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SIH - Mortgage lending > HomeReady updated 10-31-2017 > Flashcards

HomeReady updated 10-31-2017 Flashcards

1
Q

Standard Risk Based pricing is waived for LTV ratios > 80% for what FICO score

A

> = 680

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2
Q

risk-based loan level price adjustment cap of _____ applies for FICOs (LLPA)

A

1.50% cap

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3
Q

max LTV under HomeReady?

A

97%

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4
Q

Can HomeReady be used with Community Seconds?

A

yes

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5
Q

can cash on hand be used for downpayment and closing costs on 1-unit properties ?

A

Yes, 1 unit only, but:

  1. Credit report must indicate that borrower has limited use of credit
  2. proof that borrower uses cash on a regular basis for paying bills
  3. written proof from borrower as to the source of the funds
  4. funds must be seasoned in a bank account for 30 days prior to COE
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6
Q

what can be used as down payment under HomeReady (1 unit properties)

A

gifts, grants, Community Seconds and Cash on hand

Cash on Hand has special requirements

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7
Q

Can the MI be canceled on HomeReady after 80%?

A

yes

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8
Q

How does the MI compare between HomeReady and Regular Conventional?

A

there is a reduced MI coverage requirement fro LTV higher than 90% for HomeReady

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9
Q

Is Homeownership Education required for HomeReady?

A

yes, through Framework

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10
Q

What is the name of the Homeownership Education requirement under HomeReady?

A

Framework

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11
Q

What is the link for US Census tracts to check the AMI requirements?

A

https://homeready-eligibility.fanniemae.com/homeready/

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12
Q

What pct of 2015 census tracts have not income limit in the US for HomeReady?

A

31%

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13
Q

what does AMI stand for?

A

Area Median Income

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14
Q

What is a high-minority census tract?

A

Where the minority population is at least 30% and the median tract income is less than 100% AMI

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15
Q

what is a low income census tract?

A

where the median tact income is no greater than 80% AMI

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16
Q

what percentage of US census tracts are 100% of AMI for HomeReady? (2015)

A

20%

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17
Q

what percentage of US census tracts are 80% of AMI for HomeReady income eligibility?

A

49%

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18
Q

FIPS Code

A

a unique code denoting the state, county and census tract number, this FIPS is used in DU to show eligibility requirements

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19
Q

Current 2017 AMI for Bakersfield and surrounding areas is?

A

$53k (2017)

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20
Q

is there a first time home buyer requirement for HomeReady?

A

no

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21
Q

Can you do cash out refi w/ HomeReady?

A

no

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22
Q

can you do limited cash (rate and term) out refi w/ HomeReady?

A

yes

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23
Q

Can you do Condos or Manufactured housing with HomeReady?

A

yes (1 unit only) and special requirements for Manufactured Home

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24
Q

Manufactured Home is eligible in accordance with standard MH guidelines (4 items):

A

DU only
95% max LTV/CLTV
FRMs, 7/1 and 10/1 ARMs
No Buydowns

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25
Q

Can you do NOO w/ HomeReady?

A

no

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26
Q

Can you buy multi-Family with Home/Ready?

A

yes, OOC only, and no condos or Manufactured Home

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27
Q

Are ARMs permitted for HomeReady?

A

yes, various, check matrix (restrictions for 3 and 4 unit properties)

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28
Q

Are FRM possible w/ HomeReady, if so, what terms?

A

yes, 10, 15, 20 or 30 year terms

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29
Q

what does changes when dealing with MH and HomeReady?

A

LTV/CLTV drops to 95% max

cannot do multifamily

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30
Q

Does HomeReady require buyer to be first-time home buyer to allow only 3% down?

A

no

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31
Q

does 97% LTV allow ARMS?

A

no, FRM only

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32
Q

Max LTV for Rate and Term Refi for FRM and for ARM?

A

95% for FRM and 90% for ARM

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33
Q

CLTV of what amount including community Seconds?

