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My Community Mortgage & Flexible Mortgage Ppt

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My Community Mortgage & Flexible Mortgage Ppt

  1. 1. My Community Mortgage & Flexible Mortgage Training Offered through Affinity Lending Group
  2. 2. Agenda <ul><li>My Community Mortgage </li></ul><ul><ul><li>Introduction </li></ul></ul><ul><ul><li>Eligibility Guidelines </li></ul></ul><ul><ul><li>Eligible Programs </li></ul></ul><ul><ul><li>Underwriting Guidelines </li></ul></ul><ul><ul><li>Community Solutions </li></ul></ul><ul><ul><li>Community HomeChoice </li></ul></ul><ul><ul><li>MCM Program Highlights </li></ul></ul><ul><li>Flexible Mortgage </li></ul><ul><ul><li>Introduction & Highlights of Program </li></ul></ul><ul><ul><li>Eligibility Guidelines </li></ul></ul><ul><ul><li>Underwriting Guidelines </li></ul></ul><ul><ul><li>Eligible Programs </li></ul></ul><ul><ul><li>Flex Program Highlights </li></ul></ul><ul><li>Interest Rates & Fees </li></ul><ul><li>Marketing Tools, Training & Support </li></ul>
  3. 3. MY COMMUNITY MORTGAGE <ul><li>Introduction to Affinity Lending Group </li></ul><ul><li>Introduction & Eligible Borrowers </li></ul><ul><li>Suite of “Community Mortgage Options” </li></ul><ul><li>My Community Mortgage Product Features </li></ul>06/06/09
  4. 4. Introduction <ul><li>Affinity Lending Group is an independent residential Mortgage Banking firm. </li></ul><ul><li>Founded in 2003, ALG is a direct-lending mortgage banker approved as a lender and by the Federal Housing Administration (FHA); the Veterans Administration (VA); the Federal National Mortgage Association (Fannie Mae); the Federal Home Loan Mortgage Corporation (Freddie Mac); the Government National Mortgage Association (Ginnie Mae); the California Housing Finance Agency (CalHFA); the Nevada Housing Division; the California Public Employees’ Retirement System (CalPERS); the California Teachers’ Retirement System (CalSTRS); and many other major secondary market institutions. </li></ul><ul><li>Having funded in excess of $1 billion in residential real estate loans, ALG has assisted more than two thousand families with their mortgage needs.  ALG enables families to enjoy the American Dream of Homeownership…“it’s the only thing we do.” </li></ul><ul><li>ALG has a longstanding tradition of providing unparalleled customer service and a reputation built on adding value to the home loan process.  That’s why ALG should be considered…“ YOUR FIRST LENDING RESOURCE ”. </li></ul>
  5. 5. What is the MCM Program? <ul><li>Penetrating minority and other underserved markets is a core element of future growth and business success. </li></ul><ul><li>The MyCommunityMortgage (MCM) loan program is Fannie Mae’s program designed to help Lenders and Brokers meet the needs of low & moderate income homebuyers in your communities. </li></ul><ul><ul><li>Market Restrictions: All 50 states (CA for ALG only) </li></ul></ul><ul><li>2 Main Objectives of the program: </li></ul><ul><li>1. AFFORDABILITY </li></ul><ul><li>Little to no cash required </li></ul><ul><li>2. FLEXIBILITY </li></ul><ul><li>UW Flexibilities </li></ul><ul><li>Borrower Options </li></ul>
  6. 6. Targeted Borrowers Low to Moderate Income Borrowers with…
  7. 7. What is the current market doing? <ul><li>The market continues to slow down </li></ul><ul><li>Product availability continues to shrink making it a challenge to find alternative financing solutions </li></ul><ul><li>Non-Agency products continue to experience liquidity issues </li></ul><ul><li>Purchases, refinances and new home construction are declining </li></ul><ul><li>Overall home values are either flat or depreciating throughout the country </li></ul><ul><li>There is a shift in the market from Agency products to Government products </li></ul><ul><li>Agency and Government products may be a better alternative to increase originations, lessen risk, and grow market share in this turbulent environment </li></ul>
  8. 8. Opportunity <ul><li>There are still borrowers who: </li></ul><ul><ul><li>Are 1 st Time Homebuyers </li></ul></ul><ul><ul><li>Have non-traditional credit </li></ul></ul><ul><ul><li>Have blemished credit and/or a low credit score </li></ul></ul><ul><ul><li>Have limited cash for down payment or closing costs </li></ul></ul><ul><ul><li>Have low-to-moderate income </li></ul></ul><ul><ul><li>Receive income from government benefits </li></ul></ul><ul><ul><li>Have boarder income from non-family members </li></ul></ul><ul><ul><li>Have cash-on-hand for closing </li></ul></ul><ul><ul><li>Community service professionals who could use extra flexibilities </li></ul></ul><ul><ul><li>Want to realize the benefit of homeownership </li></ul></ul>
