203 - LP Open Access Lending Guide
LP Open Access Product Summary 01/07/2015 Equal Housing Lender. © 2015 Homeward Residential, Inc 1525 S. Beltline Road | Coppell, TX 75019. (877) 937-4887. Homeward Residential NMLS # 3984, applicable for all states EXCEPT MA & VA. The trademarks HomewardSM, Homeward ResidentialSM and the Homeward logos are trademarks of Homeward Residential, Inc. Trade/service marks are the property of Homeward Residential. Some products may not be available in all states. Information, rates and pricing are subject to change without prior notice at the sole discretion of Homeward Residential, Inc. All loan programs subject to borrowers meeting appropriate underwriting conditions. Advertisement for Mortgage Professionals Only. This is not a commitment to lend. Other restrictions apply. All rights reserved. LP Open Access Summary 203 - Table of Contents 203 - LP OPEN ACCESS ............................................................................................ 203-3 PRODUCT DESCRIPTION AND PRODUCT CODES ..................................................................... 203-3 Product Description .................................................................................................. 203-3 FRM Product Codes .................................................................................................. 203-3 ARM Product Codes .................................................................................................. 203-4 LOAN DETAILS ............................................................................................................ 203-5 Summary ............................................................................................................... 203-5 Overview................................................................................................................ 203-5 Same Servicer......................................................................................................... 203-5 FHLMC LookUp ........................................................................................................ 203-5 FRM Features .......................................................................................................... 203-6 ARM Features .......................................................................................................... 203-7 ARM Features, (Con’t) .............................................................................................. 203-8 Temporary Buydown ................................................................................................ 203-8 Escrow / Impound Waiver ......................................................................................... 203-9 Loan Limits ........................................................................................................... 203-10 Occupancy............................................................................................................ 203-10 Property Types ...................................................................................................... 203-11 Condo Properties ................................................................................................... 203-12 Closing Documentation ........................................................................................... 203-12 GENERAL UNDERWRITING GUIDELINES ............................................................................ 203-13 Overview.............................................................................................................. 203-13 Acceptable AUS Decisions ....................................................................................... 203-13 LP Data Entry........................................................................................................ 203-13 Documentation Requirements .................................................................................. 203-13 Credit .................................................................................................................. 203-14 Credit Inquiries ..................................................................................................... 203-14 Bankruptcy / Foreclosure ........................................................................................ 203-14 Modified & Restructured Loans ................................................................................. 203-15 Borrower Eligibility ................................................................................................. 203-15 Customer Loans .................................................................................................... 203-15 Ineligible Scenarios ................................................................................................ 203-15 All Income ............................................................................................................ 203-16 Base Pay .............................................................................................................. 203-16 Commission Income ............................................................................................... 203-17 Self-Employment ................................................................................................... 203-17 Military Income ..................................................................................................... 203-17 Alimony or Child Support ........................................................................................ 203-17 Employment-Related Assets as Qualifying Income ....................................................... 203-17 Rental Income ....................................................................................................... 203-18 Retirement, Disability, Assistance Income .................................................................. 203-18 Temporary Leave Income ........................................................................................ 203-18 Military Income ..................................................................................................... 203-18 Mortgage Differential Income ................................................................................... 203-18 Note Receivable Income.......................................................................................... 203-19 Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-1 LP Open Access Summary Dividends, Interest, Capital Gain Income ................................................................... 203-19 Trust Income ........................................................................................................ 203-19 Housing or Parsonage Allowance .............................................................................. 203-19 Tax Exempt Income ............................................................................................... 203-19 Mortgage Credit Certification (MCC) .......................................................................... 203-19 Unemployment Income ........................................................................................... 203-20 All Other Income ................................................................................................... 203-20 Projected Income................................................................................................... 