Iowa Finance Authority

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Iowa Finance Authority

• Sally Mazzola

Underwriting/ Delivery/Funding Overview First
Home/FirstHome Plus
Rev. May 11, 2009
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Disclaimer
This presentation is for basic informational
purposes only. It is the originating lenders
responsibility to follow all specific Agency
(Fannie Mae, Freddie Mac, FHA, VA, or RD
guidelines as well as all program specific
guidelines.
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Underwriting Overview
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Agency Announcements/Bulletins

• Be sure to keep updated on all Announcements
• and Bulletins released by Agencies
• U S Bank is requiring that
• lenders adhere to all terms and conditions of
  these
• announcements unless otherwise instructed
• U S Bank Help Desk (MRBP Division) will advise
  lenders of
• any updates by bulletin

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Eligible Loan Products

• FHA 203(b) 203(h) 203(b)(2) 234(c)
• VA Originated and guaranteed in accordance
  with VA
• guidelines
• USDA-RHS
• Temporary Buy downs Permitted on government
  and
• conventional, must follow Agency guidelines

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Eligible Products

• Fannie Mae MCM and standard products
• Freddie Mac Home Possible
• Note On Fannie Mae or Freddie Mac loans,
  should income
• limits differ, use those established by bond
  program
• All loan types must be 25 or 30 year amortizing
  fixed rate loans
• All loans must be originated in accordance with
  Agency guidelines
• Should bond guidelines differ from Agency, the
  stricter of
• the two shall prevail

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Loan Products Not Permitted

• Fannie Mae Flex products
• Split Loan Products (80/20, 80/15/5 etc.)
• Freddie Mac standard conventional products

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Underwriting Requirements

• Loans should be underwritten in compliance with
  the most current underwriting guidelines
  established by FHA, VA, Rural Housing, Fannie Mae
  and Freddie Mac.
• The following automated systems are approved for
  use in the program
• Fannie Mae loans (DU) Only
• Freddie Mac (LP) Only
• FHA VA loans (DU or LP)
• RHS (GUS)
• If manual underwrite is necessary, full
  documentation is required
• Other customized automated underwriting systems
  are not acceptable at this time.

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Appraisals

• Full appraisal reports are required if performing
  manual underwrite
• Correspondent Lenders, sponsored by the Master
  Servicer, required to submit full appraisals

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FHA Products
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FHA Risk-Based Pricing

• Mortgagee Letter 2008-22 FHA Moratorium on Risk
  Based
• Premiums dated 9/4/08 (Reference for full
  details)
• Effective for new FHA case number assignments
  made on
• or after October 1, 2008 and continue through
  and including
• September 30, 2009
• Upfront premium in an amount equal to mortgage of
  1.75

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FHA Mortgage Limits

• FHA Mortgage Limits page
• Allows lenders to look up the FHA Maximum
  Mortgage limits for your area. Areas are sorted
  by State, County, and Metropolitan Statistical
  Area.
• https//entp.hud.gov/idapp/fhagov/hicostlook.cfm
• The current basic standard mortgage limits for
  FHA insured loans are
• One-Family
• 271,050.00 

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Interested Party Contributions (Seller)

• Interested third parties Contributions are
  limited to six (6) percent of the sales price.
  See the below section for further guidance.
• HUD Handbook 4155.1 Rev-5, "Mortgage Credit
  Analysis for Mortgage Insurance, One to Four
  Family Properties", Chapter 1 section 2 (1-7A)
• When gift funds do not meet FHA requirements as
  an acceptable sources of gift funds down payment
  assistance are outlined in
• HUD Handbook 4155.1 Rev-5, Chapter 2,
  section 3 (2-10C).

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FHA Property Flipping Policy

• Only owners of record may sell properties that
  will be financed
• using FHA insured mortgages
• Property flipping 90 days or less following
  acquisition is
• ineligible for FHA financing. (There are some
  exceptions)
• Property flipping between 91 and 180 days
  following acquisition
• Lender is required to obtain appraisal made by
  another appraiser if resale price is 100 or more
  over the price paid by the seller when property
  was acquired.

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FHA Property Flipping Policy cont.

