We are announcing that for 2009, we are maintaining the base conforming loan limits at the 2008 levels and increasing the conforming loan limits for certain high-cost areas based on the Federal Housing Finance Agency’s (FHFA) announcement on
November 7, 2008.
Base Conforming Loan Limits
The base conforming loan limits for 2009 will remain at the following current levels:
No. of Units Maximum Base Conforming Loan Limits for properties NOT located in Alaska, Hawaii, Guam & U.S. Virgin Islands Maximum Base Conforming Loan Limits for properties in Alaska, Hawaii, Guam & U.S. Virgin Islands
1 $417,000 $ 625,500
2 $533,850 $ 800,775
3 $645,300 $ 967,950
4 $801,950 $1,202,925
High-Cost Area Loan Limits
Last month we announced our requirements for the new higher loan limits in certain high-cost areas as set forth in the Housing and Economic Recovery Act of 2008 (HERA).
HERA raises the conforming loan limits in certain high-cost areas (where 115 percent of the area median house price exceeds the applicable base loan limit) to the lesser of 115 percent of the area median home price or 150 percent of the base conforming loan limits. We have termed mortgages that will be purchased under these higher limits as “super conforming” mortgages. Since the base conforming loan limit for one-unit properties remains at $417,000, the maximum conforming loan limit in designated high-cost areas is $625,500 for one-unit properties.
The maximum loan limits in designated high-cost areas for properties located in Alaska, Guam, Hawaii, and the U.S. Virgin Islands are higher than the base of $625,500 for one-unit properties.
In all instances, the loan limits for 2- to 4-unit properties are also higher.
For purposes of determining these high-cost areas, FHFA used a nationwide set of county median home prices estimated by the Federal Housing Administration. Visit the FHFA site for details on the 2009 High-Cost Area Loan Limits and 2009 Loan Limits for All Counties.
Super Conforming Mortgages
All Seller/Servicers are eligible to deliver super conforming mortgages provided they comply with Chapter L33 of the Single-Family Seller/Servicer Guide. Super conforming mortgages with note dates on and after October 1, 2008, are eligible for Freddie Mac settlements on and after January 2, 2009.
Effective January 2, 2009, we will purchase super conforming mortgages up to the following loan limits.
No. of Units 2009 Maximum Original Loan Amount for Super Conforming Mortgages*
1 $ 625,500
2 $ 800,775
3 $ 967,950
4 $1,202,925
*These are the maximum potential loan limits for designated high-cost areas. Actual loan limits for specific high-cost areas may be lower. In addition, the super conforming limits will be higher in certain high-cost areas in Alaska, Guam, Hawaii and the U.S. Virgin Islands.
Specific maximum LTV/TLTV/HTLTV limits are based on loan purpose, number of units, and occupancy. For designated high-cost areas where the maximum loan limit exceeds $625,500 for a one-unit property mortgage, the maximum LTV/TLTV/HTLTV ratio is 80 percent. Additional details will be communicated in an upcoming Single-Family Seller/Servicer Guide Bulletin. For more information visit our Super Conforming Mortgages Web page.
Operational Impacts
Because the 2009 base conforming loan limits are unchanged from 2008, you can deliver mortgages that are within the base conforming loan limits, with no changes to your operational procedures or processes, including Loan Prospector® assessment and commitment and delivery.
We are in the process of updating Loan Prospector and the selling system to accommodate super conforming mortgages and will provide you additional details about those changes soon.
FHLMC and FNMA loan limits for next year
1 unit 2 unit 3 unit 4 unit
Beaver County 99999 UT $417,000 $533,850 $645,300 $801,950
Box Elder County 14940 UT $417,000 $533,850 $645,300 $801,950
Cache County 30860 UT $417,000 $533,850 $645,300 $801,950
Carbon County 39220 UT $417,000 $533,850 $645,300 $801,950
Daggett County 99999 UT $417,000 $533,850 $645,300 $801,950
Davis County 36260 UT $417,000 $533,850 $645,300 $801,950
Duchesne County 99999 UT $417,000 $533,850 $645,300 $801,950
Emery County 99999 UT $417,000 $533,850 $645,300 $801,950
Garfield County 99999 UT $417,000 $533,850 $645,300 $801,950
Grand County 99999 UT $417,000 $533,850 $645,300 $801,950
Iron County 16260 UT $417,000 $533,850 $645,300 $801,950
Juab County 39340 UT $417,000 $533,850 $645,300 $801,950
Kane County 99999 UT $417,000 $533,850 $645,300 $801,950
Millard County 99999 UT $417,000 $533,850 $645,300 $801,950
Morgan County 36260 UT $417,000 $533,850 $645,300 $801,950
Piute County 99999 UT $417,000 $533,850 $645,300 $801,950
Rich County 99999 UT $417,000 $533,850 $645,300 $801,950
Salt Lake County 41620 UT $600,300 $768,500 $928,950 $1,154,450
San Juan County 99999 UT $417,000 $533,850 $645,300 $801,950
Sanpete County 99999 UT $417,000 $533,850 $645,300 $801,950
Sevier County 99999 UT $417,000 $533,850 $645,300 $801,950
Summit County 41620 UT $600,300 $768,500 $928,950 $1,154,450
Tooele County 41620 UT $600,300 $768,500 $928,950 $1,154,450
Uintah County 46860 UT $417,000 $533,850 $645,300 $801,950
Utah County 39340 UT $417,000 $533,850 $645,300 $801,950
Wasatch County 25720 UT $417,000 $533,850 $645,300 $801,950
Washington County 41100 UT $417,000 $533,850 $645,300 $801,950
Wayne County 99999 UT $417,000 $533,850 $645,300 $801,950
Weber County 36260 UT $417,000 $533,850 $645,300 $801,950
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
Tuesday, November 11, 2008
Wednesday, October 29, 2008
Calculating Income for Mortgage Lending
Processing Tip
The credit freeze has made underwriting more particular than ever. Here are a few pointers to help you get your loan approved the first time. Loans that loose their Accept status when they are underwritten usually loose this because the underwriter calculates the income differently than you did. Many times if the underwriter knew how you calculated the borrowers income they would accept it. If I was processing a loan I would always include the calculation of income in my loan file. Make sure you know the guide lines regarding the income calculation. If you want an exception from the guidelines be sure and state the reason you feel the borrower deserves this exception. Example: overtime usually always requires a two year history. Your borrower has only been on the current job 12 months. However they had overtime in the previous job. In this scenario include a VOE of both jobs documenting a two year history. Don’t assume because an employer requires over time that they underwriter will accept that as a reason to have less than two years.