  9. 9. Solution <ul><li>Provide qualified borrowers an affordable, stable homeownership solution with MCM, by offering: </li></ul><ul><ul><li>Loans to qualified FTHB, low-to-moderate income borrowers and other underserved markets </li></ul></ul><ul><ul><li>No minimum down payment for qualified borrowers </li></ul></ul><ul><ul><li>Up to 100% LTV and 105% CLTV </li></ul></ul><ul><ul><li>Non-traditional credit to those who need flexible credit options </li></ul></ul><ul><ul><li>Flexibility to use cash-on-hand for down payment and closing costs </li></ul></ul><ul><ul><li>Flexible options for sources of income </li></ul></ul><ul><ul><li>Up to 6% seller contributions on loans between 90.01-100% LTV </li></ul></ul><ul><ul><li>Lower initial monthly payments with optional temporary subsidy buydown plan </li></ul></ul><ul><ul><li>Fixed rates up to 40-year terms and adjustable rate mortgages (ARMS) </li></ul></ul><ul><ul><li>Community 2nds up to 105% CLTV </li></ul></ul><ul><ul><li>Low mortgage insurance (MI) coverage – maximum of 20% </li></ul></ul><ul><ul><li>No Area Median Income (AMI) limits in Fannie Neighbors areas </li></ul></ul><ul><ul><li>Interest only option available on 30 and 40 year fixed mortgages and 5/1 adjustable rate mortgage </li></ul></ul>
  10. 10. Suite of “Community” Mortgage Options 06/06/09
  11. 11. PROGRAM TYPES <ul><li>1 ST Mortgage Programs </li></ul>06/06/09
  12. 12. 1 st Program Types <ul><li>FIXED </li></ul><ul><ul><li>Conventional Agency Fixed Rate </li></ul></ul><ul><ul><ul><li>10-40 year terms </li></ul></ul></ul><ul><ul><li>Conventional Agency Fixed Rate Interest Only (10/20) </li></ul></ul><ul><ul><ul><li>30 year term 1 </li></ul></ul></ul><ul><li>ARMS </li></ul><ul><ul><li>Conventional Agency T-Bill ARM (5/1, 7/1 and 10/1) </li></ul></ul><ul><ul><ul><li>30 year term </li></ul></ul></ul><ul><ul><li>Conventional Agency LIBOR ARM (5/1, 7/1 and 10/1) </li></ul></ul><ul><ul><ul><li>30 to 40 year terms </li></ul></ul></ul>
  13. 13. Fully Indexed FIXED Programs Topic Description Program Types Conforming 10, 15, 20, 25, 30, 40 Year Fixed Interest Rate Interest Rate is Fixed and payment is Fully Amortized for the entire term of the loan. Term 10 – 40 Years Max LTV See Max LTV/CLTV page Max CLTV See Max LTV/CLTV page Maximum Loan Amount Fannie Mae Conforming Loan Limits Loan Purpose Purchase Rate & Term Refinance Occupancy Owner Occupied Minimum Fico Score AUS: No minimum FICO – Determined by DU (NO BK or FC in last 24 months) Manual: See Max LTV/CLTV page
  14. 14. Interest Only FIXED Programs Topic Description Program Types Conforming 30, 35, 40 Year Interest Only Fixed Programs Interest Rate Interest Rate is Fixed for the entire term of the loan. Qualifying Rate Qualify borrower at the Fully Amortized Rate (PITI) Term <ul><li>30 Year Term: Interest-only payment for the first 10 years, followed by a 20-year fully amortized payment </li></ul><ul><li>35 Year Term: Interest-only payment for the first 5 years, followed by a 30-year fully amortized payment </li></ul><ul><li>40 Year Term: Interest-only payment for the first 10 years, followed by a 30-year fully amortized payment </li></ul>Max LTV See next page Max CLTV See next page Maximum Loan Amount Fannie Mae Conforming Loan Limits Loan Purpose Purchase Rate & Term Refinance Occupancy Owner Occupied Minimum Fico Score Minimum 620 regardless of DU decision
  15. 15. ARM Programs Topic Description Program Types Conforming 5/1 (2/2/5 caps only), 7/1, 10/1 T-Bill ARM Conforming 5/1 (2/2/5 caps only), 7/1, 10/1 Libor ARM Interest Rate Initial Interest rate and monthly payment are low, but these may change during the life of the loan based on the fluctuation of the 1-year T-Bill and the LIBOR Indices, Margin and Caps. Qualifying Rate Qualify borrower at the Fully Indexed Fully Amortized Payment (PITI) Term T-Bill: 30 Year Term LIBOR: 30 – 40 Year Term Max LTV See Max LTV/CLTV page Max CLTV See Max LTV/CLTV Page Maximum Loan Amount Fannie Mae Conforming Loan Limits Loan Purpose Purchase Rate & Term Refinance Occupancy Owner Occupied Minimum Fico Score AUS: No minimum FICO – Determined by DU (NO BK or FC in last 24 months) Manual: See Max LTV/CLTV page
  16. 16. Max LTV / CLTV & Fico Program Units Purchase and Rate & Term Maximum LTV 1 / CLTV 2 Minimum Credit Score (Manual UW) Community 100 Plus 1 Unit 100 / 105% 620 97 / 105% 600 Community 97 Community 2 Units 2 Units 97 / 105% 620 Community 3-4 Units 3 3-4 Units 3 95 / 105% 3 660 3 Maximum LTV/CLTV may be reduced by 5% in areas experiencing Declining Markets/Values 1 Cooperatives: Maximum LTV is 90% 2 Only community 2nds and closed-end 2nds are allowed 3 3-4 Units: A DU Approve/Eligible certificate is required
  17. 17. ELIGIBILITY REQUIREMENTS <ul><li>Eligibility Borrowers </li></ul><ul><li>Eligible Properties </li></ul>06/06/09
