Special Edition of Investor, Lender and MI Changes

Investors have been busy in recent weeks, and with no college or pro football, no NASCAR, no baseball, why not read about recent guideline changes? As always, it is best to read the actual guidelines from the investor - this is not meant to replace them. And they are not particularly timely, but meant to indicate trends in the marketplace. So, in no particular order...

Effective Wednesday, January 25, 2012, Home Savings of America temporarily suspended loans in New York and Hawaii.

Yesterday Provident Funding told its clients that as a result of increase in g-fees, its lock extension policy has been updated. "Lock extensions on Conforming and Super Conforming loans previously locked before February 9, 2012 that will extend the lock expiration date past March 9, 2012 will be affected as follows: When a lock extension is requested, a market comparison is performed on the original lock base price plus lock period adjustment and the current base price, and the lock is extended at worse case. If the original lock base price plus lock period adjustment is worse, then a 0.5% lock extension adjustment is applied. If the current market is worse, then a 0.5% lock extension adjustment is not applied since the increased G-Fees has already been accounted for in the current base price."

On the 13th Franklin American expanded its FHA Jumbo Product, issuing the following statement: "streamline refinances with or without appraisals will be eligible for FAMC's FHA Jumbo product provided the following are met: Minimum FICO 680, 0x30 mortgage history for the last 12 months, and all other FHA Jumbo and Streamline guidelines are met." FAMC also told its clients that USDA Rural Development Refinance Funds are available, starting on the 10th, under the Single Family Housing Guaranteed Loan Program. The investor reminded counterparties that VA appraisals must include interior photos, and of the VA's policy that the value must match the appraiser's value estimate. "VA SAR Underwriters must issue NOVs at the appraised value documented in the appraisal report. VA guidelines have historically allowed VA approved Underwriters who are approved as Staff Appraisal Reviewers (SARs), to issue Notices of Value (NOVs) with a value up to a five percent deviation from the appraiser's estimate, with supporting documentation. Deviation from the appraiser's value estimate is no longer allowed."

Earlier in January Wells' wholesale announced its HARP 2.0 plans. "Several changes will go into effect for the Home Affordable Refinance Program (HARP) on Monday, Feb. 6, and there are important deadlines for HARP 1.0 transactions for loans with registration dates prior to Feb. 6. Changes to the HARP will go into effect with loan registrations on or after Monday, Feb. 6, 2012. Important: The Loan-to-Value (LTV) enhancement offered by Freddie Mac and Fannie Mae will not be available to the Wells Fargo Wholesale channel until a thorough assessment of the impacts has been made.  Check out the  bulletin issued to brokers for more on specific changes, dates and underwriting.

Due to the current performance of non-credit qualifying Sreamline Refinance loans, Wells Fargo Home Mortgage increased the minimum Loan Score required for non-credit qualifying FHA transactions.  Provided that they have scores of at least 640, loans that don't meet the new minimum score can still be processed as a credit-qualifying Streamline Refinance or a Rate/Term Refinance.

And some more Wells news: as of February 13, 2012, Wells Fargo Funding
will update their Non-Conforming Loan policy by adding additional requirements to the Multiple Financed Properties policy; enhancing post-closing liquidity, departure residence and maximum LTV/CLTV; clarifying the definition of liquid assets to meet the reserve requirements when the LTV/CLTV is less than 60% or the debt ratio is less than 24%; and reducing the maximum LTV/CLTV by 5% for Loans where the subject property is located in Market Class 4.

PHH expanded the Freddie Mac Relief Refinance Open Access product family to include new 20-yr Fixed and 5/1 ARM products to provide another refinancing option for borrowers who qualify for the HARP programs.  Additionally, the 80% maximum LTV restriction for properties in Texas has been removed with cash back at closing in mind.  Thanks to the HARP II initiative, MI providers are no longer requiring lenders to apply additional restrictions to Fannie and Freddie HARP program guidelines when transferring mortgage insurance to the new loan. Accordingly, the HARP MI Provider Overlay and the HARP MI Requirements Checklist have been eliminated.

Mountain West Financial is now only offering FHA 203k Streamline loans with a maximum loan amount of $417,000.00 (not including UFMIP).
 
CitiBank spread the word to its correspondent sellers that documenting gift funds is a very common post purchase defect and that they are at the mercy of pre-purchase suspense conditions if they cannot provide the source of gift funds or the gift letter from the donor in the loan package submission-often the lender can't locate the source of the gift funds received outside of closing.  Lack of proper sourcing documentation is also a common problem, as are partial gift funds (rather than the full amount).  In short, be sure to include that pesky gift letter from the donor in the loan package!

On the 16^th MGIC changed a few underwriting guidelines regarding their ARM rates to better align with industry standards, and reworked their framework for loans with both traditional and non-traditional credit borrowers.