I also find this IRS web site in determining what income is tax deductable or how it should be reported to be helpful - IRS Frequently Asked Questions . Attached is an income worksheet that you could use to calculate income and include in your loan file
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
The credit freeze has made underwriting more particular than ever. Here are a few pointers to help you get your loan approved the first time. Loans that loose their Accept status when they are underwritten usually loose this because the underwriter calculates the income differently than you did. Many times if the underwriter knew how you calculated the borrowers income they would accept it. If I was processing a loan I would always include the calculation of income in my loan file. Make sure you know the guide lines regarding the income calculation. If you want an exception from the guidelines be sure and state the reason you feel the borrower deserves this exception. Example: overtime usually always requires a two year history. Your borrower has only been on the current job 12 months. However they had overtime in the previous job. In this scenario include a VOE of both jobs documenting a two year history. Don’t assume because an employer requires over time that they underwriter will accept that as a reason to have less than two years.
I also find this IRS web site in determining what income is tax deductable or how it should be reported to be helpful - IRS Frequently Asked Questions . Attached is an income worksheet that you could use to calculate income and include in your loan file
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
Friday, October 17, 2008
Freddie Buelltin Oct 3rd, 2008 no more stated income
Freddie Mac Announced …Today's News ... This Single-Family Advisory e-mail provides you with important information on a series of upcoming changes to our pricing and credit requirements.
First, we are providing a preview of new changes that we will finalize in an early November Single-Family Seller/Servicer Guide (Guide) Bulletin and will make effective for Freddie Mac settlements on and after February 2, 2009. These changes strengthen underwriting standards for borrower eligibility and provide additional safeguards against layered risk to support sustainable homeownership opportunities, including:
Eliminating the purchase of mortgages originated with stated income and/or stated assets
Establishing minimum Indicator Scores and maximum debt-to-income ratio requirements for most mortgages we purchase—whether manually underwritten or assessed through an automated underwriting system
Second, we are publishing a Guide Bulletin today that provides detailed requirements for the changes we previewed in our October 3 Single-Family Advisory e-mail. These changes are effective for Freddie Mac settlements on and after January 2, 2009, and reflect our focus on providing pricing and credit terms that are prudent and largely applicable in all market conditions.
Finally, today's Guide Bulletin also includes additional and not previously announced updates to our credit requirements for borrowers with significant derogatory credit information, and other credit changes for certain mortgages with higher risk characteristics. These changes are also effective for Freddie Mac settlements on and after January 2, 2009.
In aggregate, the changes we are previewing in this e-mail and those we have published in today's Guide Bulletin address underwriting standards that promote long-term homeownership for borrowers and liquidity for Sellers, while maintaining a sustainable secondary market business model.
Preview of Upcoming Changes to Credit RequirementsToday, we are previewing the following changes to our credit requirements that will be effective for Freddie Mac settlements on and after February 2, 2009. We will finalize these credit changes in an early November Guide Bulletin where we will:
Eliminate purchases of all mortgages originated with stated income and/or stated assets, including borrower selected programs, lender-branded and marketed programs, and system-selected programs such as Loan Prospector® Accept Plus.
Establish a maximum debt-to-income ratio of 45 percent for all mortgages we purchase, except for Streamlined Refinance Mortgages.
Revise requirements for minimum Indicator Scores by:
Establishing minimum Indicator Score requirements for manually underwritten mortgages secured by 1-unit primary residences as follows (Home Possible® Mortgages excluded):
620 for LTV/TLTV/HTLTV ratios less than or equal to 75 percent.
660 for LTV/TLTV/HTLTV ratios greater than 75 percent.
Establishing a minimum Indicator Score of 620 for all mortgages unless otherwise specified for a particular mortgage product in our Guide. Loan Prospector A-minus mortgages are also excluded from this requirement.
Revising minimum Indicator Scores for Home Possible Mortgages and lender-branded affordable mortgages. Details for this change will be provided in the early November Guide Bulletin.
If the borrower does not have a usable credit score, Sellers must underwrite the mortgage according to the requirements in Guide Chapter 37.
Eliminate purchases of 40-year fixed-rate mortgages except for Home Possible Mortgages and other lender-branded affordable products secured by 1-unit properties.
Reduce the maximum LTV ratio requirements for Home Possible Mortgages and other lender-branded affordable mortgage products secured by 1-unit primary residences to:
97 percent for mortgages assessed by Loan Prospector and other approved automated underwriting systems.
95 percent for manually underwritten mortgages.
We will continue to allow TLTV ratios greater than 97 percent and up to 105 percent for eligible Home Possible Mortgages and lender-branded affordable mortgages if the subordinate financing is an Affordable Second® and the borrower has a minimum Indicator Score of 700.
