5. Plan de responsabilidad social empresarial
5.3. Modelo de informe de gestión recomendado
Purchase Mortgage (continued)
If the borrower receives cash back for a permissible purpose listed above, the Underwriter must confirm that the minimum borrower contribution requirement associated with the selected mortgage product (if applicable) has been met.
Identity of Interest Transactions (non-arm’s length transaction)
An identity of interest transaction is a transaction for the purchase of a principal residence between one of the following:
Parties with a familial or business relationship
Business affiliates
Note: An identity of interest transaction does not include an employer/employee transaction when the employee is purchasing the seller's principal residence.
Maximum financing is not permitted for the identity of interest transactions on principal residences. Maximum financing is permitted under the following circumstances:
A family member purchases another family member's home as a principal residence.
If the property is sold from one family member to another and is the seller's investment property, the maximum mortgage is the lesser of 85% of the appraised value or the appropriate LTV factor percentage applied to the sales price, plus or minus required adjustments.
An employee of a builder purchases one of the builder's new homes or models as a principal residence.
A current tenant, including a family member tenant, purchases the property where he/she has rented for at least six months immediately predating the sales contract.
A corporation transfers an employee to another location, purchases the employee's home and sells the home to another employee.
203k Identity of Interest
Transaction Types (continued)
Refinance Mortgages
The maximum amount of financing is determined by the following:
Occupancy
Use of the loan proceeds
How and when the property was purchased
CMS’ investors will purchase the following refinance transaction types:
Streamline Refinance
Non-Credit Qualifying Refinance of existing FHA insured mortgages. A 12-month mortgage rating and verification of employment is
performed. Borrowers cannot be added or deleted to the mortgage using the Non-Credit Qualifying option. The loan cannot be closed as an HPML loan.
Credit Qualifying Streamline Refinance of existing FHA insured
mortgages, with or without an appraisal. A full review and evaluation of the borrower's income, assets and credit is performed.
Rate Reduction Refinance - A no cash-out refinance of any loan type
Transaction Types (continued)
Refinance Mortgages (continued)
Streamline Refinance
A streamline refinance is intended to lower the monthly principal and interest payments of a current FHA insured mortgage with no cash back to the borrower except for minor closing adjustments of no more than $500. Documentation requirements are
significantly reduced under this refinance option.
Streamline refinances can be completed with or without an appraisal. Except for health, safety, and lead-based paint related repairs, completion of repairs is not required on Streamline Refinance transactions. A termite certification is only required when a problem has been noted by the appraiser.
Changing the Loan Program
When the loan currently being refinanced as a Streamline Refinance was completed under a different FHA program, additional requirements or restrictions may apply. See the HUD Handbook 4155.1 Rev 5 for complete guidelines on changing programs.
Credit Qualifying Streamline Refinance
Credit Qualifying Streamline Refinances contain the same features as a streamline refinance, but provide a level of assurance of continued
performance on the mortgage. Evidence must be provided to show that the borrowers have an acceptable credit history and the ability to make the payments.
See the HUD Handbook 4155.1 Rev 5 for complete guidelines on Credit Qualifying Streamline Refinance transactions.
Net Tangible Benefit
It must be determined that there is a net tangible benefit to the borrower as a result of the Streamline Refinance. The net tangible benefit is defined as one of the following:
A 5 percent reduction to the P & I of the mortgage payment plus the annual MIP.
Transaction Types (continued)
Refinance Mortgages (continued)
The following table defines the permissible minimum thresholds to define net tangible benefit:
To From
Fixed Rate One-Year ARM Hybrid ARM
Fixed Rate Reduction of at least 5% of P&I and MIP
New interest rate at least 2% below the current interest rate of the fixed rate mortgage
Reduction of at least 5% of P&I and MIP
One-Year ARM New interest rate no greater than 2% above the current interest rate of the ARM
Reduction of at least 5% of P&I and MIP
New interest rate at least 2% below the current interest rate of the fixed rate mortgage
Hybrid ARM During Fixed Period (e.g. for 3/1 Hybrid ARM, first 3 years is fixed rate period)
Reduction of at least 5% of P&I and MIP
New interest rate at least 2% below the current interest rate of the fixed rate mortgage Reduction of at least 5% of P&I and MIP Hybrid ARM During Adjustable Period (Adjustable period is period when rate adjusts annually)
New interest rate no greater than 2% above the current interest rate of the ARM
Reduction of at least 5% of P&I and MIP
New interest rate at least 2% below the current interest rate of the fixed rate mortgage
A maximum principal curtailment limited to the excess premium rate credit is permitted at the closing table and must be listed on the HUD-1. If the amount exceeds $500, then the following steps must occur:
1. Recalculate the loan.
2. Draw new documents, submit for re-approval, and obtain the borrower’s signature.
Note: The principal curtailment may not be done after closing. Refer to
Transaction Types (continued)
Refinance Mortgages (continued)
Rate Reduction Refinance
A rate and term refinance mortgage represents a lien that is used to pay off the existing mortgage or lien with a new loan. Cash removal, other than incidental, is not permitted.