• Property flipping between 91days and 12 mos.
  following acquisition
• FHA reserves the right to require additional
  documentation from the lender supporting the
  resale value if resale price is 5 or greater
  than lowest sales price of the property during
  the preceding 12 mos.
• At FHAs discretion, such documentation may
  include, but is not limited to, an appraisal from
  another appraiser.
• Refer to ML2006-14 for additional information
  and requirements for
• property flipping.
• 
  

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Maximum Loan-to-Value

• The borrower minimum cash investment is 3.5 of
  the appraised/sales price, whichever is less.
• LTV, NOT including the up-front MIP, cannot be
  greater then 96.5.
• Closing costs may NOT be used to help meet the
  minimum 3.5
• downpayment requirement and are NOT
  considered in the mortgage
• amount/downpayment calculation for purchase
  money mortgages.
• CLTV - FHA requires that the sum of all liens not
  exceed 100 of the
• cost to acquire the property.

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Borrower Minimum out of pocket Expense

• When Calculating the borrowers Minimum out of
  pocket expense using a 1st and 2nd mortgage,
  start with the following calculations.
• 
  Max LTV Cal
• Cost to acquire 1st 2nd MTG
• sales price 100,000
• allowable closing cost (borrower paid)
  2,500
• discount points (if applicable) 0.0
  
• prepaids 1,500
• 100 acquisition 104,000
• Calculations exclude upfront mortgage insurance
  (UFMIP).

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Borrower Minimum out of pocket Expense Cont.
100 acquisition Cost 104,000 First
Mortgage 96.5 of Sales -
96,500 (sale price 100,000) Second 4.00
- 4,000 Borrower cost/expense
3,500 Seller can pay for closing and prepaid
expenses up to 6 of the sales price. Example
cost was 4,000, (2,500 for CC and 1,500 for
prepaid) Seller contribution can make up the
difference needed by the borrower and could allow
the borrower to come in with 0 out of their own
pocket. In the example above If the seller is
contributing more than 3,500, the first mortgage
MUST be reduced by a dollar for dollar amount.
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TRANSACTIONS THAT AFFECT MAXIMUM MORTGAGE
CALCULATIONS

• Transactions that affect the amount of financing
  available
• and the calculation of the maximum mortgage.
• These transactions include
• Identity-of-interest.
• Properties with non-occupying co-borrowers.
• Properties for which a house will be constructed
  by the borrower on his or her own land, or as a
  general contractor.
• Payoffs of land contracts.
• Transactions involving properties under
  construction or less than a year old.

The FHA 1st mortgage cannot exceed the FHA
Statutory Limits for the area and/or other
Maximum Mortgage Calculations as in those
situations listed above
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TRANSACTIONS THAT AFFECT MAXIMUM MORTGAGE
CALCULATIONS Continued

• Reference Sections
• 4155.1 REV-5 Mortgage Credit Analysis for
  Mortgage Insurance,
• One- to Four-Family Properties
• CHAPTER 1 UNDERWRITING THE MORTGAGE (10/03)
• CHAPTER 1, SECTION 2 MAXIMUM MORTGAGE AMOUNTS
  (10/03) 1-8

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Cosigners Bond Loans

• Cosigners are permitted for an FHA Bond Loan
  as in any FHA transaction with the exception of
  the following conditions
• A cosigner cannot have any ownership interest in
  the property. They
• cannot be on the Mortgage Deed of Trust or
  take title to the property.
• The cosigner cannot reside in the property being
  purchased. A
• cosigners income is not included in the
  calculation for bond
• compliance income. Income documentation is
  not required for bond
• compliance purpose. Cosigners do not sign
  any of the bond
• compliance documents.

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Conventional Products
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Conventional Product Comparison
MCM/HP Standard Eligible Property All
(except Mfg. Housing) All (includes Mfg.
Housing Eligible Loans EA-I/EA-II/EA-III DU-No
EAs permitted (run through DU 7.0) or
LP Accept Manual underwrite or Manual
Underwrite/Fannie Secondary Market Per First Home
Rate Fee sheet. No additional -Charge all
LLPAs per Fannie fee for credit score or
LLPA matrix for FICO,LTV, Adverse Mkt. Fee
and Mfg. Homes. - Charge Adverse Market
Fee