203-20 IRS Form 4506-T ................................................................................................... 203-20 Housing History ..................................................................................................... 203-20 Reserves .............................................................................................................. 203-20 Assets.................................................................................................................. 203-21 LP Home Value Explorer (HVE) ................................................................................. 203-22 Full Appraisal Requirements..................................................................................... 203-23 Transferred Appraisals ............................................................................................ 203-23 Manufactured Homes Defined .................................................................................. 203-23 Manufactured Home Property Characteristics .............................................................. 203-24 Manufactured Home Property Requirements ............................................................... 203-25 Manufactured Home Appraisal Requirements .............................................................. 203-26 Manufactured Home Security Instrument, Title Insurance and Other Legal Requirements ... 203-27 FEMA Declared Disaster Areas .................................................................................. 203-27 Validation Requirements ......................................................................................... 203-28 Escrow Holdbacks .................................................................................................. 203-28 Interest Only Option............................................................................................... 203-28 Mortgage Insurance ............................................................................................... 203-29 Multiple Properties ................................................................................................. 203-30 Non-Occupant Co-Borrowers .................................................................................... 203-30 Non-Traditional Credit History .................................................................................. 203-30 Qualifying Ratios ................................................................................................... 203-30 Refinance Requirements ......................................................................................... 203-31 LP Open Access: Maximum Loan Amount Worksheet ................................................... 203-32 Net Tangible Benefit ............................................................................................... 203-33 Listed for Sale ....................................................................................................... 203-33 Subordinate Financing ............................................................................................ 203-34 Interest Credit....................................................................................................... 203-34 RESTRICTIONS .......................................................................................................... 203-35 State Restrictions .................................................................................................. 203-35 LP OPEN ACCESS....................................................................................................... 203-36 Loan Parameters – FHLMC LP Open Access ................................................................. 203-36 LP Open Access Product Summary 203-2 Homeward Residential Client Select REV 01/07/2015 LP Open Access Summary 203 - LP Open Access Product Description and Product Codes Product Description Presentation FRM Product Codes The following Product Code Matrix outlines the applicable product codes for the LP Open Access Fixed Rate Mortgage products. To minimize repetition, general guidelines and requirements that affect all LP Open Access are presented first, and then product-specific requirements are presented as a sub-section of this Product Guideline. Each sub-section has a loan parameter matrix for easy reference. For credit parameters not referenced, refer to Homeward Residential Lending Guide. Acceptable Loan Terms: Unless otherwise noted in the Product Code Matrix, acceptable loan terms are included in the actual product code. Product Name FRM LP Open Access Standard Loan Amounts FRM Product Code Product Feature Options F1517BEF: 10 - 15 Year Increments Interest Only Option F2017BEF: 16 - 20 Year Increments Term: Not Available F3017BEF: 21 - 30 Year Increments FRM LP Open Access Super Conforming ü F1518BEF: 10 - 15 Year Increments F3018BEF: 16 - 30 Year Increments Product feature options are available only to the terms/conditions outlined in the applicable sections of this product summary. Continued on next page Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-3 LP Open Access Summary Product Description and Product Codes, ARM Product Codes Continued The following Product Code Matrix outlines the applicable product codes for the LP Open Access Adjustable Rate Mortgage products. Product Name ARM LP Open Access Standard Loan Amounts ARM Product Code Product Feature Options A5117BEF: 5/1 LIBOR Interest Only Option A7117BEF: 7/1 LIBOR Term: Not Available A10117BEF: 10/1 LIBOR ARM LP Open Access Super Conforming A5118BEF: 5/1 LIBOR SUPER CONFORMING A7118BEF: 7/1 LIBOR SUPER CONFORMING A10118BEF: 10/1 LIBOR SUPER CONFORMING ü ü Product feature options are available only to the terms/conditions outlined in the applicable sections of this product summary. MANUFACTURED HOME: 5/1 ARM terms are not permitted; only 7/1 & 10/1 adjustable rates are permitted. LP Open Access Product Summary 203-4 Homeward Residential Client Select REV 01/07/2015 LP Open Access Summary Loan Details Summary LP Open Access is a limited cash-out refinance program that allows for expanded eligibility criteria, as well as reduced documentation requirements. IMPORTANT: Application date must be dated on or before December 31, 2015 and must be funded by Homeward no later than June 30, 2016. Overview Unless otherwise noted in a specific sub-section, the loan details noted below apply to all LP Open Access loans. Review the entire product summary for full details regarding loan parameters. Same Servicer In regards to same-servicer references, Homeward Residential is a wholly owned subsidiary of Ocwen Financial and its affiliate, Ocwen Loan Servicing, LLC is the servicing platform Homeward Residential utilizes when purchasing loans. FHLMC LookUp Freddie Mac has an online tool for borrowers to determine if Freddie Mac is the investor on their loan and therefore possibly eligible for the LP Open Access program: · https://ww3.freddiemac.com/corporate/ Continued on next page Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-5 LP Open Access Summary Loan Details, FRM Features Continued The Conventional FRM Features detailed below provide definitions and other important loan details: Features Comments Interest Only Feature Not Permitted Conversion Option None Prepayment Penalty Not Permitted Assumable Not Assumable Negative Amortization None Continued on next page LP Open Access Product Summary 203-6 Homeward Residential Client Select REV 01/07/2015 LP Open Access Summary Loan Details, ARM Features Continued The LP Open Access ARM Features detailed below provide definitions and other important loan details: Features Comments Interest Only Feature Not Available. Index LIBOR defined as London interbank offered rate for twelve month United States dollar-denominated deposits, as published in the Wall Street Journal. NOTE: The rate is equal to the note margin plus the index rounded to the nearest .125%. Conversion Option None Prepayment Penalty Not Permitted Assumable 5/1, 7/1 & 10/1: Permitted after the initial fixed period, subject to qualifications. Negative Amortization None Caps 5/1: 2/2/5 7/1 & 10/1: 5/2/5 Rate Adjustments 5/1: The initial note rate is in effect for the initial 60 months. The initial rate adjustment is limited to 2% and subsequent rate adjustment to 2% with a lifetime cap of 5%. 