Delivery Fee Rate and Credit Requirements in Today's Bulletin
With today's Guide Bulletin, we are providing final requirements for the delivery fee rate increases and credit changes we previewed in early October and are announcing several additional changes to our credit requirements. It is important that you review today's Guide Bulletin in detail to prepare for these changes, effective for mortgages with Freddie Mac settlements on and after January 2, 2009.
Credit and Pricing Requirements Previewed on October 3:
Eliminate the previously announced 25 basis point increase to the Market Condition delivery fee, scheduled to go into effect on November 7, 2008.
Provide detailed pricing and credit requirements for mortgages with higher conforming loan limits in certain high-cost areas, which we've termed “super conforming” mortgages.
Update delivery fee structures and fee rates for Initial Interest® Mortgages and mortgages with secondary financing, and revise the Number of Units delivery fees to better align our pricing with the risks inherent in these products.
Change requirements for certain mortgages, including, among others, manually underwritten mortgages, Streamlined Refinance Mortgages, mortgages sold to us more than 120 days after the note date, and mortgages secured by investment properties, 2-unit properties, and second homes.
Additional Modifications to Super Conforming Mortgage Requirements in Today's Guide Bulletin:
Reduce maximum LTV/TLTV/HTLTV ratio requirements for certain super conforming mortgages. View these updates, as well as other modifications to super conforming mortgage requirements on our Web site.
Updates to Borrower Credit Reputation Requirements in Today's Guide Bulletin:
Allow authorized user tradelines to be included in determining a borrower's credit reputation only under certain circumstances as detailed in today's Guide Bulletin.
Require that a borrower's derogatory credit information be considered significant if there is a short payoff related to a delinquent mortgage obligation within the last seven years.
Extend the required recovery period needed to re-establish an acceptable credit reputation for prior foreclosures and multiple bankruptcies, whether for extenuating circumstances or financial mismanagement.
Eliminate the requirement to calculate or evaluate the debt-to-housing gap ratio when determining a borrower's capacity to meet monthly obligations.
Additional Revisions to Credit Requirements in Today's Guide Bulletin:
Add new requirements for the purchase of a new primary residence when the sale of the existing primary residence has not yet closed or the existing primary residence is being converted to a second home or investment property.
Eliminate purchases of seasoned mortgages through our flow sales paths.
Eliminate purchases of Seasoned Mortgages for Newly Constructed Homes products through our flow sales paths. For these mortgages to be eligible for delivery through our flow sales paths, the settlement date or delivery date, as applicable, must be on or before the last day of the 18-month credit/construction/settlement period.
Reaffirm that refinance mortgages must be documented with a new note and new security instrument or with a new note and a modification of the existing security instrument. If there is no new security instrument, the refinance mortgage must be delivered to Freddie Mac as a Seller-owned Modified Mortgage.
Eliminate purchases of Alternative Stated Income Mortgages, and remove references to these mortgages from the Guide as a precursor to changes across all stated income and/or stated asset products, which we previewed above and will finalize in an early November Guide Bulletin.
Updates to Delivery Requirements in Today's Guide Bulletin:
Introduce a new Special Characteristic Code D99 that exempts Freddie Mac-owned no cash-out refinance mortgages secured by second homes and 2-unit primary residences when the new mortgage is not paying off subordinate financing from the LTV/TLTV/HTLTV ratio reductions included in today's Guide Bulletin.
Pre-Funding Best Practices in Today's Guide Bulletin:
Recommend the use of Home Value Calibrator®, a tool that Freddie Mac uses in its quality control process, or a similar tool, to help assess the likelihood that an appraised value is inflated.
Get More InformationFor additional details on these changes:
Read our October 17 Guide Bulletin.
See a summary of all of our recent pricing and credit changes.
Review our pricing and credit requirements for super conforming mortgages, including recent modifications to these requirements
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
First, we are providing a preview of new changes that we will finalize in an early November Single-Family Seller/Servicer Guide (Guide) Bulletin and will make effective for Freddie Mac settlements on and after February 2, 2009. These changes strengthen underwriting standards for borrower eligibility and provide additional safeguards against layered risk to support sustainable homeownership opportunities, including:
Eliminating the purchase of mortgages originated with stated income and/or stated assets
Establishing minimum Indicator Scores and maximum debt-to-income ratio requirements for most mortgages we purchase—whether manually underwritten or assessed through an automated underwriting system
Second, we are publishing a Guide Bulletin today that provides detailed requirements for the changes we previewed in our October 3 Single-Family Advisory e-mail. These changes are effective for Freddie Mac settlements on and after January 2, 2009, and reflect our focus on providing pricing and credit terms that are prudent and largely applicable in all market conditions.
Finally, today's Guide Bulletin also includes additional and not previously announced updates to our credit requirements for borrowers with significant derogatory credit information, and other credit changes for certain mortgages with higher risk characteristics. These changes are also effective for Freddie Mac settlements on and after January 2, 2009.
In aggregate, the changes we are previewing in this e-mail and those we have published in today's Guide Bulletin address underwriting standards that promote long-term homeownership for borrowers and liquidity for Sellers, while maintaining a sustainable secondary market business model.
Preview of Upcoming Changes to Credit RequirementsToday, we are previewing the following changes to our credit requirements that will be effective for Freddie Mac settlements on and after February 2, 2009. We will finalize these credit changes in an early November Guide Bulletin where we will:
Eliminate purchases of all mortgages originated with stated income and/or stated assets, including borrower selected programs, lender-branded and marketed programs, and system-selected programs such as Loan Prospector® Accept Plus.
Establish a maximum debt-to-income ratio of 45 percent for all mortgages we purchase, except for Streamlined Refinance Mortgages.
Revise requirements for minimum Indicator Scores by:
Establishing minimum Indicator Score requirements for manually underwritten mortgages secured by 1-unit primary residences as follows (Home Possible® Mortgages excluded):
620 for LTV/TLTV/HTLTV ratios less than or equal to 75 percent.
