CountryPlace Mortgage Product guidelines
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CountryPlace Mortgage Product guidelines

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An overview of CountryPlace Mortgage\'s product offerings and guidelines

An overview of CountryPlace Mortgage\'s product offerings and guidelines

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CountryPlace Mortgage Product guidelines CountryPlace Mortgage Product guidelines Document Transcript

  • Delegated/Correspondent Underwriting Hot Spots:................................................................................................2Non-Delegated Correspondent/Broker Hot-Spots: .................................................................................................3Submission requirements........................................................................................................................................4CPM Representatives by region: ............................................................................................................................6FHA 15 & 30 Year Fixed Rate MH Matrix ...............................................................................................................7Conventional 15 & 30 Year Fixed Rate MH Matrix ...............................................................................................12Closing Highlights: ................................................................................................................................................18CPM Title Surrender Fees ....................................................................................................................................19FHA Site Built 15 & 30 Year Fixed Rate Matrix ....................................................................................................20Conventional Site Built 15 & 30 Year Fixed Rate .................................................................................................25FHA 203K(S) 15 & 30 Year Fixed Rate ................................................................................................................30How to Complete HUD-92700 Maximum Mortgage Worksheet for a Streamlined (k) Loan ................................36CountryPlace Mortgage partner funded 1X close .................................................................................................38 Page 1 of 38
  • Delegated/Correspondent Underwriting Hot Spots:Effective 6/17/2011:1. Prior to delivery, underwriting questions should be directed to Wholesaleapplication@CountryPlaceMortgage.Com2. CPM turn time for reviewing files for purchase:  2 business days for CPM purchase review and conditions  5 business days for file purchase (from time all conditions are cleared)3. CPM requires original closing documents executed by all appropriate parties4. If manufactured home title has been retired/eliminated: CPM will require Correspondent to provide proof the title to the manufactured home has been properly retired upon delivery of loan for purchase5. If manufactured home title has not been retired/eliminated: CPM will handle title elimination, however, Correspondent will be responsible for providing the necessary documents CPM will need in order to eliminate title and Correspondent originators will be required to disclose and collect the necessary fees associated with title elimination (See title elimination section of this matrix).Please Note: CPM has specific fees for eliminating title in each state. It is the correspondent’sresponsibility to disclose those fees in the initial disclosures sent to the borrower and to collect thosefees at closing. Fees not collected at closing will still be netted from Correspondent’s funds uponpurchase6. If using a POA: Power of attorney is allowed for all loans but must be specific to the transaction. This form must contain the names of the parties involved as well as the property address Page 2 of 38
  • Non-Delegated Correspondent/Broker Hot-Spots:7. underwriting questions should be directed to Wholesaleapplication@CountryPlaceMortgage.Com8. CPM turn time for reviewing files:  2-3 business days for CPM initial underwriting review  1-2 business days for CPM underwriting condition review  1 business day for CPM to release closing instructions9. CPM requires original closing documents executed by all appropriate parties10. If using a POA: Power of attorney is allowed for all loans but must be specific to the transaction. This form must contain the names of the parties involved as well as the property address11. If manufactured home title has been retired/eliminated: CPM will require Correspondent/broker to provide proof the title to the manufactured home has been properly retired upon delivery of loan for purchase12. If manufactured home title has not been retired/eliminated: CPM will handle title elimination, however, Correspondent/broker will be responsible for providing the necessary documents CPM will need in order to eliminate title and Correspondent/broker originators will be required to disclose and collect the necessary fees associated with title elimination (See title elimination section of this matrix).Please Note: CPM has specific fees for eliminating title in each state. It is the correspondent/Broker’sresponsibility to disclose those fees in the initial disclosures sent to the borrower and to collect thosefees at closing. Fees not collected at closing will still be netted from Correspondent’s funds uponpurchase Page 3 of 38 View slide
  • Submission requirements 1. Submit a complete loan package to: CountryPlace Mortgage, Ltd. 15305 Dallas Parkway, Suite 800 Addison, TX 75001 ATTN: Purchase Review Phone: 800-228-1828 2. Submitting Complete loan packages for underwriting to CPM: - Submit a complete closed loan package (correspondent) and complete loan package (broker) using the CPM “Closed Loan Purchase Checklist” (Correspondent) and “Product Specification checklist” (broker) as the coversheet, - Underwriting or scenario questions should be sent from correspondent’s underwriters to WholeSaleApplication@CountryPlaceMortgage.Com Ordering Appraisals Correspondent will be responsible for ordering the appraisal CPM will order appraisals on all brokered deals 3. Submitting marginal loans or appraisals for CPM review prior to closingFrom time to time your underwriters may have questions in regard to the acceptability of a marginal loan orappraisal. There may also be specific product questions. A scanned copy of a credit package or appraisal canbe sent via secure mail to CPM at any time. Product questions can be directed toWholesaleapplication@CountryPlaceMortgage.Com. Page 4 of 38 View slide
  • CPM reserves the right to amend these guidelines at any time. If amended, CPM will immediately informCorrespondent of any changes. Application dates after changes to this matrix have been disclosed willbe subject to amended guidelines. All agency guidelines supersede CPM specific guidelinesFHA Not Permitted: - Single-Wide MFH - Non-Occupant Co-Borrowers / Co-Signers - Subordinate Financing - Loan amounts less than 50K - Investment Properties - Second HomesConventional Not Permitted - Single-Wide MFH - Non-Occupant Co-Borrowers / Co-Signers - Subordinate Financing - Loan amounts less than 50K - Investment PropertiesCPM Fees:Underwriting $550 (Non-Delegated only)Admin Fee $450 (All Files)Supplemental Origination fee $350 (Streamline 203K only) Page 5 of 38
  • CPM Representatives by region:Bryan Chamberlain National Marketing Manager (Corporate Office)Phone: 469-865-5064 Email: Bchamberlain@CountryPlaceMortgage.ComJohn Manley Strategic Accounts Manager (High Springs, Florida)Phone: 352-284-1407 Email: JManley@CountryPlaceMortgage.ComCarly Brophy National Accounts Manager (Corporate Office)Phone: 972-764-9224 Email: CBrophy@CountryPlaceMortgage.ComDavid Bumpers-Cornelius, North Carolina-NorthEast Regional Account Executive-North Carolina, SouthCarolina, TennesseePhone: 888-677-7484 Email: DBumpers@CountryPlaceMortgage.ComBrad Smith-Jacksonville, Florida-SouthEast Regional Account Executive-Mississippi, Alabama, Georgia, FloridaPhone: 800-918-2045 Email: BCSmith@CountryPlaceMortgage.ComBryan Chamberlain-Dallas, Texas-South Regional Account Executive-Texas, Oklahoma, Louisianna, Arkansas,Kansas, MinnesotaPhone: 469-865-5064 Email: Bchamberlain@CountryPlaceMortgage.ComKory Beickel-Pheonix, Arizona-West Regional Account Executive-Arizona, California, New MexicoPhone: 928-453-4000 Email: KBeickel@CountryPlaceMortgage.ComBrett Pierce-Olympia, WashingtonNorthWest Regional Account Executive-Washington, Oregon, IdahoPhone: 360-709-9191 Email: BPierce@CountryPlaceMortgage.ComHOI Mortgagee Clause:CountryPlace Mortgage, LTD, ISAOAPO Box 246Amelia, OH 45102PCL/ICL Mortgagee ClauseConventional:CountryPlace Mortgage, LTD, ATIMA15305 Dallas Pkwy, Suite 800Addison, TX 75001FHA:CountryPlace Mortgage, LTD, ISAOA15305 Dallas Pkwy, Suite 800Addison, TX 75001 Page 6 of 38
  • FHA 15 & 30 Year Fixed Rate MH MatrixFHA Manufactured Homes FHA 15 & 30 Year Fixed Rate Purchase and Rate & Term Refinance Maximum Maximum MaximumOccupancy Credit Score Front / Back Seller Cash Reserves LTV Ratios Contributions 1-Unit 90% 620-649 As per DU unless O/O Primary 30% / 45% 6% of SP payment shock is Residence 96.5% >650 presentProgram Guidelines:Loan - PurchasePurpose - Rate & Term Refinance - Cash Out Refinance (not permitted in TexasOccupancy - Owner Occupied, Primary ResidenceDoc Type - Full documentationGeographic - WA, ID, ND, OR, CA, AZ, NM, TX, OK, LA, AR, MS, AL, KS, GA, FL, SC, NC, TN, MNAvailability Note: Look for more states being added in the near futureLoan Type - FHA 15 and 30 year fixed rate program (20 year term available upon request)and TermsPrepayment - NonePenaltyBuy down - Bonafide discount points allowed. Note: A discount point is considered bonafide when an interest rate of .25% higher than the offered rate is available on the rate card the day the rate is lockedEscrow - Not permittedWaiversAssumed - In accordance with FHA guidelines, fixed rate loans are assumable to qualified borrower(s)LoansMaximum # - Oneof Loans tooneborrowerMaximum # - It must be determined by the underwriter that the subject property home is being purchased asof the borrower’s primary residenceProperties Note: Borrower’s applying for an FHA insured mortgage that currently own a home insured byFinanced FHA must meet FHA requirements for owning a second FHA insured home. Proximity to a new job as well as an increase in family size are two common, acceptable situationsBankruptcy Bankruptcy: - CPM requires that a borrower be discharged from bankruptcy for 2 years despite the type of bankruptcy - Customer must have three established lines of credit opened after the discharge. Each trade line must have a 12 month history and must have some activity within the most recent 24 months. At least one of these trade lines must be an installment account and borrower must have paid the account down by an amount greater or equal to 10% of the subject loan amount. Rental history is considered installment and the monthly payment multiplied by the number of months can be used to meet the installment requirement - Foreclosure: - CPM requires that 36 months have passed from the date of the foreclosure sale. A satisfactory letter of explanation must be included in the file. All standard trade line and payment shock requirements applyAge of Credit Documents:Documents - As determined by DU findings Page 7 of 38
  • Appraisal : - 120-days old as of closing date (signing of Note & Mtg.)AUS Acceptable AUS Determination:Requirement - All loans must be run through DO/DU - Approve/EligibleEligible All borrowers must have a valid U.S. Social Security number.and Eligible:Ineligible 1. U.S. Resident CitizenBorrowers 2. Permanent Resident Alien - Same as U.S. Citizen - Obtain evidence of lawful, permanent residency issued by the Bureau of Citizenship and Immigration Services (BCIS), formerly the INS. - Obtain a copy of Alien Registration Receipt Card (Resident Alien card), I-551 3. Non-Permanent Resident Alien - Must be eligible to work in the U.S. - Evidence of residency and work status to be obtained through documentation from US Bureau of Citizenship and Immigration Services (BCIS) formerly INS. - Copy of the Employment Authorization Card, I-688B. This card carries an expiration date. A SS card is not acceptable as evidence of work status. Ineligible: - Non-Occupant Co-Borrowers - Co-Signers - Foreign Nationals - Non-Resident Canadians - Borrowers with Diplomatic ImmunityTitle Vesting Eligible Vesting / Rights of Ownership:Rights of - Fee SimpleOwnership - Individual & Joint Ineligible / No Exceptions: - Land Trust - Leasehold Estate - Real Estate Syndication - General or Limited Partnerships - Title in the name of a CorporationCredit - A tri-merge bureau is required on all loans; the lowest qualifying score of all applicants is used to qualify and each borrower must have at least two credit scores. The qualifying score is the lower of 2 or the middle of 3 scores and must be reviewed for each borrower. - For a credit score to be considered valid, the score must be generated from a minimum of three (3) trade lines that have been evaluated for at least 12 months. The trade lines do not need to be currently active but require some activity within the last 24 months. At least one of these trade lines must be an installment account and borrower must have paid the account down by an amount greater or equal to 10% of the subject loan amount. Rental history is considered installment and the monthly payment multiplied by the number of months can be used to meet the installment requirement Minimum Credit Score: - 620 (620-649 max LTV 90%, >649 max LTV is 96.5%) Inquiries and Derogatory Credit: - When inquiries and/or derogatory credit appear, the borrower must submit a signed credit explanation letter prior to loan approval. Inquiry letter must cover ALL inquiries in the most recent 90 days from date of credit report - Note: Any delinquent accounts shown as “disputed” will result in an automatic downgrade to a manual underwrite and all manual guidelines will apply. exceptions to this are as follows: - 1. The disputed account has a zero balance - 2. The disputed account is marked as "paid in full", or "resolved" - 3. The disputed account is both a. less than $500, and b. more than 24 months old, based on the Page 8 of 38