  18. 18. Eligible Borrowers Topic Description Eligible Borrowers <ul><ul><li>U.S.citizens </li></ul></ul><ul><ul><li>Permanent Resident Aliens </li></ul></ul><ul><ul><li>Non-Permanent Resident Aliens </li></ul></ul>Non Citizen Borrowers <ul><li>Most common types of cards and stamps: </li></ul><ul><ul><li>Social Security Card </li></ul></ul><ul><ul><li>Permanent Resident or “Green” Card </li></ul></ul><ul><ul><li>Employment Authorization Card </li></ul></ul><ul><ul><li>Immigrant Visa & Entry Stamp </li></ul></ul><ul><ul><li>I-551 Stamp in Passport </li></ul></ul>Usage of ITINs <ul><ul><li>ITINs are issued to individuals by the Internal Revenue Service without regard to their immigration status. Therefore, the ITIN does not provide any information about whether a person is residing in the US legally or not. </li></ul></ul>Non Occupant Co-Borrowers <ul><ul><li>Not Allowed </li></ul></ul>Other <ul><ul><li>Borrower may not own any other residence at time of closing </li></ul></ul>
  19. 19. Eligible Properties Topic Description Eligible Properties <ul><ul><li>Attached SFR’s </li></ul></ul><ul><ul><li>Detached SFRs 1 </li></ul></ul><ul><ul><li>Attached PUDs </li></ul></ul><ul><ul><li>Detached PUDs 1 </li></ul></ul><ul><ul><li>Low-Rise Condos </li></ul></ul><ul><ul><li>High-Rise Condos </li></ul></ul><ul><ul><li>Cooperatives </li></ul></ul><ul><ul><li>2-4 Units 2 </li></ul></ul><ul><li>1 Includes modular, panelized & prefabricated classifications of factory-built housing </li></ul><ul><li>2 3-4 Units: Ineligible with the Community Solutions option. A DU Approve/Eligible certificate is required. </li></ul>
  20. 20. INCOME REQUIREMENTS <ul><li>Borrower Income Requirements </li></ul><ul><li>Other Income Requirements </li></ul><ul><li>Overtime and Part-Time Income </li></ul><ul><li>Boarder Income </li></ul><ul><li>Rental Income </li></ul><ul><li>Co-Borrowers Income </li></ul>06/06/09
  21. 21. Income Requirement Topic Description Borrower Income Limit HUD AMI <ul><li>The borrower’s income is limited to 100% of the annual HUD AMI (area median income) in which the property is located with the following exceptions: </li></ul><ul><ul><li>CA: 140% </li></ul></ul><ul><ul><li>WA & OR (Several Counties): 120% </li></ul></ul><ul><ul><li>Non-Metropolitan Counties: 115% </li></ul></ul><ul><ul><li>All Other Areas: 100% </li></ul></ul>Exception <ul><li>Median income limits do not apply if : </li></ul><ul><li>If the subject property is located in a FannieNeighbors area including border regions : </li></ul><ul><li>www.efanniemae.com </li></ul><ul><li>OR </li></ul><ul><li>When a public agency, housing finance agency, non-profit organization or an employer provides down payment or closing cost assistance. The income limits imposed by those organizations will apply. </li></ul>
  22. 22. Other Income Requirements Topic Description Boarder Income (related or not related) MCM 97 & MCM 100 Only <ul><li>1-2 Unit Only </li></ul><ul><li>Boarder may not be obligated on the note </li></ul><ul><li>Boarder has lived with the borrower and paid rent for the past 12 months </li></ul><ul><li>Border income does not exceed 30% of the total qualifying income </li></ul><ul><li>Boarder provides documentation to demonstrate a history of shared residency that shows the boarder’s address as the same as the borrower’s, and proof of rental payments for the past 12 months </li></ul><ul><ul><li>Drivers license with property address </li></ul></ul><ul><ul><li>Bank Statements </li></ul></ul><ul><ul><li>Cancelled checks or bank deposits </li></ul></ul>Rental Income (2-4 Units) FNMA Form 216 required <ul><li>If one or more of the units is rented or is intended to be rented, rental income for the units may be added to the borrower’s income when calculating the debt ratios based on the following: </li></ul><ul><ul><li>For 2 units, 75% of the gross rents may be used </li></ul></ul><ul><ul><li>For 3-4 units, 65% of the gross rents may be used </li></ul></ul><ul><ul><li>Allowed only on LTVs <= 97 </li></ul></ul>Co-Borrower’s Income <ul><ul><li>If there are multiple occupying co-borrowers, and any of the occupying co-borrowers have no credit score due to an insufficient credit record with the repositories, no credit analysis on those borrowers is required, as long as their combined income is not greater than 30% of the total qualifying income (50% if approved through DU). </li></ul></ul>Overtime & Part Time Income <ul><li>Need to verify 24 month history of this income type </li></ul><ul><ul><li>Borrower’s eligible under Community Solutions can qualify with a 12-month history </li></ul></ul>Section 8 Voucher income allowed
  23. 23. GENERAL GUIDELINES <ul><li>Underwriting Options </li></ul><ul><li>Underwriting Guidelines </li></ul><ul><li>Other General Guidelines </li></ul><ul><li>Fannie Mae Geocoder </li></ul><ul><li>Mortgage Insurance </li></ul>06/06/09
  24. 24. Underwriting Options