7/1: The initial note rate is in effect for the initial 84 months. The initial rate adjustment is limited to 5% and subsequent rate adjustment to 2% with a lifetime cap of 5%. 10/1: The initial note rate is in effect for the initial 120 months. The initial rate adjustment is limited to 5% and subsequent rate adjustment to 2% with a lifetime cap of 5%. Continued on next page Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-7 LP Open Access Summary Loan Details, Continued ARM Features, (Con’t) Features Comments Floor The floor rate is never lower than the margin. Margin 2.250% Note Rate ü ü ARM Plans 5/1 - Greater of Note rate + 2.00% OR the Fully Indexed Rate 7/1, 10/1: Greater of Note Rate OR the Fully Indexed Rate 5/1: 2725 7/1: 2727 10/1: 2729 Temporary Buydown Not Permitted. Continued on next page LP Open Access Product Summary 203-8 Homeward Residential Client Select REV 01/07/2015 LP Open Access Summary Loan Details, Escrow / Impound Waiver Continued Escrow waiver permitted on loans with LTVs less than or equal to 80% (90% for California loans). ü If LTV is greater than 80% (90% for California), escrows may be waived on the new loan provided they were waived on the loan being paid in full, regardless of the LTV/CLTV. NOTE: If Mortgage Insurance is required on the new loan and is “monthly” or “annual” borrower paid, an escrow account for the MI portion must be established. ü Partial Escrow Accounts permitted under the following circumstances: · Hazard & Wind Insurance(s) may be waived with taxes still escrowed. a. If HO-6 insurance is required, then it must be escrowed regardless of partial escrow request. · NOTE: If the loan requires flood insurance, then partial escrow waivers are not permitted; either a full escrow account or a full escrow wavier is required. ü ü NOTE: In California, loans with LTVs between 80.01% - 90.00%, the borrower may elect to waive escrows for Taxes and Insurance (subject to the above requirements), but MUST escrow any Mortgage Insurance premiums that are “monthly” or “annual” borrower paid. Continued on next page Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-9 LP Open Access Summary Loan Details, Continued Loan Limits Property Type General Permanent High Balance Continental U.S. Alaska & Hawaii Continental U.S. Alaska & Hawaii 1 Unit $417,000 $625,500 $625,500 $938,250 2 Units $533,850 $800,775 $800,775 $1,000,0001 3 Units $645,300 $967,950 $967,950 $1,000,0001 4 Units $801,950 $1,000,0001 $1,000,0001 N/A1 NOTE: ü Loan amounts may not exceed the applicable maximum loan limits for the specific area in which the property is located. Maximum loan amounts are limited by MSA/County. The loan limits by county can be located in the Federal Housing Finance Agency website at http://www.fhfa.gov/DataTools/Downloads/Documents/Conforming-LoanLimits/Counties_with_increases_cy2015.pdf Freddie Mac’s website at 1 OR http://www.freddiemac.com/singlefamily/mortgages/super_conforming.html Freddie Mac limits LP Open Access loans amounts to a maximum of $1,000,000. Occupancy Unless otherwise specifically restricted or not permitted by the applicable loan parameters, the following property types are acceptable: ü Primary Residence 1-4 units ü Second Home ü Investment 1-4 units Continued on next page LP Open Access Product Summary 203-10 Homeward Residential Client Select REV 01/07/2015 LP Open Access Summary Loan Details, Property Types Continued Eligible Property Types Unless otherwise specifically restricted or not permitted by the applicable loan parameters, the following property types are acceptable in accordance to applicable agency guidelines: ü ü ü ü ü ü ü ü ü 1-4 units Properties, Attached and Detached Eligible Condominiums Modular Homes/Factory Built (SFR, 1-unit only) 1 Unit PUDs Rural Properties Land Contracts for Sale Mixed Use Properties Leasehold properties Manufactured Homes (multi-width properties only; FRM and 7/1 & 10/1 ARMs only) Ineligible Property Types The following property types are not acceptable: ü Model Home Leaseback properties ü Properties located outside the United States ü Condotels ü Raw Land ü Subsidized Condos also known as Limited Equity Condos ü Cooperative Share Properties (Co-Op) ü Properties with ANY resale restrictions (excluding age restricted). NOTE: For other property types not listed above, refer to the Lending Guide for eligibility requirements. Continued on next page Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-11 LP Open Access Summary Loan Details, Continued Condo Properties ü No new project review is required. Underwriter is not required to confirm project meet’s typical agency requirements (i.e., no consideration given to size of unit, shared facilities, common elements, etc). ü Only required to certify property is not a condominium hotel or motel, houseboat project, timeshare or segmented ownership project. ü Must confirm hazard insurance, HO-6 insurance, flood insurance, liability insurance and fidelity insurance (when applicable to each insurance type) coverage as required within the Conventional Lending Guide. ü Executed Condo/PUD Warranty form (as published on our website) must be completed and included in the loan file. Closing Documentation All fixed Rate Mortgages sold to Homeward Residential must use the most current Fannie Mae uniform instruments for the fixed rate Note and for the Security Instrument. The respective ARM terms must use the following current Fannie Mae uniform instruments for the adjustable rate Note and Rider: Term Note Rider 5/1, 7/1, 10/1 FNMA 3528 or FHLMC 5531 FNMA 3187 or FHMLC 5131 LP Open Access Product Summary 203-12 Homeward Residential Client Select REV 01/07/2015 LP Open Access Summary General Underwriting Guidelines Overview The LP Open Access loans require initial submission through Freddie Mac LP; the agency underwriting guidelines of Freddie Mac must be met, unless otherwise indicated. NOTE: Manually Underwritten files are not permitted. Acceptable AUS Decisions Homeward Residential will accept Conforming loans only with the following credit recommendations. AUS Decision Required Eligible Freddie Mac Accept Yes Caution No NOTES: 1 LP Caution recommendations may NOT be turned into a manual underwrite under the LP Open Access; A minus products are not offered or permitted by Homeward Residential. LP Data Entry ü ü ü Documentation Requirements User must select the Open Access Offering ID 310 in Loan Prospector when submitting the mortgage as a LP Open Access. The