  • date of dispute. Housing Payment History: - 0 X 30 in the past 12 months. - For borrowers with mortgage delinquency beyond the most previous 12 months, it is the underwriter’s responsibility to carefully review and determine the borrower’s credit worthiness. Mortgage Payment History/Documentation: - The mortgage payment history may be documented by a VOM or provide a rating in the credit report. Rental Payment History/Documentation: - A rental payment history is required per the AUS findings or underwriter determination and must be documented by a VOR from a property management company or 12 months cancelled checks if rented from an individual (If there is payment shock of 25% or more, CPM requires a VOR regardless of what DU requires)Employment Salaried:/ Income  Most current paystubs covering a 30-day period with YTD income  Most current and consecutive 2-Years W-2’s  Most current two years tax transcripts (ordered via 4506 on all loans) Self-Employed: - Business must be in existence for at least two (2) years prior to subject application date. - Most current and consecutive (signed) 2-Years Business Tax Returns with all schedules required if incorporated - Most current two years personal tax returns for principals of corporations or sole proprietors - Copy of Business License or a CPA letter proving business still exists. Overtime/Bonus/Other income - Overtime income will be considered if employer indicates it is likely to continue and a two year history is available and averaged - Bonus income will be considered if employer indicates it is likely to continue and two year history is available and averaged - Commission income will be considered if employer indicates it is likely to continue and a two year history is available and averaged. If commission income is more than 25% of total income, tax returns for two years will be required to calculate income Verbal Verification Prior to Closing:  A verbal verification of employment is required for each employer of all borrowers, within 10-days of closing. This policy applies to all non-self employed income types. Child Support, Alimony or Maintenance Income:  In order to use as income, child support, alimony or maintenance income, payments must reasonably be documented to continue for at least a three (3) year period. The following documentation is required: o Copy of the divorce decree, separation agreement or court order o Copies of court records, bank statements or cancelled checks evidencing a minimum of three (3) months receipt of payments. Rental income:  Rental income must be supported by two years tax returns.  If converting primary residence to rental property and relying on rental income to qualify, 25% equity in the rental property, as validated through appraisal or difference between original financed amount and current balance, is required along with a copy of the a 12 month lease agreement and evidence of security deposit All income must match 1003 and DU findingsQualifying Maximum Ratios:Ratios PITI FICO (Front End)  30% Max 620 – 679  35% Max 680+  If gross monthly income is less than 2500 dollars 25% Max Ratio (CPM to review any exceptions) DTI FICO (Back End)  45% Max 620 – 679  50% Max 680 – 739  55% Max 740+ No exceptions on FICO scores < 650 Exceptions to maximum ratios considered with compensating factors such as minimal payment shock with substantial reserves, etc. Must keep DO/DU Approved/EligibleLease - Not permittedOptionRent Credits Page 9 of 38
  • Payment In all cases, the “existing housing” and the “proposed housing” sections of the 1003 application must beShock fully completed CPM considers payment shock on all loans: - Payment Shock occurs when the proposed housing expense will be considerably higher than the existing housing expense and where there are multiple layers of risk. The UW must analyze the borrower’s existing cash flow as depicted on bank statements and determine the borrower’s capacity for payment shock Payment Shock Guideline:  620-679 FICO score and payment shock is 50% or more-2 months PITI reserves required  >679 FICO score and payment shock is 50% or more-1 months PITI reserves required In order to be considered cash reserves for payment shock purposes, the borrowers ending balance on two consecutive bank statements must consistently show the reserve requirements available in the account. This shows the borrower has the ability to maintain the reserve levels required to sufficiently offset payment shock THIS IS ONE OF THE MOST IMPORTANT FACTORS IN ANALYZING THE BORROWER’S ABILITY TO PAYAssets Bank Statements: - Most current and consecutive two (2) months bank statements (all pages). Quarterly Bank statements must be dated within 90-days of the initial application date and 120 days of closing (signing of note) Earnest Money: - Verification and source of funds for EM deposit required. Stocks, Bonds, Mutual Funds, U.S. Government Securities: - Copy of the account statement for the most recent 60 days/quarterly statement is required. All assets must match 1003 and DU findings exactlySeller Max Concessions:Contribution - Max seller concession is the lower of 6% of contracted sales price or contracted amount - Seller contribution is limited to discount points, closing costs and prepaid itemsCash - Cash reserves are not generally a requirement except when cash reserves are used as a compensatingReserves factor when approving an FHA loan with debt ratios that exceed guidelines or payment shock is present -Gift funds, cash proceeds from a refinance and equity in another property, are not acceptable sources of cash reserves.Gift Funds In accordance with current FHA guidelines: - 100% gift funds for down payment are only acceptable if the funds are documented by a gift letter that states the funds are not to be repaid, clear documentation of the donor’s ability to gift the funds and transfer of funds from donor to the borrower Gift Letter: - A gift letter is required and must list the donor’s name, address, city, state and zip, phone number, relationship to the borrower, and the dollar amount of the gift. The gift letter must indicate that the funds do not have to be repaid in any way and must be signed and dated by the donor. Documentation / Track Gift Funds : - Evidence that gift funds stated in the Gift Letter were withdrawn from the donors account; and, - Evidence that the same gift funds were received from the donors account to the borrower’s account, prior to closing. - When funds are transferred by donor to closing, verification of the transfer of the gift funds from the donors account must show the donor as the remitter and HUD-1 must clearly indicate the exact amount of the gift funds received from the donor and the account the funds were drawn fromSubordinate - Not PermittedFinancingState - Manufactured Homes require a State Administrative Agency to inspect all modifications to manufacturedRequirements homes once they leave the factory. If the appraiser observes changes to the manufactured home such as an addition, and there is no local agency to inspect the home, obtain an engineers report indicating that the structural changes or additions were made in accordance with HUD Manufactured Home Construction and Safety Standards. - If the property cannot be inspected by the State Administrative Agency and an Engineers Report cannot be obtained, the property is ineligible for financing .Refinance A Cash-Out Refinance is not permitted in Texas and limited to an 85% in all other states Page 10 of 38
  • Rate/Term and C/O refinances - If a refinance, the owner of the MFH must have owned the unit and the land for a minimum of 1-year to be eligible for financing. - Properties owned free and clear will be considered a C/O Refi and not eligible for financing in Texas - The refinance of a manufactured home that is currently financed as personal property and will be converted to real estate in the transaction is eligible. (See Title “CPM Elimination Fees by State” below)Special Vacant Properties:Certification - If the appraiser indicates that the property was vacant at the time of the inspection, the utilities must be/ Inspections turned on and an “As is” appraisal must be received from appraiser indicating that all utilities are now functioning properly prior to closing. If vacant and property has a well/septic, a well water test and a septic certification are needed if vacant more than 12 months. Flood Determination / Certification: - Mandatory - All MFH located in a Flood Zone A or V are eligible Flood Zone Elevation Certificate - If the site supporting a manufactured home is within a FEMA designated Special Flood Hazard Area, the following requirements apply: Order a FEMA Elevation Certificate to determine if the manufactured home is eligible. The Lowest Adjacent (finished) Grade (LAG) level beneath a manufactured home must be at or above the 100-Year return frequency elevation (Base Flood Elevation) - If the Elevation Certificate indicates that the lowest adjacent grade of the manufactured home is below the Base Flood Elevation (BFE) level, the loan is not eligible- even if flood insurance is obtained. Well and/or Septic Systems Certifications: - Required only when made a condition of the sales contract, inspection report or appraisal, or if property is vacant more than 12 months or for new construction. When required, the certification(s) may be no more than 90-days old as of the date of closing (regardless of how old the system is). NOTE: Shared wells must have a recorded shared well agreement executed by all partiesFoundation The Foundation for the MFH must be inspected by a licensed engineer. Engineer must address, grading, skirting, and foundation system and state that all comply with FHA standards for a permanent foundation. This information must be provided on an engineer’s certification that includes the engineer’s seal and signatureAppraisal - A full appraisal is required and must be completed on the Manufactured Home Appraisal Report (1004C) - The appraiser must verify the location and wording on the “HUD” Tags/Certification Labels of the unit and clear pictures of these tags must be provided (if HUD tags are not available, a certification from IBITS is required. If appraiser cannot obtain a clear picture of the HUD label number, and the label is present and accessible, he must manually insert the label number below the HUD label pictures on the appraisal) - The appraiser must also use standard single-family residential appraisal techniques when appraising the manufactured home. Other factory-built housing would provide the most similar comparables so every effort should be made to obtain such comparables even though their distances from the subject may be greater than usual. CPM requires that three manufactured home comparables be used to validate the value of the subject property Maximum adjustments: - Maximum line item adjustment is 10% - Maximum net adjustment is 15% - Maximum gross adjustment is 25% NOTE: Appraisals exceeding these maximum adjustments may be acceptable if the appraiser clearly identifies the reason for exceeding these percentages. This must be clearly justified and within normal appraisal practice. Page 11 of 38
