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Slide 1: DU REFI Plus and Open Access
Slide 2: Agenda • • • • What are these products? AUS and Qualifications FAQ’s Questions 2 01/11/10
Slide 3: What are these products? • They are both new programs designed to “reignite” the mortgage industry by streamlining the refinance process for potentially millions of Americans. The agencies have loosened the rules for homeowners seeking lower monthly payments. The less-stringent criteria includes: – – – lower acceptable credit scores, reduced income documentation, as well as waiving the requirement for appraisals in certain scenarios. • The products are allowing homeowners to refinance up to 105% of the current value of their home and will accept borrowers with credit scores below their current 620 requirement. The reduced documentation requirement results in borrowers submitting a single, current pay stub, rather than the traditional two. The ultimate objective is to benefit borrowers. – – By providing assistance that allows them to remain in their homes. Correspondents are encouraged to: • • reduce a borrower's monthly principal and interest payments, provide a more permanent product (such as refinancing an adjustable-rate mortgage into a fixed-rate mortgage) whenever possible, or both. • • • Each product is specific to the agency that currently owns the existing mortgage. YOU can refinance more borrowers into mortgages that better position them for a successful long-term homeownership experience. 3 01/11/10
Slide 4: Available Terms • Fixed Options: – Conforming Limits • • • • • 15 Yr Fixed DU Refi Plus 30 Yr Fixed DU Refi Plus 40 Yr Fixed DU Refi Plus 15 Yr Fixed Relief Refi - Open Access 30 Yr Fixed Relief Refi - Open Access 15 Yr Fixed High Balance DU Refi Plus 30 Yr Fixed High Balance DU Refi Plus 15 Yr Fixed Super Conforming Relief Refi - Open Access 30 Yr Fixed Super Conforming Relief Refi - Open Access – High Balance Limits • • • • • ARM Options: – Conforming Limits • • • • 5/1 LIBOR DU Refi Plus 7/1 LIBOR DU Refi Plus 5/1 LIBOR Relief Refi - Open Access 7/1 LIBOR Relief Refi - Open Access 5/1 LIBOR High Balance DU Refi Plus 5/1 LIBOR Super Conforming Relief Refi - Open Access – High Balance Limits • • • Expanded Approval Options: – Conforming Limits • • 15 Yr Fixed Conforming EA DU Refi Plus 30 Yr Fixed Conforming EA DU Refi Plus 4 01/11/10
Slide 5: Transaction Type—Rate and Term Only Criteria Pay Off: DU REFI PLUS Pay off of the existing first mortgage only Subordinate financing must re-subordinate Open Access Pay off the first mortgage only (The payoff amount can be rounded up to the nearest thousand.) Subordinate financing must re-subordinate Finance Closing costs, prepaid costs and discount points Cash Back Seasoning Benefit Yes with no specific limitations Pay the lesser of 4 percent of the current unpaid principal balance of the mortgage being refinanced or $5,000 in related closing costs, financing costs and prepaids/escrows. The borrower may receive cash back at closing of no more than $250. No seasoning requirement on existing first mortgage or ownership of subject property Three (3) months seasoning of the existing mortgage is required, as determined by length of time from the Note date to application date Must demonstrate that the refinance improves borrower’s position as follows: •Reducing interest rate •Reducing amortization period •Replacing ARM, IO or Balloon Product with a fully amortizing Fixed Rate Product Properties that have been listed for sale are eligible with the following restrictions: •Property has been taken off the market on or before the application date. •Borrower confirms the intent to maintain ownership Properties that have been listed for sale are eligible with the following restrictions: •Property has been taken off the market on or before the application date. •Borrower must sign an affidavit confirming 5 occupancy, and that the home was not listed at time of application and is not listed at the time of funding. Property Listed For Sale 01/11/10
Slide 6: Occupancies • Primary Residence • Second Homes • Investment Properties • Note: Open Access may be refinanced as 1-4 Unit Primary Residence, Second Home or Investment Property, whether or not the mortgage being refinanced was underwritten and sold originally as a 1-4 Unit Primary Residence, Second Home or Investment Property mortgage. 6 01/11/10
Slide 7: Eligible Property Types 1-4 units PUD's Condo's Modular/ Pre-Cut Leasehold Estates 7 01/11/10
