White House to Banks; Bond Spreads; Calculating Income

What is happening today in mortgage lending:
White House to Banks: Start Lending Now

Fannie, Freddie Mortgage-Bond Spreads Hit Widest Since March
Processing Tip
The credit freeze has made underwriting more particular than ever. Here are a few pointers to help you get your loan approved the first time. Loans that loose their Accept status when they are underwritten usually loose this because the underwriter calculates the income differently than you did. Many times if the underwriter knew how you calculated the borrowers income they would accept it. If I was processing a loan I would always include the calculation of income in my loan file. Make sure you know the guide lines regarding the income calculation. If you want an exception from the guidelines be sure and state the reason you feel the borrower deserves this exception. Example: overtime usually always requires a two year history. Your borrower has only been on the current job 12 months. However they had overtime in the previous job. In this scenario include a VOE of both jobs documenting a two year history. Don’t assume because an employer requires over time that they underwriter will accept that as a reason to have less than two years.

I also find this IRS web site in determining what income is tax deductable or how it should be reported to be helpful - IRS Frequently Asked Questions . Attached is an income worksheet that you could use to calculate income and include in your loan file

Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

Mortgagage Shock, Adjustable rates? What is a blog?

What is happening today in mortgage lending:
Mortgage Shock?Ajustable rates tied to LIBOR, COFI and other idex


What is a blog?
It is now been just a little over 6 months since I started my blog. When I first started I hardly knew how to spell blog and wasn’t really sure how it worked or why I would want one. The deciding point was when I would get calls from brokers who would ask me for information that I had sent out in a daily email maybe days or weeks ago. At that time I wasn’t keeping my information and would have to start the research process all over again in order to help them. That is what made me decide to start a blog. I thought it was a way to house all my information.

A blog is intended to be interactive. I seldom have comments posted on mine although that is the intent of a blog. I definitely would love to see you post your opinions. I was surprised when the Sr. Vice President of AllRegs posted a comment. I wouldn’t have expected him to see my blog. I have found a blog can be far reaching and can definitely give your customer a feeling of familiarity towards you. When I see people that are reading my blog it is like we are instant friends and we kind of cut through the; who am I, what can I do for you stuff and get right to the point.

It has helped me be more available to my brokers. If I get a call with some complicated questions and I am in my car with no access to the internet it could be tough. My blog lets me direct my broker to the requested information so they can see what I am talking about when answering their questions. If someone needs a form I can say go to my blog and click. If someone wants very specific information about FHA Limits, appraisers, condos, termite certifications etc, I can say go here and click

Would a blog help your business? I think that depends on: you, the information you would put on your blog and how often you plan to update information on it. The more informative it is to your potential customer the more likely it would be an asset to you in your business dealings. A blog is very simple to set up and maintain. They are also much less complicated then a website. I could probably show someone how to set one up and get going on it in about 20-30 min.

I am working on a new feature to my blog called “Power Tips” these are ”audio power point shows”. They take about 10 minutes to go over a training topic. Hopefully these will be available in the next few weeks. This brings me to another great point about blogs, you can improve on it as you learn more.

I would love to see your comments on my blog https://mtgview.blogspot.com Please give me a the opportunity to be your lender of choice.


Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com/em>>

Sales price up; inventory down; Feds to lend to businesses

What is happening today in mortgage lending:
More signs things could be turning around.
US Home Sales up; inventory down, prices fall

Fed sent to lend to business

Short-term Borrowing cost edge lower

Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

More on the LIBOR; AmeriDream

What is happening today in mortgage lending:

According to these articles we need to go through our records and help those borrowers who were tied to the LIBOR ARM by refinancing them.