  • Conventional 15 & 30 Year Fixed Rate MH Matrix Conventional Manufactured Homes Conventional 15 & 30 Year Fixed Rate Purchase and Rate & Term Refinance Maximum Maximum Maximum Occupancy Occupancy Front / Back Seller Cash Reserves LTV Ratios Contributions 1-Unit Owner As per DU unless 80% See “Qualifying >90% max 3%O/O or Second Occupied Ratios” <=90% max 6% payment shock is Home 80% Second Home present- Purchase: Borrower must have a minimum investment of 20% and maintain an 80% LTV after appraisal- Rate & Term Refi: The current owner must have owned the MFH & land for a minimum of 1-Year prior to the application date. Manufactured home financed as personal property being paid off in the transaction are eligible but loan must be considered a cash out refinance and a max 65% LTV is required. (Not permitted in Texas)- Cash Out Refi Program Guidelines:Loan - PurchasePurpose - Rate & Term Refinance - Cash Out refinanceOccupancy - Owner Occupied, Primary Residence and Second HomesDoc Type - Full documentationGeographic - WA, ID, ND, OR, CA, AZ, NM, TX, OK, LA, AR, MS, AL, KS, GA, FL, SC, NC, TN, MNAvailability Note: Look for more states being added in the near futureLoan Type - Conventional 15 and 30 year fixed rate programand TermsPrepayment - NonePenaltyBuy down - Bonafide discount points allowed. Note: A discount point is considered bonafide when an interest rate of .25% higher than the offered rate is available on the rate card the day the rate is lockedEscrow - Not permittedWaiversAssumed - In accordance with Fannie Mae guidelines, fixed rate loans are assumable to qualifiedLoans borrower(s)Maximum # - Oneof Loans tooneborrowerMaximum # - It must be determined by the underwriter that the subject property home is being purchased asof the borrower’s primary residence or second homeProperties - Maximum of seven properties financed allowedFinancedBankruptcy Bankruptcy: - CPM requires that a borrower be discharged from bankruptcy for 4 years despite the type of bankruptcy - Customer must have three established lines of credit opened after the discharge. Each trade line must have a 12 month history and must have some activity within the most recent 24 months. At least one of these trade lines must be an installment account and borrower must have paid the account down by an amount greater or equal to 10% of the subject loan amount. Rental history Page 12 of 38
  • is considered installment and the monthly payment multiplied by the number of months can be used to meet the installment requirement - Any repossessions within the most recent 3 years will disqualify the borrower Foreclosure: 4 years from foreclosure sale dateAge of Credit Documents:Documents - 120-days old at time of closing (signing of Note & Mtg.) Appraisal : - 120-days old as of closing date (signing of Note & Mtg.)AUS Acceptable AUS Determination:Requirement - All loans must be run through DO/DU - Approve/EligibleEligible All borrowers must have a valid U.S. Social Security number.and Eligible:Ineligible 4. U.S. Resident CitizenBorrowers 5. Permanent Resident Alien - Same as U.S. Citizen - Obtain evidence of lawful, permanent residency issued by the Bureau of Citizenship and Immigration Services (BCIS), formerly the INS. - Obtain a copy of Alien Registration Receipt Card (Resident Alien card), I-551 6. Non-Permanent Resident Alien - Must be eligible to work in the U.S. - Evidence of residency and work status to be obtained through documentation from US Bureau of Citizenship and Immigration Services (BCIS) formerly INS. - Copy of the Employment Authorization Card, I-688B. This card carries an expiration date. A SS card is not acceptable as evidence of work status. Ineligible: - Non-Occupant Co-Borrowers - Co-Signers - Foreign Nationals - Non-Resident Canadians - Borrowers with Diplomatic ImmunityTitle Vesting Eligible Vesting / Rights of Ownership:Rights of - Fee SimpleOwnership - Individual & Joint Ineligible / No Exceptions: - Land Trust - Leasehold Estate - Real Estate Syndication - General or Limited Partnerships - Title in the name of a CorporationCredit - A tri-merge bureau is required on all loans; the lowest qualifying score of all applicants is used to qualify and each borrower must have at least two credit scores. The qualifying score is the lower of 2 or the middle of 3 scores and must be reviewed for each borrower. - For a credit score to be considered valid, the score must be generated from a minimum of three (3) trade lines that have been evaluated for at least 12 months. The trade lines do not need to be currently active but require some activity within the last 24 months. At least one of these trade lines must be an installment account and borrower must have paid the account down by an amount greater or equal to 10% of the subject loan amount. Rental history is considered installment and the monthly payment multiplied by the number of months can be used to meet the installment requirement Minimum Credit Score: - 620 (620-649 max LTV 90%, >649 max LTV is 96.5%) Inquiries and Derogatory Credit: - When inquiries and/or derogatory credit appear, the borrower must submit a signed credit explanation letter Page 13 of 38
  • prior to loan approval. Inquiry letter must cover ALL inquiries in the most recent 90 days from date of credit report - Note: Any delinquent accounts shown as “disputed” will result in an automatic downgrade to a manual underwrite and all manual guidelines will apply. exceptions to this are as follows: - 1. The disputed account has a zero balance - 2. The disputed account is marked as "paid in full", or "resolved" - 3. The disputed account is both a. less than $500, and b. more than 24 months old, based on the date of dispute. Housing Payment History: - 0 X 30 in the past 12 months. - For borrowers with mortgage delinquency beyond the most previous 12 months, it is the underwriter’s responsibility to carefully review and determine the borrower’s credit worthiness. Mortgage Payment History/Documentation: - The mortgage payment history may be documented by a VOM or provide a rating in the credit report. Rental Payment History/Documentation: - A rental payment history is required per the AUS findings or underwriter determination and must be documented by a VOR from a property management company or 12 months cancelled checks if rented from an individual (If there is payment shock of 25% or more, CPM requires a VOR regardless of what DU requires)Employment Salaried:/ Income  Most current pay stubs covering a 30-day period with YTD income  Most current and consecutive 2-Years W-2’s  Most current two years tax transcripts (ordered via 4506 on all loans) Self-Employed: - Business must be in existence for at least two (2) years prior to subject application date. - Most current and consecutive (signed) 2-Years Business Tax Returns with all schedules required if incorporated - Most current two years personal tax returns for principals of corporations or sole proprietors - Copy of Business License or a CPA letter proving business still exists. Overtime/Bonus/Other income - Overtime income will be considered if employer indicates it is likely to continue and a two year history is available and averaged - Bonus income will be considered if employer indicates it is likely to continue and two year history is available and averaged - Commission income will be considered if employer indicates it is likely to continue and a two year history is available and averaged. If commission income is more than 25% of total income, tax returns for two years will be required to calculate income Verbal Verification Prior to Closing:  A verbal verification of employment is required for each employer of all borrowers, within 10-days of closing. This policy applies to all non-self employed income types. Child Support, Alimony or Maintenance Income:  In order to use as income, child support, alimony or maintenance income, payments must reasonably be documented to continue for at least a three (3) year period. The following documentation is required: o Copy of the divorce decree, separation agreement or court order o Copies of court records, bank statements or cancelled checks evidencing a minimum of three (3) months receipt of payments. Rental income:  Rental income must be supported by two years tax returns.  If converting primary residence to rental property and relying on rental income to qualify, 25% equity in the rental property, as validated through appraisal or difference between original financed amount and current balance, is required along with a copy of the a 12 month lease agreement and evidence of security deposit o All income must match 1003 and DU findingsQualifying Maximum Ratios:Ratios PITI FICO (Front End)  30% Max 620 – 679  35% Max 680+  If gross monthly income is less than 2500 dollars 25% Max Ratio (CPM to review any exceptions) DTI FICO (Back End)  45% Max 620 – 679  50% Max 680 – 739 Page 14 of 38
  •  55% Max 740+ No exceptions on FICO scores < 650 - Exceptions to maximum ratios considered with compensating factors such as minimal payment shock with substantial reserves, etc. Must keep DO/DU Approved/EligiblePayment In all cases, the “existing housing” and the “proposed housing” sections of the 1003 application must beShock fully completed CPM considers payment shock on all loans: - Payment Shock occurs when the proposed housing expense will be considerably higher than the existing housing expense and where there are multiple layers of risk. The UW must analyze the borrower’s existing cash flow as depicted on bank statements and determine the borrower’s capacity for payment shock Payment Shock Guideline:  620-679 FICO score and payment shock is 50% or more-2 months PITI reserves required  >679 FICO score and payment shock is 50% or more-1 months PITI reserves required In order to be considered cash reserves for payment shock purposes, the borrowers ending balance on two consecutive bank statements must consistently show the reserve requirements available in the account. This shows the borrower has the ability to maintain the reserve levels required to sufficiently offset payment shock THIS IS ONE OF THE MOST IMPORTANT FACTORS IN ANALYZING THE BORROWER’S ABILITY TO PAYAssets Bank Statements: Most current and consecutive two (2) months bank statements (all pages). Quarterly Bank statements must be dated within 90-days of the initial application date and 120 days of closing (signing of note) Earnest Money: - Verification and source of funds for EM deposit required. Stocks, Bonds, Mutual Funds, U.S. Government Securities: - Copy of the account statement for the most recent 60 days/quarterly statement is required.Seller Max Concessions:Contribution - Max seller concession is the lower of 3% of contracted sales price or contracted amount on loans with an LTV above 90% and 6% on loans with an LTV of 90% or below - Seller contribution is limited to discount points, closing costs and prepaid itemsCash - Cash reserves are not generally a requirement except when cash reserves are used as a compensatingReserves factor when approving a conventional loan with debt ratios that exceed guidelines or payment shock is present - Gift funds, cash proceeds from a refinance and equity in another property, are not acceptable sources of cash reserves.Gift Funds In accordance with current CPM guidelines: - 100% gift funds for down payment are only acceptable if the funds are documented by a gift letter that states the funds are not to be repaid as well as clear documentation of the donor’s ability to gift the funds as well the transfer of funds from donor to the borrower - Borrower must have 5% of their own, documented funds contributed if the subject property is a second home with an LTV greater than 80% Gift Letter: - A gift letter is required and must list the donor’s name, address, city, state and zip, phone number, relationship to the borrower, and the dollar amount of the gift. The gift letter must indicate that the funds do not have to be repaid in any way and must be signed and dated by the donor. Documentation / Track Gift Funds : - Evidence that gift funds stated in the Gift Letter were withdrawn from the donors account; and, - Evidence that the same gift funds were received from the donors account to the borrower’s account, prior to closing. - When funds are transferred by donor to closing, verification of the transfer of the gift funds from the donors account must show the donor as the remitter and HUD-1 must clearly indicate the exact amount of the gift funds received from the donor and the account the funds were drawn from Page 15 of 38