  25. 25. MCM DU Guidelines Topic Description Advantages of using DU <ul><li>Quicker approval </li></ul><ul><li>Limited waiver of reps and warrants </li></ul><ul><li>Co-borrower with no credit can contribute up to 50% of the qualifying income </li></ul><ul><li>Possible reduced documentation </li></ul><ul><li>Possible higher ratios than with manual underwriting </li></ul><ul><li>Possible lower credit score than with manual underwriting </li></ul><ul><li>DU recommendation of EA-I eligible with limited waiver of reps and warrants </li></ul><ul><li>Standard EA loan-level price adjustments (LLPAs) do not apply </li></ul><ul><ul><li>Up to 100% LTVs with 3% seller contributions </li></ul></ul><ul><ul><li>Use of DU not required, but strongly encouraged </li></ul></ul>Reasons for using Manual UW <ul><li>Broker is not a DU/DO subscriber </li></ul><ul><ul><li>Goal should be to transition to DU </li></ul></ul><ul><li>Broker not participating in Expanded Approval (Refer with Caution) </li></ul><ul><li>Under the following DU Recommendations: </li></ul><ul><ul><li>“ Approve/Ineligible,” “Refer/Ineligible,” “EA-II”, “EA-III,” “Refer with Caution IV,” “Refer with Caution,” or “Out of Scope” </li></ul></ul><ul><li>Nontraditional credit history borrowers (Out of Scope) </li></ul><ul><li>Borrowers with extenuating circumstances </li></ul><ul><li>Borrowers needing additional flexibility through a targeted borrower option (Community Solutions) </li></ul>
  26. 26. Credit Score <ul><li>Minimum Credit Score requirements: </li></ul><ul><ul><li>DU - No minimum credit score required except for IO loans (620) </li></ul></ul><ul><li>Manual Underwrite: </li></ul>Program Units Purchase and Rate & Term Maximum LTV 1 / CLTV 2 Minimum Credit Score (Manual UW) Community 100 Plus 1 Unit 100 / 105% 620 97 / 105% 600 Community 97 Community 2 Units 2 Units 97 / 105% 620 Community 3-4 Units 3 3-4 Units 3 95 / 105% 3 660 3 1 Cooperatives: Maximum LTV is 90% 2 Only community 2nds and closed-end 2nds are allowed 3 3-4 Units: A DU Approve/Eligible certificate is required
  27. 27. Credit History Borrowers who do not meet the minimum credit score requirement or lack credit history may be eligible if they meet the following requirements: NO Credit Score Manual UW ONLY! <ul><li>A non-traditional credit report is acceptable: </li></ul><ul><ul><li>One rental housing expense source (If no rental payment exists, then other credit references can be utilized as long as a total of four sources are documented for at least 12 months) </li></ul></ul><ul><ul><li>One utility payment source such as telephone service or cable television service </li></ul></ul><ul><ul><li>One additional utility or other credit source (medical, auto, life, school tuition, insurance policy or household/renter’s) </li></ul></ul>LESS than required credit score <ul><ul><li>The borrower has an insufficient credit score due to insufficient traditional credit history the credit will be considered acceptable provided the borrower has all of the following: </li></ul></ul><ul><ul><li>Minimum credit history of 3 tradelines at least 2 years old </li></ul></ul><ul><ul><li>No more than nine accounts currently open (Accounts closed six months or more at application are not counted). </li></ul></ul><ul><ul><li>No history of bankruptcy, foreclosure, collections or judgments. </li></ul></ul><ul><ul><li>No history of delinquency in housing debt. </li></ul></ul><ul><ul><li>No delinquencies for revolving accounts in the last 12 months and no more than one account 1x30 days in the 1 months before </li></ul></ul><ul><ul><li>No delinquencies for installment accounts in the last 24 months, and no more than one account 1x30 days in the 12 months before </li></ul></ul><ul><ul><li>Outstanding revolving account balances representing no more than 50% of aggregate credit lines at application. The account may not be paid off or paid down to qualify the borrower. </li></ul></ul>
  28. 28. Other General Guidelines Topic DU Manual Maximum DTI As determined by DU <ul><li>43% </li></ul><ul><li>Community Solutions: </li></ul><ul><li>> 97% LTV: 45% DTI ; =< 97% LTV: 50% DTI </li></ul>Reserves <ul><ul><li>As determined by DU </li></ul></ul><ul><li>MCM 100 : NO RESERVES REQUIRED </li></ul><ul><li>MCM 97 : </li></ul><ul><li>1 Unit – NO RESERVES REQUIRED </li></ul><ul><li>2-4 Units – 2 Months PITI (May not be gifted) </li></ul><ul><li>Community Solutions 100 – No Reserves required </li></ul><ul><li>Community Solutions 97 - Same as MCM 97 except Gift funds are OK for reserves </li></ul>Homebuyer Education <ul><ul><li>1 Unit: </li></ul></ul><ul><ul><ul><li>Participation in a homebuyer education program is recommended but not required </li></ul></ul></ul><ul><ul><li>2-4 Units: </li></ul></ul><ul><ul><li>Homebuyer education is required for all borrowers and co-borrowers who are 1 st Time Homebuyers: </li></ul></ul><ul><ul><li>All Income Properties: All borrower and co-borrowers must complete a landlord education course </li></ul></ul><ul><ul><li>Education programs can be taken through a community counseling organization and require in-person, face-to-face tutorial, classroom, or workshop sessions. Participation in an education program must be documented by a “Certificate of Completion” that is submitted with the loan file </li></ul></ul>Prepayment Penalties <ul><ul><li>Not Available </li></ul></ul>