LP Feedback must NOT indicate that his loan is ineligible for Relief Refi-Open Access for any reason. The FINAL LP must indicate all of the above. Required file documentation determined by the applicable LP findings unless otherwise specified within the LP Assisted Loan section. Continued on next page Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-13 LP Open Access Summary General Underwriting Guidelines, Continued Credit ü Credit Inquiries Homeward requires the following for all inquiries dated within 120 days of the credit report date: Bankruptcy / Foreclosure Minimum 12 month mortgage history and 0x30 lates reported in the most recent 12 months; applies to all mortgages listed on the borrower’s credit report, regardless of LP. · 0x30 not applicable for loans being refinanced that are currently serviced by Ocwen Loan Servicing, LLC; Borrower(s) must only meet LP’s mortgage delinquency policy. ü If there are no usable credit scores due to insufficient information or inaccurate information, the loan is ineligible. ü Refer to product matrix for specific credit score requirements. IMPORTANT: Minimum requirements are the MORE restrictive of the above OR as required by LP recommendations. ü LP Loans – Homeward must determine whether additional credit was granted. A letter from the creditor or, if such a letter is unobtainable, a signed statement from the Borrower may be used to determine whether additional credit was obtained. If additional credit was granted, the Homeward must obtain verification of the debt and must consider the debt when qualifying the Borrower. ü A borrower’s credit reputation, including bankruptcy and foreclosure, is acceptable with an Accept risk class delivered by Loan Prospector (LP). If the bankruptcy is discharged, it does not matter if the mortgage being refinanced was included in the Bankruptcy provided the borrower continued to make the monthly mortgage payments on time. ü Continued on next page LP Open Access Product Summary 203-14 Homeward Residential Client Select REV 01/07/2015 LP Open Access Summary General Underwriting Guidelines, Continued Modified & Restructured Loans If the mortgage being refinanced was considered for and/or received a Freddie Mac modification (Home Affordable Modification Program (HAMP) or non-HAMP), the mortgage eligible to be refinanced as a Relief Refinance Mortgage-Open Access. The current contractually-obligated payment terms under the Note, including the most recent modification of the Note, if any, must be used for the purpose of determining whether the Relief Refinance Mortgage-Open Access meets the Borrower benefit requirements stated herein. Borrower Eligibility For the majority of scenarios, the Borrowers on the existing mortgage should match the borrowers on the new mortgage; however, the below circumstances are permitted: ü A new borrower may be added to the new loan, provided the existing borrower(s) are also in title. ü A borrower may be removed from the new loan providing all of the following: · Permits the removal of borrowers for any reason, does not need to solely be due to a death or divorce. · At least one of the original borrower(s) remains on the new loan. Any person who has ownership interest in the subject property must sign the security instrument (or any other document required to perfect the lien position or satisfy any state regulation), regardless if the person applied for the loan. ü Maximum of 4 borrowers per transaction. Customer Loans Homeward Residential Client Select affiliated Mortgage Brokers, owners of mortgage firms, employees of affiliated mortgage brokers and/or mortgage firms are not permitted. Ineligible Scenarios Refinances of mortgages with Note Dates on or after June 1, 2009. Continued on next page Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-15 LP Open Access Summary General Underwriting Guidelines, All Income Continued Acceptable Verbal verification of employment in addition to the specific income documentation detailed within this summary. IMPORTANT: The below income documentation requirements detailed within this product summary are to be used and supersede LP Findings in the following cases: · For any income type NOT specifically addressed below, documentation as required within the Conventional Lending Guide must be included in the loan file. Base Pay Base Pay (salary or hourly) requires One Acceptable YTD Paystub documenting 30 days of income, dated no earlier than 30 days prior to the initial loan application date and no more than 90 days old on the date the Note is signed. ü Paystub must clearly identify the borrower as the employee, with all necessary information to calculate income, including gross YTD earnings, base salary with pay period specified, and must clearly specify the employer’s name. NOTE: · Applies to primary employment, secondary employment (second job and multiple jobs), bonus, overtime, tip, automobile allowance and seasonal income. · Bonus and/or overtime income must be annualized for qualifying purposes. ü Continued on next page LP Open Access Product Summary 203-16 Homeward Residential Client Select REV 01/07/2015 LP Open Access Summary General Underwriting Guidelines, Commission Income ü ü SelfEmployment ü ü Military Income ü ü Alimony or Child Support ü ü EmploymentRelated Assets as Qualifying Income Continued A YTD paystub documenting at least 30 days of income, dated no earlier than 30 days prior to the initial loan application date and no more than 90 days old on the date the note is signed is required. Paystub must clearly identify the borrower as the employee, with all necessary information to calculate income, including gross YTD earnings, base salary with pay period specified, and must clearly specify the employer’s name; OR Copies of the most recent one year filed personal income tax returns signed by the borrower (s). Copies of the most recent one year filed Personal income tax returns sign by the borrower (s). Verification of existence of the business through a third party source no more than 30 calendar days prior to the Note Date. Year to date Leave and Earnings Statement (LES) or written VOE documenting at least 30 days of income. In lieu of a Verbal verification of employment (as required above), a year to date LES dated no more than 30 days prior to the name date may be obtained. Copy of the divorce decree or property settlement agreement, court order or equivalent documentation. One month documentation of receipt. (i.e. bank statement showing direct deposit, deposit ticket, etc.). Standard documentation as described within the Conventional Lending Guide. Continued on next page Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-17 LP Open Access Summary General Underwriting Guidelines, Continued Rental Income Acceptable Lease OR one year personal tax return (Form 1007 is not required). Applies to rental income from subject or other properties owned by the borrower. Retirement, Disability, Assistance Income ü ü Temporary Leave Income ü ü ü ü Military Income ü ü Mortgage Differential Income A copy of the award letter, 1099 or other third-party documentation showing income type, source, amount; or Most recent one-month bank statement or other equivalent documentation evidencing receipt of the income. Documentation includes retirement, survivor/dependent benefits, long term disability, social security, supplemental security, Section 8, public