  • Subordinate - Not PermittedFinancingProperty The Manufactured Home (MFH) must be designed and constructed to the Federal Manufactured ConstructionEligibility and Safety Standards and be so labeled. Home is eligible if it has ever been moved from the original installation site - Must be a double-wide MFH and have a floor area of not less than 900 square feet; this means that a single-wide is not eligible for financing. - Be constructed after June 15, 1976, in conformance with the Federal Manufactured Home Construction and Safety Standards, as evidenced by an affixed certification label - Be classified and taxed as real estate; (see “CPM Title Elimination Fees By State” section for documentation required for CPM to surrender title as well as state specific fee to CPM for elimination of title for manufactured homes that do not currently have eliminated title) - The mortgage must cover both the manufactured unit and its site and shall have a term of not more than 30 years from the date amortization begins; - Must be built and remain on a permanent chassis with all wheels removed and designed to be used as a residential dwelling, affixed to a permanent foundation as required by Fannie Mae. - Permanent foundation must meet manufacturer’s specifications for a permanent foundation. Appraiser to confirm. - If manufactured home is located in a flood zone, flood insurance will be required - MFH must meet the National Manufactured Home Construction and Safety Standards. New manufactured homes (100% complete but never previously occupied); - The MFH must be used as an O/O primary residence or second home - Newly Constructed MFH: If the MFH is newly, the following construction documents must be supplied with the file for purchase: Clear 442 final inspection completed by appraiserFoundation - Permanent foundation per manufacturer’s specifications.SystemsState - Manufactured Homes require a State Administrative Agency to inspect all modifications to manufacturedRequirements homes once they leave the factory. If the appraiser observes changes to the manufactured home such as an addition, and there is no local agency to inspect the home, obtain an engineers report indicating that the structural changes or additions were made in accordance with HUD Manufactured Home Construction and Safety Standards. - If the property cannot be inspected by the State Administrative Agency and an Engineers Report cannot be obtained, the property is ineligible for financing .Refinance A Cash-Out Refinance is not permitted in Texas and limited to a max 65% LTV in all other states Rate/Term and C/O refinances - If a refinance, the owner of the MFH must have owned the unit and the land for a minimum of 1-year to be eligible for financing. - Properties owned free and clear will be considered a C/O Refi and not eligible for financing in Texas - The refinance of a manufactured home that is currently financed as personal property and will be converted to real estate in the transaction is eligible, however, paying off an installment loan (personal property loan on manufactured home) requires the loan to be structured as a cash out refinance and all applicable guidelines and pricing adjustments applySpecial Vacant Properties:Certification -If the appraiser indicates that the property was vacant at the time of the inspection, the utilities must be/ Inspections turned on and an “As is” appraisal or 442 final inspection must be received from appraiser indicating that all utilities are now functioning properly prior to closing. Page 16 of 38
  • Flood Determination / Certification: - Mandatory - All MFH located in a Flood Zone A or V are eligible Flood Zone Elevation Certificate - If the site supporting a manufactured home is within a FEMA designated Special Flood Hazard Area, the following requirements apply: - Flood Insurance required Well and/or Septic Systems Certifications: - Required only when made a condition of the sales contract, inspection report or appraisal. NOTE: Shared wells must have a recorded shared well agreement executed by all partiesAppraisal - A full appraisal is required and must be completed on the Manufactured Home Appraisal Report (1004C) - The appraiser must verify the location and wording on the “HUD” Tags/Certification Labels of the unit and clear pictures of these tags must be provided (if HUD tags are not available, a certification from IBITS* is required. If appraiser cannot obtain a clear picture of the HUD label number, and the label is present and accessible, he must manually insert the label number below the HUD label pictures on the appraisal-CPM does require this on conventional loans) - The appraiser must also use standard single-family residential appraisal techniques when appraising the manufactured home. Other factory-built housing would provide the most similar comparables so every effort should be made to obtain such comparables even though their distances from the subject may be greater than usual. While CPM would like all MH comparisons, the minimum we will accept are two MH comparisons and one site built comparison Maximum adjustments: - Maximum line item adjustment is 10% - Maximum net adjustment is 15% - Maximum gross adjustment is 25% NOTE: Appraisals exceeding these maximum adjustments may be acceptable if the appraiser clearly identifies the reason for exceeding these percentages. This must be clearly justified and within normal appraisal practice. *Please contact your CPM Representative if you would like information on the HUD Tag verification site, IBITS Page 17 of 38
  • Closing Highlights:Power Of - Permitted; however, the POA must be transaction specificAttorney - May not be an interested party to the transaction, i.e.: real estate agent, seller, closing agent - the Attorney- In-Fact cannot have any direct or indirect financial interest in the transaction. - If executed outside of the United States, POA must be notarized at an U.S. Embassy or military installation. - Must be dated no more than 90-days prior to closing and must be in effect the date of the closing.Survey - A survey is mandatory in survey states. - In non-survey states, proof from title that a survey endorsement will be included with the final policy is requiredInterest - Permitted up to the first 10 calendar days of the month.CreditWarranty - A certified copy of the “Warranty Deed” is required on Purchase and Refinance transactions.DeedTitle Policy - Endorsements that are appropriate to the product type are required, in addition to the ALTA 7 Endorsement for Manufactured Homes (environmental, survey, modification if applicable) - There can be no outstanding survey exceptions, unpaid real estate taxes and/or special assessments against the property title - The Title Commitment cannot be issued more than 90 Days prior to the date of closing and vesting must match both the security instrument and the warranty deed Closing In addition to the required “standard” FNMA closing documents, the following are required for MFH loans: Forms Form If using POA, must be transaction specific Manufactured Home Rider to Security Instrument (IDS) Manufactured Home Borrower Affidavit Special Surrendering the manufactured home title: See “CPM Title Elimination Fees By State” section below Closing Purging Title to the Manufactured Home:Instructions - The title must be purged to ensure that the manufactured home will not revert to being a personal property. - Once the manufactured home unit is permanently attached to land, filing a request or application to purge the manufactured home title with the appropriate state or local authority (i.e. Department of Motor Vehicle) is required. Mortgagees must comply with all state or local requirements for proper purging of the title [chattel or other equivalent debt instrument] and the subject property must be classified or taxed as real estate. A Certification of purged title of the manufactured home must be provided to evidence the manufactured home has been officially converted from chattel to real property. In short, if the original chattel deed or title is not purged, the property does not have marketable real estate title, and as a result, in the event of a foreclosure, HUD will not accept a conveyance nor pay a claim. IMPORTANT CPM requires the correspondent to provide all documentation needed for CPM to surrender title. The required documentation is as follows: New home, never previously occupied and less than 12 months old: - Original MSO collected at closing and sent with collateral package for purchase - Title to forward POA executed by manufactured home builder/seller to CPM with tracking number (this is needed to give CPM authority to surrender title) - Application to surrender title Used Home, previously occupied and over 12 months old: - Original Title to home collected at closing and sent with collateral package for purchase - If there is currently a lien, that lien must be released and documentation provided - If original title is not available, correspondent is responsible for obtaining a new title and providing this to CPM - Title to forward POA executed by seller - Buyer executed application to surrender title Page 18 of 38
  • CPM Title Surrender Fees $376.00-Double WideAlabama $399.00-Triple WideArizona $350.00Arkansas $300.00California No fee. Title to record Form 433AFlorida $1100.00 if Real Property tag is not present on home $700.00 if Real Property tag is currently on homeGeorgia $342.00Louisiana No fee. Title to record Affidavit of immobilizationMississippi $308.00 for new home with MSO $300.00 used homeNew Mexico $345.50North No Fee. Title company to prepare and file Declaration of Intent to AffixCarolinaOklahoma There are four aspects to surrendering title in Oklahoma:  Tag fee: See chart attached  Excise Tax: New Home-Take the lesser of the sales price or $75,200 dollars divided by 2 and then multiplied by 3.25% to calculate the dollar amount for excise tax. This must be disclosed upfront. Used Home-Take the contract price of the home and divide it by 2, multiply that number by .65 and multiply that number by 3.25% to calculate the dollar amount for excise tax. This must be disclosed upfront.  Title Elimination: $330.00  Title must collect current year taxes in full and obtain Oklahoma tax Commissioners form 936. Note: Tag Fee does not apply to used homes. For new homes, all four calculations apply and must be disclosed, for used homes, all calculations apply, other than the Tag Fee.Oregon No fee. Title to record an exemption application. Must see fee on settlement statement showing title company is handling. Do not presume they are, your originator must request title to do this. LOAN WILL NOT BE PURCHASED IF NOT ON HUDSouth $495.00CarolinaTennessee New Home-No fee. Title to record New Home Affixation Affidavit $300.00-Used HomeTexas $375.00 If Texas Department of Housing and Urban Affairs website does not show seller is currently in title, there is a $55.00 charge for each person that has been in title between the seller on the subject loan and the person currently showing in title on TDHCAs website. Please have your originators confirm the seller on our transaction is the person currently showing on title with TDHCA (http://www.tdhca.state.tx.us/mh/)Washington $563.00Idaho No Fee. Title to record Declaration of Intent to Declare a Manufactured Home as Real Property. If borrower is not currently in title there is an 8 dollar fee to transfer titleKansas No fee. Title to record Affidavit to Affix. If borrower is not currently in title there is a 10 dollar fee to transfer titleNorth Dakota No fee. Title to record Affidavit of Use for a Manufactured Home. If borrower is not currently in title there is a 5 dollar fee to transfer titleMinnesota $308.00 Page 19 of 38
  • FHA Site Built 15 & 30 Year Fixed Rate Matrix FHA Site Built FHA Site Built 15 & 30 Year Fixed Rate Purchase and Rate & Term/Cash Out Refinance Maximum Maximum Maximum Occupancy Credit Score Front / Back Seller Cash Reserves LTV Ratios Contributions 1-Unit 90% 620-649 As per DU unless O/O Primary 30% / 45% 6% of SP payment shock is Residence 96.5% >650 present- Purchase: Borrower must have a minimum investment of 3.5% and maintain a 96.5% LTV after appraisal- Rate & Term Refi: The current owner must have owned the subject property for a minimum of 1-Year prior to the application date- Cash Out Program Guidelines:Loan - PurchasePurpose - Rate & Term Refinance - Cash out (ineligible in Texas)Occupancy - Owner Occupied, Primary ResidenceDoc Type - Full documentationGeographic - WA, ID, ND, OR, CA, AZ, NM, TX, OK, LA, AR, MS, AL, KS, GA, FL, SC, NC, TN, MNAvailability Note: Look for more states being added in the near futureLoan Type - FHA 15 and 30 year fixed rate programand TermsPrepayment - NonePenaltyBuy down - Bonafide discount points allowed. Note: A discount point is considered bonafide when an interest rate of .25% higher than the offered rate is available on the rate card the day the rate is lockedEscrow - Not permittedWaiversAssumed - In accordance with FHA guidelines, fixed rate loans are assumable to qualified borrower(s)LoansMaximum # - Oneof Loans tooneborrowerMaximum # - It must be determined by the underwriter that the subject property home is being purchased asof the borrower’s primary residenceProperties Note: Borrower’s applying for an FHA insured mortgage that currently own a home insured byFinanced FHA must meet FHA requirements for owning a second FHA insured home. Proximity to a new job as well as an increase in family size are two common, acceptable situations Bankruptcy:Bankruptcy - CPM requires that a borrower be discharged from bankruptcy for 2 years despite the type of bankruptcy - Customer must have three established lines of credit opened after the discharge. Each trade line must have a 12 month history and must have some activity within the most recent 24 months. At least one of these trade lines must be an installment account and borrower must have paid the account down by an amount greater or equal to 10% of the subject loan amount. Rental history Page 20 of 38
