Conventional Plus – Mortgage Insurance

Report
SONYMA Conventional Plus
Correspondent Program Introduction
October 25, 2012
Presentation Outline
I.
Sales Focus
II.
Conventional Plus Highlights
III.
Underwriting Guidelines
IV.
Mortgage Insurance
V.
DPAL Details
VI.
MCC Eligibility
VII.
Example Scenarios
VIII.
Secondary Marketing
IX.
Operational & Delivery Considerations
X.
Questions
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2
Sales Focus
With this product, we are
selling payment, not rate
• Conventional Plus is a 30 year fixed rate mortgage
– Originated and funded by an approved correspondent
• Underwritten to FNMA’s MyCommunity Mortgage guidelines
– Purchased by M&T Bank and sold to Fannie Mae
• M&T sets daily loan pricing
– Serviced by M&T
• As a result of SONYMA’s housing finance agency
status, the following borrower benefits include:
– No loan level price adjustments
– Lower mortgage insurance coverage requirements
– Ability to finance closing costs, prepaids and mortgage
insurance for both Purchases and Refinances
– Mortgage credit certificate availability for certain borrowers
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3
Conventional Plus
• 1-4 family primary
including co-ops are
eligible
• Standard GSE loan
limits
• All loans must be
underwritten through
DU – PIW’s are not
eligible
• Non-traditional credit is
NOT permitted
Page
• No other properties may
be owned simultaneously
• At least one borrower
must complete prepurchase counseling
• For 1 unit, maximum
97% LTV, 105% CLTV,
620 score
• For 2-4 unit, maximum
95% LTV, 105% CLTV,
680 score
4
Conventional Plus - Underwriting
• 1 unit DP – no minimum
borrower’s own funds
– Remainder may be
funded by DPAL, soft
second, unsecured loan
from an approved
source, or gift from family
member
• 2-4 unit DP – 3% own
funds required
• Cash-on-hand eligible
except for reserves
• Reserves per DU
Per FNMA guidelines
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5
• Maximum 40 / 45% ratios
no matter DU response
• Vacancy factors of 75%
(2 unit) and 65% (3-4
unit) for rental income
• Boarder income is
allowed
• MCC tax credit is NOT
factored into income
• Standard 3% and 6%
guidelines for
concessions
Conventional Plus – Mortgage Insurance
• Lower coverage requirements apply:
LTV
Required
Coverage, Factors
Standard
Coverage, Factors
95.01% - 97%
18%, 65 bps
35%, 115 bps
90.01% - 95%
16%, 54 bps
30%, 67 bps
85.01% - 90%
12%, 39 bps
25%, 49 bps
80.01% - 85%
6%, 30 bps
12%, 32 bps
[Payment
factors for
720 FICO]
• The DPAL may be used to pay a one-time upfront
mortgage insurance premium
• Primary mortgage insurance is required from either
Genworth or SONYMA’s Mortgage Insurance Fund (MIF)
• Financed and monthly plans are eligible. The financed
premium and adjusted LTV must not exceed the stated
minimum for the program.
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6
Conventional Plus – Project Reviews
• All co-ops and condos must be
reviewed by M&T’s project
review team if a project is not
on M&T’s approved lists
• Co-ops must meet FNMA’s
NYC Pilot guidelines
• Questionnaires and project
documents must be submitted
to [email protected]
• A Correspondent’s co-op
closing doc set must be
approved by M&T
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7
Conventional Plus – SONYMA ‘isms
• Borrowers are NOT required to be first-time homebuyers
– Restrictions do apply to MCC loans
• Income Limits apply (see SONYMA Website)
– Separate limits apply for loans with MCCs
• Low Interest Rate Program Purchase Price Limits do
NOT apply
– Purchase price limits apply for loans with MCCs
• Income utilized is based on qualifying income, NOT
household income
– SONYMA’s standard household income calculation applies for
loans with MCCs
• Pool insurance from MIF is NOT required
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8
Conventional Plus – Other
• Community Solutions Option
– For teachers, law enforcement officers, firefighters and
emergency response personnel
– 1-2 unit properties
– Reserves may be gifted (1 month for 1-unit, 2 months for 2-unit)
– Part-time/OT income of less than 2 years permitted
• Community HomeChoice
– For handicapped borrowers
– 1-2 unit properties
– For 1-unit, no reserves required when DTI is less than or equal to
43%
– Reserves may be gifted (1 month for 1-unit, 2 months for 2-unit)
– Non-occupant co-borrowers allowed to maximum 33 / 38% ratios
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9
Down Payment Assistance Loan (DPAL)
• Second mortgage that can be used for down payment,
closing costs, prepaids or to pay MI
• Maximum assistance is three percent (3%) of the home
purchase price (not the loan amount).