SunTrust has issued a friendly reminder to follow Agency guidelines for rural properties and that the Key Loan Program limits properties to a maximum of 10 acres.  In other SunTrust news, SunTrust Mortgage, Inc. has updated acceptable borrower benefit requirements for the DU Refi Plus loan program.

HSOA now allows electronic delivery and signing of upfront disclosures. Keep this in mind, though: although it's HSOA/Federal policy that signed initial disclosures are not required to be in the file, proof of delivery of initial disclosures is mandatory, so if the borrower signs and returns the documents (either electronically or physical/wet signature) HSOA will scan and upload them. Some documents that can use the electronic signature: URLA/Application/1003 (unless the loan will be closing with a Power of Attorney), interim; pre-closing; disclosures; and appraisals (if signed by the appraiser and reviewer appraiser).  The rulers are a bit more specific for FHA loan documents, though, so it's worth a closer look if you're interested.

HSOA told clients that the DU for Government Loans is to be updated 2/18. FNMA will install an update for DU for Government loans the weekend of February 18, and any new submission and any re-submissions will be subject to the changes.  The new county limits, when they're published, can be viewed at https://entp.hud.gov/idapp/html/hicostlook.cfm.

In response to recent updates to FHA TOTAL Scorecard User Guide, Chase is revising the policy regarding the treatment of FHA loans with disputed accounts on the credit report.  In addition to the existing Chase Records Center in Monroe, Louisiana, Chase opened a second site in Fort Worth, Texas, which will be the primary delivery site for Correspondents whose headquarters are located in Minnesota and North Dakota.  The site will also provide disaster recovery capabilities for the Records Center in Monroe. Chase is also notifying Correspondents that they must convert to Imaged Document Delivery in ChaseLoanManager by February 1, 2012.

Chase announced a policy overlay, effective on the 23^rd for best efforts and mandatory, requiring all reported delinquent Chase accounts be brought current prior to or at the time of closing on all FHA, VA and Conventional loan transactions due to Fannie Mae DU Refi PlusTM and Freddie Mac LP Open Access transactions being excluded from this policy overlay.

Kinecta Federal Credit Union has updated its "Eligibility Matrix" for loans in Florida, Arizona, Nevada and Georgia such that jumbo products and Kinecta HELOCs are no longer available, and if property is a condo in a declining market, a 5% reduction in LTV will apply.  Applications for properties in Nevada will no longer be accepted.  Meanwhile, in California, any guideline changes changes that apply to properties will occur "only to non-conforming/jumbo products and...in certain counties."  Guideline changes include an additional 5% reduction in CLTV and that Kinecta HELOCs are subject to70% maximum CLTV, 720 minimum FICO, 41% maximum DTI, and 24 months' minimum reserves.  Some counties are exempted, though.

GMAC has announced VA overlay additions dictating the following: the payoff of revolving accounts is permitted if the account is paid in full prior to closing, and the pay off and zero balance must be documented directly from the creditor. (The pay off may not be reflected on the HUD-1.)

Essent Guaranty has been added as an approved MI company for borrower paid monthly insurance for Fifth Third Correspondent Lending.

In order to be compliant with the S.A.F.E. Act, U.S. Bank Home Mortgage Wholesale Division would like to inform you that, as of, Thursday, January 19, "our SellUs web site requires you to fill in your 'Loan Originator ID' and 'Loan Originator Name' on any loan that is locked on the SellUs website, regardless of registration date. The 'Loan Originator ID' will be your LO NMLS number (LO originating the application) and the 'Loan Originator Name' will be the Loan Officer's name.

United Guaranty is introducing an enhancement to Performance Premium mortgage insurance eligibility effective for rate quote requests and mortgage insurance applications received on or after February 13, 2012. "The enhancement offers a new approach to determining MI eligibility for loans using both general underwriting requirements and automated risk tools, which will be able to provide eligibility for loans that don't qualify for United Guaranty mortgage insurance at present."

A good old Alabama boy won a bass boat in a raffle drawing.
He brought it home and his wife looks at him and says, "What you gonna do with that. There ain't no water deep enough to float a boat within 100 miles of here."
He says, "I won it and I'm a-gonna keep it."
His brother came over to visit several days later. He sees the wife and asks where his brother is.
She says, "He's out there in his bass boat", pointing to the field behind the house.
The brother heads out behind the house and sees his brother in the middle of a big field sitting in a bass boat with a fishing rod in his hand.
He yells out to him, "What are you doin'?"
His brother replies, "I'm fishin'. What does it look like I'm a doin'?"
His brother yells, "It's people like you that give people from Alabama a bad name, makin' everybody think we're stupid. If I could swim, I'd come out there and whip your +++!"

If you're interested, visit my twice-a-month blog at the STRATMOR Group web site located at www.stratmorgroup.com. The current blog discusses residential lending and mortgage programs around the world. If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what's going on out there from the other readers.