  • is considered installment and the monthly payment multiplied by the number of months can be used to meet the installment requirement - Foreclosure: - CPM requires that 36 months have passed from the date of the foreclosure sale. A satisfactory letter of explanation must be included in the file. All standard trade line and payment shock requirements applyAge of Credit Documents:Documents - As per DU findings Appraisal : - 120-days old as of closing date (signing of Note & Mtg.)AUS Acceptable AUS Determination:Requirement - All loans must be run through DO/DU - Approve/EligibleEligible All borrowers must have a valid U.S. Social Security number.and Eligible:Ineligible 7. U.S. Resident CitizenBorrowers 8. Permanent Resident Alien - Same as U.S. Citizen - Obtain evidence of lawful, permanent residency issued by the Bureau of Citizenship and Immigration Services (BCIS), formerly the INS. - Obtain a copy of Alien Registration Receipt Card (Resident Alien card), I-551 9. Non-Permanent Resident Alien - Must be eligible to work in the U.S. - Evidence of residency and work status to be obtained through documentation from US Bureau of Citizenship and Immigration Services (BCIS) formerly INS. - Copy of the Employment Authorization Card, I-688B. This card carries an expiration date. A SS card is not acceptable as evidence of work status. Ineligible: - Non-Occupant Co-Borrowers - Co-Signers - Foreign Nationals - Non-Resident Canadians - Borrowers with Diplomatic ImmunityTitle Vesting Eligible Vesting / Rights of Ownership:Rights of - Fee SimpleOwnership - Individual & Joint Ineligible / No Exceptions: - Land Trust - Leasehold Estate - Real Estate Syndication - General or Limited Partnerships - Title in the name of a CorporationCredit - A tri-merge bureau is required on all loans; the lowest qualifying score of all applicants is used to qualify and each borrower must have at least two credit scores. The qualifying score is the lower of 2 or the middle of 3 scores and must be reviewed for each borrower. - For a credit score to be considered valid, the score must be generated from a minimum of three (3) trade lines that have been evaluated for at least 12 months. The trade lines do not need to be currently active but require some activity within the last 24 months. At least one of these trade lines must be an installment account and borrower must have paid the account down by an amount greater or equal to 10% of the subject loan amount. Rental history is considered installment and the monthly payment multiplied by the number of months can be used to meet the installment requirement Minimum Credit Score: - 620 (620-649 max LTV 90%, >649 max LTV is 96.5%) Inquiries and Derogatory Credit: - When inquiries and/or derogatory credit appear, the borrower must submit a signed credit explanation letter Page 21 of 38
  • prior to loan approval. Inquiry letter must cover ALL inquiries in the most recent 90 days from date of credit report - Note: Any delinquent accounts shown as “disputed” will result in an automatic downgrade to a manual underwrite and all manual guidelines will apply. exceptions to this are as follows: - 1. The disputed account has a zero balance - 2. The disputed account is marked as "paid in full", or "resolved" - 3. The disputed account is both a. less than $500, and b. more than 24 months old, based on the date of dispute. Housing Payment History: - 0 X 30 in the past 12 months. - For borrowers with mortgage delinquency beyond the most previous 12 months, it is the underwriter’s responsibility to carefully review and determine the borrower’s credit worthiness. Mortgage Payment History/Documentation: - The mortgage payment history may be documented by a VOM or provide a rating in the credit report. Rental Payment History/Documentation: - A rental payment history is required per the AUS findings or underwriter determination and must be documented by a VOR from a property management company or 12 months cancelled checks if rented from an individual (If there is payment shock of 25% or more, CPM requires a VOR regardless of what DU requires)Employment Salaried:/ Income  Most current pay stubs covering a 30-day period with YTD income  Most current and consecutive 2-Years W-2’s  Most current two years tax transcripts (ordered via 4506 on all loans) Self-Employed: - Business must be in existence for at least two (2) years prior to subject application date. - Most current and consecutive (signed) 2-Years Business Tax Returns with all schedules required if incorporated - Most current two years personal tax returns for principals of corporations or sole proprietors - Copy of Business License or a CPA letter proving business still exists. Overtime/Bonus/Other income - Overtime income will be considered if employer indicates it is likely to continue and a two year history is available and averaged - Bonus income will be considered if employer indicates it is likely to continue and two year history is available and averaged - Commission income will be considered if employer indicates it is likely to continue and a two year history is available and averaged. If commission income is more than 25% of total income, tax returns for two years will be required to calculate income Verbal Verification Prior to Closing:  A verbal verification of employment is required for each employer of all borrowers, within 10-days of closing. This policy applies to all non-self employed income types. Child Support, Alimony or Maintenance Income:  In order to use as income, child support, alimony or maintenance income, payments must reasonably be documented to continue for at least a three (3) year period. The following documentation is required: o Copy of the divorce decree, separation agreement or court order o Copies of court records, bank statements or cancelled checks evidencing a minimum of three (3) months receipt of payments. Rental income:  Rental income must be supported by two years tax returns.  If converting primary residence to rental property and relying on rental income to qualify, 25% equity in the rental property, as validated through appraisal or difference between original financed amount and current balance, is required along with a copy of the a 12 month lease agreement and evidence of security deposit All income must match 1003 and DU findingsQualifying Maximum Ratios:Ratios PITI FICO (Front End)  30% Max 620 – 679  35% Max 680+  If gross monthly income is less than 2500 dollars 25% Max Ratio (CPM to review any exceptions) DTI FICO (Back End)  45% Max 620 – 679  50% Max 680 – 739 Page 22 of 38
  •  55% Max 740+ No exceptions on FICO scores < 650 Exceptions to maximum ratios considered with compensating factors such as minimal payment shock with substantial reserves, etc. Must keep DO/DU Approved/EligibleLease - Not permittedOptionRent CreditsPayment In all cases, the “existing housing” and the “proposed housing” sections of the 1003 application must beShock fully completed CPM considers payment shock on all loans: - Payment Shock occurs when the proposed housing expense will be considerably higher than the existing housing expense and where there are multiple layers of risk. The UW must analyze the borrower’s existing cash flow as depicted on bank statements and determine the borrower’s capacity for payment shock Payment Shock Guideline:  620-679 FICO score and payment shock is 50% or more-2 months PITI reserves required  >679 FICO score and payment shock is 50% or more-1 months PITI reserves required In order to be considered cash reserves for payment shock purposes, the borrowers ending balance on two consecutive bank statements must consistently show the reserve requirements available in the account. This shows the borrower has the ability to maintain the reserve levels required to sufficiently offset payment shock THIS IS ONE OF THE MOST IMPORTANT FACTORS IN ANALYZING THE BORROWER’S ABILITY TO PAYAssets Bank Statements: - Most current and consecutive two (2) months bank statements (all pages). Quarterly Bank statements must be dated within 90-days of the initial application date and 120 days of closing (signing of note) Earnest Money: - Verification and source of funds for EM deposit required. Stocks, Bonds, Mutual Funds, U.S. Government Securities: - Copy of the account statement for the most recent 60 days/quarterly statement is required.Seller Max Concessions:Contribution - Max seller concession is the lower of 6% of contracted sales price or contracted amount - Seller contribution is limited to discount points, closing costs and prepaid itemsCash - Cash reserves are not generally a requirement except when cash reserves are used as a compensatingReserves factor when approving an FHA loan with debt ratios that exceed guidelines or payment shock is present - Gift funds, cash proceeds from a refinance and equity in another property, are not acceptable sources of cash reserves.Gift Funds In accordance with current FHA guidelines: - 100% gift funds for down payment are only acceptable if the funds are documented by a gift letter that states the funds are not to be repaid as well as clear documentation of the donor’s ability to gift the funds as well the transfer of funds from donor to the borrower Gift Letter: - A gift letter is required and must list the donor’s name, address, city, state and zip, phone number, relationship to the borrower, and the dollar amount of the gift. The gift letter must indicate that the funds do not have to be repaid in any way and must be signed and dated by the donor. Documentation / Track Gift Funds : - Evidence that gift funds stated in the Gift Letter were withdrawn from the donors account; and, - Evidence that the same gift funds were received from the donors account to the borrower’s account, prior to closing. - When funds are transferred by donor to closing, verification of the transfer of the gift funds from the donors account must show the donor as the remitter and HUD-1 must clearly indicate the exact amount of the gift funds received from the donor and the account the funds were drawn from Page 23 of 38
  • Subordinate - Not PermittedFinancingProperty 1-4 Family Residential PropertiesEligibility If new construction less than 12 months old:  Termite soil treatment and HUD form 99A&B (in pest inspection states only)  Well/Septic inspection (if well/septic exist on property)  Final inspection completed by approved FHA fee inspector or “as is” appraisal that has never been completed “subject to”Refinance A Cash-Out Refinance is not permitted in Texas and limited to an 85% in all other states Rate/Term and C/O refinances - If a refinance, the owner of the property must have owned the unit and the land for a minimum of 1-year to be eligible for financing. - Properties owned free and clear will be considered a C/O Refi and not eligible for financing in Texas Vacant Properties: - If the appraiser indicates that the property was vacant at the time of the inspection, the utilities must beSpecial turned on and an “As is” appraisal must be received from appraiser indicating that all utilities are nowCertification functioning properly prior to closing. If vacant and property has a well/septic, a well water test and a septic/ certification are needed if vacant more than 12 months.Inspections Flood Determination / Certification: - Mandatory Well and/or Septic Systems Certifications: - Required only when made a condition of the sales contract, inspection report or appraisal, or if property is vacant more than 12 months or for new construction. When required, the certification(s) may be no more than 90-days old as of the date of closing (regardless of how old the system is). NOTE: Shared wells must have a recorded shared well agreement executed by all partiesAppraisal - A full appraisal is required - The appraiser must also use standard single-family residential appraisal techniques when appraising the Property. Maximum adjustments: - Maximum line item adjustment is 10% - Maximum net adjustment is 15% - Maximum gross adjustment is 25% NOTE: Appraisals exceeding these maximum adjustments may be acceptable if the appraiser clearly identifies the reason for exceeding these percentages. This must be clearly justified and within normal appraisal practice.Power Of - Permitted; however, the POA must be transaction specificAttorney - May not be an interested party to the transaction, i.e.: real estate agent, seller, closing agent - the Attorney- In-Fact cannot have any direct or indirect financial interest in the transaction. - If executed outside of the United States, POA must be notarized at an U.S. Embassy or military installation. - Must be dated no more than 90-days prior to closing and must be in effect the date of the closing.Survey - A survey is mandatory in survey states. - In non-survey states, proof from title that a survey endorsement will be included with the final policy is requiredInterest - Permitted up to the first 10 calendar days of the month.CreditWarranty - A certified copy of the “Warranty Deed” is required on Purchase and Refinance transactions.DeedTitle Policy - Endorsements that are appropriate to the product type are required(environmental, survey, modification if applicable) - There can be no outstanding survey exceptions, unpaid real estate taxes and/or special assessments against the property title - The Title Commitment cannot be issued more than 90 Days prior to the date of closing and vesting must match both the security instrument and the warranty deed Page 24 of 38