660 for LTV/TLTV/HTLTV ratios greater than 75 percent.
Establishing a minimum Indicator Score of 620 for all mortgages unless otherwise specified for a particular mortgage product in our Guide. Loan Prospector A-minus mortgages are also excluded from this requirement.
Revising minimum Indicator Scores for Home Possible Mortgages and lender-branded affordable mortgages. Details for this change will be provided in the early November Guide Bulletin.
If the borrower does not have a usable credit score, Sellers must underwrite the mortgage according to the requirements in Guide Chapter 37.
Eliminate purchases of 40-year fixed-rate mortgages except for Home Possible Mortgages and other lender-branded affordable products secured by 1-unit properties.
Reduce the maximum LTV ratio requirements for Home Possible Mortgages and other lender-branded affordable mortgage products secured by 1-unit primary residences to:
97 percent for mortgages assessed by Loan Prospector and other approved automated underwriting systems.
95 percent for manually underwritten mortgages.
We will continue to allow TLTV ratios greater than 97 percent and up to 105 percent for eligible Home Possible Mortgages and lender-branded affordable mortgages if the subordinate financing is an Affordable Second® and the borrower has a minimum Indicator Score of 700.
Delivery Fee Rate and Credit Requirements in Today's Bulletin
With today's Guide Bulletin, we are providing final requirements for the delivery fee rate increases and credit changes we previewed in early October and are announcing several additional changes to our credit requirements. It is important that you review today's Guide Bulletin in detail to prepare for these changes, effective for mortgages with Freddie Mac settlements on and after January 2, 2009.
Credit and Pricing Requirements Previewed on October 3:
Eliminate the previously announced 25 basis point increase to the Market Condition delivery fee, scheduled to go into effect on November 7, 2008.
Provide detailed pricing and credit requirements for mortgages with higher conforming loan limits in certain high-cost areas, which we've termed “super conforming” mortgages.
Update delivery fee structures and fee rates for Initial Interest® Mortgages and mortgages with secondary financing, and revise the Number of Units delivery fees to better align our pricing with the risks inherent in these products.
Change requirements for certain mortgages, including, among others, manually underwritten mortgages, Streamlined Refinance Mortgages, mortgages sold to us more than 120 days after the note date, and mortgages secured by investment properties, 2-unit properties, and second homes.
Additional Modifications to Super Conforming Mortgage Requirements in Today's Guide Bulletin:
Reduce maximum LTV/TLTV/HTLTV ratio requirements for certain super conforming mortgages. View these updates, as well as other modifications to super conforming mortgage requirements on our Web site.
Updates to Borrower Credit Reputation Requirements in Today's Guide Bulletin:
Allow authorized user tradelines to be included in determining a borrower's credit reputation only under certain circumstances as detailed in today's Guide Bulletin.
Require that a borrower's derogatory credit information be considered significant if there is a short payoff related to a delinquent mortgage obligation within the last seven years.
Extend the required recovery period needed to re-establish an acceptable credit reputation for prior foreclosures and multiple bankruptcies, whether for extenuating circumstances or financial mismanagement.
Eliminate the requirement to calculate or evaluate the debt-to-housing gap ratio when determining a borrower's capacity to meet monthly obligations.
Additional Revisions to Credit Requirements in Today's Guide Bulletin:
Add new requirements for the purchase of a new primary residence when the sale of the existing primary residence has not yet closed or the existing primary residence is being converted to a second home or investment property.
Eliminate purchases of seasoned mortgages through our flow sales paths.
Eliminate purchases of Seasoned Mortgages for Newly Constructed Homes products through our flow sales paths. For these mortgages to be eligible for delivery through our flow sales paths, the settlement date or delivery date, as applicable, must be on or before the last day of the 18-month credit/construction/settlement period.
Reaffirm that refinance mortgages must be documented with a new note and new security instrument or with a new note and a modification of the existing security instrument. If there is no new security instrument, the refinance mortgage must be delivered to Freddie Mac as a Seller-owned Modified Mortgage.
Eliminate purchases of Alternative Stated Income Mortgages, and remove references to these mortgages from the Guide as a precursor to changes across all stated income and/or stated asset products, which we previewed above and will finalize in an early November Guide Bulletin.
Updates to Delivery Requirements in Today's Guide Bulletin:
Introduce a new Special Characteristic Code D99 that exempts Freddie Mac-owned no cash-out refinance mortgages secured by second homes and 2-unit primary residences when the new mortgage is not paying off subordinate financing from the LTV/TLTV/HTLTV ratio reductions included in today's Guide Bulletin.
Pre-Funding Best Practices in Today's Guide Bulletin:
Recommend the use of Home Value Calibrator®, a tool that Freddie Mac uses in its quality control process, or a similar tool, to help assess the likelihood that an appraised value is inflated.
Get More InformationFor additional details on these changes:
Read our October 17 Guide Bulletin.
See a summary of all of our recent pricing and credit changes.
Review our pricing and credit requirements for super conforming mortgages, including recent modifications to these requirements
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
Fannie Mae issues Permanent High Cost Area Loan Limit Bulletin
Fannie Mae issues new bulletin Permanent High Cost Area Loan Limits Eligibility Matrix Desktop Underwriter
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
Monday, September 29, 2008
Use the tools avilable
Understanding DU and LP can make a difference whether you get a loan approved. Please notice the links on my blog under "Conventional Lending and DU Tips" on left hand side "Helpful web sites" . There are a number of tools available. Take time to get familiar with this links and how they can help you.