– For refinances, the DPAL must not be greater than the amount of
the MI premium and cannot exceed 3% of the lower of the UPB
or the appraised value.
• Both first and DPAL must be registered with M&T
– One package is required for both first and DPAL
– GFE is required (recording fee & mtg tax); a TIL is NOT required
• Loans are NOT registered through Lender Online nor is
SONYMA approval required
• DPALs are serviced by M&T in SONYMA’s name
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10
Mortgage Credit Certificates (MCC)
• MCCs allow eligible buyers to convert 20% of their
annual mortgage interest into a tax credit that can be
deducted dollar for dollar from their Federal tax liability.
– The remaining 80% of the interest continues to qualify as an
itemized tax deduction for the life of the mortgage loan.
• Eligibility:
– First-time homebuyers with a household income of 80% of AMI
or less; OR
– US military veterans (including non FTHBs); OR
– Active duty US military including National Guard and reservists
(must be FTHB unless purchasing in a Target Area); OR
– FTHBs purchasing a home in communities impacted by 2011’s
severe flooding
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11
MCCs - continued
• The flood-impacted communities are:
– Counties of Broome, Delaware, Greene, Schoharie, and
Tioga; and
– Cities of Port Jervis and Middletown and Village of Goshen
(Orange County); and
– Towns of Hurley, Olive, Shandaken, Shawangunk, Ulster
and Wawarsing (Ulster County).
• Income and Purchase Price Limits apply
• The tax credit is not factored into the underwriting
• Lenders submit all required documents and the
required fee directly to SONYMA; SONYMA then
issues the MCC directly to the homebuyer and
Lender
• Lenders must file Form 8329 with IRS annually.
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12
Example Scenario - Purchase
Loan Details
Maximum LTV
Sales Price
Note Rate (3)
Base Mortgage Amount
MI Premium (Upfront %)
MI Premium (Annual %)
Gross Mortgage Amount
Total P&I
Monthly MIP
Unsecured Loan Payment
Total Mortgage Payment
Monthly Savings (Compared to FHA)
Annual Savings (Compared to FHA)
Monthly MI
Upfront MI
FHA (1)
Conv Plus w/DPAL Conv Plus w/DPAL
96.50%
97%
97%
$274,000
$274,000
$274,000
3.500%
4.625%
4.625%
$264,410
$265,780
$265,780
1.75%
0%
2.70% (2)
1.25%
0.85% (2)
0%
$269,037
$265,780
$265,780
$1,208
$1,366
$1,366
$275
$188
$1,483
$1,554
$1,366
Monthly MI
Conv Plus
97%
$274,000
3.875%
$265,780
0%
0.85% (2)
$265,780
$1,250
$188
$1,438
Upfront MI
Conv Plus
97%
$274,000
3.875%
$265,780
2.70% (2)
0%
$265,780
$1,250
$1,250
-
($71)
($852)
$117
$1,404
$45
$540
$233
$2,796
$9,416
$77,900
$12,292
$77,900
$12,292
$77,900
$10,299
$77,900
$10,299
$77,900