  29. 29. Buydowns, Down Payment, Sources of Funds Topic Description Temporary Buydowns <ul><li>2/1 & 1/1 Temporary Buydowns available </li></ul><ul><ul><li>660 min. score </li></ul></ul><ul><ul><li>Purchase Transactions Only </li></ul></ul><ul><ul><li>Not permitted on 3-4 units </li></ul></ul><ul><ul><li>Not permitted on 5/1 ARM </li></ul></ul>Temporary B/D Qualifying Rate LTV > 95%: Qualify at Note Rate (DU or Manual) LTV =< 95%: Qualify at Note Rate PLUS 1% DU (Bought Down rate if Manual UW) Borrower Contribution <ul><li>1 Unit: No minimum contribution required </li></ul><ul><li>2 Units: The minimum down payment is 3% which must be from the borrower’s own funds </li></ul><ul><li>3-4 Units: The minimum down payment is 5% of which 3% must be from the borrower’s own funds </li></ul>Interested Party Contribution <ul><li>Loans > 90% LTV are eligible up to 3% interested party contributions (6% for 90% or less) </li></ul><ul><li>Interested-party contributions may be used exclusionary to cover closing costs and prepaid expenses </li></ul>Acceptable Sources of Funds for Down Payment, Closing Costs and Prepaid Items: <ul><li>Borrower’s own funds, including checking, savings, certificate of deposit, Individual Development Account (IDA) </li></ul><ul><li>Proceeds from loans secured by the borrower’s own assets </li></ul><ul><li>Gift Funds from relative, fiance / fiancee, or domestic partner </li></ul><ul><li>Unsecured loans or grants from a non-profit organization, government agency, or the borrower’s employer </li></ul><ul><li>Cash-on-hand (allowed for 1-unit properties only) </li></ul><ul><li>Approved Fannie Mae Community 2nds </li></ul>Subordinate Financing** <ul><li>Only an Approved Fannie Mae Community 2 nd is allowed </li></ul><ul><li>Community 2 nd may be treated as a gift in DU rather than a Subordinate 2 nd if: </li></ul><ul><ul><li>Community 2 nd is fully forgiven over time (both the P&I) </li></ul></ul><ul><ul><li>Payment is deferred for no less than 5-years </li></ul></ul><ul><li>**Must be included as Subordinate financing in CLTV calculation and all system calculations. </li></ul>
  30. 30. Submitting an MCM loan through DU Topic Description Step 1 <ul><li>Input 1003 as you would normally </li></ul>Step 2 <ul><li>In left navigation panel, select Community Lending </li></ul>Step 3 <ul><li>Input the Metropolitan area or Co. and HUD median Income. If you don’t, DU will automatically fill it out for you </li></ul>Step 4 <ul><ul><li>Select “Yes” or “No” in Fannie Neighbors area </li></ul></ul>Step 5 <ul><ul><li>Select “Yes” or “No” in Community Seconds Area </li></ul></ul><ul><ul><li>If the Community 2nds meet the 2 criteria below, select NO and input it as Gift Funds </li></ul></ul><ul><ul><ul><li>Requires NO repayment within the first 5 years of the loan </li></ul></ul></ul><ul><ul><ul><li>It meets Fannie Mae eligibility requirements </li></ul></ul></ul><ul><ul><li>If it doesn’t meet the above criteria, select YES and input it as a Community 2 nd loan </li></ul></ul><ul><ul><li>Must enter funds as subordinate financing it in the DOT and payment in the proposed housing section. </li></ul></ul>
  31. 31. 06/06/09
  32. 32. Determining Income Eligibility with the Fannie Mae Property GeoCoder <ul><li>No Income limits if property is located in a Fannie Neighbors area </li></ul><ul><ul><li>www.efanniemae.com </li></ul></ul><ul><li>Workaround for new construction in a Fannie Neighbors census tract </li></ul><ul><ul><li>For new construction (the address is not in the system), use the Property Geo Coder to provide a printout for the loan file showing an existing property in the same census tract </li></ul></ul><ul><ul><li>The appraisal must provide evidence that the subject property is in the same census tract </li></ul></ul>06/06/09