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
Friday, June 20, 2008
DU 7. Tip
Here are two more items I notice that have changed in regards to DU 7
1-The level of risk associated with each amortization type is as follows, starting with those loan types representing the least amount of risk:
• Fully amortizing fixed-rate mortgages;
• Fully amortizing five-year, seven-year, and ten-year adjustable-rate mortgages;
• Six-month, one-year, and three-year ARMs as well as fixed-rate interest-only mortgages; and
• Interest-only ARMs and balloon
2. DU will continue to use the amortization term of the loan in its risk assessment for fixed rate mortgages, but will no longer look at the loan term in combination with LTV.\
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
1-The level of risk associated with each amortization type is as follows, starting with those loan types representing the least amount of risk:
• Fully amortizing fixed-rate mortgages;
• Fully amortizing five-year, seven-year, and ten-year adjustable-rate mortgages;
• Six-month, one-year, and three-year ARMs as well as fixed-rate interest-only mortgages; and
• Interest-only ARMs and balloon
2. DU will continue to use the amortization term of the loan in its risk assessment for fixed rate mortgages, but will no longer look at the loan term in combination with LTV.\
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
Thursday, June 19, 2008
DU 7 Tips
Fannie Mae News (continued)
DU 7 has made changes each day I have been pointing out two things I noticed different from DU 5 version to the current.
1- Purchase transactions continue to represent less risk than refinance transactions. When evaluating refinance transactions, a limited cash-out refinance transaction represents less risk than a cash-out refinance transaction, and lower LTV/CLTV refinance transactions will be viewed as representing less risk than higher LTV/CLTV refinance transactions. DU will no longer analyze the UPB increase when assessing the risk of a refinance transaction, but will use the purpose of refinance entered on the loan application, when the loan purpose is refinance. On construction-to-permanent transactions, DU will continue to determine the purpose of refinance based on the amount of cash theborrower is receiving at closing.
2-DU will continue to use the LTV and CLTV in its risk assessment; however, the existence of mortgage insurance will no longer be considered a mitigating factor
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
DU 7 has made changes each day I have been pointing out two things I noticed different from DU 5 version to the current.
1- Purchase transactions continue to represent less risk than refinance transactions. When evaluating refinance transactions, a limited cash-out refinance transaction represents less risk than a cash-out refinance transaction, and lower LTV/CLTV refinance transactions will be viewed as representing less risk than higher LTV/CLTV refinance transactions. DU will no longer analyze the UPB increase when assessing the risk of a refinance transaction, but will use the purpose of refinance entered on the loan application, when the loan purpose is refinance. On construction-to-permanent transactions, DU will continue to determine the purpose of refinance based on the amount of cash theborrower is receiving at closing.
2-DU will continue to use the LTV and CLTV in its risk assessment; however, the existence of mortgage insurance will no longer be considered a mitigating factor
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
Wednesday, June 18, 2008
Freddie Mac News
You are reading key updates from Freddie Mac Today's News...
With the June 17 Single-Family Seller/Servicer Guide (Guide) Bulletin, we continue to provide you with additional information about our requirements as you manage your origination and servicing operations to meet the needs of borrowers in today’s market. The Bulletin announces the retirement of our temporary selling requirements for mortgages affected by Hurricanes Katrina and Rita, and includes updated Guide exhibits to incorporate new state laws and authorized changes applicable to Uniform Instruments.
For Servicers, the Bulletin includes important information about increases to our foreclosure time lines in Maryland and Massachusetts that stemmed from recent changes in foreclosure law.
You’ll find complete details on these changes in today’s Guide Bulletin available on FreddieMac.com. It is important that you’re familiar with all changes announced in the Bulletin, including the following changes we are making to our:
Selling requirements:
Announcing that our temporary selling requirements for mortgages affected by Hurricanes Katrina and Rita will not be extended, and reminding Sellers that our temporary special collateral requirements for these mortgages remain in effect until further notice
Revising Guide Exhibits 4 and 5 to incorporate new state laws and authorized changes that are applicable to the Uniform Instruments listed in these exhibits
Reminding Sellers that they must provide information regarding the source and amount of secondary financing for all mortgages with secondary financing when completing Forms 11 and 13SF at delivery
Reinforcing the requirement that the mortgage file contain all relevant title policy endorsements
Adding a reference to Texas Constitution Article XVI Section 50, which describes the determination of fair market value for Texas Equity Section 50(a)(6) Mortgages
Selling and servicing requirements:
Updating existing Seller/Servicer obligations to comply with all applicable laws and regulations by adding a specific reference to compliance with The Bank Secrecy Act, the Money Laundering Control Act and Title III of the USA PATRIOT Act
Servicing requirements:
Extending our allowable foreclosure time lines in Maryland and Massachusetts in response to recent changes in foreclosure law, and to help Servicers provide assistance to borrowers facing financial hardships.
Providing additional guidance regarding reimbursement of condominium, homeowners association (HOA) and PUD special assessments
Revising and moving instructions to Servicers regarding their obligation to notify Freddie Mac in the event a disaster affects their operations
Revising the Guide to reflect that all property valuation requests must be submitted to us via our BPOdirect® Web site
Removing Section 81.4, Preparation of documents for delivery of second mortgages, as we do not currently purchase second mortgages
Updating the Guide to reflect the new address for BPO cost reimbursements and REO redemption proceeds, which resulted from the JP Morgan Chase acquisition of Bank One
Updating the designated counsel/trustee list to remove Stern, Lavinthal, Frankenberg & Norgaard, L.L.C. of New Jersey that ceased accepting new referrals under the Designated Counsel Program referrals as of May 1, 2008
We encourage you to review the entire Guide Bulletin to become familiar with all changes and updates to the Guide. Read more
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
With the June 17 Single-Family Seller/Servicer Guide (Guide) Bulletin, we continue to provide you with additional information about our requirements as you manage your origination and servicing operations to meet the needs of borrowers in today’s market. The Bulletin announces the retirement of our temporary selling requirements for mortgages affected by Hurricanes Katrina and Rita, and includes updated Guide exhibits to incorporate new state laws and authorized changes applicable to Uniform Instruments.