A rate and term refinance transaction is a loan where proceeds are distributed for one or more of the following reasons:
Pay off the outstanding principal balance of an existing first loan plus any required per diem interest.
Incidental cash back up to $500.
Allowable closing costs and prepaid expenses.
Payoff of the outstanding principal balance of:
o Any existing subordinate closed end lien seasoned more than 12 months.
o Any existing subordinate Mortgage that was used in whole to acquire the subject property or for documented home improvements. Written confirmation must be obtained to show that all proceeds of an existing subordinate lien were used to fund part of the purchase price of the subject property or for the repair and/or rehabilitation of the property. A copy of the HUD-1 Settlement Statement or other documentation must be obtained.
If any portion of the funds from an equity line of credit in excess of $1,000 was advanced within the past 12 months for purposes other than repairs or rehabilitation of the property, the line of credit would not be eligible for inclusion in the new mortgage.
Payoff of prepayment penalties associated with the payoff of the existing mortgage.
No new secondary financing.
For existing subordinate liens that have a variable loan balance (i.e., lines of credit), the maximum credit line must be subordinated at refinance. The full HELOC amount must be used to calculate the CLTV ratio.
For existing subordinate liens that are closed-end seconds, the current unpaid principal must be used to calculate the CLTV.
Buyout of a co-owner.
A refinance transaction that results in a buyout of the other party's interest in his or her primary residence is considered a rate and term refinance. If the new loan is to refinance an existing mortgage or to buy out an ex- spouses or other co-owner's equity, the specified equity to be paid to the ex- spouse is considered property-related indebtedness and is eligible for inclusion in the new mortgage. The divorce decree, settlement agreement, or other type of bona fide equity agreement must be provided to document the equity awarded to the ex-spouse or co-mortgagor.
Transaction Types (continued)
Refinance Mortgages (continued)
A maximum principal curtailment limited to the excess premium rate credit is permitted at the closing table and must be on the HUD-1 Settlement
Statement. If the amount exceeds$500, the following steps must occur: 1. Recalculate the loan.
2. Resubmit the loan to Total Scorecard.
3. Draw new documents, submit for re-approval, and obtain the borrower’s signature.
Note: The principal curtailment may not be done after closing. Refer to
Principal Curtailment for additional information.
Restructured Loan/Short Payoff
A restructured loan or short payoff is a mortgage loan in which the terms of the original transaction have been changed resulting in either absolute forgiveness of debt or a restructure of debt through either a modification of the original loan or origination of a new loan that results in one of the following:
Forgiveness of a portion of principal and/or interest on either the first or second mortgage.
Application of a principal curtailment by or on behalf of the investor to simulate principal forgiveness.
Conversion of any portion of the original mortgage debt to a soft subordinate mortgage.
In many cases, a borrower may not disclose that their existing mortgage loan has been restructured. The credit report may show a restructured loan as settled for less than owed. If the credit report does not specify settled for less than owed, scrutinize the mortgage balance reported on the credit report versus the payoff balance. If the two balances do not match and the difference is more than unpaid interest or prepayment penalties, the loan may have been restructured.
Restructured loans/Short payoffs are eligible for financing as a rate/term refinance. The loan must comply with all FHA and product guidelines. The loan may not currently be delinquent and there can be no late payments in the last 12 months.
Transaction Types (continued)
Refinance Mortgages (continued)
Cash-Out Refinance
Cash-Out Refinance transactions are loans used to remove equity from a property. Funds received from a Cash-Out Refinance Mortgage may be used for purposes such as one of the following:
Allowable closing costs and prepaid items.
Debt consolidation.
Cash back exceeding the amount allowable for a Rate and Term Refinance.
Payoff of any existing subordinate financing not used to acquire the subject property, or for documented home improvements.
May subordinate existing junior liens.
Base loan amount may exceed $417,000.
Minimum six months property ownership preceding the date of the loan application.
At least one of the borrowers must have held title for at least six months.
If the property was acquired less than 12 months prior to the date of loan application, the maximum LTV is based on the lesser of the appraised value or the original sales price.
If the property was acquired more than 12 months prior to the date of loan application and the property was acquired as the result of an inheritance and is or will become the borrower's primary residence, the LTV is based on the current appraised value.
Not eligible if the loan being paid off is a restructured loan or short payoff.
Non-occupant co-borrowers who are not borrowers on the current mortgage and do not hold title cannot be added to the loan.
Transaction Types (continued)
Refinance Mortgages (continued)
Refinance Existing Section 203(k) Loans
Loans closed under Section 203(k) must be refinanced into a Section 203(b) mortgage and will be subject to the following requirements:
Upfront MIP and monthly MIP apply on the new loan even if Up-Front MIP was not charged on the existing 203(k) loan.
All rehabilitation work must be completed before the loan can be refinanced.
Any remaining funds in escrow accounts must have been disbursed. The rehabilitation work may be documented as complete with the current lender providing all of the following documentation:
A letter of completion from the servicing lender.