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Conventional Product Comparison
MCM/HP Standard
Maximum LTV 100 95 (subject to MI
eligibility) (subject to MI avail.) Maximum
CLTV Up to 105 w/ Community 2nds (subject to
MI elig.) LTV N/A due to LTV 97 to 100
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Conventional Product Comparison
MCM/HP Standard Manual Underwrite
LTV/CLTV 97/105. 660 660 FICO FICO scores
LTV/CLTV100/105 680 Max ratio 45 for
total DTI Non-Traditional LTV/CLTV
95/105 subject to MI availability Credit UW
Max Job Loss Ins. IUI
required on loan 97 Encouraged
(or 28 coverage)
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Conventional Product Comparison
MCM/HP Standard Pre-Closing
Homebuyer Education Required Early
Delinquency Counseling Required form at
closing Min Borrower None 5 of
borrowers own resources Funds unless 80 LTV
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Conventional Product Comparison
MCM/HP Standard Seller Contributions
90 LTV3 Ratios Per DU or single ratio up to 45
(manual underwrite) Freddie Mac Home All loans
must be submitted through N/A Possible LP.
NO manual underwrite Risk Class Accept- if
LTV 97 FICO Score of 700
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Conventional Product Comparison
MCM/HP Standard Additional variance
Non-occupant co-signer signs Note not on
mortgage or Title restricted to immediate
relative. May ignore DU non-occupant
co-signer Messaging. Limited to 90 LTV /
Occupant DTI 55
Income Limits Above Fannies 100 AMI permitted
as long as checked to ensure limits are within
IFAs limits or use income adjustor button to
increase limit to IFA limit
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MI Coverage Comparison
MCM/HP Standard 80.01-85 LTV
6 12 (17 if Mfg. Hsg.) 85.01-90 LTV
12 25 (30 if Mfg. Hsg.) 90.01-95 LTV
16 35 95.01-97 LTV 18 No financed
MI LTV 95 97.01-100 LTV 20 Split
Premiums MCM only whole or in part Single
Premium Financed Up to 100 Up to 95
Standard Coverage

• Not all MI companies have the same policies, be
  sure to research

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Special Feature / Characteristic Codes

• Enter the appropriate Special Feature Code for
  Fannie Mae
• Special Characteristic Codes for Freddie Mac
  loans
• (Processors and Underwriters) Include on
  Transmittal Summary (1008)
• (Closers/Shippers) Include on the USBHM Loan
  Delivery Checklist
• All Bond loans should be coded (088)

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Special Feature Codes
Most commonly used SFC and SCCs
Special Feature Codes must be listed on the
1008 and USBHM Loan Delivery Checklist
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Special Feature Codes
Special Feature Codes must be listed on the
1008 and USBHM Loan Delivery Checklist
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Special Characteristic Codes Freddie Mac
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Underwriting References

• Fannie Mae References
• www.efanniemae.com
• Freddie Mac References
• Freddie Mac website www. freddiemac.com
• FHA References
• Guide 4155.1 rev 5
• FHA website www.hud.gov
• Other References
• Allregs www.allregs.com
• VA www.homeloans.va.gov
• USDA-RD www.rurdev.usda.gov

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Contact Information

• Correspondent Lenders Only
• Information on status of file submitted
• Tina Lloyd [phone] or
• Margaret Cruz [phone]
• UW conditions are to be e-mailed
• bedfordmrb_at_usbank.com

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Contact Information
Participating Lenders Prior to contacting
USBHM, please reference specific Agency
guidelines relative to product you are
underwriting. If further clarification is still
needed UNDERWRITERS ONLY can send questions
via e-mail bedfordmrb_at_usbank.com Phone
1-800-562-5165
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Delivery Funding Overview
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Preparation for Delivery

• All Originators, Shippers Closers should review
  the guides and documentation required prior to
  closing
• Closing instructions and document preparation are
  to be performed by originating lender
• Provide Complete Contact Information and Wiring
  Instructions
• Access the web at www.mrbp.usbank.com or
• www.iowafinanceauthority.gov to obtain the
  information.

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Loan File Process

• Lender registers loan through Iowa Finance
  Authority (IFA)
• Lender can elect to either deliver
• Pre-Closing (optional) compliance file to IFA
  for review
• IFA requires Post Closing compliance review
  prior to loan
• purchase on all loans
• If sending a pre-closing compliance package,
  when approved the
• Lender is permitted to close and fund loan,
  per agency guidelines
• USBHM is not permitted to purchase until post
  closing package
• approved by IFA

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Loan File Process cont.

• Lender is to ship loan immediately after closing
  (within 10 days
• closing)
• Be sure to use our USBHM Loan Delivery Checklist
  
• Deliver closed mortgage loan file to
• U.S. Bank Home Mortgage-MRBP Division
• 17500 Rockside Road
• Bedford, OH 44146-2099
• ATTN Operations Department
• U S Bank reviews file to verify integrity

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Loan File Process cont.