For Servicers, the Bulletin includes important information about increases to our foreclosure time lines in Maryland and Massachusetts that stemmed from recent changes in foreclosure law.
You’ll find complete details on these changes in today’s Guide Bulletin available on FreddieMac.com. It is important that you’re familiar with all changes announced in the Bulletin, including the following changes we are making to our:
Selling requirements:
Announcing that our temporary selling requirements for mortgages affected by Hurricanes Katrina and Rita will not be extended, and reminding Sellers that our temporary special collateral requirements for these mortgages remain in effect until further notice
Revising Guide Exhibits 4 and 5 to incorporate new state laws and authorized changes that are applicable to the Uniform Instruments listed in these exhibits
Reminding Sellers that they must provide information regarding the source and amount of secondary financing for all mortgages with secondary financing when completing Forms 11 and 13SF at delivery
Reinforcing the requirement that the mortgage file contain all relevant title policy endorsements
Adding a reference to Texas Constitution Article XVI Section 50, which describes the determination of fair market value for Texas Equity Section 50(a)(6) Mortgages
Selling and servicing requirements:
Updating existing Seller/Servicer obligations to comply with all applicable laws and regulations by adding a specific reference to compliance with The Bank Secrecy Act, the Money Laundering Control Act and Title III of the USA PATRIOT Act
Servicing requirements:
Extending our allowable foreclosure time lines in Maryland and Massachusetts in response to recent changes in foreclosure law, and to help Servicers provide assistance to borrowers facing financial hardships.
Providing additional guidance regarding reimbursement of condominium, homeowners association (HOA) and PUD special assessments
Revising and moving instructions to Servicers regarding their obligation to notify Freddie Mac in the event a disaster affects their operations
Revising the Guide to reflect that all property valuation requests must be submitted to us via our BPOdirect® Web site
Removing Section 81.4, Preparation of documents for delivery of second mortgages, as we do not currently purchase second mortgages
Updating the Guide to reflect the new address for BPO cost reimbursements and REO redemption proceeds, which resulted from the JP Morgan Chase acquisition of Bank One
Updating the designated counsel/trustee list to remove Stern, Lavinthal, Frankenberg & Norgaard, L.L.C. of New Jersey that ceased accepting new referrals under the Designated Counsel Program referrals as of May 1, 2008
We encourage you to review the entire Guide Bulletin to become familiar with all changes and updates to the Guide. Read more
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
Tuesday, June 17, 2008
Fannie Mae News
Fannie issues two new bulletins.
08-13 Amends these Guides: Selling
2008 Area Median Income Estimates, Interest-Only Clarification, Revised Form 1008, FHASecure Special Feature Code read more
Announcement 08-13 June 13, 2008
Amends these Guides: Selling
2008 Area Median Income Estimates, Interest-Only Clarification, Revised Form 1008, FHASecure Special Feature Cod read more
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
08-13 Amends these Guides: Selling
2008 Area Median Income Estimates, Interest-Only Clarification, Revised Form 1008, FHASecure Special Feature Code read more
Announcement 08-13 June 13, 2008
Amends these Guides: Selling
2008 Area Median Income Estimates, Interest-Only Clarification, Revised Form 1008, FHASecure Special Feature Cod read more
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
Monday, June 9, 2008
DU User Guide Changes
DU News
Fannie Mae has annotated their DU Users Guide as of May 2008
I have also added this link to my blog under DU tip and then "Helpful Conventional Websites"
I thought I would point out a couple of changes for the next little while in regards to DU 7 here are two changes I noticed when reading the guide.
1-The level of risk associated with each property type is as follows, starting with those property types representing the least amount of risk:
• One-unit properties that are not in a cooperative project and are not attached condominiums;
• Attached condominiums, units incooperative projects, and two-unit properties;
• Three- and four-unit properties; and
• Manufactured homes, including those in a condominium or cooperative project
2-Self-employment will no longer be a risk factor with DU Version 7.0.
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
Fannie Mae has annotated their DU Users Guide as of May 2008
I have also added this link to my blog under DU tip and then "Helpful Conventional Websites"
I thought I would point out a couple of changes for the next little while in regards to DU 7 here are two changes I noticed when reading the guide.
1-The level of risk associated with each property type is as follows, starting with those property types representing the least amount of risk:
• One-unit properties that are not in a cooperative project and are not attached condominiums;
• Attached condominiums, units incooperative projects, and two-unit properties;
• Three- and four-unit properties; and
• Manufactured homes, including those in a condominium or cooperative project
2-Self-employment will no longer be a risk factor with DU Version 7.0.
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
Friday, May 23, 2008
DU Tip Data Integrity
I am sure you have heard the saying before "You must have Data Integrity when submitting a loan to DU or LP". This means that everything you have entered in the AU systems is verified in the loan file as being true and accurate by the time it goes to underwriting. The primary purpose of the underwriter is to verify data integrity. If you're good and matching the information from the loan docs to the information entered in the AU systems you will never loose your approval from DU or LP when the underwriter reviews the file.
Some good examples of this are:
Income not calculated correctly. It is always a good idea to show the underwriter how you calculated the income. Always make sure your year to date makes sense with the income you are using to qualify the borrower
Enter the income in the appropriate category. Example don't enter commission income as base income. I see this happen quit often. Commission income was entered as base income and DU gives a verbal waiver but when the income is moved to the appropriate category of commission income sometimes the verbal waiver is lost.