  • Conventional Site Built 15 & 30 Year Fixed Rate Conventional Site Built Conventional Site built 15 & 30 Year Fixed Rate Purchase and Rate & Term Refinance Maximum Maximum Maximum Occupancy Occupancy Front / Back Seller PMI LTV Ratios Contributions 1-Unit Owner Broker/Correspondent 95% See “Qualifying >90% max 3%O/O or Second Occupied Ratios” <=90% max 6% is responsible for Home 90% Second Home providing PMI cert- Purchase- Rate & Term Refi: The current owner must have owned the property for a minimum of 1-Year prior to the application date.- Cash out Program Guidelines:Loan - PurchasePurpose - Rate & Term Refinance - Cash Out refinanceOccupancy - Owner Occupied, Primary Residence and Second HomesDoc Type - Full documentationGeographic - WA, ID, ND, OR, CA, AZ, NM, TX, OK, LA, AR, MS, AL, KS, GA, FL, SC, NC, TN, MNAvailability Note: Look for more states being added in the near futureLoan Type - Conventional 15 and 30 year fixed rate programand TermsPrepayment - NonePenaltyBuy down - Bonafide discount points allowed. Note: A discount point is considered bonafide when an interest rate of .25% higher than the offered rate is available on the rate card the day the rate is lockedEscrow - Not permittedWaiversAssumed - In accordance with Fannie Mae guidelines, fixed rate loans are assumable to qualifiedLoans borrower(s)Maximum # - Oneof Loans tooneborrowerMaximum # - It must be determined by the underwriter that the subject property home is being purchased asof the borrower’s primary residence or second homeProperties - Maximum of seven properties financed allowedFinancedBankruptcy Bankruptcy: - CPM requires that a borrower be discharged from bankruptcy for 4 years despite the type of bankruptcy - Customer must have three established lines of credit opened after the discharge. Each trade line must have a 12 month history and must have some activity within the most recent 24 months. . At least one of these trade lines must be an installment account and borrower must have paid the account down by an amount greater or equal to 10% of the subject loan amount. Rental history Page 25 of 38
  • is considered installment and the monthly payment multiplied by the number of months can be used to meet the installment requirement - A satisfactory letter of explanation and a copy of the complete discharge papers must be included in the file - Any repossessions within the most recent 3 years will disqualify the borrower Foreclosure: 4 years from foreclosure sale dateAge of Credit Documents:Documents - Per DU findings Appraisal : - 120-days old as of closing date (signing of Note & Mtg.)AUS Acceptable AUS Determination:Requiremen - All loans must be run through DO/DUt - Approve/EligibleEligible All borrowers must have a valid U.S. Social Security number.and Eligible:Ineligible 10. U.S. Resident CitizenBorrowers 11. Permanent Resident Alien - Same as U.S. Citizen - Obtain evidence of lawful, permanent residency issued by the Bureau of Citizenship and Immigration Services (BCIS), formerly the INS. - Obtain a copy of Alien Registration Receipt Card (Resident Alien card), I-551 12. Non-Permanent Resident Alien - Must be eligible to work in the U.S. - Evidence of residency and work status to be obtained through documentation from US Bureau of Citizenship and Immigration Services (BCIS) formerly INS. - Copy of the Employment Authorization Card, I-688B. This card carries an expiration date. A SS card is not acceptable as evidence of work status. Ineligible: - Non-Occupant Co-Borrowers - Co-Signers - Foreign Nationals - Non-Resident Canadians - Borrowers with Diplomatic ImmunityTitle Vesting Eligible Vesting / Rights of Ownership:Rights of - Fee SimpleOwnership - Individual & Joint Ineligible / No Exceptions: - Land Trust - Leasehold Estate - Real Estate Syndication - General or Limited Partnerships - Title in the name of a CorporationCredit - A tri-merge bureau is required on all loans; the lowest qualifying score of all applicants is used to qualify and each borrower must have at least two credit scores. The qualifying score is the lower of 2 or the middle of 3 scores and must be reviewed for each borrower. - For a credit score to be considered valid, the score must be generated from a minimum of three (3) trade lines that have been evaluated for at least 12 months. The trade lines do not need to be currently active but require some activity within the last 24 months. At least one of these trade lines must be an installment account and borrower must have paid the account down by an amount greater or equal to 10% of the subject loan amount. Rental history is considered installment and the monthly payment multiplied by the number of months can be used to meet the installment Page 26 of 38
  • requirement Minimum Credit Score: - 620 (620-649 max LTV 90%, >649 max LTV is 96.5%) Inquiries and Derogatory Credit: - When inquiries and/or derogatory credit appear, the borrower must submit a signed credit explanation letter prior to loan approval. Inquiry letter must cover ALL inquiries in the most recent 90 days from date of credit report - Note: Any delinquent accounts shown as “disputed” will result in an automatic downgrade to a manual underwrite and all manual guidelines will apply. exceptions to this are as follows: - 1. The disputed account has a zero balance - 2. The disputed account is marked as "paid in full", or "resolved" - 3. The disputed account is both a. less than $500, and b. more than 24 months old, based on the date of dispute. Housing Payment History: - 0 X 30 in the past 12 months. - For borrowers with mortgage delinquency beyond the most previous 12 months, it is the underwriter’s responsibility to carefully review and determine the borrower’s credit worthiness. Mortgage Payment History/Documentation: - The mortgage payment history may be documented by a VOM or provide a rating in the credit report. Rental Payment History/Documentation: - A rental payment history is required per the AUS findings or underwriter determination and must be documented by a VOR from a property management company or 12 months cancelled checks if rented from an individual (If there is payment shock of 25% or more, CPM requires a VOR regardless of what DU requires)Employment Salaried:/ Income  Most current paystubs covering a 30-day period with YTD income  Most current and consecutive 2-Years W-2’s  Most current two years tax transcripts (ordered via 4506 on all loans) Self-Employed: - Business must be in existence for at least two (2) years prior to subject application date. - Most current and consecutive (signed) 2-Years Business Tax Returns with all schedules required if incorporated - Most current two years personal tax returns for principals of corporations or sole proprietors - Copy of Business License or a CPA letter proving business still exists. Overtime/Bonus/Other income - Overtime income will be considered if employer indicates it is likely to continue and a two year history is available and averaged - Bonus income will be considered if employer indicates it is likely to continue and two year history is available and averaged - Commission income will be considered if employer indicates it is likely to continue and a two year history is available and averaged. If commission income is more than 25% of total income, tax returns for two years will be required to calculate income Verbal Verification Prior to Closing:  A verbal verification of employment is required for each employer of all borrowers, within 10-days of closing. This policy applies to all non-self employed income types. Child Support, Alimony or Maintenance Income:  In order to use as income, child support, alimony or maintenance income, payments must reasonably be documented to continue for at least a three (3) year period. The following documentation is required: o Copy of the divorce decree, separation agreement or court order o Copies of court records, bank statements or cancelled checks evidencing a minimum of three (3) months receipt of payments. Rental income:  Rental income must be supported by two years tax returns.  If converting primary residence to rental property and relying on rental income to qualify, 25% equity in the rental property, as validated through appraisal or difference between original financed amount and current balance, is required along with a copy of the a 12 month lease agreement and evidence of security deposit All income must match 1003 and DU findingsQualifying Maximum Ratios:Ratios PITI FICO (Front End) Page 27 of 38
  •  30% Max 620 – 679  35% Max 680+  If gross monthly income is less than 2500 dollars 25% Max Ratio (CPM to review any exceptions) DTI FICO (Back End)  45% Max 620 – 679  50% Max 680 – 739  55% Max 740+ No exceptions on FICO scores < 650 Exceptions to maximum ratios considered with compensating factors such as minimal payment shock with substantial reserves, etc. Must keep DO/DU Approved/EligibleLease - Not permittedOptionRent CreditsPayment In all cases, the “existing housing” and the “proposed housing” sections of the 1003 application must beShock fully completed CPM considers payment shock on all loans: - Payment Shock occurs when the proposed housing expense will be considerably higher than the existing housing expense and where there are multiple layers of risk. The UW must analyze the borrower’s existing cash flow as depicted on bank statements and determine the borrower’s capacity for payment shock Payment Shock Guideline:  620-679 FICO score and payment shock is 50% or more-2 months PITI reserves required  >679 FICO score and payment shock is 50% or more-1 months PITI reserves required In order to be considered cash reserves for payment shock purposes, the borrowers ending balance on two consecutive bank statements must consistently show the reserve requirements available in the account. This shows the borrower has the ability to maintain the reserve levels required to sufficiently offset payment shock THIS IS ONE OF THE MOST IMPORTANT FACTORS IN ANALYZING THE BORROWER’S ABILITY TO PAYAssets Bank Statements: - Most current and consecutive two (2) months bank statements (all pages). Quarterly Bank statements must be dated within 90-days or per DU findings Earnest Money: - Verification and source of funds for EM deposit required. Stocks, Bonds, Mutual Funds, U.S. Government Securities: - Copy of the account statement for the most recent 60 days/quarterly statement is required.Seller Max Concessions:Contribution - Max seller concession is the lower of 3% of contracted sales price or contracted amount on loans with an LTV above 90% and 6% on loans with an LTV of 90% or below - Seller contribution is limited to discount points, closing costs and prepaid itemsCash - Cash reserves are not generally a requirement except when cash reserves are used as a compensatingReserves factor when approving an conventional loan with debt ratios that exceed guidelines or payment shock is present - Gift funds, cash proceeds from a refinance and equity in another property, are not acceptable sources of cash reserves.Gift Funds In accordance with current CPM guidelines: - 100% gift funds for down payment are only acceptable if the funds are documented by a gift letter that states the funds are not to be repaid as well as clear documentation of the donor’s ability to gift the funds as well the transfer of funds from donor to the borrower Gift Letter: - A gift letter is required and must list the donor’s name, address, city, state and zip, phone number, relationship to the borrower, and the dollar amount of the gift. The gift letter must indicate that the funds do not have to be repaid in any way and must be signed and dated by the donor. Page 28 of 38
  • Documentation / Track Gift Funds : - Evidence that gift funds stated in the Gift Letter were withdrawn from the donors account; and, - Evidence that the same gift funds were received from the donors account to the borrower’s account, prior to closing. - When funds are transferred by donor to closing, verification of the transfer of the gift funds from the donors account must show the donor as the remitter and HUD-1 must clearly indicate the exact amount of the gift funds received from the donor and the account the funds were drawn fromSubordinate - Not PermittedFinancingRefinance A Cash-Out Refinance is not permitted in Texas and limited to a max 90% LTV in all other states or limited to other state or agency guidelines Rate/Term and C/O refinances - If a refinance, the owner of the home must have owned the property for a minimum of 1-year to be eligible for financing. - Properties owned free and clear will be considered a C/O Refi and not eligible for financing in TexasSpecial Vacant Properties:Certification -If the appraiser indicates that the property was vacant at the time of the inspection, the utilities must be/ turned on and an “As is” appraisal or 442 final inspection must be received from appraiser indicating that allInspections utilities are now functioning properly prior to closing. Flood Determination / Certification: - Mandatory Well and/or Septic Systems Certifications: - Required only when made a condition of the sales contract, inspection report or appraisal. NOTE: Shared wells must have a recorded shared well agreement executed by all partiesAppraisal - A full appraisal is required - The appraiser must also use standard single-family residential appraisal techniques when appraising the home. Maximum adjustments: - Maximum line item adjustment is 10% - Maximum net adjustment is 15% - Maximum gross adjustment is 25% NOTE: Appraisals exceeding these maximum adjustments may be acceptable if the appraiser clearly identifies the reason for exceeding these percentages. This must be clearly justified and within normal appraisal practice.Power Of - Permitted; however, the POA must be transaction specificAttorney - May not be an interested party to the transaction, i.e.: real estate agent, seller, closing agent - the Attorney- In-Fact cannot have any direct or indirect financial interest in the transaction. - If executed outside of the United States, POA must be notarized at an U.S. Embassy or military installation. - Must be dated no more than 90-days prior to closing and must be in effect the date of the closing.Survey - A survey is mandatory in survey states. - In non-survey states, proof from title that a survey endorsement will be included with the final policy is requiredInterest - Permitted up to the first 10 calendar days of the month.CreditWarranty - A certified copy of the “Warranty Deed” is required on Purchase and Refinance transactionsDeedTitle Policy - Endorsements that are appropriate to the product type are required(environmental, survey, modification if applicable) - There can be no outstanding survey exceptions, unpaid real estate taxes and/or special assessments against the property title - The Title Commitment cannot be issued more than 90 Days prior to the date of closing and vesting must match both the security instrument and the warranty deed Page 29 of 38