$9,416
$6,758
$7,400
$54,326
$9,834
$6,758
$7,400
$53,908
$9,834
$6,758
$7,400
$53,908
$8,239
$6,758
$7,400
$55,503
$8,239
$6,758
$7,400
$55,503
$7,299
$7,299
$7,239
$2,458
$4,781
$7,239
$2,458
$4,781
$7,479
$2,060
$5,419
$7,479
$2,060
$5,419
Annual Savings
Monthly Savings
-
$2,518
$210
$2,518
$210
$1,880
$157
$1,880
$157
MONTHLY SAVINGS
TOTAL ANNUAL SAVINGS
-
$139
$1,666
$327
$3,922
$202
$2,420
$390
$4,676
$8,220
$21,920
$7,176
$500
$37,816
$8,220
$8,220
$21,376
100.00%
$8,220
$21,920
$500
$30,640
$8,220
$22,420
97.00%
$8,220
$21,920
$7,176
$500
$37,816
$8,220
$29,596
97.00%
MCC Calculation
Estimated First Year's Mortgage Interest
Annual Borrower Income
Deductions
Mortgage Interest (4)
Annual Real Estate Taxes
Exemptions (5)
Taxable Income
Tax Liability (6)
MCC Credit (20%)
Modified Tax Liability
Assets Required
Required Down Payment
Closing Costs/Prepaids (8% of Sales Price)
Upfront MIP
MCC Fee
Required Cash to Close
Allowed Seller Concessions
DPAL Amount
Unsecured Loan from M&T
Net Cash Required
CLTV
$9,590
$21,920
$31,510
$8,220
$23,290
98.19%
$8,220
$21,920
$500
$30,640
$8,220
$8,220
Page$14,200 13
100.00%
Notes:
(1) Credit Score of 680-719. Higher
credit scores have lower rates.
(2) Rates as of 10/12/12.
(3) For MCC loans, this figure
represents 80% of the total mortgage
interest.
(4) Based on a household of 2
persons.
(5) From Federal tax tables.
Example Scenario - Refinance
Loan Details
Maximum LTV
Appraised Value
Unpaid Principal Balance (UPB)
Financed Closing Costs (8% of Appraised Value)
DPAL Cap (3% of UPB)
Note Rate (2)
Base Mortgage Amount
MI Premium (Upfront %)
MI Premium (Annual %)
Total P&I
Monthly MIP
Total Mortgage Payment
FNMA
97%
$274,000
$243,860
$21,920
3.875%
$265,780
0.00%
1.36%
$1,249
$301
$1,550
Monthly Savings (Compared to FNMA)
Annual Savings (Compared to FNMA)
Assets Required
Upfront MIP
Required Cash to Close
DPAL Amount
Net Cash Required
CLTV
Monthly MI
Upfront MI
Conv Plus w/DPAL Conv Plus w/DPAL
97%
97%
$274,000
$274,000
$243,860
$243,860
$21,920
$21,920
$7,316
$7,316
4.625%
4.625%
$258,464
$265,780
0%
2.70% (1)
0.85% (1)
0%
$1,331
$1,369
$183
$1,514
$1,369
-
$0
$0
97.00%
Notes:
(1) Credit Score of 680-719. Higher
credit scores have lower rates.
(2) Rates as of 10/12/12.
Page
14
Monthly MI
Conv Plus
97%
$274,000
$243,860
$21,920
3.875%
$265,780
0%
0.85% (1)
$1,249
$188
$1,437
Upfront MI
Conv Plus
97%
$274,000
$243,860
$21,920
3.875%
$265,780
2.70% (1)
0%
$1,249
$1,249
$36
$431
$181
$2,172
$113
$1,356
$301
$3,612
$0
$7,316
$0
97.00%
$7,176
$7,176
$7,176
$0
99.62%
$0
$0
97.00%
$7,176
$7,176
$7,176
97.00%
“HFA Preferred” must be
selected in the Community
Lending section of DU
Process Map
Lender meets with
borrower and takes
application
Eligible
for MCC?