A Notice of Final Release from the servicing lender showing they have closed the rehab escrow account.
The 203(k) Close Out screen in FHA Connection must be completed and a printout of the FHA Connection Electronic Certificate of Close Out screen must be included in the file to verify the current lender has entered the required close out information and closed out the account.
Construction Permanent Mortgages (Single-Close Modification of Note)
Single-Close Modification of the Note is not permitted.
Financing Limit When Paying Off Land Contracts
If a borrower does not receive cash at closing, his/her new mortgage may be
processed as a purchase or refinance transaction with FHA-insured financing if he/she uses the loan to complete payment on a:
Land contract
Contract for deed, or
Other similar financing arrangements in which the borrower does not have title to the property.
Transactions should be processed as cash-out to pay off land contracts, or refinances on properties subject to ground rents as if they were cash-out refinances on properties held in fee simple, as described in HUD 4155.1.3.B.2.
Transaction Types (continued)
LTV Ratio When Paying Off Land Contracts
If the property was acquired less than 12 months earlier, and the loan proceeds are to be used to pay off outstanding balance on the land contract, plus eligible repairs and renovations, the loan-to-value (LTV) ratio is applied to the lesser of the:
Appraised value on the land and improvements, or
Total cost to acquire the property, which includes the original purchase price, plus any documented costs the borrower incurs for rehabilitation, repairs, renovation, or weatherization, closing costs and reasonable discount points, if treated as a refinance. Equity as Cash Investment When Paying Off Land Contracts
Equity in the property (original sales price minus the amount owed) may be used for the borrower’s entire cash investment. However, if the property was acquired fewer than 12 months earlier, and the borrower receives more than $500 cash at closing, the loan is limited to 85% of the lesser of the:
Appraised value of the land and improvements, or
Total cost to acquire the property, which includes the original purchase price, plus any documented costs the borrower incurs for rehabilitation, repairs, renovation, weatherization, closing costs and reasonable discount points, if treated as a refinance.
Replenishing the borrower’s own cash expended for repairs, improvements,
renovation, or weatherization is not considered “cash back”, provided that the borrower can substantiate with cancelled checks and paid receipts all out-of-pocket funds for the improvements.
Rent Credits The cumulative amount of rental payments that exceed the appraiser’s estimate of fair
market rent may be considered accumulation of the borrower’s cash investment. The endorsement package must include the following:
Rent with option to purchase agreement.
Appraiser’s estimate of market rent.
Canceled checks to verify that rent paid to seller by borrower.
The underwriter must treat the rent as an inducement to purchase, with an appropriate reduction to the mortgage, if the sales agreement reveals that the borrower has been living in the property rent-free or has an agreement to occupy the property at a rental amount considerably below fair market value, in anticipation of eventual purchase.
Transaction Types (continued)
Principal Curtailment
CMS permits a principal curtailment on purchase and refinance loans as a result of excess premium rate credit. The excess premium must be identified on the HUD-1 Settlement Statement and is limited to the amount of the excess premium rate credit. The premium rate credit is the amount associated with the lowest pricing rate option that allows for some or all of the borrower’s closing costs to be paid so the borrower does not have to pay those closing costs out of pocket.
If there is an excess premium rate credit greater than $500, complete the following:
o Review the pricing available on the day of lock and determine how much premium is generated by the next 1/8%.
o If the next lower rate results in a lower premium that still covers the closing costs, lower the rate by requesting an adjustment to the pricing.
o If the next lower rate results in a lower premium that DOES NOT cover the closing costs, evidence that the next lower pricing option would require the borrower to pay the closing costs out of pocket must be documented in the file (e.g., GFE, Pricing/Rate Sheet, etc.).
If the program permits, the borrower may also receive cash back within program guidelines in addition to the amount of the curtailment. See the CMS Product Guidelines for cash back eligibility criteria.
Refinance Transactions with Escrow Credits
FHA prohibits the reduction of loan principal by use of escrow funds. FHA to FHA refinances must not include credit of the escrow balance deducted from the principal balance on the payoff statement and/or shown as a credit in the 100 section of the HUD-1 Settlement Statement.
FHA continues to permit lenders to reduce the borrower’s cash-to-close by crediting the escrow account balance to the borrower in the 200 section of the HUD-1 Settlement Statement.
FHA Refinances of Conventional or VA Loans
If the loan being paid off is not an FHA loan, the following requirements must be met:
If the existing escrow balance indicated on the payoff statement is deducted from the payoff amount on the payoff statement and/or shown as a credit in the 100 section of the HUD-1 Settlement Statement, the existing principal balance must be reduced by the amount of the escrow credit when calculating the maximum allowable loan amount for rate and term and streamline
refinances.
If the existing escrow balance indicated on the payoff statement is shown as a credit in the 200 section of the HUD-1 Settlement Statement, no maximum mortgage re-calculation is required.
If the borrower does not receive a credit for the existing escrow balance on the HUD-1 Settlement Statement, the existing servicer will refund the escrow balance to the borrower according to its company policies.