  • FHA 203K(S) 15 & 30 Year Fixed Rate FHA Streamline 203K FHA 203K(s) 15 & 30 Year Fixed Rate Purchase and Rate & Term Refinance Maximum Maximum Maximum Occupancy Occupancy Front / Back Seller Cash Reserves LTV Ratios Contributions 1-Unit 96.5% of 110% of as Primary O/O Primary improved appraised 30% / 45% 6% of SP As per DU Residence value Residence- Purchase:- Rate & Term Refi: The current owner must be in title for a minimum of 1-Year prior to the application date (for manufactured homes, the current owner must be in title to both home and land).- See important MFH requirements under “Eligible Property” section. Program Guidelines:Loan Purpose - Purchase - Rate & Term RefinanceOccupancy - Owner Occupied, Primary ResidenceDoc Type - Full documentationGeographic - WA, ID, ND, OR, CA, AZ, NM, TX, OK, LA, AR, MS, AL, KS, GA, FL, SC, NC, TN, MNAvailability Note: Look for more states being added in the near futureLoan Type and - FHA Fixed Rate 15 and 30 year termsTermsPrepayment - None; however, if refinancing and the payoff funds for the existing loan are not received by thePenalty servicing lender by the first day of the month, the lender may collect interest on the existing loan through the end of the month.Buydown - Bonafide discount points allowed. Note: A discount point is considered bonafide when an interest rate of .25% higher than the offered rate is available on the rate card the day the rate is lockedEscrow - Not PermittedWaivers (taxes &Ins.)Assumability - In accordance with FHA guidelines, fixed rate loans are assumable to qualified borrower(s)Maximum # of - OneLoans to oneborrowerMaximum # of - One FHAProperties - (Multiple FHA loans are only permitted if all FHA requirements for multiple FHA loans areFinanced met. Underwriting will determine the occupancy of our subject loan based on the documentation in the file)Program - All FHA and RESPA required disclosures in complianceSpecific Forms Initial disclosure/Prior to underwrite - 203(K) Borrowers Acknowledgement (HUD92700) - FHA Streamlined Indemnity Agreement (CPM Specific, see website for form) - Draw Request Disclosure (CPM specific detailing draw process) - Borrower Disclosure (warrants that borrower has satisfactorily investigated each contractor and states that CPM has the right to reject any contractor) Page 30 of 38
  • - Maximum Mortgage Worksheet (This form will be updated as needed by UW, however, processor should complete initial form for UW) During Processing, Property Specific - Homeowner/Contractor agreement (each contractor must execute) - Contractor Profile Report - Contractor Bids (these must be accurate as bids CANNOT increase during rehab period - Client Reference Form (two references are needed for each contract and form must be completed by previous client)Age of Credit Docs May Not be Older Than:Documents - 30-days old at time of application; - 60-days at time of underwriting; - 90-days old at time of closing (signing of Note & Mtg.) Appraisal May Not be Older Than - 90-days old as of closing date (signing of Note & Mtg.) If more than 90 but less than 120 prior to closing, a recertification of value from the appraiser is acceptable.Bankruptcy Bankruptcy:Foreclosure - CPM requires that a borrower be discharged from bankruptcy for 2 years despite the type of bankruptcy - Customer must have three established lines of credit opened after the discharge. Each trade line must have a 12 month history and must have some activity within the most recent 24 months. At least one of these trade lines must be an installment account and borrower must have paid the account down by an amount greater or equal to 10% of the subject loan amount. Rental history is considered installment and the monthly payment multiplied by the number of months can be used to meet the installment requirement - Foreclosure: CPM requires that 36 months have passed from the date of the foreclosure sale. A satisfactory letter of explanation must be included in the file. All standard trade line and payment shock requirements applyUnderwriting - All loans must be run through DO/DUMethod Acceptable AUS Determination: - Approve/Eligible (All loans are subject to clear LDP and GSA search results)Eligible All borrowers must have a valid U.S. Social Security number.and Eligible:Ineligible 13. U.S. Resident CitizenBorrowers 14. Permanent Resident Alien - Same as U.S. Citizen - Obtain evidence of lawful, permanent residency issued by the Bureau of Citizenship and Immigration Services (BCIS), formerly the INS. - Obtain a copy of Alien Registration Receipt Card (Resident Alien card), I-551 15. Non-Permanent Resident Alien - Must be eligible to work in the U.S. - Evidence of residency and work status to be obtained through documentation from US Bureau of Citizenship and Immigration Services (BCIS) formerly INS. - Copy of the Employment Authorization Card, I-688B. This card carries an expiration date. A SS card is not acceptable as evidence of work status. Ineligible: - Non-Occupant Co-Borrowers - Co-Signers - Foreign Nationals - Non-Resident Canadians - Borrowers with Diplomatic ImmunityCredit - A tri-merge bureau is required on all loans; the lowest qualifying score of all applicants is used to qualify and each borrower must have at least two credit scores. The qualifying score is the lower of 2 or the middle of 3 scores and must be reviewed for each borrower. - For a credit score to be considered valid, the score must be generated from a minimum of three (3) Page 31 of 38
  • trade lines that have been evaluated for at least 12 months. The trade lines do not need to be currently active but require some activity within the last 24 months. At least one of these trade lines must be an installment account and borrower must have paid the account down by an amount greater or equal to 10% of the subject loan amount. Rental history is considered installment and the monthly payment multiplied by the number of months can be used to meet the installment requirement Minimum Credit Score: - 620 (620-649 max LTV 90%, >649 max LTV is 96.5%) Inquiries and Derogatory Credit: - When inquiries and/or derogatory credit appear, the borrower must submit a signed credit explanation letter prior to loan approval. Inquiry letter must cover ALL inquiries in the most recent 90 days from date of credit report - Note: Any delinquent accounts shown as “disputed” will result in an automatic downgrade to a manual underwrite and all manual guidelines will apply. exceptions to this are as follows: - 1. The disputed account has a zero balance - 2. The disputed account is marked as "paid in full", or "resolved" - 3. The disputed account is both a. less than $500, and b. more than 24 months old, based on the date of dispute. Housing Payment History: - 0 X 30 in the past 12 months. - For borrowers with mortgage delinquency beyond the most previous 12 months, it is the underwriter’s responsibility to carefully review and determine the borrower’s credit worthiness. Mortgage Payment History/Documentation: - The mortgage payment history may be documented by a VOM or provide a rating in the credit report. Rental Payment History/Documentation: - A rental payment history is required per the AUS findings or underwriter determination and must be documented by a VOR from a property management company or 12 months cancelled checks if rented from an individual (If there is payment shock of 25% or more, CPM requires a VOR regardless of what DU requires)Employment / Salaried:Income  Most current paystubs covering a 30-day period with YTD income  Most current and consecutive 2-Years W-2’s  Most current two years tax transcripts (ordered via 4506 on all loans) Self-Employed: - Business must be in existence for at least two (2) years prior to subject application date. - Most current and consecutive (signed) 2-Years Business Tax Returns with all schedules required if incorporated - Most current two years personal tax returns for principals of corporations or sole proprietors - Copy of Business License or a CPA letter proving business still exists. Overtime/Bonus/Other income - Overtime income will be considered if employer indicates it is likely to continue and a two year history is available and averaged - Bonus income will be considered if employer indicates it is likely to continue and two year history is available and averaged - Commission income will be considered if employer indicates it is likely to continue and a two year history is available and averaged. If commission income is more than 25% of total income, tax returns for two years will be required to calculate income Verbal Verification Prior to Closing:  A verbal verification of employment is required for each employer of all borrowers, within 10-days of closing. This policy applies to all non-self employed income types. Child Support, Alimony or Maintenance Income:  In order to use as income, child support, alimony or maintenance income, payments must reasonably be documented to continue for at least a three (3) year period. The following documentation is required: o Copy of the divorce decree, separation agreement or court order o Copies of court records, bank statements or cancelled checks evidencing a minimum of three (3) months receipt of payments. Rental income:  Rental income must be supported by two years tax returns.  If converting primary residence to rental property and relying on rental income to qualify, 25% equity in Page 32 of 38
  • the rental property, as validated through appraisal or difference between original financed amount and current balance, is required along with a copy of the a 12 month lease agreement and evidence of security deposit All income must match 1003 and DU findingsQualifying Rate Maximum Ratios:Qualifying PITI FICO (Front End)Ratios  30% Max 620 – 679  35% Max 680+  If gross monthly income is less than 2500 dollars 25% Max Ratio (CPM to review any exceptions) DTI FICO (Back End)  45% Max 620 – 679  50% Max 680 – 739  55% Max 740+ No exceptions on FICO scores < 650 - Exceptions to maximum ratios considered with compensating factors such as minimal payment shock with substantial reserves, etc. Must keep DO/DU Approved/EligibleLease Option - Not permittedRent CreditsPayment Shock In all cases, the “existing housing” and the “proposed housing” sections of the 1003 applications must be fully completed so the Underwriter can appropriately consider potential payment shock. CPM considers payment shock on all loans. Payment Shock occurs when the new housing expenses will be considerably higher than the existing housing expenses and where there are multiple layers of risk. CPM will analyze the borrower’s existing cash flow as depicted on bank statements and determine the borrower’s capacity for payment shockAssets Bank Statements: Most current and consecutive two (2) months bank statements (all pages). Quarterly Bank statements must be dated within 90-days of the initial application date and 120 days of closing (signing of note) Earnest Money: Verification and source of funds for EM deposit required. Stocks, Bonds, Mutual Funds, U.S. Government Securities: Copy of the account statement for the most recent month/quarter is required.Seller Max Concessions:Contribution - Max Concession 6% - Seller contribution is limited to discount points, closing costs and prepaid itemsCash Reserves - Cash reserves are not generally a requirement except when cash reserves are used as a compensating factor when approving an FHA loan with debt ratios that exceed guidelines or payment shock is present - Gift funds, cash proceeds from a refinance and equity in another property, are not acceptable sources of cash reserves.Gift Funds In accordance with current FHA guidelines: - 100% gift funds for down payment are acceptable Gift Letter: - A gift letter is required and must list the donor’s name, address, city, state and zip, phone, relationship to the borrower, and the dollar amount of the gift. The gift letter must indicate that the funds do not have to be repaid in any way and must be signed and dated by the donor. Documentation / Track Gift Funds : - Evidence that gift funds stated in the Gift Letter were withdrawn from the donors account; and, - Evidence that the same gift funds were received from the donors account to the borrower’s account, prior to closing. - When funds are transferred by donor to closing, verification of the transfer of the gift funds from the donors account must show the donor as the remitter and HUD-1 must clearly indicate the exact amount Page 33 of 38