A

105% CLTV (refer to Eligibility Matrix)

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34
Q

Can community seconds be used with multifamily?

A

yes

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35
Q

Max LTV for 2 unit purchase or Rate and Term Refi?

A

85% FRM and 75% ARM

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36
Q

Max LTV for 3-4 unit purchase or Rate and Term Refi?

A

75% FRM only

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37
Q

What is the minimum borrower own funds contribution to down payment for 1-unit?

A

zero:

gifts, grants and community seconds can be used and cash on hand (for 1 unit only)

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38
Q

what is the minimum borrower own funds contribution to down payment for a 2 to 4 unit purchase?

A

3% own borrower funds, other contributions are acceptable

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39
Q

can cash on hand be used for 100% of down payment on 1-unit?

A

Yes, but:

  1. Credit report must indicate that borrower has limited use of credit
  2. proof that borrower uses cash on a regular basis for paying bills
  3. written proof from borrower as to the source of the funds
  4. funds must be seasoned in a bank account for 30 days prior to COE
  5. One Unit buildings only
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40
Q

What can cash on hand NOT be used for?

A

reserves (if required)

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41
Q

What can cash on hand be used for?

A

down payment, closing costs, prepaid items (cannot be used for reserves if any)
Cash can be used, but:
1. Credit report must indicate that borrower has limited use of credit
2. proof that borrower uses cash on a regular basis for paying bills
3. written proof from borrower as to the source of the funds
4. funds must be seasoned in a bank account for 30 days prior to COE
5. One Unit buildings only

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42
Q

What 4 things must borrower show in order to use cash on hand as down payment?

A
  1. the amount of funds saved is consistent with the borrower previous payment practices
  2. LOE from borrower stating that the funds have been saved, from where and that they are not borrowed
  3. credit report shows limited or no trade lines and limited or no use of financial institution
  4. confirm that funds are in a financial institution account or escrow account no less than 30-days prior to closing
  5. One Unit buildings only
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43
Q

Can HomeStyle and HomeReady be used together?

A

yes, with Special lender approval
max LTV 95%
max CLTV 105% w/ Community 2nd

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44
Q

Can HomeStyle, HomeReady and Community 2nd be used together?

A

yes, check each for special requirements

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45
Q

are non-occupant borrower’s allowed with HomeReady?

A

yes, max DU LTV is 95%

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46
Q

what things are considered from a non-occupant borrower?

A

income, assets, credit and liabilities

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47
Q

What is non-borrower Household income or Extended-Income Households (EIH)?

A

it is not part of DTI income, only a compensating factor for possible increase in DTI as a part of DU

considered a compensating factor in DU, allowing DTI higher than 45%, up to 50%

48
Q

what type of income will Boarder income be?

A

include as qualifying income

49
Q

what type of income will income from an accessory unit be?

A

include as qualifying income

50
Q

what is EIH?

A

Extended Income Households

51
Q

what does EIH add?

A

considered a compensating factor in DU, allowing DTI higher than 45%, up to 50%

52
Q

is EIH and non-borrower income the same thing

A

yes, different terms for the same thing

53
Q

does non borrower income contribute to qualifying income ?

A

no, it does not add to borrower’s income, it is only a compensating factor in DU to allow borrower’s DTI to be higher than 45% (up to 50%)

54
Q

must the non borrower income be from a family member?

A

no, only from someone who will be living in the household

55
Q

is the non-borrower income used to determine whether the loan meets applicable HomeReady income limits?

A

no

56
Q

what is the percentage requirement on non borrower income all about?

(HomeReady)

A

No more than 30% of the total gross income used to qualify can come from Non-Borrower (boarder) income.

And it can be an aggregate of income from more than one person, but not more than 30% total of qualifying income.

57
Q

non borrower income must be documented how?

HomeReady

A

in accordance with the Selling Guide policy based on income type

58
Q

what must the non-borrower sign? (HomeReady)

A

The non-borrower must sign Form 1019, HomeReady non borrower household income worksheet and certification

59
Q

where in DU is non -borrower income entered? (HomeReady)

A

“Other Monthly Income” as “Non-Borrower Household Income”

60
Q

are Non-occupant co-borrowers allowed with HomeReady?

