Presentation on theme: "DU Refi Plus The primary expectation for the Home Affordable Refinance Program (HARP) is that refinancing will put responsible borrower(s) in a better."— Presentation transcript:
DU Refi Plus The primary expectation for the Home Affordable Refinance Program (HARP) is that refinancing will put responsible borrower(s) in a better position by reducing their monthly principal and interest payments, reducing the amortization period, or moving them from a risky loan structure (such as an interest-only mortgage or a short-term ARM) to a more stable product (such as a fixed-rate mortgage).
Is there a way to determine whether Fannie Mae is the investor on an existing loan other than having the borrower contact their servicer? Yes, Fannie Mae has an online tool, the Fannie Mae Loan Lookup, for borrowers to determine whether Fannie Mae is the investor on their loan. The Fannie Mae Loan Lookup is available on knowyouroptions.com by Fannie Mae.Loan Lookup The tool indicates whether Fannie Mae is the investor on a property at a specific address, but does not determine refinance or loan modification eligibility for borrowers. Movement Mortgage must refer to our published guidelines to determine a borrowers eligibility for a particular refinance opportunity. See slide 18 and 19.1819
Will Movement Mortgage allow existing subordinate financing to be refinanced? The simultaneous refinance of subordinate lien is not eligible for Movement Mortgage’s DU Refi Plus mortgage loans. Under no circumstances may any portion of the existing subordinate financing be included in the new first loan amount. – No new subordinate financing allowed. – Existing subordinate financing must be re-subordinated.
What is the max cash back to the borrower? DU Refi Plus is a Limited Cash Out Refinance (LMCOR) transaction; therefore, it is underwritten as such. The max cash back to the borrower is $250.00. – The borrower can receive a refund of fees or closing costs paid up front if these fees are rolled into the loan amount, the refund does not count toward the $250 limit. – When running DU, please make sure to confirm within PC Lender, the amount of cash back to the borrower. If this is greater than $250, DU will run as a regular limited cash out refinance transaction and not as a DU Refi Plus.
Is there a limit on the amount of closing costs? Points, prepaid items, and closing costs may be rolled into the new loan. Points and fees, including origination, underwriting fees, processing fees, etc… regardless of the party paying the fee may not exceed 5% of the current principal balance. – Discount points and prepaid items are not included in the 5% limitation.
Are all borrower on the existing mortgage required to be on the new DU Refi Plus mortgage? Can borrower(s) be removed through the refinance transaction? For loans underwritten and delivered as DU Refi Plus, borrower(s) may be removed through the refinance transaction, provided that at least one of the original borrowers is retained on the new loan.
Can a borrower “buy out” the interest of another borrower that is being removed through a DU Refi Plus transaction? No. The remaining borrower may not “buy out” the interest of another borrower through the DU Refi Plus transaction since increases to the existing unpaid principal balance are not permitted except for the financing of closing costs.
What should be the term of the MI coverage on the new loan? What provisions govern cancellation and termination of MI? The MI coverage should extend for the life of the new loan, or until cancellation or termination of coverage as required by law or Fannie Mae. – For example: If a 15 year loan that is 3 years old is refinanced into a 30 year loan, the MI coverage should be extended for the full life of the new loan. The terms of the new mortgage note should be used to calculate the MI cancellation or termination date.
Are existing loans with financed MI and Lender Paid MI, eligible for DU Refi Plus, and are there any differences from other loans in how the MI is continued? Existing loans with financed MI and Lender Paid, are eligible for DU Refi Plus and there should be no difference in how coverage is continued on the refinance of such loans versus existing loans that do not have financed MI. The existing coverage can be continued on the new loan regardless of whether the financed premium on the existing loan was paid as a single premium or a split premium. – It is critical to identify the MI type on the existing loan as well as the MI provider.
What condominium project review must be completed by the lender originating a DU Refi Plus loan? Since the loan is currently owned or securitized by Fannie Mae, Fannie Mae will assume that it met the review standards in effect at the time it was originated. No further review is required, except Movement Mortgage must confirm that the property is not in a condo hotel or motel, a houseboat project, or a timeshare project, and that adequate hazard, flood, and liability insurance coverage is in place.
How does a lender know if a DU Refi Plus property fieldwork waiver is offered when running DU? If a loan is eligible for the DU Refi Plus property fieldwork waiver, the loan findings will receive two messages. – One message indicating that the loan is eligible for deliver to Fannie Mae with an appraisal or property inspection, if the DU Refi Plus property fieldwork waiver is exercised by the lender. – A second message indicating the minimum fieldwork required if the lender chooses not to exercise the DU Refi Plus property fieldwork waiver when delivering the loan to Fannie Mae. See slide 17.17
If we receive a DU Refi Plus property fieldwork waiver message on a loan submission, and on a subsequent submission loses the waiver can we still exercise the DU Refi Plus waiver? No. We may only exercise the DU Refi Plus property fieldwork waiver if the DU Refi Plus property fieldwork waiver is issued on the final submission to DU. – We must use caution when running DU. Make sure PCL is complete before running DU to minimize the risk of losing the fieldwork waiver.