  33. 33. Mortgage Insurance Reduced MI Rates – Use MI chart below regardless of DU recommendation. Reduced or Custom MI is not acceptable. See sample combination below: LTV RANGE MCM Minimum Coverage Standard Minimum Coverage <ul><ul><li>97.01 – 100% LTV </li></ul></ul><ul><ul><li>95.01 – 97% LTV </li></ul></ul><ul><ul><li>90.01 – 95% LTV </li></ul></ul><ul><ul><li>85.01 – 90% LTV </li></ul></ul><ul><ul><li>80.01 – 85% LTV </li></ul></ul><ul><ul><li>20% </li></ul></ul><ul><ul><li>18% </li></ul></ul><ul><ul><li>16% </li></ul></ul><ul><ul><li>12% </li></ul></ul><ul><ul><li>6% </li></ul></ul><ul><ul><li>35% </li></ul></ul><ul><ul><li>35% </li></ul></ul><ul><ul><li>35% </li></ul></ul><ul><ul><li>30% </li></ul></ul><ul><ul><li>25% </li></ul></ul>Borrower paid MI may be financed into loan up to max 100% CLTV (including financed MI). Borrower financed MI may be in whole or in part; check with MI company for availability of this option. Financed MI allowed on 1 Unit up to 100% LTV. Max CLTV > 95% including financed MI must be delivered using Special Feature Code 574. Example: Using standard MI or A- MI rates $200,000 loan; 100% LTV, 30 Yr Fixed, 6.50% int. rate Standard Rate MI Monthly Payment 20% MI $98 35% MI $160 Savings $62 / Month MI A- Rate, 619 score $162 $237 $75 / Month
  34. 34. Mortgage Insurance Reduced MI Rates – Use MI chart below regardless of DU recommendation. Reduced or Custom MI is not acceptable. See sample combination below: LTV RANGE MCM Minimum Coverage Standard Minimum Coverage <ul><ul><li>97.01 – 100% LTV </li></ul></ul><ul><ul><li>95.01 – 97% LTV </li></ul></ul><ul><ul><li>90.01 – 95% LTV </li></ul></ul><ul><ul><li>85.01 – 90% LTV </li></ul></ul><ul><ul><li>80.01 – 85% LTV </li></ul></ul><ul><ul><li>20% </li></ul></ul><ul><ul><li>18% </li></ul></ul><ul><ul><li>16% </li></ul></ul><ul><ul><li>12% </li></ul></ul><ul><ul><li>6% </li></ul></ul><ul><ul><li>35% </li></ul></ul><ul><ul><li>35% </li></ul></ul><ul><ul><li>35% </li></ul></ul><ul><ul><li>30% </li></ul></ul><ul><ul><li>25% </li></ul></ul>Borrower paid MI may be financed into loan up to max 100% CLTV (including financed MI). Borrower financed MI may be in whole or in part; check with MI company for availability of this option. Financed MI allowed on 1 Unit up to 100% LTV. Max CLTV > 95% including financed MI must be delivered using Special Feature Code 574.
  35. 35. Community Solutions Community Solutions 100 & Community Solutions 97 <ul><li>Community Solutions a targeted borrower option under the MCM is designed especially for America’s teachers, police officers, firefighters, health care workers, and military personnel. </li></ul><ul><li>Community Solutions adds flexibilities to the MCM to help our country’s valued workers overcome obstacles to homeownership. </li></ul><ul><li>The Community Solutions option may be especially attractive to borrowers who have access to an Employer-Assisted Housing benefit to cover gifted reserves, a temporary interest rate buydown, and/or down payment or closing costs. </li></ul>06/06/09
  36. 36. Community Solutions Community Solutions was designed especially to add flexibilities to MyCommunityMortgage to help our country’s valued workers overcome obstacles to homeownership. Eligible Borrowers <ul><li>Education Professionals: </li></ul><ul><ul><li>Public or private schools, kindergarten through post-secondary levels; </li></ul></ul><ul><li>Public Safety: </li></ul><ul><ul><li>State or local law enforcement agency, fire department, or other sworn law enforcement or firefighting officers; or </li></ul></ul><ul><li>Health Care Professionals: </li></ul><ul><ul><li>Certified, accredited, or licensed healthcare workers such as nurses, medical residents, pharmacists, technicians, or technologists. </li></ul></ul><ul><li>Military Personnel </li></ul>Qualifying Ratio <ul><li>45% single qualifying ratio </li></ul><ul><ul><li>43% with temporary interest rate buydown </li></ul></ul><ul><ul><li>50% with 2 months’ reserves and strong compensating factors (maximum 97% LTV) </li></ul></ul>Reserves <ul><li>One month’s reserves; gifting acceptable </li></ul><ul><ul><li>2 months’ reserves for 50% qualifying ratio </li></ul></ul>Temporary Buydown Underwritten at bought-down rate 43% single qualifying ratio Other <ul><li>1-2 Unit Properties only </li></ul><ul><li>Part-time and overtime income with 12 months’ history </li></ul><ul><li>Manual underwriting required </li></ul>
  37. 37. Community HomeChoice <ul><li>Community HomeChoice is an option under MyCommunityMortgage designed to meet the mortgage needs of low-to-moderate income borrowers with disabilities or have a family member with a disability. </li></ul><ul><li>It offers extra flexibilities for borrower income and qualifying ratios, and allows a non-occupying co-borrower. </li></ul>06/06/09
  38. 38. What is the Community HomeChoice Community HomeChoice is an option under MyCommunityMortgage designed to meet the mortgage needs of low-to-moderate income borrowers with disabilities or have a family member with a disability. Eligible Borrowers <ul><li>Borrower who are disabled </li></ul><ul><li>Borrower’s who have a family member(s) with disabilities living with them purchasing their first home </li></ul><ul><ul><li>Defined as handicapped under the federal Fair Housing Act </li></ul></ul>Borrower Income Limit <ul><li>Borrower Income limit 115% of AMI </li></ul><ul><ul><li>See income limits page for higher income limit areas </li></ul></ul>Other <ul><li>Non-occupying co-borrowers allowed </li></ul><ul><li>DU or Manual Underwriting in most cases </li></ul><ul><li>Manual underwriting: Higher ratios, gifted reserves </li></ul>