Slide 8: Condo Conditions DU REFI PLUS •No project review required for Condominium and PUD; however, satisfactory verification must be provided verifying subject project is not a Condo Hotel and confirmation of hazard, flood, liability and fidelity insurance coverage is required. •Florida Condos: –GM to GM refinance •Primary Residence •Second Home •Investment Properties Open Access •Freddie Mac warrantable projects (See GMAC Bank Broker Manual/Correspondent Funding Client Guide for the policy on Condominium Comparables) •Florida Condos –Second homes and Investment properties not permitted –Primary Residence requires a full project warranty –Non-GM to GM refinance •Primary Residence Only permitted • Ineligible Project Warranty – FHA Approved Project, CPM Expedited*, Limited Project Review • Eligible Project Warranty New and Newly converted Attached Condominium projects – Must have PERS Final Project Approval issued by FNMA (posted on eFanniemae.com) Established Attached Condominium projects* – Must have Lender Full Review 8 01/11/10
Slide 9: Eligible Borrowers DU REFI PLUS •Borrowers on existing mortgage must match borrowers on the new loan. (No exceptions) •Borrowers may not be removed in the new transaction. •A borrower may be added, provided the original borrower remains. Open Access •Borrowers on existing mortgage must match borrowers on the new loan. EXCEPT AS FOLLOWS: –Borrowers may be removed due to death or divorce provided: •Obtain documentation of the death or divorce, and •Obtain evidence that the remaining Borrower has been making the mortgage payments for the most recent 12 month period, or if the Mortgage is seasoned less than 12 months, since the Note Date of the existing mortgage. •A borrower may NOT be added • • US Citizens Permanent Resident Aliens – Provide Alien Registration Card if borrower is not living in the U.S. • Non-Permanent Resident Alien – – – Must be a legal resident of the U.S. as evidenced by social security number Must be employed in the U.S. Tax Identification Number (TIN) is not acceptable 9 01/11/10
Slide 10: AUS and Qualifications
Slide 11: DU and the Refi Plus • Loan must be underwritten via Fannie Mae DU Version 8.0 submission and receive eligibility findings for DU Refi Plus Program. DU must state eligibility for this program: – This loan casefile was underwritten according to the DU Refi Plus expanded eligibility guidelines offered on certain limited cash-out refinance loan casefiles where the borrower's existing loan is identified by DU as a Fannie Mae loan. This loan casefile must be delivered with Special Feature Code 147. • There will be new DU Refi Plus Messages issued to inform users why a loan casefile was NOT underwritten as DU Refi Plus and will appear in the Risk/Eligibility section of the DU Underwriting Findings Report. • Manual underwriting is NOT permitted – All loans must be designated as eligible by DU and the loan must be underwritten, closed and delivered according to the requirements on the findings report. 11 01/11/10
Slide 12: DU Refi Plus High Balance Messages • Loans are eligible for purchase by GMAC Bank with the Approve/Ineligible decision AND any of the messages below. • BUT ONLY IF the loan amount is within the applicable county limit and the Temporary High Cost loan limit. • Loan amount must be the only reason for the ineligibility. All other findings or reasons for ineligibility are not permitted. – – – – This DU Refi Plus Loan casefile is not eligible for delivery to Fannie Mae. The borrower(s) should contact their current servicer to explore other potential Fannie Mae refinance or loan modification options. OR This high-balance mortgage loan case file is ineligible for delivery to Fannie Mae because the loan amount exceeds the allowable loan limit of $_____________ This DU Refi Plus loan casefile is not eligible for delivery to Fannie Mae. The borrower(s) should contact their current lender to explore other potential Fannie Mae refinance or loan modification options. 12 01/11/10
Slide 13: Loan Prospector and Relief Refinance • Must be fully underwritten and submitted to Loan Prospector. • Relief Refinance Mortgages – Open Access with a risk class of Caution and A-minus eligible purchase eligibility message are not eligible. • Noncredit payment references are prohibited and may not be used to establish an acceptable credit reputation. • Manual underwriting is NOT permitted – All loans must be designated as eligible by LP and the loan must be underwritten, closed and delivered according to the requirements on the feedback. 13 01/11/10
Slide 14: Qualifying and Ratios • Qualify at note rate for Fixed and 7/1 options – 5/1 ARMs: Qualify at the greater of the Note Rate or Fully Indexed Rate • Ratios: – LP Accept, DU Approve and Expanded Approval loans- Ratios evaluated by AUS 14 01/11/10