  • of the gift funds received from the donor and the account the funds were drawn fromSubordinate - Not PermittedFinancingProperty If MH, the Manufactured Home (MFH) must be designed and constructed to the Federal ManufacturedEligibility Construction and Safety Standards and is so labeled. - must have been built in accordance with HUD code post June 15, 1976 - Home is not eligible if moved from original installation site - Must be a double-wide MFH and have a floor area of not less than 900 square feet; this means that a single-wide is not eligible for financing. - Be constructed after June 15, 1976, in conformance with the Federal Manufactured Home Construction and Safety Standards, as evidenced by an affixed certification label (MFHs produced prior to that date are ineligible for financing); - Be classified and taxed as real estate; - The mortgage must cover both the manufactured unit and its site and shall have a term of not more than 30 years from the date amortization begins; - Must be built and remain on a permanent chassis with all wheels removed and designed to be used as a residential dwelling, affixed to a permanent foundation per manufacturers specifications and subject to any repairs noted by the appraiser - The finished grade elevation beneath the manufactured home or, if a basement is used, the lowest finished exterior grade adjacent to the perimeter enclosure, shall be at or above the 100-year return frequency flood elevation. - MFH must meet the National Manufactured Home Construction and Safety Standards. New manufactured homes (100% complete but never previously occupied); - The MFH must be used as an O/O primary residenceDraw Process - There is a maximum 2 draw disbursement for each contractor regardless if there is one, or more than one, contract between the borrower and the contractor. - Bids will be used by the underwriter to determine length of time needed for rehab work with a maximum rehab period of 6 months - Initial disbursement may be made at closing to cover, but not to exceed, actual, required contractor deposits, building permits, and/or the cost of materials incurred prior to construction. Verifiable estimates and initial disbursement requests must be in the file and cleared by UW prior to a clear to close. - Maximum initial disbursement at closing cannot exceed 50% of total bid, not including required 10% contingency reserve - Repairs completed or started prior to UW issuing Conditional Commitment will not be eligible for inclusion in repair escrow - Final Inspection may be done by either FHA Fee Inspector or AppraiserFoundation - If MH, the Foundation for the MFH must be inspected by a licensed engineer. Engineer must address,Systems grading, skirting, and foundation system and state that all comply with FHA standards for a permanent foundation. This information must be provided on an engineer’s certification that includes the engineer’s seal and signatureState - Manufactured Homes require a State Administrative Agency to inspect all modifications toRequirements manufactured homes once they leave the factory. If the appraiser observes changes to the manufactured home such as an addition, and there is no local agency to inspect the home, obtain an engineers report indicating that the structural changes or additions were made in accordance with HUD Manufactured Home Construction and Safety Standards. - If the property cannot be inspected by the State Administrative Agency and an Engineers Report cannot be obtained, the property is ineligible for financing .Refinance A combination of Cash Out and FHA 203K(s) is NOT acceptable 1. Rate and Term ONLY - In all cases, the MFH and land or Site Built Home must be owned 1-year or more, prior to the date of Page 34 of 38
  • the application. - Current standard conforming maximum mortgage calculations, current refinance and seasoning requirements apply. - Properties owned free and clear will be considered a C/O Refi and not eligible for financing - Combining and paying off the combination of land and personal property loans on a manufactured home is acceptableSpecial Vacant Properties:Certifications / If the appraiser indicates that the property was vacant at the time of the inspection, the utilities must beInspections turned on and a final clear certification from appraiser is required indicating that all utilities are now functioning properly prior to closing. If vacant and property has a well/septic, a well water test and a septic certification is needed if vacant more than 12 months. Flood Determination / Certification: Mandatory Flood Zone Elevation Certificate: All homes located in a Flood Zone A or V are not eligible - If the site supporting a manufactured home is within a FEMA designated Special Flood Hazard Area, the following requirements apply: Order a FEMA Elevation Certificate to determine if the home is eligible. The Lowest Adjacent (finished) Grade (LAG) level beneath a home must be at or above the 100-Year return frequency elevation (Base Flood Elevation) - If the Elevation Certificate indicates that the lowest adjacent grade of the home is below the Base Flood Elevation (BFE) level, the loan is not eligible- even if flood insurance is obtained. Well and/or Septic Systems Certifications: - Required only when made a condition of the sales contract, inspection report, appraisal, or if property is vacant more than 12 months or for new construction. When required, the certification(s) may be no more than 90-days old as of the date of closing (regardless of how old the system is). NOTE: Shared wells must have a recorded shared well agreement executed by all partiesAppraisal - A full appraisal is required and must be completed on the Manufactured Home Appraisal Report (1004C) if a manufactured home - The lower of the sales price or 110% of the AS IMPROVED value can be used to calculate the LTV on a purchase and 110% of the AS IMPROVED value can be used to calculate the LTV on rate and term refinances - The appraiser must verify the location and wording on the “HUD” Tags/Certification Labels of the unit and clear pictures of these tags must be provided if a manufactured home. The appraiser must also use standard single-family residential appraisal techniques when appraising the manufactured home. Other factory-built housing would provide the most similar comparables so every effort should be made to obtain such comparables even though their distances from the subject may be greater than usual. Page 35 of 38
  • How to Complete HUD-92700 Maximum Mortgage Worksheet for a Streamlined (k)LoanA. Property Information1. Contract Sales Price:• If Purchase, input the Contract Amount.• If Refinance, input the Payoff Amount.2. “As-is” Value:• If Purchase and not a HUD/REO, input the amount in A1. Purchase does not require an “As is”value.• If Purchase and a HUD/REO, need copy of Management and Marketing Appraisal availablefrom realtor.• If Refinance, input “As-is” Value from appraisal.3. After-Improved Value:• Input value of as is completed product from new appraisal.4. 110% of A35. Borrower Paid Closing Costs: Skip until later step. At that point, Borrower Paid Closing Costs willhave been calculated on GFE.6. Allowable Energy Improvements: N/A in most cases.B. Rehabilitation and Other Allowable Costs1. Total Costs of Repairs:• Input the sum of all Contracts/Bids.• The appraiser will list all bids/costs on the Appraiser Repair Addendum. Both the Borrower andContractor(s) must sign all bids/work orders to acknowledge quotes.2. Contingency Reserve on Repair Costs:• Input 10% of B1, not to exceed $2,500.• Any excess not used in the transaction will be applied as a Principle Reduction after completion.3. Inspection Fees + Title Update Fees:• Inspections Fees: $100 per Contractor per loan, not per inspection.• Title Update Fees: $65 per loan, not per draw.4. Mortgage Payments Escrowed: N/A on a Streamlined (k) Loan5. Sub-Total for Rehabilitation Escrow Account: Sum B1 thru B4.6. Architectural and Engineering Fees: N/A on a Streamlined (k) Loan7. Consultant Fees: N/A on a Streamlined (k) Loan8. Permits: Copy of Permit Fee invoice required. Can be paid at closing.9. Other Fees: As needed. (e.g. Impact Fees) Copy of invoices required to document.10. Sub-Total: Sum B5 thru B911. Supplemental Origination Fee:• Fee is optional and is charged to the Borrower.• The max that can be charged is the greater of $350 or 1.5% of B10.• It cannot be paid by the Seller and it is financed into the loan.• Does not satisfy any part of the 3.5% statutory investment.12. Discount Points on Repair Costs and Fees:• Fee is optional and is charged to the Borrower.• Take % of Discount charged on whole loan and multiply by B10.• It cannot be paid by the Seller and it is financed into the loan.• Does not satisfy any part of the 3.5% statutory investment. Page 36 of 38
  • 13. Sub-Total for Release at Closing: Sum B6 thru B9 + B11 and B1214. Total Rehabilitation Cost: Total of B5 and B13 minus A6• Cannot exceed $35,000C. Mortgage Calculation for Purchase Transactions1. Lesser of Sales Price (A1) or As-Is Value (A2)2. Total Rehabilitation Cost (B14)3. Lesser of Sum of C1 + C2 or 110% of A44. Mortgage Amount: C3 x LTV Factor (96.5%)• Occasionally, if a HUD REO (Officer Next Door), the calculation would be (C3 – allowableDown payment/HUD Owned property) x LTV Factor.5. Statutory Investment Required: C3 x 3.5%• NOTE: Before you can calculate C6, you must determine the minimum closing costs that theBorrower must pay to meet the required 3.5% investment. To determine this, take C4 + C5 – C3= A56. Actual Cash Investment: (C3 + A5 – C4). This amount must be equal to or greater than C5; if less,an adjustment must be made to lower the loan amount.7. Adjusted Max Mortgage Amount: Only applies if the loan amount needs to be lowered to meet the3.5% minimum investment.D. Mortgage Calculation for Refinance Transactions● If a refinance, you must sum B14 and A1 to arrive at the payoff for the refinance. You would thengo to your loan origination system and build your refinance as normal then return to this worksheetand complete this section.1. A1 + B14 + A5 + Total Prepaid items + Discount on Total Loan Amt – B12 – FHA MIP Refund2. Lesser of (A2 + B14) or 110% of A43. D2 x LTV Factor (97.75%)4. Maximum Mortgage Amount: Lesser of D1 or D35. Borrower’s Required Investment: (D1 – D4)E. Energy Efficient Mortgage Amount:1. N/A in most casesTo see detailed information regarding this program please visit,http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_14589.doc***This Matrix is designed to be a quick reference, while detailed information regarding the programshould be retrieved from this link.*** Page 37 of 38
  • CountryPlace Mortgage partner funded 1X close CountryPlace Mortgage provides a 1X close product that involves an upfront commitment from CountryPlace Mortgage to purchase the permanent loan once modified. This allows a secure option for institutions to provide construction financing to their builder partners. Here is how it works:  A new construction home loan is originated, for the most part just as an existing loan would be originated. The difference is in the appraisal, the construction documents required by the insuring entity or GSE, the modification and the fact that there is not an existing home on the property at closing  The loan will be originated and approved based on the terms of the permanent loan  A full loan package is submitted to CountryPlace including all credit documents and property documents with the exception of a final appraisal. The appraisal is submitted subject to the plans and specifications provided to the appraiser by the builder  CountryPlace approves all credit documents, title work, survey (if applicable), and the subject to completion appraisal.  Credit documents may not expire (see Fannie Mae and FHA guidelines for age of documents) prior to signing of the note at the construction close (Fannie Mae documents can expire, even on a one time close during the construction period and cannot be more than 120 days old at the time of delivery to Fannie Mae, IF the LTV at the time of construction close is above 70%)  Upon clear to close, CPM will issue an approval and a clear to close for the construction closing  The loan can either be locked or the loan can float during the construction period (The correspondent must make this decision knowing that the loan must be locked and within the lock period when delivered to CPM for purchase)  CPM must approve a set of standard closing and modification documents prior to closing on your first construction loan  Correspondent will close the loan in it’s own name based on the terms of the approval CPM has issued  After closing, correspondent will determine what draw process will be in place for their builder partner  Upon full disbursement of funds to builder, completion of the project, all inspections required being completed based on the loan program (FHA/Conforming only) the file will be submitted to CountryPlace along with the closed loan package and the executed modification  CountryPlace Mortgage then purchases the whole loan. Page 38 of 38