  39. 39. Highlights of the MCM Program MCM Program Highlights My Community 97 = 97/105% LTV/CLTV My Community 100 Plus = 100/105% LTV/CLTV Purchase and Rate & Term refinances <ul><li>Flexibility on credit histories </li></ul><ul><ul><li>Non traditional credit accepted </li></ul></ul><ul><li>Income Source flexibilities </li></ul><ul><ul><li>Boarder Income allowed (from relatives or non-relatives) </li></ul></ul><ul><ul><li>Rental Income Allowed </li></ul></ul><ul><li>Greatly Reduced Mortgage Insurance Premiums </li></ul><ul><ul><li>Eg., 20% coverage for 100% LTV, 18% for 97%, 6-16 for other LTVs >80% </li></ul></ul><ul><li>Community Solutions Program </li></ul><ul><ul><li>Extra flexibilities with options to serve teachers/educational institution employees, police officers, firefighters, health care workers and eligible military personnel (eligible for higher ratios and gifted reserves) </li></ul></ul><ul><li>Community HomeChoice Program </li></ul><ul><ul><li>Available for borrowers with a disability or borrowers with family members who have a disability living with them purchase their first home who may need greater underwriting flexibilities, including non-occupying co-borrowers </li></ul></ul>No minimum borrower contribution (1 unit)
  40. 40. MCM Highlights Cont’d… MCM Program Highlights No reserves required in most cases No minimum Fico score with a DU approval <ul><li>5/1, 7/1 and 10/1 Fixed Period ARMS </li></ul><ul><ul><li>30 and 40 year terms available </li></ul></ul>20, 25, 30 or 40-year Fixed Rate terms <ul><li>10-year Interest Only option for 5/1 30 year term and 30 or 40-year Fixed </li></ul><ul><ul><li>Qualify at higher of note rate or fully indexed rate on fully amortized payment </li></ul></ul>Temporary Buydowns allowed for Fixed Rate, 7/1 and 10/1 ARMS Available though DU or Manual Underwrite Secondary financing only allowed with an approved Community 2 nd Qualifying community 2nds can be treated as a gift rather than a subordinate lien (DU only) <ul><li>Owner-occupied primary residences only </li></ul><ul><ul><li>Borrower must not own any other property </li></ul></ul><ul><li>2-4 Units allowed for borrowers who want to live in one and rent out the other </li></ul><ul><ul><li>3-4 Units: DU Approve/Eligible up to 95/105% LTV/CLTV </li></ul></ul>
  41. 41. FANNIE MAE FLEXIBLE 100 <ul><li>Introduction </li></ul><ul><li>Eligible Borrowers </li></ul><ul><li>Highlights of the Program </li></ul><ul><li>Down Payment / Source of Funds </li></ul>06/06/09
  42. 42. What is the Flexible Mortgage Program? <ul><li>The Flexible Mortgage loan program is Fannie Mae’s reward program for borrowers with average to above average credit history who have experienced difficulty in saving a down program for a home. </li></ul><ul><ul><li>Market Restrictions: All 50 states (CA for ALG only) </li></ul></ul><ul><li>Targeted Borrowers: </li></ul><ul><li>1. Limited Funds for Down Payment </li></ul><ul><li>Flex 100 (NO DP) </li></ul><ul><li>Flex 97 (3% DP) </li></ul><ul><li>Use savings for other investments or expenditures </li></ul><ul><li>Use savings for moving expenses, etc. </li></ul><ul><li>2. Have Access to alternative sources of funds </li></ul><ul><li>Gifts, grants, unsecured loans from relatives, employers, etc. </li></ul>
  43. 43. Eligibility Guidelines Topic Description Eligible Borrowers <ul><li>U.S. Citizens </li></ul><ul><li>Permanent Resident Aliens </li></ul><ul><li>Non-Permanent Resident Aliens </li></ul>Eligible Properties <ul><li>1 Unit SFR Detached or Attached </li></ul><ul><li>PUD Detached or Attached </li></ul><ul><li>Condominium </li></ul>Income Limits Not Applicable Sales Price Limits Not Applicable Target Area/Fannie Neighbors Not Applicable Occupancy Owner Occupied Only Purpose Purchase Rate & Term Interested Party Contribution Up to 3% of sales price (Premium pricing may be used to fund closing costs exceeding the minimum borrower contribution requirement) Prepayment Penalty Not Available
  44. 44. Underwriting Guidelines Topic Description Underwriting Options DU ONLY with Approve/Eligible, EA-I, EA-II, EA-III or Refer/Eligible Minimum Credit Score NO MINIMUM with a DU approval (IO loans require 620 Minimum) Maximum DTI As determined by DU Reserves As determined by DU Temporary Buydowns 2/1 and 1/1 Eligible Temporary Buydown Qualifying Rate <ul><li>95% LTV – Qualify at the Note Rate </li></ul><ul><li><= 95% LTV – Qualify at the Note Rate PLUS 1% </li></ul>