Slide 15: Occupancy/LTV’s Occupancy Primary Residence Second Home Investment Property Units LTV w/o Secondary Financing LTV with Secondary Financing Credit Score 1-4 105% 105% N/A Note: Maximum LTV/CLTV in West Virginia 100% (applies to all occupancy) 01/11/10 15
Slide 16: Underwriting Authority • • Delegated – Eligible to underwrite or send to GMAC Bank Conditional Delegated – – Requires Approve/Eligible or an Accept recommendation Otherwise submit to Contract Underwriting or GMAC Bank (includes EA recommendations) • Non-Delegated – Submit to Contract Underwriting or GMAC Bank • Approved Contract Underwriter Providers: – – – Genworth RMIC United Guaranty 16 01/11/10
Slide 17: Credit DU REFI PLUS •DU Approve (and Expanded Approval) recommendations only. •Credit report required •No minimum Credit Score requirement; DU will evaluate eligibility •Mortgage Payment History – Evaluated by DU Open Access •The borrower’s credit score is acceptable if an LP Accept decision is received. •Relief Refinance Mortgages – Open Access with a risk class of Caution and A-minus eligible purchase eligibility message are not eligible. •Noncredit payment references are prohibited and may not be used to establish an acceptable credit reputation. •The existing mortgage must be current. Regardless of LP decision, 0 x 30 in the last 12 months or, if the mortgage is seasoned < 12 months, since the Note Date. 17 01/11/10
Slide 18: Bankruptcy and Foreclosure Guidelines • Measures by discharge or dismissal date – Chapter 7 Bankruptcy And Foreclosure • Bankruptcy must be discharged for 4 years • 4 years since the date of the foreclosure completion. – Chapter 13 Bankruptcy • 2 years since the repayment plan was successfully completed and the bankruptcy was discharged. • For a previous foreclosure or conveyance of a deed-inlieu of foreclosure, the new mortgage must: – Comply with GMAC standard guidelines 18 01/11/10
Slide 19: Appraisal Requirements DU REFI PLUS Follow DU recommendation: DU Version 8.0 will issue two property fieldwork recommendation messages. •One message will indicate that the loan casefile is eligible for the DU Refi Plus property fieldwork waiver •the other message will indicate the minimum level of property fieldwork required if the DU Refi Plus property fieldwork waiver is not exercised. Open Access A new appraisal with an interior and exterior inspection must be obtained 19 01/11/10
Slide 20: Appraisal Requirements—State Specifics DU REFI PLUS •Owner-occupied properties in Kansas with an LTV exceeding 100% require a minimum of exterior appraisal (Form 2055) unless DU recommendation requires a full appraisal (Form 1004). •Owner-occupied and second home properties in West Virginia will require a minimum of exterior appraisal (Form 2055) unless DU recommendation requires A full appraisal (Form1004). •All properties in Texas require interior/exterior appraisal regardless of DU recommendation. Open Access Loans in West Virginia where the value is less than the loan amount are not eligible. 20 01/11/10
Slide 21: Property Fieldwork Waiver (FIW) • A Property Fieldwork Waiver (FIW) may be offered if credit and property criteria are met within DU recommendation. A $75 fee is applied if lender exercises waiver option, property value re/warrants are waived. It is the Borrower’s choice on whether to exercise this option. – – – – – Notice About Appraisal of Your Property- (FHLMC Form #1149) disclosure required Eligibility for FIW limited to 1 unit properties with LTV<95% DU Expanded Approval recommendations are not eligible for FIW FIW must be dated within 120 days of the Note date. If FIW is exercised, a signed affidavit is required disclosing the length of time the borrower has owned the property and confirmation the subject property is not currently listed for sale. 21 01/11/10
Slide 22: Property Fieldwork Waiver for DU REFI PLUS • When a lender exercises a the property fieldwork waiver, Fannie Mae accepts the property value estimate submitted to DU as the market value for the subject property, and the lender is not required to make any representation or warranty as to value, marketability, or condition of the subject property. However, the lender continues to be required to represent and warrant that all of the information and data submitted to DU is complete and accurate. A lender may only exercise the property fieldwork waiver if: – – the final submission of the loan casefile to DU resulted in a waiver offer; and the waiver offer is not more than four months old on the date of the note and the mortgage. • • Lenders