If your adjustable-rate mortgage is linked to LIBOR, brace yourself, analysts say | mycentraljersey.com | MyCentralJersey.com

'Libor' closest thing to global yardstick

AmeriDream Responds to Greenspan Testimony - MarketWatch

Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

What is happening today in mortgage lending:
Good-Faith Changes From HUD - washingtonpost.com

Daily Herald | HUD looks to protect borrowers from overcharges

Daily Herald | Reform may mean end of mortgage broker deception is near



Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

Good Faith Changes From HUD

What is happening today in mortgage lending:
Good-Faith Changes From HUD - washingtonpost.com

Daily Herald | HUD looks to protect borrowers from overcharges

Daily Herald | Reform may mean end of mortgage broker deception is near

Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

Fannie and Freddie ask for higher loan limits; Mortgage Matters and how does RNY relates to Mortgage Rates

What is happening today in mortgage lending:
FNMA and FHLMC ask US for higher loan limits

I am also adding a new link to my blog called Mortgage Matters it’s supplied by Bank Rate. It will be posted on the right hand side of my blog under “What’s the Market Doing..”? It gives you insight on what’s going on with rates. Today’s article talks about the Freddie Mac’s Required Net Yield RNY. This is also a link I have on my blog (again on the right hand side) and I think it has been a better indicator than 10 year treasury. I have been following the RNY and it has gone down over a 100 bps in the last week. Rates should be good today! My blog is http://www.mtgview.blogspot.com/ The first page of my blog is a chronicle of mortgage lending and links that you will find helpful, Including links to my FHA and Conventional blog.

Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

Rule on Mortgage Rate Disclosre; August Home Sale Surge paart to DPA; Did you know

What is happening today in mortgage lending:
Articles you may want to read today
US Fed finalizes rule on mortgage rate disclosure Markets Markets News Reuters
August Home Sales Surge Thanks in Part to Downpayment Assistance - MarketWatch

Each morning I send out mortgage news with Rates. I am motivated to do this for my brokers to help you stay on top of what is going on in the market. I post my results on my blog also, so you can go back and look at older information if needed. It is interesting to see the chronicle of mortgage lending over the last six months. But do you have other questions such as;
How is Utah’s Economy doing?
Where are rates going?
How can I get more Mortgage Training?
What does the FHLMC Required Net Yield to do with Mortgage Rates?
Is a pension taxable?
Did you know that FHA has many websites?
How can I learn about self employed borrowers?
What are forms 92900 and other forms?
Can a family member lend a borrower the down payment on FHA?
What changes did DU make in version 7?
Are there any DPAs acceptable in UT for FHA?
Are there grants available for down payments?
Where can the borrower get the down payment from?
Do you have a question about Rural Housing?

You can find the answer to these questions and much more on my blog just go to http://www.mtgview.blogspot.com/. I am always updating it and it is a free a service I provide my brokers. Please feel like posting your comments there also. I am interested to know your thoughts.


Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

Freddie annouces no more Accept-Plus; VA Cashout to 100%

What is happening today in mortgage lending:
Freddie Mac Announced …Today's News ... This Single-Family Advisory e-mail provides you with important information on a series of upcoming changes to our pricing and credit requirements.

First, we are providing a preview of new changes that we will finalize in an early November Single-Family Seller/Servicer Guide (Guide) Bulletin and will make effective for Freddie Mac settlements on and after February 2, 2009. These changes strengthen underwriting standards for borrower eligibility and provide additional safeguards against layered risk to support sustainable homeownership opportunities, including:
Eliminating the purchase of mortgages originated with stated income and/or stated assets
Establishing minimum Indicator Scores and maximum debt-to-income ratio requirements for most mortgages we purchase—whether manually underwritten or assessed through an automated underwriting system

Second, we are publishing a Guide Bulletin today that provides detailed requirements for the changes we previewed in our October 3 Single-Family Advisory e-mail. These changes are effective for Freddie Mac settlements on and after January 2, 2009, and reflect our focus on providing pricing and credit terms that are prudent and largely applicable in all market conditions.
Finally, today's Guide Bulletin also includes additional and not previously announced updates to our credit requirements for borrowers with significant derogatory credit information, and other credit changes for certain mortgages with higher risk characteristics. These changes are also effective for Freddie Mac settlements on and after January 2, 2009.
In aggregate, the changes we are previewing in this e-mail and those we have published in today's Guide Bulletin address underwriting standards that promote long-term homeownership for borrowers and liquidity for Sellers, while maintaining a sustainable secondary market business model.
Preview of Upcoming Changes to Credit RequirementsToday, we are previewing the following changes to our credit requirements that will be effective for Freddie Mac settlements on and after February 2, 2009. We will finalize these credit changes in an early November Guide Bulletin where we will:

Eliminate purchases of all mortgages originated with stated income and/or stated assets, including borrower selected programs, lender-branded and marketed programs, and system-selected programs such as Loan Prospector® Accept Plus.
Establish a maximum debt-to-income ratio of 45 percent for all mortgages we purchase, except for Streamlined Refinance Mortgages.
Revise requirements for minimum Indicator Scores by:
Establishing minimum Indicator Score requirements for manually underwritten mortgages secured by 1-unit primary residences as follows (Home Possible® Mortgages excluded):
620 for LTV/TLTV/HTLTV ratios less than or equal to 75 percent.
660 for LTV/TLTV/HTLTV ratios greater than 75 percent.
Establishing a minimum Indicator Score of 620 for all mortgages unless otherwise specified for a particular mortgage product in our Guide. Loan Prospector A-minus mortgages are also excluded from this requirement.
Revising minimum Indicator Scores for Home Possible Mortgages and lender-branded affordable mortgages. Details for this change will be provided in the early November Guide Bulletin.
If the borrower does not have a usable credit score, Sellers must underwrite the mortgage according to the requirements in Guide Chapter 37.

Eliminate purchases of 40-year fixed-rate mortgages except for Home Possible Mortgages and other lender-branded affordable products secured by 1-unit properties.
Reduce the maximum LTV ratio requirements for Home Possible Mortgages and other lender-branded affordable mortgage products secured by 1-unit primary residences to:
97 percent for mortgages assessed by Loan Prospector and other approved automated underwriting systems.
95 percent for manually underwritten mortgages.
We will continue to allow TLTV ratios greater than 97 percent and up to 105 percent for eligible Home Possible Mortgages and lender-branded affordable mortgages if the subordinate financing is an Affordable Second® and the borrower has a minimum Indicator Score of 700.
Delivery Fee Rate and Credit Requirements in Today's Bulletin
With today's Guide Bulletin, we are providing final requirements for the delivery fee rate increases and credit changes we previewed in early October and are announcing several additional changes to our credit requirements. It is important that you review today's Guide Bulletin in detail to prepare for these changes, effective for mortgages with Freddie Mac settlements on and after January 2, 2009.
Credit and Pricing Requirements Previewed on October 3:

Eliminate the previously announced 25 basis point increase to the Market Condition delivery fee, scheduled to go into effect on November 7, 2008.
Provide detailed pricing and credit requirements for mortgages with higher conforming loan limits in certain high-cost areas, which we've termed “super conforming” mortgages.
Update delivery fee structures and fee rates for Initial Interest® Mortgages and mortgages with secondary financing, and revise the Number of Units delivery fees to better align our pricing with the risks inherent in these products.
Change requirements for certain mortgages, including, among others, manually underwritten mortgages, Streamlined Refinance Mortgages, mortgages sold to us more than 120 days after the note date, and mortgages secured by investment properties, 2-unit properties, and second homes.
Additional Modifications to Super Conforming Mortgage Requirements in Today's Guide Bulletin:

Reduce maximum LTV/TLTV/HTLTV ratio requirements for certain super conforming mortgages. View these updates, as well as other modifications to super conforming mortgage requirements on our Web site.
Updates to Borrower Credit Reputation Requirements in Today's Guide Bulletin:

Allow authorized user tradelines to be included in determining a borrower's credit reputation only under certain circumstances as detailed in today's Guide Bulletin.
Require that a borrower's derogatory credit information be considered significant if there is a short payoff related to a delinquent mortgage obligation within the last seven years.
Extend the required recovery period needed to re-establish an acceptable credit reputation for prior foreclosures and multiple bankruptcies, whether for extenuating circumstances or financial mismanagement.
Eliminate the requirement to calculate or evaluate the debt-to-housing gap ratio when determining a borrower's capacity to meet monthly obligations.
Additional Revisions to Credit Requirements in Today's Guide Bulletin:

Add new requirements for the purchase of a new primary residence when the sale of the existing primary residence has not yet closed or the existing primary residence is being converted to a second home or investment property.
Eliminate purchases of seasoned mortgages through our flow sales paths.
Eliminate purchases of Seasoned Mortgages for Newly Constructed Homes products through our flow sales paths. For these mortgages to be eligible for delivery through our flow sales paths, the settlement date or delivery date, as applicable, must be on or before the last day of the 18-month credit/construction/settlement period.
Reaffirm that refinance mortgages must be documented with a new note and new security instrument or with a new note and a modification of the existing security instrument. If there is no new security instrument, the refinance mortgage must be delivered to Freddie Mac as a Seller-owned Modified Mortgage.
Eliminate purchases of Alternative Stated Income Mortgages, and remove references to these mortgages from the Guide as a precursor to changes across all stated income and/or stated asset products, which we previewed above and will finalize in an early November Guide Bulletin.
Updates to Delivery Requirements in Today's Guide Bulletin:
Introduce a new Special Characteristic Code D99 that exempts Freddie Mac-owned no cash-out refinance mortgages secured by second homes and 2-unit primary residences when the new mortgage is not paying off subordinate financing from the LTV/TLTV/HTLTV ratio reductions included in today's Guide Bulletin.
Pre-Funding Best Practices in Today's Guide Bulletin:
Recommend the use of Home Value Calibrator®, a tool that Freddie Mac uses in its quality control process, or a similar tool, to help assess the likelihood that an appraised value is inflated.
Get More InformationFor additional details on these changes:
Read our October 17 Guide Bulletin.
See a summary of all of our recent pricing and credit changes.
Review our pricing and credit requirements for super conforming mortgages, including recent modifications to these requirements

VA Circulars/News - FY2008
Important Announcements:
On October 10, 2008, the President signed S. 3023, the Veterans' Benefits Improvement Act of 2008. Following are the three major impacts to the VA Home Loan Guaranty Program:

1. Authority to guarantee adjustable rate mortgages (ARMs) and hybrid adjustable rate mortgages (HARMs) has been extended through September 30, 2012.

2. The maximum guaranty for cash-out refinance loans has been made the same as purchase loans - they are no longer limited to $36,000. In addition, cash-out refinance loans may now be made up to 100% of the appraised value of the home.

3. The temporary increase to the maximum guaranty has been extended through December 31, 2011. When combined with new locality-based Freddie Mac conforming loan limit in January 2009, VA's maximum county “loan limit” will be $1,094,625 ($1,641,937.50 in Alaska, Guam, Hawaii, and the Virgin Islands). This results in unique county "loan limits" for VA. This notice is meant to provide general information regarding the major impacts of the recently passed legislation. Click on this link for more detailed information and guidance.

Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

What is going on with Mortgage Rates...

What is happening today in mortgage lending:
Mortgage News
What is going on with Mortgage rates...
Libor Loosens Up: Why You Should Care - New Money (usnews.com)
Credit freeze: Signs of a thaw
Consumer confidence, perception can move economic mountains

Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

An end of an Era; Bailout takes new direction; Rural Housing news

What is happening today in mortgage lending:
It is end of an era and the beginning of something we have never done before…
newsobserver.com Bank rescue closes door on a free-wheeling era

New direction for rescue plan Real Estate and Technology News for Agents, Brokers and Investors Inman News

Rural Housing News
September 24, 2008

Funds Usage Accelerates for Single Family Housing Guaranteed Loan Program

To date, the USDA Rural Development Single Family Housing Guaranteed Loan Program (SFHGLP) has obligated over $6.7 billion in loan guarantees. This all-time record is thanks to our partners in the lending community who are to be congratulated for participating so strongly in the SFHGLP. The obligation rate for the SFHGLP has accelerated significantly over the past few days, and if the increased rate of obligation continues, we project that funds may be depleted by this weekend. There may be no available funds for the last two days of Fiscal Year 2008, September 29 and 30.