When DU issues the estimated value message, can I update the appraised value in PCL with the value seen in the message and run DU? Yes. When we receive the estimated value message in DU, we may re-run our findings using the estimated value provided by DU. We also have the option to resubmit using any other value the obtained, whether from the borrower or from another source (for example, from an automated valuation model). We are not required to resubmit with estimated value provided by DU.
If we receive findings, “this property is not eligible for a DU Refi Plus property fieldwork waiver” doe this mean the loan will not be eligible for the waiver, even if changes to the value are made? Yes. When the “this property is not eligible for a DU Refi Plus property fieldwork waiver” message is received, DU does not have enough information on the property to offer the waiver. Updating the value entered into DU will not change that fact.
DU Findings As with all loans, it is imperative that we read the findings. Under the “Risk/Eligibility”, section in your findings, you will read the following when DU is underwriting the file as a DU Refi Plus. This loan case file was underwritten according to the DU Refi Plus expanded eligibility guidelines offered on certain limited cash-out refinance loan casefiles where the borrower's existing loan is identified by DU as a Fannie Mae loan. If this loan casefile is delivered to Fannie Mae it must be delivered with Special Feature Code 147. By selling a DU Refi Plus mortgage loan to Fannie Mae the lender represents and warrants that the borrower is receiving a benefit in the form of either a reduction in the monthly mortgage principal and interest payment, a reduction in the interest rate, a reduction in the amorization term, or movement to a more stable product. It is critical that you receive this message, if this is not received, the loan is ineligible for the DU Refi Plus.
DU Property Information Make sure that your address is reading properly in your DU findings. This is important due to the fact that DU is accessing the Fannie Mae data base to determine DU Refi Plus eligibility. Go to 20 Desktop Underwriter returned the following standardized address and census tract for the subject property: This is the address that Desktop Underwriter used in its property valuation and fieldwork recommendation. Regardless of the property fieldwork required by Desktop Underwriter. If this address is not valid for the subject property, an appraisal based on an interior and exterior property inspection reported on Form 1004 is required for this transaction. If the subject property is located in a condominium project, the appraisal must be reported on Form 1073.
Appraisal Information Section 16 states that DU values the property at $194,100.00. Section 17 is requiring an appraisal; however, section 18 states that DU accepts the value submitted in PCL, which is $220,000.00 and that we can exercise a fieldwork waiver. Therefore, section 18 will take precedence over section 17 and an appraisal is not required. If the fieldwork waiver message is not received, then an appraisal will be required. Go BackBack Based on the standardized address. Desktop Underwriter estimates the value of the property at $ 194100.00. This estimated value was developed by internal proprietary models to help determine eligibility for a DU Refi Plus property fieldwork waiver. It is nor the result of an appraisal nor was it developed by a state licensed or certified appraiser. This estimate is intended to be used solely by the lender to underwriter the refinance of the borrower's mortgage loan. An appraisal based on an interior and exterior property inspection reported on Form 1004 is required for this refinance transaction. Desktop Underwriter accepts the value submitted as the market value for this subject property on this limited cash-out refinance transaction where the borrower's existing loan is identified as a Fannie Mae loan. This loan is eligible for delivery to Fannie Mae without an appraisal if the DU Refi Plus property fieldwork waiver is exercised by the lender at the time of loan delivery to Fannie Mae. To exercise this waiver and be eligible for representation and warranty relief on the value, condition and marketability of the subject property. Special Feature Code 807 and the DU Casefile ID must be included in the loan delivery file. A fee will be charged to exercise this waiver. If the waiver is not exercised, an appraisal based on an interior and exterior property inspection reported on Form 1004 is required for this transaction, if the subject property is located in a condominium project, the appraisal must be reported on Form 1073.
Go to Fannie Mae’s Loan Lookup web site, Know Your Options. Know Your Options With permission from the borrower, complete the fields and click “Get Results”. Go BackBack
Results—Our Records Indicate: Your loan was acquired by Fannie Mae on or before May 31, 2009. Knowing the Fannie Mae Loan Acquisition Date is important because some programs, such as HARP, are available only on loans acquired by Fannie Mae on or before May 31, 2009. Your mortgage company is FANNIE MAE/GREENTREE SUBSERVICER. You may be eligible for the Home Affordable Refinance Program (HARP) or for the Home Affordable Modification Program (HAMP)—or other programs available exclusively for Fannie Mae borrowers.Home Affordable Refinance Program (HARP)Home Affordable Modification Program (HAMP) Loan Look Up Results The results will indicate the approximate date that Fannie Mae acquired the loan. Please remember this still does not confirm that the loan is eligible for the DU Refi Plus. We must always input the loan into PCL fully, then run the findings and read the DU feedback. Go BackBack
DU Refi Plus/ Movement Mortgage Overlay’s Max LTV/CLTV is 105% – Up to 125% on a case by case basis subject to Loan Committee final approval. No new subordinate financing allowed. Second homes, 2-4 unit dwellings, investment properties and condo’s are allowed on a case by case basis subject to Loan Committee final approval. Minimum FICO is 660. Max DTI is 50%. Chapter 7 bankruptcy is 4 years from discharge date. Chapter 13 is 2 years from discharge date. Previous short sale 90% is 7 years.