assistance and foster care income. A paystub or written VOE documenting pre-leave income. The borrower’s written confirmation of his or her intent to return to work, No evidence or information from the borrower’s employer indicating that the borrower does not have the right to return to work after the leave period is required. Regardless of the date of return, the amount of the “regular employment income” the borrower received prior to the temporary leave must be used to qualify. YTD Leave and Earnings Statement (LES) or written VOE documenting at least 30 days of income. Note in lieu of a Verbal verification of employment, a YTD LES dated no more than 30 days prior to the name date may be obtained. Provide a copy of the agreement from the employer stating the amount of the payments. Continued on next page LP Open Access Product Summary 203-18 Homeward Residential Client Select REV 01/07/2015 LP Open Access Summary General Underwriting Guidelines, Continued Note Receivable Income Copy of the note and most recent one month bank statement or other equivalent documentation evidencing receipt of the income. Dividends, Interest, Capital Gain Income ü ü ü Copy of complete individual federal income tax returns for the most recent one-year period; Evidence of sufficient assets to support the qualifying income for dividend/interest income and capital gains. Documentation includes dividends, interest, capital gain and royalty payments/income. Trust Income Copy of the Trust Agreement. Housing or Parsonage Allowance ü ü A written VOE, a letter from the employer or paystubs reflecting the amount of the housing or parsonage allowance and the terms under which it is paid; OR Evidence of one month receipt of the housing allowance. Tax Exempt Income The most recent complete individual federal tax returns or other documentation evidencing that the income, or a portion of the income, is nontaxable. Only the nontaxable portion of income may be grossed up. Mortgage Credit Certification (MCC) Copy of the certificate. Continued on next page Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-19 LP Open Access Summary General Underwriting Guidelines, Unemployment Income Continued ü Unemployment benefits may be used in qualifying an applicant for a LP Open Access loan whether the benefits are seasonal or nonseasonal. · Most recent one-month bank statement or other equivalent documentation evidencing receipt of the income, or · Other third-party documentation showing income type, source, amount; ü NOTE: Lenders are not required to establish a minimum history of receiving income or make a determination that the income can be expected to continue for at least three years. All Other Income Standard documentation as described within the Conventional Lending Guide for all other income types not specifically addressed within this summary. Projected Income Future income is not acceptable for qualifying purposes. IRS Form 4506-T Required to be signed at application and closing; however, not to be processed. Housing History ü ü Reserves 0x30 days lates in the most recent 12 months on any mortgage tradelines. · Not applicable for loans being refinanced that are currently serviced by Ocwen Loan Servicing, LLC. Payoff statement required to be documented in the loan file. As determined by LP. Continued on next page LP Open Access Product Summary 203-20 Homeward Residential Client Select REV 01/07/2015 LP Open Access Summary General Underwriting Guidelines, Assets ü ü ü ü ü ü Continued If asset verification is required per LP, the most recent one month, quarterly, or annual statement showing the asset balance is required. IMPORTANT: A written VOD is not acceptable without bank statements. Large deposits that appear on bank or other asset statement for LP Open Access loans does not require further investigation or documentation. Proof of liquidation of assets (i.e. sale of stock) is not required even if the borrower uses those assets for closing costs. Self-employed borrowers may use business funds to satisfy the asset verification requirements regardless of percentage of business ownership. Grant-like unsecured financing provided to the borrower through a HFA's HHF (Hardest Hit Funds) program for the purpose of paying down the outstanding mortgage balance at the time of closing resulting in a lower new loan amount is permitted. The HHFs may also be used for the payment of closing costs. The following requirements apply to HHFs: · The funds must be reflected in the Uniform Residential Loan Application (Form 1003 or 1003(S)) (and in the online loan application for LP Open Access) in Section VII, Details of Transaction as an Other Credit. · The loan file must be documented with a copy of the promissory note or other documentation specifying the terms and conditions of the loan. · If repayment of the HHF is indicated in the supporting documentation, the monthly payment must be included in the debt to income ratio unless repayment is only due upon sale or default. · The transfer of the loan proceeds must be reflected on the HUD-1 Settlement Statement. Continued on next page Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-21 LP Open Access Summary General Underwriting Guidelines, LP Home Value Explorer (HVE) Continued The value of the subject property may be determine by using Freddie Mac’s Home Value Explorer (HVE) obtained through Loan Prospector if the following are met: ü The date of the HVE estimate (HVE Value Date) must be no more than 120 days as of the Note Date. ü The HVE point value estimate must have a Forecast Standard Deviation that is no greater than 0.20 (corresponding to a Confidence Score of “H” (high) or “M” (medium) as reported by the HVE report. ü A copy of the HVE point value estimate utilized to determine the value (through the LP Findings report) must be included in the loan file verifying that the Forecast Standard Deviation is no greater than .20. ü If the HVE value is used to calculate the LTV/CLTV, the “appraised” value entered into LP must match the HVE value. ü In cases where the HVE is used to calculate LTV/CLTV and the LP is run again for any reason and the HVE on the new run is different: · The “appraised” value in LP does not need to be changed based on the updated finding provided the HVE value continues to satisfy all the above requirements. · The LP Findings report that supports the HVE Value used in calculating the LTV/CLTV must be included in the loan file. NOTE: Utilization of appraisal waivers requires the borrower to be provided and sign the Notice About Appraisal of Your Property disclosure. If the above requirements are not met, then a full appraisal with an interior/exterior inspection must be obtained in accordance to the full AIR compliant appraisal guidelines detailed in the Conventional Lending Guide. IMPORTANT: As of the Freddie Mac settlement date, you must not be aware of any circumstances or conditions that would adversely affect the value, condition, or marketability of the mortgaged premises. If you are aware of any adverse conditions, you cannot use HVE to determine the property value and must obtain a new appraisal. ü Continued on next page LP Open Access Product Summary 203-22 Homeward Residential Client Select REV 01/07/2015 LP Open Access Summary General Underwriting Guidelines, Full Appraisal Requirements Continued Property fieldwork/appraisal type is acceptable as issued