A

yes

61
Q

must the non-occupant borrower be a family member? (HomeReady)

A

no

62
Q

is non-occupant Co-borrower income used for income eligibility for HomeReady?

A

YES!

63
Q

Can the borrower occupant hold title to any other residential property at the time of closing?
(HomeReady)

A

Yes, both the occupant borrower and non-occupant borrower can hold title to other property at time of closing

64
Q

What is the maximum DU LTV w/ a non-occupant borrower? (HomeReady)

A

95% LTV

65
Q

What can be considered from the non occupant borrower’s application? (HomeReady)

A

Income, Assets, Credit, LIabilities

66
Q

Does a non-occupant co-borrower sign on the loan?

HomeReady

A

yes

67
Q

Does a non-borrower household member sign on the loan if using non-borrower income?

(HomeReady)

A

no

68
Q

does a non-occupant borrower live in the home?

HomeReady

A

no

69
Q

does a non-borrower household member live in the home (HomeReady)

A

yes

70
Q

is non-occupant co-borrower income included in qualifying income?
(HomeReady)

A

yes

71
Q

is non borrower household member income included in qualifying income?
(HomeReady)

A

no

72
Q

must non occupant borrower meet income eligibility requirements?
(HomeReady)

A

yes

73
Q

must non borrower household member income meet income eligibility requirements?
(HomeReady)

A

no

74
Q

Can boarder income be used?

HomeReady

A

yes, only for 1 unit properties

75
Q

what amount of qualifying income can come from boarder income?
(HomeReady)

A

max 30%

76
Q

documentation for boarder income?

HomeReady

A

Must have both:
1. shared residency for most recent 12-month period
2. Boarder income documentation for at least 9 of the last 12 months
(look at guidelines) (not payment to a 3-party)

77
Q

how to calculate use of rental income with HomeReady?

A

using standard selling guide calculations

78
Q

Can rental income be used in a 1 unit property?

HomeReady

A

Yes, only if there is a legitimate separate dwelling unit at the property as denoted in the appraisal (must have own kitchen and bathroom)

79
Q

Can rental income be used in a 2 to 4 unit property?

HomeReady

A

Yes, according to the selling guide calculations

80
Q

What is considered a separate dwelling unit to allow for rent from a 1-unit property?

(HomeReady)

A

appraisal must denote that it exists as a separate dwelling unit
must have own kitchen and bath

81
Q

must boarder income have a history of being paid monthly?

HomeReady

A

yes, for at least 9 of the preceding 12 months

82
Q

What is the minimum credit score for DU Home/Ready?

A

620

83
Q

is Home/Ready available for credit scores below 620?

A

Possibly, must see the reason codes on the credit report to determine
(Standard DU minimum is 620)
(HomeReady)

84
Q

If there is a borrower on the loan for which no “traditional” or “non traditional” credit profile can be established, what to do?
(HomeReady)

A

the income from that borrower is limited to 30% of the total qualifying income (HomeReady only)

85
Q

Does HomeReady allow for borrower’s with no credit score?

A

Yes, but there is much restriction and documentation required, see manual

86
Q

Does HomeReady allow for 1 of the multiple borrower’s to not have traditional credit score?

A

yes, but in this case:
- all borrowers must occupy the property
income used for qualifying may not come from self-employment
- borrower with the traditional credit score must contribute more than 50% of the qualifying income

87
Q

Will DU alert eligibility of HomeReady?

A

yes

88
Q

if the home is input to DU as HomeReady, will DU use the eligibility guidelines, MI requirements, etc for HomeReady?

A

yes, but it must be submitted as HomeReady

89
Q

must the FIPS code be input to DU?