NO
Lender registers
Conventional Plus
and DPAL loans with
M&T in MEME
Lender processes
loan, submits to DU,
and prepares the
underwriting package
YES
Pre-closing
underwriting review
performed by M&T
Conditions collected,
loan scheduled and
closed by lender
Lender registers loan
in SONYMA’s Lender
Online
Lender submits loan
to Genworth
Comt Letter sent to
Borrower by lender
YES
Approval certificate
issued
MCC package sent to
SONYMA by lender
YES
Approval published on
Lender Online
Collateral package
forwarded to M&T
Approved
?
Post-closing pkg sent
to SONYMA by lender
Approved
?
NO
Genworth forwards to
SONYMA’s Mortgage
Insurance Fund
MCC sent by SONYMA
to lender and borrower
Loan purchased by
M&T
NO
Loan serviced by M&T
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Adverse Action
Notice is issued by
lender
Secondary Marketing
• Rates to be posted daily to MEME at
https://mortgageportal.mtb.com/
– CPlus loans with DPAL priced with rate premium of ~0.625%
• Lender compensation:
– Lender to earn 2 points
– Additionally, lenders may charge up to $1,200 in ancillary fees
• MCC Fee (payable to SONYMA):
– Loans amounts of $100,000 or less - $250
– Loan amount greater than $100,000 - $500
• M&T Fees:
– $350 Funding Fee, Flood Cert Fee of $8, Tax Service Fee of $75
• Document Review Fees for CEMAs or Co-ops may apply
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Secondary Marketing - continued
•
•
•
•
60-day and 90-day rate locks will be available
Loans may be registered and float
Loans to be delivered on Best Efforts basis
Extensions may be granted, but charges may apply
depending on market conditions
• Escrows required on all loans with LTVs in excess of
80%
• Temporary buydowns are not permitted
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Operational & Delivery Considerations
• Lenders must be approved correspondents of M&T Bank
– All lenders must sign a correspondent agreement with M&T
– All lenders must also sign a tri-party agreement with M&T and
SONYMA
• All Conventional Plus and DPAL loans must be registered
on M&T’s MEME website
• All MCCs must be registered on Lender Online (LOL)
– M&T has no involvement with this transaction
• DPAL and Conv Plus loans are NOT registered on LOL
• All term sheets (3), the Operational Instructions (3
sections) and any required forms and exhibits will be
posted on MEME as well as SONYMA’s website
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Operational & Delivery - continued
• M&T performs a pre-closing underwriting review of the
credit package for all loans
• The closed loan file must be delivered by the lock
expiration date; if not in fundable form a suspense notice
will be issued
• Deficiencies must be cured and the loan cleared for
funding by the later of the 5th business day from receipt
of the Suspense Notice or the lock expiration date.
Loans delivered or cleared after are subject to re-pricing
at worst pricing (original or current).
• Non-collateral packages must be submitted via BlitzDocs
at www.blitzdocs.net – first-time users must set up a
password
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Important Exhibits on MEME
• Exhibit 02-454 Conventional Plus Loan Submission
Checklist
• Exhibit 03-016 Condominium Questionnaire
• Exhibit 03-020 Co-operative Questionnaire
• Exhibit 03-030 Visa Classifications
• Exhibit 03-050 Approved Condominium List
• Exhibit 03-051 Approved Co-operative List
• Exhibit 02-204 FNMA MCM HomeChoice Worksheet
• Exhibit 02-205 FNMA MCM HomeChoice Worksheet
Instructions
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M&T Loan Program Codes
• SONYMA Conventional Plus
– 200
• SONYMA Conventional Plus w/DPAL
– 201
• SONYMA Conventional Plus w/DPAL & MCC
– 202
• SONYMA Conventional Plus w/MCC
– 203
• SONYMA Second Mortgage DPAL
– 878
• Unique product codes do not apply for Community
Solutions or Community HomeChoice
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Important Contacts
• Program Administration
– James Ahrens; [email protected]
• Sales Management
– Jeff Mastro; [email protected]
• Operations Management
– Esther Farron; [email protected]
• Secondary Marketing (Daily Pricing & Extensions)
– Mark Monile; [email protected]
• Seller Administration (Correspondent Approvals)
– Doug Crow; [email protected]
• SONYMA
– George Leocata; [email protected]
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QUESTIONS ?

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