by LP. Property Condition/Quality Rating for loans being refinanced that are currently serviced by Ocwen Loan Servicing, LLC If an appraisal is obtained, Homeward will accept appraisal reports with a property condition rating of C6 and/or quality rating of Q6 completed on an “as-is” basis. The appraisal does not have to be completed “subject to” repairs being made. Property Condition/Quality Rating for loans being refinanced that are currently NOT serviced by Ocwen Loan Servicing, LLC If an appraisal is obtained, Homeward will only purchase loans where the appraisal is completed “as is” with the property’s conditions rating C1 – C5 and the quality of construction rating Q1- Q5. IMPORTANT: For Manufactured Homes, a full appraisal Form FHLMC 70B or FNMA 1004c is required. Transferred Appraisals Not Permitted. Manufactured Homes Defined ü A manufactured home is described as a dwelling built on a permanent chassis and attached to a permanent foundation. The manufactured home and the land on which it is situated must be titled as real property. ü Other factory-built housing (not built on a permanent chassis) – such as modular, prefabricated, panelized, or sectional housing – is not considered manufactured housing and is eligible for purchase by Homeward. Continued on next page Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-23 LP Open Access Summary General Underwriting Guidelines, Manufactured Home Property Characteristics Continued A Manufactured Home must have the following characteristics: ü The Manufactured Home must be built on a permanent chassis in compliance with the applicable HUD Codes for Manufactured Homes (HUD Codes) in effect as of the date the Manufactured Home was constructed. ü A "HUD Certification Label" must be permanently affixed to each transportable section of the Manufactured Home evidencing compliance with the HUD Codes. If the HUD Certification Label has been removed, compliance may be evidenced using the HUD Data Plate located near the main electrical panel or in another readily accessible and visible location. The HUD certification number appears on each HUD Certification Label on each section of the Manufactured Home, and all HUD certification numbers for the Manufactured Home are found on the HUD Data Plate." ü The Manufactured Home must be legally classified as real property; it must be a 1-unit dwelling that is permanently affixed to a permanent foundation in a way that makes it part of the real property. ü The anchoring system must comply with the HUD Codes. If the Manufactured Home was installed prior to October 20, 2008, the anchoring system must comply with the manufacturer's design or a design by a licensed (registered) professional engineer. ü Anchoring systems refer to all components of the anchoring and support systems such as piers, footings, ties, anchoring equipment, anchoring assemblies, and any other equipment, materials, and methods of construction that support and secure the Manufactured Home to the ground. ü The permanent foundation must be designed for the site conditions, home design features, and the loads the home was designed to withstand in accordance with the manufacturer's instructions or a design by a licensed (registered) professional engineer. The foundation must meet all local, State or federal codes, as applicable. ü The Manufactured Home must be at least a double-wide. ü The Manufactured Home must have been built on or after June 15, 1976. Continued on next page LP Open Access Product Summary 203-24 Homeward Residential Client Select REV 01/07/2015 LP Open Access Summary General Underwriting Guidelines, Manufactured Home Property Requirements Continued A Manufactured Home must meet the following requirements: ü If any structural modifications or add-ons have been made to a 1-unit dwelling and any portion of the dwelling is a Manufactured Home, the Mortgage securing such property must be delivered as a Manufactured Home in compliance with the requirements of this chapter. ü The Manufactured Home must be a 1-unit dwelling comprised of multiple sections (a "multiwide Manufactured Home"). ü The wheels, axles, and towing hitches must be removed from the Manufactured Home. ü The land on which the Manufactured Home is situated must be owned by the Borrower in fee simple. Mortgages secured by Manufactured Homes located in a Condominium Project are eligible if project eligibility is determined through a reciprocal review. See Section 42.9. ü A multiwide Manufactured Home may be located on an individual lot or in a subdivision or Planned Unit Development; leasehold properties are not permitted. ü The Manufactured Home must be permanently connected to utilities in compliance with the HUD Codes. Utilities include power, water, and a sewage disposal system. ü The Mortgaged Premises must conform to all applicable use restrictions and must be zoned for residential use, and not commercial or business uses ü The square footage and room dimensions must be acceptable to typical purchasers in the market area ü The Manufactured Home must be permanently affixed to the permanent foundation, in compliance with the HUD Codes. If the installation was prior to October 20, 2008, the foundation must be designed for the site conditions, home design features, and the loads the home was designed to withstand in accordance with the manufacturer's instructions or a design by a licensed (registered) professional engineer. The foundation must meet all applicable local, State or federal codes. Any structural modifications to an existing Manufactured Home must be approved by a licensed professional engineer or the local, State or federal authority ü Any improvements, modifications or repairs that affect the safety, soundness or habitability of the Manufactured Home must be completed prior to closing. Continued on next page Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-25 LP Open Access Summary General Underwriting Guidelines, Manufactured Home Appraisal Requirements Continued The appraiser must, at a minimum: ü Perform a complete visual inspection of the interior and exterior areas of the Manufactured Home ü Inspect the neighborhood ü Inspect each of the comparable sales from at least the street ü Research, verify, and analyze data from reliable public and/or private sources ü Develop an opinion of the market value of the Manufactured Home based on the sales comparison approach to value. Non-realty items, such as insurance, warranties or furniture must be excluded from the value conclusion ü Develop the cost approach to value as support for the sales comparison approach ü Report his or her analyses, opinions, and conclusions on FHLMC Form 70B (or FNMA Form 1004c), Manufactured Home Appraisal Report ü Match the manufacturer's serial number(s) and the HUD Certification Label number(s) on the dwelling to the number(s) on the contract for sale, manufacturer's invoice, and any other documentation provided. If the numbers do not match, the appraisal report must clearly state that the Manufactured Home is not the same dwelling referenced on the contract for sale or other applicable documentation ü If the manufactured home is located in a condominium project, the appraiser must also report the project information on Form 465, Individual Condominium Unit Appraisal Report and attach the form as an addendum to the full appraisal. Continued on next page LP Open Access Product