  45. 45. Down Payment Sources of Funds Topic Description Borrower Contribution <ul><li>There isn’t a down payment required, however the borrower must contribute a minimum amount based upon one of the two choices: </li></ul><ul><ul><li>Minimum of 3% of the purchase price which may be applied towards closing costs and/or prepaid items for Flex 97 or 100. (The 3% can be paid by any acceptable source of funds) OR </li></ul></ul><ul><ul><li>Minimum $500 cash from own funds for Flex 100 or Flex with sub financing (funds must be on deposit; acceptable sources of funds are checking, savings, CD or other depository accounts). All other funds from the list of “acceptable sources” of funds may not be included in the $500. </li></ul></ul>Acceptable Sources of Funds for Any Use <ul><li>Borrowers own funds – checking, savings, CD or other depository accounts </li></ul><ul><li>Proceeds from loans secured by borrower’s assets </li></ul><ul><li>Gift funds from a relative </li></ul><ul><li>Grants from non-profit agencies that do not have to be repaid </li></ul><ul><li>Unsecured loans from a non-profit community organization, government agency, or the borrower’s employer </li></ul><ul><ul><li>(Premium pricing is not an acceptable source of flexible funds) </li></ul></ul>Acceptable Sources of Funds for Down Payment & Closing Costs <ul><li>Interested party contributions limited to 3% of the lesser of the sales price or appraised value </li></ul><ul><li>Lender paid closing costs are limited to 2% of value </li></ul><ul><ul><li>Interested party contributions may not be applied to the borrower’s minimum required contribution. The contributions and premium pricing may only cover closing costs and prepaid items in excess of the borrower’s initial contribution </li></ul></ul>
  46. 46. 1 st Program Types <ul><li>FIXED </li></ul><ul><ul><li>Conventional Agency Fixed Rate </li></ul></ul><ul><ul><ul><li>10-40 year terms </li></ul></ul></ul><ul><ul><li>Conventional Agency Fixed Rate Interest Only (10/20) </li></ul></ul><ul><ul><ul><li>30 year term 1 </li></ul></ul></ul><ul><li>ARMS </li></ul><ul><ul><li>Conventional Agency T-Bill ARM (5/1, 7/1 and 10/1) </li></ul></ul><ul><ul><ul><li>30 year term </li></ul></ul></ul><ul><ul><li>Conventional Agency LIBOR ARM (5/1, 7/1 and 10/1) </li></ul></ul><ul><ul><ul><li>30 year term </li></ul></ul></ul><ul><ul><li>Conventional Agency LIBOR ARM Interest Only (5/1, 7/1 and 10/1) </li></ul></ul><ul><ul><ul><li>30 year term </li></ul></ul></ul>
  47. 47. Max LTV / CLTV Mortgage Insurance Topic Flex 97 Flex 100 Flex w/Sub Financing Maximum Loan Amount Fannie Mae Conforming loan limits apply <ul><li>Maximum LTV/CLTV </li></ul><ul><li>Purchase, R&T Refinance </li></ul>97% / 105% 100% / 105% 95% / 105% <ul><li>With IO Feature </li></ul>97% / 100% 100% / 100% 100% / 100% <ul><li>Cash Out Refinance </li></ul>Not Eligible Topic Flex 97 Flex 100 Flex w/Sub Borrower Paid 35% LTV > 80%: MI Coverage is 18% Lower Cost (Must receive a DU approve or refer recommendation) 18% 25%
  48. 48. Highlights of the Program Flexible Mortgage Program Highlights <ul><li>Maximum 100% LTV (minimum 90% LTV without secondary financing) </li></ul><ul><ul><li>No minimum LTV required for loans with secondary financing </li></ul></ul><ul><ul><li>On refinance transactions, minimum 95.01% LTV </li></ul></ul>Up to 105% CLTV when originated with an approved Community 2 nd Available to be underwritten through FNMA DU <ul><li>Interest Only Option (for the 1 st 10 years of the loan) available on 30 </li></ul><ul><ul><li>Quality at higher of note rate or fully indexed rate on fully amortized payment </li></ul></ul>No Borrower Income restrictions No Homebuyer Education required Reserves determined by DU (usually 2 months) Purchase and Rate & Term refinances Owner-occupied primary residence only Available Terms: 15, 20, 25, 30 year Fixed
  49. 49. INTEREST RATE, FEES, MARKETING & SUPPORT <ul><li>Interest Rate </li></ul><ul><li>Allowable Points </li></ul><ul><li>Fees / Costs </li></ul><ul><li>Marketing </li></ul><ul><li>Support </li></ul>06/06/09
  50. 50. Interest Rate <ul><li>Interest Rates for the MCM & Flexible programs are ava ilable from your </li></ul><ul><li>Affinity Lending Representative </li></ul><ul><li>www.AffinityLendingGroup.com </li></ul>
  51. 51. Points & Fees Topic Description Origination Points No Max Points – Negotiated between Broker/Borrower – Must not violate laws Discount Points <ul><ul><li>No Max Points – Negotiated between Broker/Borrower – Must not violate laws </li></ul></ul>Premium Pricing MCM – Must be used to cover Closing Costs & Prepaid Items Flex - Allowed
  52. 52. <ul><li>On behalf of Affinity Lending Group, we thank you for joining our training today and hope the information provided was informative and will help you… </li></ul><ul><li>Building This Together ! </li></ul>06/06/09

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