Nevertheless, as mentioned in our communication dated September 19, 2008, USDA Rural Development will continue to accept and process applications, and will issue Conditional Commitments “subject to receipt of Congressionally appropriated funds.” Lenders will continue closing loans under the SFHGLP; business as usual. There will be no interruption of service by USDA Rural Development during any period in which funding is not available.

The United States Congress is working on a Continuing Resolution (CR) which in its current draft appears to provide significant funding for the SFHGP during the CR period in Fiscal Year 2009. Fiscal Year 2009 begins on October 1, 2008. Once funding is appropriated by Congress and has become available to the SFHGLP, USDA Rural Development will be able to issue Loan Note Guarantees for Conditional Commitments that were issued “subject to receipt of Congressionally appropriated funds.”

Questions about this communication may be addressed by dialing the Single Family Housing Guaranteed Loan Division at (202) 720-1452.


Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

Why the Fed's Cut rates; Where is the bottom

What is happening today in mortgage lending:
What is the purpose for the central bank to coordinate the rate cut made earlier this week?
Q&A: The Fed’s Rate Cut
http://economix.blogs.nytimes.com/2008/10/08/qa-the-feds-rate-cut/?ref=business

Here is a helpful web site for consumers looking to selling, buying and financing their homes HGTV FrontDoor Real Estate - Powered by HGTV with homes for sale, buying and selling tips and more

Investor's Business Daily: A Wild Time To Buy A Home, But Some Are Answering The Call

Looking for a bottom? Historically October has sometimes been tough on stock. Let’s hope today we hit the bottom.Where Are We in the Stock Market Cycle? - Seeking Alpha
Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

Statues of limitations for old debt; Pending home sales rise..

What is happening today in mortgage lending:When looking at a credit report some times it helps to know what the statues of limitations are.

Here is a helpful link that lets you know the legal time frame.
State statutes of limitations for old debts

Pending home sales rise in August - The Boston Globe

Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

Today vs The Great Depression; Best Places to live

What is happening today in mortgage lending:
Run-up to Great Depression and today's recession have some eerie similarities, but many important differences

Congratulations Sandy and Orem! Check out Money’s top 100 City’s to live in list.
Best Places to Live Money's list of America's best small cities
# 63 Orem, UT population 90,857
#83 Sandy, UT 94,203

Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

How the Bailout works; What caused the Mortgage Meltdown

What is happening today in mortgage lending:

The bailout plan passed now what happens? Here are three articles to give you more insight. Notice there is no plan B so we have to make this work.
The Bailout: An Owner's Manual - Forbes.com
How The Federal Mortgage Bailout Should Work
Historic Bailout Passes As Economy Slips Further - WSJ.com

Did you know that Monday October 31, 1938:
Great Depression: In an effort to try restore investor confidence, the New York Stock Exchange unveils a fifteen-point program aimed to upgrade protection for the investing public. As we know the great depression didn’t end until 1941.

The Best explanaation of the Mortgage Melt Down this is going to require some time to read


Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

Bailout Bill Sent Back to House; HOPE; More on DPA's

What is happening today in mortgage lending:

Bailout Bill Sent Back to House After Senate Passage (Update1)

Study these mortgagee letters and the press announcement for HOPE you may have some opportunity to get some more business.

FHA issues new mortgagee letters giving more help for borrowers who are behind on their mortgage payments.