Assets listed but not verified. DU is changing next week you don't want the underwriter running your loan without the assets that you plan on verifying and risk loosing your approval (the underwriter doesn't know that you are going to verify more assets).
Listing a borrower as salary employee vs. being self employed or visa versa.
We could probably could cover many more scenarios but this should give you a good idea. Remember DU changes next weekend and although they say it will not impact loans already submitted, that has not been my experience in the past. Please make sure you files are up to date and have data integrity before next weekend.
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
Some good examples of this are:
Income not calculated correctly. It is always a good idea to show the underwriter how you calculated the income. Always make sure your year to date makes sense with the income you are using to qualify the borrower
Enter the income in the appropriate category. Example don't enter commission income as base income. I see this happen quit often. Commission income was entered as base income and DU gives a verbal waiver but when the income is moved to the appropriate category of commission income sometimes the verbal waiver is lost.
Assets listed but not verified. DU is changing next week you don't want the underwriter running your loan without the assets that you plan on verifying and risk loosing your approval (the underwriter doesn't know that you are going to verify more assets).
Listing a borrower as salary employee vs. being self employed or visa versa.
We could probably could cover many more scenarios but this should give you a good idea. Remember DU changes next weekend and although they say it will not impact loans already submitted, that has not been my experience in the past. Please make sure you files are up to date and have data integrity before next weekend.
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
Friday, April 18, 2008
DU Self employed vs 1099
When I am out calling on brokers I run into this dilemma all the time. Many are under the impression if a borrower receives 1099 income they are self employed. They maybe but many times they are not. See Fannie Mae's definition below defining self-employed borrowers:
"We consider any individual who has a 25 percent or greater ownership interest in a business to be self-employed. A number of factors need to be considered in underwriting a self-employed borrower, some of which may be beyond the borrower’s control (although they still have a significant effect on the borrower’s business). The lender should analyze each of the following factors before approving a mortgage for a self-employed borrower:
•
the stability of the borrower’s income;
•
the location and nature of the borrower’s business, the demand for the product or service offered by the business, the financial strength of the business, and the ability of the business to continue generating sufficient income to enable the borrower to make the payments on the requested mortgage; and
•
the marketability of the property that is security for the mortgage as a private residence (rather than as the location of a business), since the property could be the source of repayment for the mortgage should the borrower’s business fail.
Because income from self-employment may be unpredictable and the business owner often is personally liable for the business debt, self-employed borrowers tend to default at a much higher rate than other borrowers. For this reason, we usually require the lender to obtain a two-year history of the borrower’s prior earnings as a means of demonstrating the likelihood that the income will continue to be received. However, a person who has a shorter history of self-employment—12 to 24 months—may be considered, as long as the borrower’s latest federal income tax returns reflect the receipt of such income for a 12-month period and he or she has a history of receiving income at the same (or a greater) level in a field that provides the same products or services as the current business or in an occupation in which the he or she had similar responsibilities to those undertaken in connection with the current business. In such cases, the lender must give careful consideration to the nature of the borrower’s business, the demand for the service or product, the borrower’s level of experience, and the amount of debt the business has."
A 1099 borrower has the same documentation requirements as a self employed borrower. So why does it matter if they are not self employed? When you run a loan through DU and mark yes, the self employed borrowers taken on an additional risk. If you mark no many times you will get an approval vs. yes. This doesn't mean you should circumvent the transaction and say they are not when they are but don't mark the box if they don't own 25% of a business.
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
"We consider any individual who has a 25 percent or greater ownership interest in a business to be self-employed. A number of factors need to be considered in underwriting a self-employed borrower, some of which may be beyond the borrower’s control (although they still have a significant effect on the borrower’s business). The lender should analyze each of the following factors before approving a mortgage for a self-employed borrower:
•
the stability of the borrower’s income;
•
the location and nature of the borrower’s business, the demand for the product or service offered by the business, the financial strength of the business, and the ability of the business to continue generating sufficient income to enable the borrower to make the payments on the requested mortgage; and
•
the marketability of the property that is security for the mortgage as a private residence (rather than as the location of a business), since the property could be the source of repayment for the mortgage should the borrower’s business fail.
Because income from self-employment may be unpredictable and the business owner often is personally liable for the business debt, self-employed borrowers tend to default at a much higher rate than other borrowers. For this reason, we usually require the lender to obtain a two-year history of the borrower’s prior earnings as a means of demonstrating the likelihood that the income will continue to be received. However, a person who has a shorter history of self-employment—12 to 24 months—may be considered, as long as the borrower’s latest federal income tax returns reflect the receipt of such income for a 12-month period and he or she has a history of receiving income at the same (or a greater) level in a field that provides the same products or services as the current business or in an occupation in which the he or she had similar responsibilities to those undertaken in connection with the current business. In such cases, the lender must give careful consideration to the nature of the borrower’s business, the demand for the service or product, the borrower’s level of experience, and the amount of debt the business has."
A 1099 borrower has the same documentation requirements as a self employed borrower. So why does it matter if they are not self employed? When you run a loan through DU and mark yes, the self employed borrowers taken on an additional risk. If you mark no many times you will get an approval vs. yes. This doesn't mean you should circumvent the transaction and say they are not when they are but don't mark the box if they don't own 25% of a business.
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
Thursday, April 17, 2008
DU Tip "Potential Red Flag Messages"
Why can some brokers get a loan approved and some can not? There are probably more reasons than we would want to know, but one reason is knowing how to use DU or LP. Here is one more DU tip:
When using DU if you do not get an approval review your feedback for the reasons that you may be giving the non approval. If the reasons are DTI, reserves etc. and there is anything you can do to eliminate the risk try this first. If you still don't have an approval notice if your Feed back has any "Potential Red Flag messages".