• Loans cited for deficiencies are put on
  exception and
• communicated to lender by Fax or Exception
  Report
• Once all deficiencies are cleared loan is
  purchased by
• U. S. Bank Home Mortgage
• Funds are wired and purchase summaries faxed
  same day

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Collateral Reminders

• ORIGINAL NOTE
• Endorsed to U.S. Bank N.A.
• If borrower(s) undersign name affidavit required
• Be sure borrowers typed name(s) under signature
  line
• Co-Signers are to execute NOTE only

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Collateral Reminders

• RIDERS (copy)
• Applicable rider to the mortgage (FHA/VA MRB
  14A) or
• (Conv./RD MRB 14B)
• Other applicable riders (condo, pud, etc.)
• ASSIGNMENTS MERS lender can use in lieu of
  intervening
• assignment MERS
  ID1000212
• Non- MERS member assignments should
• be assigned to U.S. Bank N.A. (copy)

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Iowa Title Guaranty

• All lenders must obtain Title Guaranty
  Commitment and Title
• Guaranty Certificate from the Title Guaranty
  Division of the Iowa
• Finance Authority on all loans under the
  program
• - Perform a borrower search to insure you have
  clear title
• and no liens prior to mortgage or
  if any judgments / collection
• that will become lien should be paid
• USBHM will not purchase unless we receive
  either proof of Title
• Guaranty Commitment or Title Guaranty
  Certificate

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FirstHome Plus

• Lenders are to advance the FirstHome Plus
  grant to borrowers
• at closing
• USBHM will reimburse lender at time of
  purchase
• NOTE USBHM does NOT fund the Military
  Homeownership or REO
• Home programs

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Flood Insurance Certification

• Flood Insurance / Windstorm
• Proof of Insurance Payment (if applicable)
• Flood Certification
• Flood Certification required
• Life of Loan
• Transferable to USBHM

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Maximum Hazard/Flood Insurance Deductibles

• Government Loans
• Unless a higher maximum amount is required by
  state law, maximum deductible clause may not
  exceed the greater of 1,000 or 1 percent of the
  face amount of the policy
• For 1-4 family Individual PUD units
  Individual condo units
• (i.e. detached condos, town or row house)
• Deductibles may not exceed the higher of 1,000
  or 1 percent of the policys insurance limits for
  all covered losses.
• Association Policy requirements for CONDO/PUD
  Projects and common areas

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Maximum Hazard/Flood Insurance Deductibles

• Conventional Loans
• Maximum deductible may not exceed 5 percent of
  the face amount of the insurance policy limits
  for dwelling coverage (applies to all perils)
• For 1-4 family Individual PUD units
  Individual condo units
• (i.e. detached condos, town or row house)
• Maximum deductible may not exceed 5 percent of
  the face amount of the insurance policy (applies
  to all perils)
• Association Policy requirements for CONDO/PUD
  Projects and common areas

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Secondary Financing

• Participating Lenders are responsible for review
  and approval of
• any Non-HFA provided secondary
  financing
• Correspondent Lenders fax or e-mail program
  description and applicable legal documents for
  approval to
• Sally Mazzola, Client Support [phone]
  or e-mailed to sally.mazzola_at_usbank.com
• Funding source for all DPA programs must be
• Stated on the 1003 and HUD-1
• Must meet Agency (HUD, Fannie, Freddie, VA, RD)
  requirements
• Be sure the loan product, down payment source
  amount are
• reflected on the 1008 or LT-92900
• The only subordinate financing permitted is a
  Community 2nd or
• Employer assisted down payment assistance
  loan

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Top 10 Exception List
In order of most common suspense items.

• Mortgage/Deed of Trust (1st 2nd)
• Riders missing, (Rider to Mortgage, Condo, PUD)
• Property Address incorrect
• Pages and/or legal description not in file
• Notary Section blank or incorrectly completed

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Top 10 Exception List (cont.)

• Note
• Endorsements missing or incorrect
• Property address incorrect
• Payment terms of the loan incorrect
• Hazard Flood Policies
• Names addresses not matching other documents
  (Street, Drive, Blvd., etc)
• Proof of premium paid not in the file
• Flood coverage inadequate

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Top 10 Exception List (cont.)

• Manufactured Housing Documentation
• Exceptions related to following our Mfg. Hsg.
  Bulletin (dated 2007)
• Evidence of title being surrendered to state,
  model number/name
• on Security Agreement
• Security Instrument missing information on Mfg.
  Home
• Review our complete state specific guidelines on
  the USBHM website

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Top 10 Exception List (cont.)

• Underwriting
• Conventional loans--incorrectly put through DU/LP
  and/or have missing 1008s
• FHA loans-- missing 92900-LT Transmittal
• Assignment
• Not found in loan file
• Not assigned correctly to U.S. Bank N.A.
• Incorrect reference to borrower and/or property
  information on
• mortgage

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Top 10 Exception List (cont.)