Summary 203-26 Homeward Residential Client Select REV 01/07/2015 LP Open Access Summary General Underwriting Guidelines, Manufactured Home Security Instrument, Title Insurance and Other Legal Requirements Continued Manufactured housing security instrument must include the following information: · Year manufactured · Make Model · Serial number/VIN number(s) · Any other information required by applicable law. One of the following title policy endorsements must be provided for a Manufactured Home: ü An ALTA Form 7.1, where available, or ALTA Form 7 endorsement, or ü An endorsement required in the applicable jurisdiction that insures that the Manufactured Home constitutes real property, such as the T31 endorsement in the State of Texas. Subject property must be taxed as real estate or personal property according to state law and local taxing authority. FEMA Declared Disaster Areas ü ü Regardless of the Property Fieldwork requirements used for the LP Open Access loan, an additional inspection and/or new appraisal of the property is not necessary after a disaster. A property secured by a LP Open Access mortgage that was damaged as a result of a disaster will not be required to be repaired prior to closing as long as the loan meets the property insurance requirements for Hazard Insurance and Flood Insurance as stated within the Conventional Lending Guide. Continued on next page Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-27 LP Open Access Summary General Underwriting Guidelines, Continued Validation Requirements Homeward Residential will assess all properties and appraisals to confirm values are well supported. It will be at the Underwriter’s discretion to utilize any additional validation tools at their disposal to escalate value concerns. Escrow Holdbacks Holdbacks of any kind are not permitted. Interest Only Option ü Not Permitted Continued on next page LP Open Access Product Summary 203-28 Homeward Residential Client Select REV 01/07/2015 LP Open Access Summary General Underwriting Guidelines, Mortgage Insurance Continued The LP Findings will state if the current loan has Mortgage insurance. The MI Company and the percentage of coverage will be identified in the findings. ü Must obtain the mortgage insurance on the new loan from the same company that is insuring the loan being paid off. The percentage of coverage, frequency and renewal type MUST remain the same on the new loan. notes ü If the loan being refinanced currently has Mortgage Insurance and the new loan has a LTV greater than 80% LTV, then the new loan will require Mortgage Insurance. ü Underwriter must process or work with the MI Partner to process the MI transfer/modification. ü Must provide the MI Certification in the closed loan file reflecting the appropriate coverage amount. ü Lender Paid Monthly MI premiums are not eligible unless Ocwen is servicing the loan that is being refinanced. Premium types may be modified to borrower paid options if correctly disclosed and accepted by the borrower. IMPORTANT: MI Partners can take 30 days or more to process a same servicer HARP modification request; Brokers are responsible for managing expectations (i.e. rate lock expiration) accordingly. Instructions for completing HARP modification request with each MI Partner: Genworth http://mortgageinsurance.genworth.com/RatesAndGuidelines/MakingHomeAffordable.aspx ü United Guaranty https://www.ugcorp.com/services/affordability.html MGIC http://www.mgic.com/underwriting/refi-to-mod.html Radian http://www.radian.biz/page?name=HASPSameServicerPerf PMI (PMI is only permitted under the HARP program) http://www.pmi-us.com/lenders/harp.html RMIC (RMIC is only permitted under the HARP program) www.rmic.com Triad (Triad is only permitted under the HARP program) http://www.triadguaranty.com/Home.aspx NOTES: * New Servicers follow the same guidelines on DURP loans. * Loan will keep the same coverage and rate. * Premium changes will be due to changed loan amount. Continued on next page Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-29 LP Open Access Summary General Underwriting Guidelines, Continued Multiple Properties There is not a limit on the number of financed properties for LP Open Access eligible loans, regardless of occupancy type. Non-Occupant Co-Borrowers ü ü ü Occupant borrower must qualify for the loan per FHLMC guidelines and the General Underwriting Guidelines stated within this summary. Non-occupant borrower must be on separate application. A borrower who is not on the mortgage being refinanced may be added to the mortgage, except that a non-occupying borrower may not be added to a mortgage secured by a primary residence. In all cases, at least one borrower(s) from the mortgage being refinanced must be retained. NonTraditional Credit History Not Permitted. Qualifying Ratios Homeward Residential will accept loans with the maximum Debt-ToIncome (DTI) ratios accepted by the LP’s Approve recommendation: ü NOTE: If there are no usable credit scores due to insufficient information or inaccurate information, the loan is ineligible. The loan characteristics are... Maximum DTI LP Open Access As permitted by LP recommendations For ARM loans: · 5/1: Qualify at greater of fully indexed rate (index + margin) OR Note Rate + 2%. · 7/1, 10/1: Greater of Note Rate OR the Fully Indexed Rate. Continued on next page LP Open Access Product Summary 203-30 Homeward Residential Client Select REV 01/07/2015 LP Open Access Summary General Underwriting Guidelines, Refinance Requirements Continued Refinance under the LP Open Access may include the following: ü Pay off the existing first mortgage ü Closing costs, financing costs and prepaids/escrows not to exceed $5,000. ü The borrower may receive up to $250 at closing from loan proceeds (not permitted to come from premium pricing) (excluding Texas primary residence in which the borrower may not receive any cash back). If the amount exceeds $250, then refer to the next bullet point regarding principal curtailments. ü A Principal Curtailment to the new refinance mortgage at closing is allowed for the excess amount and must be reflected on the HUD-1 Form or other equivalent closing statement. Not permitted for Borrower Paid Transactions. ü Texas Section 50a6 scenarios are not permitted. ü Rate term refinance of an existing FHLMC loan. ü Underwriter must complete the LP Open Access LTV Maximum Loan Amount Worksheet. Continued on next page Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-31 LP Open Access Summary General Underwriting Guidelines, Continued LP Open Access: Maximum Loan Amount Worksheet To determine the maximum loan amount, follow the outlined steps below: Step Result 1. Unpaid Principal Balance: Enter the total amount of the current unpaid principal balance from payoff statement 2. Accrued Interest: Enter the total amount of the accrued interest due at closing to pay the current loan off. (Calculate (the number of days to the date the Mortgage being refinanced is paid off) x (per diem interest indicated on the payoff statement)). 3. Closing Costs and Prepaids/Escrows: Compare the following and enter the lesser amount as your result: a. $ __________ The total closing costs, financing costs and prepaids/escrows that are paid by the borrower minus any applicable lender credits. $_________ b. $5,000.00 The lesser of “a” and “b” is the maximum amount that may be included in the loan amount to pay closing costs, financing costs and prepaids/escrows. Additional costs, if any, that remain must be paid by the borrower from acceptable sources of funds as outlined in the Lending Guide. $ __________ 4. Maximum Loan Amount: Add the results of Steps 1, 2 and 3 together to determine the maximum loan amount. 