing for each year documented in the loan file

Properties considered in the to five to ten limitation
Subject to limitation:

Joint ownership of residential real estate

Financing/mortgage held in the name of the borrower but property held in the name of another person and/or corporation

Joint or total ownership of a property held in the name of a limited liability corporation or partnership

Ownership of a manufactured home and the land on which it s situated that is titled as real property

Not subject to limitation:

Ownership of commercial real estate, including multifamily properties consisting of more than 4 dwelling units

Ownership of a timeshare

Ownership of a vacant lot

 
Minimum Credit Score

740

Eligible Transactions

Purchase

Limited Cash Out Refinance

Occupancy

Second Home (only 1 Unit)

Investment Home (1-2 units)

If subject property is owner occupied then it will follow guideline of conventional High balance Conforming loan program

Eligible Terms

15 and 30 Years Fixed

Eligible Properties

1-2 Units

Condominiums

PUDs

Minimum Loan Amount

48 Contiguous States

1 Unit = $ 417,000.00

2 Unit = $ 533,851.00

Alaska and Hawaii

1 Unit = $ 625,501.00

2 Unit = $ 800,776.00

Subordinate Financing

Not Allowed

Approval

DU only (Manual UW not allowed)

Maximum Debt to Income Ratios

43.00%/43.00%

Max. Number of Properties Financed by borrower

10 (including borrower's principal residence)

If borrower is SELF EMPLOYED :

6 months PITI reserves required

Maximum LTV/CLTV: lesser of 80% or as per matrix above

Receipt of a minimum two- year self-employed income with business tax returns

Income Decrease of 10%-20%: Use most recent business tax year

Income Decrease beyond 20%: Not acceptable

Bankruptcy or Foreclosures

None in the past 7 years

Mortgage Lates

None in the last 12 months

Collection Accounts

Housing-expense related Collection accounts within 24 months NOT Allowed

Other Collections (including Medical) is subject to UW discretion on the file

PITI Reserves

As per DU for loan case files submitted to DU plus

Additional 6 months reserves for each second home or investment property
Third Party Originations

Not Allowed

Rental Income

Proposed rental Income from subject property may only be used if borrower has history of managing properties for past 2 years evidenced by most recent 2 years tax returns

Rental income may only be considered in qualifying income when a borrower documents two years receipt of rental income as documented by the borrower's U.S. Tax Returns

Tax Returns

A completed and signed IRS Form 4506-T is required for every borrower on the loan application

Tax transcripts validated from the IRS are required prior to closing for each year documented in the loan file

Properties considered in the to five to ten limitation

Subject to limitation:

Joint ownership of residential real estate

Financing/mortgage held in the name of the borrower but property held in the name of another person and/or corporation

Joint or total ownership of a property held in the name of a limited liability corporation or partnership

Ownership of a manufactured home and the land on which it s situated that is titled as real property

Not subject to limitation:

Ownership of commercial real estate, including multifamily properties consisting of more than 4 dwelling units

Ownership of a timeshare

Ownership of a vacant lot