fha streamline refinance guide - carrington wholesale … · cms fha streamline refinance . i....

CARRINGTON MORTGAGE SERVICES 1610 EAST SAINT ANDREW PLACE SUITE B-150 H SANTA ANA, CA 92705 949. 517. 7000

Confidential & Proprietary Presented to:

June 2012

FHA Streamline Refinance Guide

CMS Approved Brokers

1 Confidential & Proprietary

CMS FHA Streamline Refinances

• What Questions do you need to ask

• What systems will you need to access to gain the correct

numbers

• How to complete the 1003 correctly for CMS

• How to complete the proper CMS forms

• How to determine the net tangible benefit for CMS

• What CMS documentation is required

• Examples of 3 CMS streamline scenarios

• HUD Policies

How to Determine Streamline Refinances Eligibility For CMS


CMS FHA Streamline Refinances

• What is the current balance of the mortgage?

• What was the original loan amount and term?

• Are all Borrowers on existing loan going to be on the new FHA loan?

• Has there been any 30 day late payments in the last 12 months?

• Has the borrower been in the house at least 210 days and made at least 6 payments?

• What is the current interest rate?

• When was the FHA Case number issued?

• Is the Property listed for sale?

• Is the property currently owner occupied?

• Do any Borrowers have additional existing FHA Financing?

Questions You Need to Ask for CMS Streamline Refinances


CMS FHA Streamline Refinance

1. Loan Origination Software • Employment Information section (pg. 1 of the 1003)

• Income Section (pg. 2 of the 1003)

• Present Housing Expense section (pg. 2 of the 1003)

• Liability Section (pg. 2 of the 1003)

• Asset Section (pg. 2 of the 1003) only if short to close

• Schedule of Real Estate (pg. 3 of the 1003)

• Details of Transaction (pg. 3 of the 1003)

2. FHA Connection (You will need the info below) • FHA Case number from the current loan

• Date of Birth for all Borrowers

• Social Security Number for all Borrowers

• Address of Property

Systems, Forms & Charts to Use



3. Title Company’s Data Base • Deed of Trust

• Property Profile

4. Pipeline Manager • Pricing

5. Forms • CMS Net Tangible Benefit Worksheet

• FHA Max Mortgage. Calculation Worksheets – Streamline With & Without Appraisal

6. Charts • HUD Upfront & Annual MIP Premium Chart

7. Attachments • CMS Required Documentation Checklist

• CMS FHA Streamline Scenarios

Systems, Forms & Charts to Use (Continued)



I. Systems – The 1003 for CMS

Make sure you complete the current

employment information section on

the 1003

Compare the current loan’s monthly PI and MI to the new loan in order to calculate the Net Tangible Benefit

If this is a non-credit qualifying loan make sure you

don’t place any income on the 1003

Make sure you complete the Schedule of Real Estate



I. Systems – Details of Transaction for CMS

The cash from the Borrower is usually at least 1 month’s

payment, unless the rate you selected gives a credit to the

borrower. The loan cannot be structured with any cash back to

the borrower.



I. Systems – FHA Connection



I. Systems – Any Title Company’s Database



I. Systems – CMS Pipeline Manager, Pricing



II. Forms – CMS Net Tangible Benefit Worksheet

Completed by CMS Underwriters.



II. CMS Forms - FHA Max Mortgage Calculation w/o Appraisal



II. CMS Forms - FHA Max Mortgage Calculation with Appraisal



III. CMS Charts – Upfront & Annual MIP Chart.

Find more details about changes effective in April and June 2012 in the HUD Mortgagee Letter at:

• http://portal.hud.gov/hudportal/documents/huddoc?id=12-04ml.pdf

and the official HUD press release here:

• http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2012/HUDNo.12-037

http://portal.hud.gov/hudportal/documents/huddoc?id=12-04ml.pdf

http://portal.hud.gov/hudportal/documents/huddoc?id=12-04ml.pdf

http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2012/HUDNo.12-037

http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2012/HUDNo.12-037



CMS Resources:



• With a little preparation you should be able to quickly identify if a CMS FHA Streamline product is the best program for your customer.

• Remember to ask the proper questions so you can estimate the new maximum loan limit.

• Remember to pull the Refinance Authorization Results record from FHA Connection.

• Complete the CMS forms correctly.

• Do not complete the income section (pg. 2 of the 1003 for CMS) for CMS Non Credit Qualifying Streamline Refinances.

• If created correctly, CMS FHA Streamline Refinances should be easier to sell, process and fund.



