Transcript Conventional Plus – Mortgage Insurance
SONYMA Conventional Plus
Correspondent Program Introduction
October 25, 2012
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Presentation Outline
Sales Focus Conventional Plus Highlights Underwriting Guidelines Mortgage Insurance DPAL Details MCC Eligibility Example Scenarios Secondary Marketing Operational & Delivery Considerations Questions Page 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 Page 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 • No other properties may be owned simultaneously • At least one borrower must complete pre purchase counseling • For 1 unit, maximum 97% LTV, 105% CLTV, 620 score • For 2-4 unit, maximum 95% LTV, 105% CLTV, 680 score Page 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 • 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 Per FNMA guidelines Page 5
Conventional Plus – Mortgage Insurance
• Lower coverage requirements apply:
LTV
95.01% - 97% 90.01% - 95% 85.01% - 90% 80.01% - 85%
Required Coverage, Factors 18%, 65 bps 16%, 54 bps 12%, 39 bps 6%, 30 bps Standard Coverage, Factors
35%, 115 bps 30%, 67 bps 25%, 49 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. Page 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 Page 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 Page 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 Page 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 Page 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 Page 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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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) 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
Annual Savings Monthly Savings MONTHLY SAVINGS TOTAL ANNUAL SAVINGS 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
FHA (1) 96.50% $274,000 3.500% $264,410 1.75% 1.25% $269,037 $1,208 $275
$1,483
-
Monthly MI Conv Plus w/DPAL
97% $274,000 4.625% $265,780 0% 0.85% (2) $265,780 $1,366 $188
$1,554
-
Upfront MI Conv Plus w/DPAL
97% $274,000 4.625% $265,780 2.70% (2) 0% $265,780 $1,366 -
$1,366
-
($71) ($852) $117 $1,404
$9,416 $77,900 $9,416 $6,758 $7,400 $54,326 $7,299 $7,299 $9,590 $21,920 -
$31,510
$8,220 -
$23,290
98.19% $12,292 $77,900 $9,834 $6,758 $7,400 $53,908 $7,239 $2,458 $4,781
$2,518 $210 $139 $1,666
$8,220 $21,920 $500
$30,640
$8,220 $8,220 Page
$14,200
100.00% 13 $12,292 $77,900 $9,834 $6,758 $7,400 $53,908 $7,239 $2,458 $4,781
$2,518 $210 $327 $3,922
$8,220 $21,920 $7,176 $500
$37,816
$8,220 $8,220 -
$21,376
100.00%
Monthly MI Conv Plus
97% $274,000 3.875% $265,780 0% 0.85% (2) $265,780 $1,250 $188
$1,438
-
$45 $540
$10,299 $77,900 $8,239 $6,758 $7,400 $55,503 $7,479 $2,060 $5,419
$1,880 $157 $202 $2,420
$8,220 $21,920 $500
$30,640
$8,220 -
$22,420
97.00%
Upfront MI Conv Plus
97% $274,000 3.875% $265,780 2.70% (2) 0% $265,780 $1,250 -
$1,250
-
$233 $2,796
$10,299 $77,900 $8,239 $6,758 $7,400 $55,503 $7,479 $2,060 $5,419
$1,880 $157 $390 $4,676
$8,220 $21,920 $7,176 $500
$37,816
$8,220 -
$29,596
97.00%
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
Monthly Savings (Compared to FNMA) Annual Savings (Compared to FNMA) Assets Required
Upfront MIP
Required Cash to Close
DPAL Amount
Net Cash Required CLTV FNMA
97% $274,000 $243,860 $21,920 3.875% $265,780 0.00% 1.36% $1,249 $301
$1,550
Monthly MI Conv Plus w/DPAL
97% $274,000 $243,860 $21,920 $7,316 4.625% $258,464 0% 0.85% (1) $1,331 $183
$1,514
Upfront MI Conv Plus w/DPAL
97% $274,000 $243,860 $21,920 $7,316 4.625% $265,780 2.70% (1) 0% $1,369 -
$1,369
$36 $431 $181 $2,172 Monthly MI Conv Plus
97% $274,000 $243,860 $21,920 3.875% $265,780 0% 0.85% (1) $1,249 $188
$1,437
$113 $1,356 Upfront MI Conv Plus
97% $274,000 $243,860 $21,920 3.875% $265,780 2.70% (1) 0% $1,249 -
$1,249
$301 $3,612 $0
-
$0
97.00%
$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%
Notes:
(1) Credit Score of 680-719. Higher credit scores have lower rates.
(2) Rates as of 10/12/12.
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Lender meets with borrower and takes application Pre-closing underwriting review performed by M&T Conditions collected, loan scheduled and closed by lender Collateral package forwarded to M&T Loan purchased by M&T
Process Map
Eligible for MCC?
NO Lender registers Conventional Plus and DPAL loans with M&T in MEME YES Lender registers loan in SONYMA’s Lender Online
“HFA Preferred” must be selected in the Community Lending section of DU
Lender processes loan, submits to DU, and prepares the underwriting package Lender submits loan to Genworth Comt Letter sent to Borrower by lender MCC package sent to SONYMA by lender Approval published on Lender Online Post-closing pkg sent to SONYMA by lender MCC sent by SONYMA to lender and borrower Loan serviced by M&T
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Approval certificate issued YES YES Approved ?
Approved ?
NO Genworth forwards to SONYMA’s Mortgage Insurance Fund NO 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 Page 16
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 Page 17
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 Page 18
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 5 th 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 Page 19
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 Page 20
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 Page 21
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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