5. Closing Statement Review: The final HUD-1 should be reviewed to determine that the proceeds from the LP Open Access loan have been applied properly. $ __________ Cash disbursed to the borrower may not exceed $250.00. Closing Costs, Financing Costs and Prepaids/Escrows paid out of the closing by the borrower may be reimbursed at closing and are not considered cash to the borrower. The Underwriter must review the payoff statement for the loan being refinanced. Additional fees on the payoff statement such as (but not limited to) a statement delivery fee or a recording fee MAY NOT be added to the new loan amount and must be paid by the borrower. NOTE: If the final loan amount is greater than the Maximum Loan Amount calculated in Step #4 above, then: a. The loan amount must be reduced, OR b. A Principal Curtailment to the new refinance mortgage at closing is allowed up to the lesser of 2% of the new loan amount or $2,000 and must be clearly reflected on the HUD-1 form or other equivalent closing statement. Continued on next page LP Open Access Product Summary 203-32 Homeward Residential Client Select REV 01/07/2015 LP Open Access Summary General Underwriting Guidelines, Net Tangible Benefit Listed for Sale Continued Transaction must represent a net tangible benefit to the borrower and be documented by the Underwriter on the 1008. IMPORTANT: LP does not have the ability to make the determination that the transaction will benefit the borrower. This review must be performed manually by the Underwriter. ü The monthly principal and interest payment is decreasing. · Payment increases are only permitted if the loan is refinancing into a more stable product (i.e. ARM to Fixed, IO to fully amortizing, shorter term, etc.). ü ü ü The amortization period is shortened. Interest rate is reduced The amortization period is extended (i.e. from 15 to 30 years) provided there is a reduction in the principal and interest payment. · An extension of the amortization period is not considered movement to a more stable product; the reduction of P&I MUST be present as well. ü If the mortgage being refinanced is a Fixed Rate mortgage, the new mortgage may be a 5/1, 7/1 or 10/1 LIBOR ARM provided that it results in a reduction in the monthly principal and interest payment of the first lien mortgage. Due to the riskier nature of the ARM product, the borrower should be urged to refinance into a fixed rate product whenever possible. Properties that have been listed for sale are eligible if the property has been removed from the market prior to the application date. NOTE: Policy does not apply to scenarios without appraisals. Continued on next page Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-33 LP Open Access Summary General Underwriting Guidelines, Subordinate Financing ü ü ü ü Interest Credit Continued Existing subordinate financing can remain in place so long as it is resubordinated to the new LP Open Access mortgage loan. Existing subordinate financing may not be paid down or satisfied with the proceeds of the new LP Open Access mortgage. New subordinate financing is only permitted if it replaces existing subordinate financing If the existing subordinate financing is simultaneously refinanced with new subordinate financing, the following must be met · The new subordinate lien amount cannot exceed the existing amount. · The existing lien must be refinanced for one of the following purposes · A reduction in interest rate of the junior lien · To replace an ARM, an Interest only junior lien, or a junior lien with a balloon or call option with a fixed rate, fully amortizing junior lien. · A reduction in the amortization term of the junior lien. · A reduction in the monthly payment of the junior lien. Permitted up to the 10th day of the month. LP Open Access Product Summary 203-34 Homeward Residential Client Select REV 01/07/2015 LP Open Access Summary Restrictions State Restrictions ü ü California: Preliminary title commitments are required. Illinois: · All refinances require a net tangible benefit form to be calculated by the underwriter; signed by both the Underwriter and Borrower(s). · Cook, Kane, Peoria or Will Counties Only: Ø Mortgage must be recorded with either a Certificate of Compliance or a Certificate of Exemption as applicable. Ø High level steps: originator uses loan application to enter required information into the database; database will determine if the property is exempt; if not exempt, the database will then determine if it will be necessary for the borrower to obtain counseling; proof of exemption, if applicable, must be printed and provided within the loan file. Ø Refer to https://www.ilapld.com for instructions from the state. · Borrower Certification stating that counseling is not required as Homeward Residential does not offer loan products or allow closing scenarios that would trigger state required counseling. ü Maryland: All refinances require a net tangible benefit form to be disclosed to and signed by the borrower. Rhode Island: All refinances must include a state specific net tangible benefit form disclosed to and signed by the borrower. Texas: · Texas Section 50a6 loans or refinances of previous Texas Section 50a6 loans are NOT permitted. ü ü Homeward Residential currently lends in the states of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, DC, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin and Wyoming. IMPORTANT: All loans must meet Federal and State Regulations; Homeward Residential does not participate in high cost/higher priced mortgage loans. ü Homeward Residential Client Select REV 01/07/2015 LP Open Access Product Summary 203-35 LP Open Access Summary LP Open Access Loan Parameters – FHLMC LP Open Access LP Open Access # of Units Primary Residence Maximum LTV CLTV 1 Second Home Maximum HCLTV1 LTV CLTV Investment Property Maximum HCLTV LTV CLTV HCLTV Minimum Credit Score Limited Cash Out Refinance Transactions FOR LOANS BEING REFINANCED THAT ARE NOT CURRENTLY SERVICED BY Ocwen Loan Servicing, LLC: 1-4 150.00 Unlimited Unlimited NA NA NA NA NA NA 660 1 NA NA NA 100.00 Unlimited Unlimited NA NA NA 700 1-4 NA NA NA NA NA NA 100.00 Unlimited Unlimited 700 FOR LOANS BEING REFINANCED THAT ARE CURRENTLY SERVICED BY Ocwen Loan Servicing, LLC: 1-4 Per LP Per LP Per LP Per LP Per LP Per LP Per LP Per LP Per LP Per LP NA NA NA NA NA NA NA NA Cash-Out Refinance Transactions ALL NA NA NOTES: 2 Refer to the Subordinate Financing section within this product summary for all details 3 1-Unit only for Second Homes. 4 Condo Properties: For loans being refinanced that are NOT currently serviced by Ocwen Loan Servicing, LLC, Florida condo projects permitted for Primary Residence up to 75% LTV/CLTV and Second Homes up to 65% LTV/CLTV. IMPORTANT: 105% maximum LTV for ARMs; no maximum for CLTV/HCLTV regardless of current servicer. Non-Ocwen serviced loans with Second Home or Investment occupancy types continue to be limited to 100.00% LTV for both fixed and ARMs. LP Open Access Product Summary 203-36 Homeward Residential Client Select REV 01/07/2015
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