Attachments

• CMS Checklist of Required Documentation

• 3 CMS Example Files

• Financing 60 days Interest

• Financing 30 days Interest

• Financing 30 days Interest w/ a twist

• HUD Mortgagee Letter 12-4

p 949.517.7000 1610 E. Saint Andrew Place, Suite B‐150, Santa Ana, CA 92705

Non-Credit Qualifying FHA Streamline (without Appraisal) Required Documentation

1. Completed submission sheet

2. FHA Maximum Mortgage Calculation Worksheet

3. FHA Streamline Net Tangible Benefit Worksheet

4. Initial 1003 completed in its entirety (do not include any income or liabilities

with the exception of the mortgage being paid off)

5. Initial 92900-A

6. Credit Authorization

7. Copy of Current Mortgage Note

8. Copy of Current Mortgage Statement – Evidencing MIP

9. Driver’s License / Identification Card

10. Social Security Card

11. Payoff Demand

12. FHA Case # with Refinance Authorization **

13. 2 Months Current Bank Statements (If $$$ is due escrow)

14. Estimated HUD-1

15. Escrow Instructions

16. Prelim

17. All Applicable Disclosures

** Contact your Carrington Mortgage Account Manager for FHA Case # ordering and to

request refinance authorization / Unearned UFMIP amount.

CMS Example #1 – Financing 60 Days Interest HUD allows for borrowers to finance up to 60 days of interest into the new FHA streamline provided it is itemized on the payoff demand. In this example, our payoff demand shows the borrower is due for their Mar. 1st payment (Interest from 2/01/12 – 3/31/12). To complete our FHA streamline loan amount worksheet, we will do the following: March 2012 Closing: 1a. Total Loan Amount of Current FHA Loan – This can be found on the existing note or the credit report. 2a. Unpaid Principal Balance – We may include up to 60 days interest for the current month but may not include late charges, escrow shortages, delinquent interest and processing type fees. For this example, we will include the unpaid principal balance of $236,188.13 + 60 days interest $2165.06 for a total of $238,353.19. 2b. Maximum UFMIP - The unearned UFMIP can be found on line 4(h) of the refinance authorization. In our example, the amount is $2,605.40 (closing date of Mar. 2012. New Estimated UFMIP – Multiply line 2a by 1%. In our example, the amount is $2,383.53. 3a. Maximum Base Mortgage – Line 3a will be calculated by utilizing the payoff amount as described in line 1a minus the lesser of the unearned UFMIP or the new UFMIP. In this case, our the new UFMIP is less so we would subtract $2,383.53 from our payoff amount of $238,353.19 to get a new base loan amount of $235,969.66. 4a. UFMIP (if Financed) – Multiply line 3a by 1%. 4b. Total New Mortgage Amount – This is the maximum new mortgage that can be utilized in the FHA streamline. Notes:

When utilizing your new mortgage amounts within your mortgage origination software, always remember to drop the “cents” from the totals on the worksheet. Work in whole dollars only.

It is important to remember that if the borrower in this example was to make their 3/1 payment prior to funding, the payoff amount would change and you would need to recalculate the loan amount based on financing 30 days of interest only.

The new loan amount may never exceed the previous loan amount (line 1a)

Payoff Demand Statement

Escrow # Xxx Faxed to: 1-555-1212 (FHA)

PAYOFF CALCULATION

Principle Balance as of 02/01/2012 $236,188.13Interest from 02/01/2012 to 03/31/2012 2,165.06

Uncollected Late Charges 72.94 Mortgage Insurance Premium 105.60 Escrow Balance Due 420.89

Total Amount Required to Release Lien (As of March 30, 2012) $238,952.62 Payoff Statement Via Facsimile Fee 10.00

Total Amount Due $238,962.62AMENDED DEMAND STATEMENTS ARE SENT AUTOMATICALLY IF THE TOTAL AMOUNT DUE INCREASES

BEFORE MARCH 30, 2012

PAYOFF INSTRUCTIONS Payoff funds must be made payable to Bank of America, N.A. and will be accepted by WIRE or CERTIFIED FUNDS ONLY. They MUST reference the YOUR BANK loan number, property address and borrower’s name in the OBI (Originator Beneficiary Information) field of the wire transfer or on the face of the check and must be sent per the instructions below. Failure to do so may cause delays resulting in additional interest due or the return of the funds to the remitter. Funds received after 4:00 p.m. Central Time may be posted the following business day.

Wire Funds to: Beneficiary Band: YOUR BANK

ABA Routing #: 4444-5555-6 Beneficiary Acct Name: BBB MRC Account #123456-7890

Mail CERTIFIED Funds to: YOUR BANK

Attention: Payoff Department 5555 Corporate Drive

Anywhere, CA 55555-4444

PLEASE DO NOT SEND CERTIFIED FUNDS TO THE WIRE FUNDS INTRUCTIONS ABOVE AS CERTIFIED FUNDS MUST BE PROCESSED IN OUR PAYOFF DEPARTMENT.

