Best Rate Finance
In the mortgage industry, investor's constantly update their guidelines.
We want to share a few of the recent updates with you, and our consultants.
SUBJECT: FNMA beneficial Underwriting changes
As of July 22, 2015, Fannie Mae loosened a few underwriting guidelines in the following ways:
- Borrowers converting current principal residence to an investment property ONLY needs a satisfactory letter explaining the reason for the conversation, and the rental lease (and 75% of rental income on appraisal form 1007 will be used for income) (no more requirements for equity or reserves)
- 100% of Vested stocks, bonds and or mutual funds can be used for reserves
- For a rate/term refinance or a purchase, liabilities can be paid of prior to, or at closing, in order to reduce the debt ratio to qualify, AND the credit account does not need to be closed.
SUBJECT: Reduction in Monthly Mortgage Insurance (MMI)
For all FHA loans with terms over 15 years
Effective for FHA case numbers assigned on or after January 26, 2015, the MMI on all FHA loans with terms over 15 years, will be reduced by 50 bsp.
The following shows the new MMI factors:
Term > 15 Years
Base Loan Amt. LTV Previous MIP New MIP
≤ $625,500 ≤ 95.00% 130 bps 80 bps
≤ $625,500 > 95.00% 135 bps 85 bps
> $625,500 ≤ 95.00% 150 bps 100 bps
> $625,500 > 95.00% 155 bps 105 bps
Term ≤ 15 Years
≤ $625,500 ≤ 90.00% 45 bps 45 bps
≤ $625,500 > 90.00% 70 bps 70 bps
> $625,500 <78.00% 45 bps 45 bps
> $625,500 78.01% - 90.00% 70 bps 70 bps
> $625,500 > 90.00% 95 bps 95 bps
SUBJECT: Fannie Mae updated guideline
As of today, Fannie Mae (conventional loans) updated product guidelines as to the following:
- Purchase to 97% LTV (at least one of the borrowers must be a first time home buyer, which includes past owners who have not owned a home in the past 3 years)
- Rate and term refinances to 97% LTV
- Cash out refinances to 80% LTV
SUBJECT: CFPB Compliance 2014
Effective 01/10/14, the Consumer Finance Protection Bureau (CFPB) has enacted new legislation regarding Qualified Mortgages, allowable origination Points and Fees, High Priced Mortgage Loans, Additional Disclosures needed at application, and other rules pertaining to mortgages.
As these changes must be followed in order to remain in compliance, and have loans purchased in the secondary market, please be assured that Best Rate Finance has already corrected all government lending programs available that are affected by these laws.
Our rate sheets, good faith estimates and fee worksheets have all be updated to remain in compliance with CFPB guidelines, to eliminate any delays in future closings.
SUBJECT: Eligibility/Waiting Period after a foreclosure (FC) – short sale (SS) FANNIE MAE RECENTLY UPDATED – bankruptcy (BK)
FHA/VA has been fairly consistent in their guidelines, in regards to how long a borrower must wait to get financing, after going through a bankruptcy, short sale or foreclosure. Conventional loans have varied a bit in the last few years. The only change with this memo, than the one issued 07/20/13, is that FNMA changed their eligibility periods for SS and charged off mortgages.
However, below is an accurate description, as to when is a borrower eligible for financing, through a certain loan program, after either a BK, SS, or FC.
- Conventional refinance and purchase <80% LTV = based on desktop underwriter (DU) response
- Conventional refinance and purchase, between 80-90% LTV = based on DU (generally 4 years)
- Conventional refinance and purchase over 90% LTV = 7 years
- FHA/VA = 3 years
SS (and charged off mortgages)
- Conventional refinance and purchase = 4 years
- Extenuating Circumstance resulting in the SS (a one time occurrence that most likely with not happen again) = 2 years
- FHA/VA = 3 years
- Conventional refinance and purchase = based on DU (generally 4 years)
- FHA/VA = 2 years