HomeReady

A

yes

90
Q

if the Borrower’s DTI exceeds 45% but has NBHI (Non-Borrower Household Income) of up to 30% of Borrower’s income will DU issue an Ineligible?
HomeReady

A

DU will issue an Ineligible at about 50% DTI in this case.

91
Q

Will DU require the NBHI (Non-Borrower Household Income) to be documented as a compensating factor?
HomeReady

A

yes, if the DTI exceeds 45%, otherwise no

92
Q

how is Accessory Unity Income added to DU?

A

as Other Income type in DU

93
Q

What is an LLPA?

A

standard Loan Level Price Adjustments

94
Q

what happens to Standard LLPA’s with HomeReady?

A

they are waived with an LTV > 80% and a credit score >= 680 (zero price adjustment)

95
Q

what happens to Standard LLPA’s with FICOs between 620 and 679
(HomeReady)

A

LLPAs are capped at 1.5 with LTV > 80% and credit score 620 and 679

96
Q

what is the affect of HomeReady’s change to LLPA’s and MI?

A

HomeReady pricing will always produce a better than or equal result in pricing

  • LTV > 80% and FICO >= 680 means zero price adjustment
  • LTV > 80% and FICO 620 to 679 LLPA is capped at 1.5
    Plus: MI is capped at 25% for > 90% LTV
97
Q

What MI coverage for all HomeReady loans w/ LTV 90.01-97%?

A

25% (better than standard pricing)

98
Q

What is the MI coverage for all HomeReady loans w/ LTV of at or below 90%

A

standard MI coverage applies (north of 90% LTV is capped at 25%)

99
Q

What is the MI coverage requirement for HomeReady 97% LTV?

A

25%

100
Q

may Lender Paid MI be used with HomeReady?

A

yes

101
Q

Does HomeReady allow Lender Paid MI?

A

Yes

102
Q

Must borrowers complete homeowner edu?

A

yes, one borrower only

103
Q

how many borrower’s must complete homeownership edu?

A

at least one borrower

104
Q

What is the HomeOwnership education course called that is required?

A

Framework at www.homeready.frameworkhomeownership.org

105
Q

How much is the Framwork Education?

A

$75 paid to Framework

106
Q

Can the $75 fee to Framework be offset at closing as a credit to Borrower?

A

yes

107
Q

Is Framework in Spanish?

A

yes

108
Q

If borrower does not have internet, how do they take the Framework education?

A

They call the toll free number and Framework will direct them to how to take it

109
Q

When is Landlord education required?

A

With HomeReady 2 to 4 unit purchases (not provided by Framework, but must be HUD approved)

110
Q

Can a non-occupant Co-Borrower hold title to any other residential property at the time of closing?
(HomeReady)

A

Yes and so can the Occupant Borrower

111
Q

What is then benefits of HomeReady?

A

HomeReady pricing will always produce a better than or equal result in pricing

  • LTV > 80% and FICO >= 680 means zero price adjustment
  • LTV > 80% and FICO 620 to 679 LLPA is capped at 1.5
    Plus: MI is capped at 25% for > 90% LTV
112
Q

When is HomeReady a good option?

A

HomeReady pricing will always produce a better than or equal result in pricing

  • LTV > 80% and FICO >= 680 means zero price adjustment
  • LTV > 80% and FICO 620 to 679 LLPA is capped at 1.5
    Plus: MI is capped at 25% for > 90% LTV
113
Q

When to think HomeReady?

A
  • Where two borrowers can be split with one buying and one having non-borrower household income
  • When property is located in a no-income limit tract
  • When One borrower can qualify under the area AMI ($53k in 2017)
114
Q

Does a non-occupant Co-borrower change the max LTV with HomeReady?

A

yes, from 97% down to 95% max allowed with non-occupant co-borrower

115
Q

What are HomeReady income limits?

A
  • No income limits in low-income tracts

- 100% of AMI for all other properties

116
Q

Does HomeReady Allow 3% down with non-occupant co-borrower?

A

No, 95% max LTV with non-occupant co-borrower

SIH - Mortgage lending (3 decks)

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