If you read the DU Manuel it says "Du can provide a number of potential red flag messages that are designed to help our customers detect inconsistencies in loan casefiles as well as potentially fraudulent transactions. For a list of these messages as well as information on what causes DU to return each potential red flag message and Fannie Mae's recommended approach for reviewing the information when each of these messages is received, see the DU Potential Red Flag message matrix. The matrix is available through efanniemae.com as well as the DU Help Center (by searching on the words "red flags") Lenders can contact Fannie Mae for help.
Note: The appearance of these messages does not affect the underwriting recommendation from DU. Rather they are designed to help lenders detect inconsistencies and potentially fraudulent transactions. Furthermore, the absent of any of these messages doesn't not indicate or imply Fannie Mae's acceptance of the data submitted to DU including the appraised value."
Okay that is what FANNIE says, but that has not been my experience. Very often when I see a Red Flag and if it is something that I can address such as the value not being there and I reduce the value I get an approval. My suggestion if you do not get an approval and you have a Red Flag try to address that issue and rerun your loan through DU and you will usually get an approval.
DU will be having web trainings next month take some time and sign up
I want my brokers to be as knowledgeable as possible on DU/LP so you can close more loans. The training is for the new Version 7 DU.
Also Version 7 DU will be more conservative than the current version so it will be worth your while to take these trainings
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
When using DU if you do not get an approval review your feedback for the reasons that you may be giving the non approval. If the reasons are DTI, reserves etc. and there is anything you can do to eliminate the risk try this first. If you still don't have an approval notice if your Feed back has any "Potential Red Flag messages".
If you read the DU Manuel it says "Du can provide a number of potential red flag messages that are designed to help our customers detect inconsistencies in loan casefiles as well as potentially fraudulent transactions. For a list of these messages as well as information on what causes DU to return each potential red flag message and Fannie Mae's recommended approach for reviewing the information when each of these messages is received, see the DU Potential Red Flag message matrix. The matrix is available through efanniemae.com as well as the DU Help Center (by searching on the words "red flags") Lenders can contact Fannie Mae for help.
Note: The appearance of these messages does not affect the underwriting recommendation from DU. Rather they are designed to help lenders detect inconsistencies and potentially fraudulent transactions. Furthermore, the absent of any of these messages doesn't not indicate or imply Fannie Mae's acceptance of the data submitted to DU including the appraised value."
Okay that is what FANNIE says, but that has not been my experience. Very often when I see a Red Flag and if it is something that I can address such as the value not being there and I reduce the value I get an approval. My suggestion if you do not get an approval and you have a Red Flag try to address that issue and rerun your loan through DU and you will usually get an approval.
DU will be having web trainings next month take some time and sign up
I want my brokers to be as knowledgeable as possible on DU/LP so you can close more loans. The training is for the new Version 7 DU.
Also Version 7 DU will be more conservative than the current version so it will be worth your while to take these trainings
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.mtgview.blogspot.com
Friday, April 11, 2008
Bonus and Overtime with DU (Conventional)
Bonus and Overtime - DU will recommend one of the following
Verbal VOE
One Pay stub and telephone confirmation (or in lieu of telephone confirmation, an additional pay stub dated within 30 days of closing) or
One pay stub, telephone confirmation, and the previous year's W2
Income calculation:
When using a verbal VIE, the lender just determine that the stated bonus and overtime income used for qualifying purposes is reasonable based on the borrower's occupation, tenure and title.
When using a pay stub that reflects YTD bonus and overtime income, the bonus and overtime income must be annualized (divided by 12). If the lender choose to average the bonus and overtime over a longer period of time, additional documentation must be provided. It may also be necessary to obtain additional information or documentation from the borrower to establish the stability of the bonus and over time income.
It could sometimes be in the borrower's best interest to provide more documentation then what DU ask for. The required calculation including annualizeing the YTD from a pay stub will decrease the bonus/Overtime substantially if the borrower is in the first-mid late year.
Please, Please if you do get the verbal waiver DO NOT PROVIDE ANY INCOME DOCUMENTATION! The underwriter will make you meet the manual underwriting guidelines if you do.
Verbal VOE
One Pay stub and telephone confirmation (or in lieu of telephone confirmation, an additional pay stub dated within 30 days of closing) or
One pay stub, telephone confirmation, and the previous year's W2
Income calculation:
When using a verbal VIE, the lender just determine that the stated bonus and overtime income used for qualifying purposes is reasonable based on the borrower's occupation, tenure and title.
When using a pay stub that reflects YTD bonus and overtime income, the bonus and overtime income must be annualized (divided by 12). If the lender choose to average the bonus and overtime over a longer period of time, additional documentation must be provided. It may also be necessary to obtain additional information or documentation from the borrower to establish the stability of the bonus and over time income.
It could sometimes be in the borrower's best interest to provide more documentation then what DU ask for. The required calculation including annualizeing the YTD from a pay stub will decrease the bonus/Overtime substantially if the borrower is in the first-mid late year.
Please, Please if you do get the verbal waiver DO NOT PROVIDE ANY INCOME DOCUMENTATION! The underwriter will make you meet the manual underwriting guidelines if you do.
Wednesday, April 9, 2008
Commission Income for Conventional loans W/DU
DU TIP The Du guide says that there is no stated minimum history requirement for commission income that equals or exceeds 25% of the borrower's employment income. However, If the documentation level recommend by DU is one or two years personal federal tax returns, at least six months of commission income must be documented on the filed tax returns for it to be used for qualifying purposes. It gives an example that if Du ask for one year tax returns you and it only shows 6 months commission you would divide by 12. I would assume than if it ask for 2 years you would divide by 24 months.
No new News from agency or the market.
No new News from agency or the market.
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