Mortgagee letter 2008-29 HOPE for Homeowners Origination Guidance
Mortgagee Letter 2008-30: HOPE for Homeowners Servicing Guidance

BUSH ADMINISTRATION LAUNCHES "HOPE FOR HOMEOWNERS" PROGRAM TO HELP MORE STRUGGLING FAMILIES KEEP THEIR HOMESDetailed Program Eligibility Requirements Announced

CONFIRMED: Seller-Funded Downpayment Assistance Generates Homeownership at No Cost to U.S. Government or Taxpayers

Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

A Deal for the Mortgage Crisis; Libor 1-Month Rates Rise

What is happening today in mortgage lending:
A Square Deal for the Mortgage Crisis
Click Here for the full story



Libor 1-Month Rates Rise on Credit Crisis; Overnight Costs Drop

Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to www.naultfhatips.blogspot.com or www.dutips.blogspot.com

More on the bailout; Libor and DPA's

What is happening today in mortgage lending:

You’ve read the headlines and know that the bailout plan was rejected. There are many that think that congress will not be able to get anything passed until after the elections. Even once the bill is passed the speculation is it will take months to get things in place. Read more…
World Markets Calm Down after Congress Rejection - Financials * US * News * Story - CNBC.com
UPDATE 1-Mortgage markets hit; US bailout plan voted down - Forbes.com

After Wall Street, anger spreads to Congress - Economy in Turmoil- msnbc.com

Here is suggested alternative to the bailout?
Commentary: Bankruptcy, not bailout, is the right answer - CNN.com

Borrowers with a LIBOR index really need help refinancing
Bloomberg.com: Worldwide

What about the DPAs? It seems the DPA issue is getting little attention as the focus continues on the bailout.

Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

Bailout Bill; Summary and what is Libor?

What is happening today in mortgage lending:

It was a crazy weekend. They finally came up with a proposed Bailout Plan. If you are interested I have attached a link for the complete copy or a link for the summary. Good article about the Libor check it out. Don’t forget that coming Oct 1, 2008 FHA risk base pricing goes away, you will need the new MCAW and 92900A. Check out my Sept 4, 2008 post on my blog for all changes.
Text of Draft Proposal for Bailout Plan

Summary of U.S. financial bailout bill draft

What is Libor? Answers to interest-rate questions

Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

Bailout Plan Stalls and WaMu is seized by FDIC

What is happening today in mortgage lending:
Bailout negotiations break down into bipartisan finger-pointing

WaMu is seized by FDIC

Libor Increase Causes Mortgage Rate Hikes

Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

Guide to Bailout Debate; More about DPA's

What is happening today in mortgage lending:


Your Guide to Bailout Debate

Mansfield realtors to sponsor rally to lobby Congress on down payment bill (DPA)

Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com

RMIC makes significant Changes

What is happening today in mortgage lending:

FBI Investigates Four Firms at Heart of the Mess

Paulson’s Bazooka: A Weapon to Be Remembered?

RMIC makes significant changes to guidelines please read
What's New in This Release?
During these unsettled times in the financial and housing markets, it is critical that RMIC continue to maintain our financial strength and dedicate our support and substantial capital resources to insuring risks that positively contribute to the fundamentals of the housing market. RMIC is announcing changes to our eligibility and guidelines that reflect this position while maintaining eligibility for the most important segments of the market.

The credit policy changes announced in this release are effective for all mortgage insurance applications submitted on or after November 1, 2008.

The policies outlined in this release supersede all existing waivers and negotiated guidelines previously granted by RMIC, and apply regardless of the findings of any automated underwriting system (AUS) except where specifically noted.

Guideline/Eligibility Changes - Effective November 1, 2008
> Loans with LTV/CLTVs of 95.01% to 97% may only be originated through a lender's retail channels (i.e., broker originated and wholesale loans are ineligible). In order to be considered a retail loan, the loan must be closed and the MI ordered in the name of the originating lender, by that lender's personnel. The minimum representative FICO required for insurance on loans over 95% LTV/CLTV will remain 720 as stated in the August 27, 2008 release notes.

> Loans on Investment Properties will no longer be eligible for coverage.

> Cash-Out Refinances will no longer be eligible for coverage.

> Eligible loans with representative FICO scores below 660 will be classified as A-Minus loans and may be eligible for RMIC's A-Minus program (i.e., loans with representative FICO scores between 620 and 659 will no longer be eligible for RMIC's Monthlies/ZIP Monthlies, Singlemax Plus or LPMIpreferred programs). Eligible loans with Desktop Underwriter (DU) 7.0 Expanded Approval recommendations will continue to be classified as A-Minus loans regardless of FICO score.