• Appraisal
• Missing pages of the Appraisal
• Property address doesnt match other
  documentation
• HUD-I
• Property address not precisely matching other
  documents
• Calculations and/or amounts are incorrect
• DPA assistance was not properly identified
• Signed copy of the final not contained in file
• Missing monthly escrows or not collected escrows

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Top 10 Exception List (cont.)

• Title Guaranty Commitment/Certificate
• Not completed properly
• Not found in file submission
• Final T.I.L.
• Missing from file
• Name and address not matching other documentation
• MI under-disclosed or not disclosed at all

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Submission of Exceptions

• Provide separate cover letter/sheet identified by
  USBHM loan number (available after loan is
  reserved with IFA)
• Or attach weekly exception report identifying
  specific exception items to your submission
• Partial submissions are acceptable!

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Lender Compensation
Origination 0 Discount
0 SRP
1.75 or 1,000, whichever is greater LENDERS
NET 1.75 or 1,000, whichever is
greater
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Funding Information

• Loans purchased daily on an amortized balance
• Provide loan payment histories if there has been
  any activity prior to us
• purchasing
• Net Purchase (send no checks)
• Net current principal balance, interest,
  starting escrow balance
• Tax Service Fee 80
• Conventional loans only, applicable Secondary
  Marketing Fees

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Post Closing Documentation

• Organize trailing documents in order of Final
  Document Checklist
• Docs due in our office no later than 120 days
  after purchase
• A 50 penalty fee may be assessed after 120
  days (at a rate of 50 per
• month until last document has been received)
• Recorded Mortgages, Assignments, Riders, Title
  Guaranty Certificate,
• (MIC, LGC, LNG)
• Deliver to U S Bank Home Mortgage / Document
  Control Department
• 17500 Rockside Road
• Bedford, Ohio 44146-2099
• Questions? Contact Document Control Supervisor
• Darlene Kreigh darlene.kreigh_at_usbank.com (216)
  475-7739

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Quick Reference

• Note Endorsements / Assignments
• U.S. BANK N.A.
• MERS
• USB Mers ID 1000212
• Hazard Insurance / Loss Payee Clause
• U.S. BANK N.A.
• its successors and or assigns as their interest
  may appear.
• c/o U.S. Bank Home Mortgage
• P.O. Box 7298
• Springfield, OH 45501-7298

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Quick Reference

• Lender Changes (Names, DBAs etc.)
• Please Notify Elaine Wojtowicz 216-475-8268 /
  216-475-8619 fax

• Borrower Payment Address and Website
• U.S. Bank Home Mortgage
• P.O. Box 468002
• Bedford, OH 44146-8002
• www.usbankhomemortgage.com

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USBHM-MRBP Website

• Access our website at www.mrbp.usbank.com, select
  
• U S Bank Lending Manuals and link up to our
• information via AllRegs
• Lender manual
• Loan Delivery Checklists
• Product Descriptions
• U S Bank Lender Bulletins
• Manufactured Housing requirements (state
  specific)
• Underwriting/Closing
• 61

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Lender Support (Help Desk)

• In an effort to provide all Lenders who
  participate in the program with easy access to
  facilitate Program Administration, we have a
  specialized Help Desk exclusively for that
  purpose
• Product information
• Pipeline information
• Loan level information
• Any other support that you may require
• (800 a.m. EST - 600 p.m. EST)
• 1-800-562-5165 or
• Email mrbp.helpdesk_at_usbank.com

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Lender Scorecard

• Quarterly analysis is done based on performance
  of loans purchased and monitors
• Loans on exception and not purchased within
  required
• timeframes
• YTD Deficiencies, delinquency, foreclosure
  bankruptcy
• Final recorded documents over 240 days
  outstanding
• Lenders are advised in writing of issues
• IFA is copied on any notices sent to lender

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Payment Information
Borrower Payment Address and website U.S. Bank
Home Mortgage P.O. Box 468002 Bedford, OH
44146-8002 www.usbankhomemortgage.com

• Borrowers will receive a monthly statement
• Payments can be made online at
  www.usbankhomemortgage.com
• Borrower can also access payment transaction
  loan information.
• Borrowers can make their payment at any U S Bank
  Branch (must have loan number)

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Servicing Quick Reference List
Customer Service Toll Free Number [phone]
Hours Monday Friday 700 am 800 pm EST
Please give this information to your borrowers at
loan closing
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• Thank you
• for participating in the Iowa Finance Authority
  program

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