may NOT exercise the property fieldwork waiver, AND must order the minimum level of property fieldwork as specified by DU, – – – if the lender has reason to believe that fieldwork is warranted based on additional information obtained about the property or subsequent events such as a hurricane or other natural disaster, or based on additional information provided by DU regarding the subject property and/or loan casefile. • Note: Fannie Mae specifically does not warrant that the estimated value used in the determination of eligibility for the property fieldwork waiver represents the actual value of the subject property. Lenders should not make any representations to third parties that Fannie Mae has performed any kind of property review, appraisal or valuation of the subject property for these loans. Laws and regulations regarding the use of appraisals and automated valuation models may vary, based for example on the type of transaction (purchase vs. refinance), the location of the property, and lender’s licensing within that jurisdiction. The lender is responsible for compliance with all federal, state and local laws, rules and regulations. 22 01/11/10
Slide 23: Mortgage Insurance DU REFI PLUS Original LTV >80% and MI Cancelled or terminated If original transaction LTV was <80% New MI is not required Open Access Mortgage insurance is not required on the subject refinance it is not eligible under these programs If the mortgage insurance on the original transaction was LPMI 23 01/11/10
Slide 24: New Mortgage Insurance Requirements • If the LTV of the original loan was >80% AND if current LTV >80%, new mortgage insurance certificates are required; however, the new mortgage is subject to acceptable MI company guidelines. Terms < 20 Years LTVs 80.01%-85.00% 85.01%-90.00% 90.01%-95.00% Term > 20 Years 80.01%-85.00% 85.01%-90.00% 90.01%-95.00% 12% 25% 30% 24 Coverage Required 6% 12% 25% 01/11/10
Slide 25: FAQ’s • Are increases to the borrowers payment permitted? – Only if a more stable product (i.e. ARM to Fixed, IO to fully amortizing, shorter term, etc) is utilized • Is there a way to determine which agency owns my borrowers loan? – YES! • Visit http://loanlookup.fanniemae.com/loanlookup • Or https://ww3.freddiemac.com/corporate/ • I ran my loan through AUS and got the findings/feedback for this product can I flip it to the other AUS to get rid of it? – – – – NO! If you “think” your loan might get that finding and you don’t want it to you need to run it through the opposite AU FIRST. We do not allow it to be flipped to another AU. OR For Open Access Simply choose a product OTHER than Relief Refinance For DU REFI PLUS: 25 01/11/10
Slide 26: “Opting” out of DU REFI PLUS • • FNMA has added the ability to allow you to instruct DU to underwrite the file as a standard Limited cash-out refinance. Entering “Standard LCOR” in the Product Description field will instruct it to do so – – This field is available on the Additional Data screen MOST Loan Origination Systems have NOT been updated with this field. • DU/DO will issue the following message if the loan is eligible but not underwritten as a DU Refi Plus because the system was instructed to underwrite as a standard limited cash-out refinance: – The borrower's existing loan has been identified as a Fannie Mae loan. The loan casefile was not underwritten according to the DU Refi Plus expanded eligibility guidelines because DU was instructed to underwrite the loan casefile as a standard limited cashout refinance. This was indicated by “Standard LCOR” being entered in the Product Description field • No value or a value other than “Standard LCOR” in the Product Description field, will be underwritten as DU Refi Plus if the loan is matched to an existing eligible Fannie Mae loan and the loan casefile meets the eligibility criteria required for DU Refi Plus. 26 01/11/10
Slide 27: Borrower Profile • For borrowers who have experienced declining property values • Borrowers must be current on their mortgage payments • Payment history cannot have any 30 day or more late payments in the most recent 12 months 27 01/11/10
Slide 28: Key Features • Maximum LTV ratio up to 105 percent • No maximum TLTV/HTLTV ratios • Relief from standard mortgage insurance requirements • Must be submitted to AUS 28 01/11/10
Slide 29: DU REFI PLUS & Open Access Products Questions? 29 01/11/10
Slide 30: Further Information • Refer to: – – – – GMAC Bank Website • www.gmacbankcorrespondent.com The Correspondent Funding Client Guide Product Matrix Client Services 877-700-4622, Option 9 Correspondent_Lending@gmacm.com Your Sales Director 30 • Contact: – 01/11/10