> All loans with A-Minus pricing (including all loans with FICOs below 660 and loans with DU 7.0 Expanded Approval recommendations) will be limited to a maximum allowable debt-to-income (DTI) ratio of 45%.

> Loans on Second Homes will:
o Require a minimum loan representative FICO score of 720, and
o Be limited to a maximum LTV/CLTV of 90%.

> If the subject property is a Second Home, the borrower may own no more than a total of four (4) financed properties including their primary residence.

> Interest Only loans will:
o Require a minimum loan representative FICO score of 720, and
o Be limited to a maximum LTV/CLTV of 90%; and
o No longer be eligible for coverage with DU 7.0 Expanded Approval recommendations.

> For Non-Fixed Payment loans (i.e. loans with minimum payments that can change in the first five years):
o The maximum initial interest rate discount from the fully indexed accrual rate (FIAR) will be 200 basis points, and
o The interest rate used to qualify the borrower for the loan must be at least the greater of the initial interest rate or the FIAR.

> Loans on one-unit properties with loan balances over $417,000 that otherwise meet RMIC's non-conforming balance guidelines (including Conforming Jumbo) will require a minimum representative FICO score of 720.

> Rate/Term Refinances are defined as refinances of first lien mortgages only. The following are defined as Cash-Out Refinances and will be ineligible for coverage:
o Refinances involving the consolidation of existing subordinate lien(s) or line(s) of credit. (Note that such existing liens may be resubordinated in the context of a Rate/Term Refinance);
o Refinances within 6 months of the first lien origination date to consolidate a second lien or other line(s) of credit; and
o Loans to finance lien-free properties that already have one or more of the borrowers on the property title.

> Rate/Term Refinances which cannot be shown to improve the borrowers' ability to repay their mortgage debt are ineligible.

> Rate/Term Refinances on properties listed for sale in the last 6 months are eligible only if the property has been taken off the market. If the subject property is a primary residence, the borrower must confirm their intent to occupy it.

> RMIC no longer provides coverage during the construction phase of Construction-Permanent loans. We will still issue commitments with a 12-month term during the construction period to facilitate one-close and two-close processes. However, coverage may not be activated until the permanent financing has been closed or perfected.

> RMIC will no longer contract underwrite subordinate liens. This includes all subordinate installment liens and revolving lines of credit. This change supersedes and replaces any provisions in the Agreement for Loan Underwriting Review that permits the underwriting of these loans.

> All loans with an appraisal more than 60 days old at the date of closing will require a new appraisal or a recertification of the existing appraisal and the value.

Declining Markets Policy Guideline/Eligibility Changes - Effective November 1, 2008
RMIC's Declining Markets Policy will be amended as follows:
> Loans on Second Homes will no longer be eligible for coverage.
> The maximum allowable DTI will be 45%.
> Maximum allowable seller or other interested party contributions will be 3%, regardless of LTV/CLTV.
> Interest Only loans will no longer be eligible for RMIC's Enhanced Declining Markets policy and will follow general Declining Markets eligibility.


Updated Underwriting Guidelines and Rate Materials
The following materials will be posted to http://www.rmic.com/ to assist customers with underwriting and implementation of the credit policy:
o This announcement (Release Notes 09.23.08)
o Quick Reference Underwriting Guidelines - November 1, 2008
o Declining Markets Policy - Effective November 1, 2008
DU/Desktop Underwriter is a registered trademark of Fannie Mae.LP/Loan Prospector is a registered trademark of Freddie Mac.
RMIC's Mortgage Insurance Guidelines are available in electronic format. If you have any questions regarding RMIC's new guidelines, please contact your RMIC Account Manager at 800-999-7642.

Shirley Nault has been a mortgage professional for over 20 years. Visit her other mortgage web sites go to: www.naultfhatips.blogspot.com or www.dutips.blogspot.com