STATEMENT VOID AFTER March 30, 2012

Statement Date March 19, 2012

Your Bank Here Loan No: FHA Case #:

Name & Property Address:

FHA CONNECTION

Refinance Authorization Results FHA Case Number:

Contact Name: Contact Phone:

Projected Closing Date: 03/20/12

Pricing LTV: $96.50

Term: Upfront MIP Factor: Annual MIP Factor:

360 1.000% TBD

* Refinance Authorization *

New Case Old Case

Borrower Name:

Address:

Lender ID: 2475100005 13065

Lender Name: CARRINGTON MORTGAGE SERVICES L YOUR BANK IN YOUR TOWN

New Closing Month 03/12 04/12

Computed Premium (4B): $4,070.94 (4B): $4,070.94

Period of Insurance (4C): 9 (4C): 10

Old Term (in months) (4D): 360 (4D): 360

Original Mortgage Amt (4E): $411,164 (4E): $411,164

Refund UFMIP Factor (%) (4F): .64000 (4F): .62000

UFMIP Earned by HUD (4G): $1,465.54 (4G): $1,546.96

Unearned UFMIP (4H): $2,605.40 (4H): $2,523.98

Original Property Value (4I): $421,860 (4I): $421,860

Unpaid Balance (4J): $406,106 (4J): $405,533

Authorization No. 9946320120320

Expiration Date 07/31/12

HSG/FHA Home Page | HUD Single Family Housing Page

HUD Multifamily Housing Page | HUDCLIPS | Lenders Information | Mortgagee Letters

CMS Example #2 – Financing 30 Days Interest HUD allows for borrowers to finance up to 60 days of interest into the new FHA streamline provided it is itemized on the payoff demand. In this example, our payoff demand shows the borrower is due for their April 1st payment (Interest from 3/1/2012 – 3/31/2012). To complete our FHA streamline loan amount worksheet, we will do the following: March 2012 Closing: 1a. Total Loan Amount of Current FHA Loan – This can be found on the existing note or the credit report. 2a. Unpaid Principal Balance – We may include 30 days interest for the current month but may not include late charges, escrow shortages, delinquent interest and processing type fees. For this example, we will include the unpaid principal balance of $406,676.31 + 30 days interest $1,482.67 for a total of $408,158.98. 2b. Maximum UFMIP - The unearned UFMIP can be found on line 4(h) of the refinance authorization. In our example, the amount is $2,605.40. New Estimated UFMIP – Multiply line 2a by 1%. In our example, the amount is $4,081.58. 3a. Maximum Base Mortgage – Line 3a will be calculated by utilizing the payoff amount as described in line 1a minus the lesser of the unearned UFMIP or the new UFMIP. In this case, our unearned UFMIP is less so we would subtract $2,605.40 from our payoff amount of $408,158.98 to get a new base loan amount of $405,553.58. 4a. UFMIP (if Financed) – Multiply line 3a by 1%. 4b. Total New Mortgage Amount – This is the maximum new mortgage that can be utilized in the FHA streamline. Notes:




Escrow # Xxx Faxed to: 555-555-1212 (FHA)

PAYOFF CALCULATION


Mortgage Insurance Premium 387.21Total Amount Required to Release Lien (As of March 30, 2012 $408,546.19

Payoff Statement Via Facsimile Fee 5.00Total Amount Due $408,551.19

AMENDED DEMAND STATEMENTS ARE SENT AUTOMATICALLY IF THE TOTAL AMOUNT DUE INCREASES BEFORE MARCH 30, 2012

PAYOFF INSTRUCTIONS

Payoff funds must be made payable to Bank of America, N.A. and will be accepted by WIRE or CERTIFIED FUNDS ONLY. They MUST reference the YOUR BANK loan number, property address and borrower’s name in the OBI (Originator Beneficiary Information) field of the wire transfer or on the face of the check and must be sent per the instructions below. Failure to do so may cause delays resulting in additional interest due or the return of the funds to the remitter. Funds received after 4:00 p.m. Central Time may be posted the following business day.







STATEMENT VOID AFTER March 30, 2012




FHA CONNECTION




Pricing LTV: $96.50


360 1.000% TBD


New Case Old Case

Borrower Name:

Address:

Lender ID: 2475100005 13065
















CMS Example #3 – Financing 30 Days Interest (with a twist) HUD allows for borrowers to finance up to 60 days of interest into the new FHA streamline provided it is itemized on the payoff demand. In this example, our payoff demand shows the borrower is due for their March 1st payment (Interest from 2/01/2012 – 4/30/2012). The catch here is that we will be closing in March and since we pay mortgage interest in arrears, we cannot include the interest from 4/1/2012 – 4/30/2012. To complete our FHA streamline loan amount worksheet, we will do the following: February 2012 Closing: 1a. Total Loan Amount of Current FHA Loan – This can be found on the existing note or the credit report. 2a. Unpaid Principal Balance – We may include 30 days interest for the current month but may not include late charges, escrow shortages, delinquent interest and processing type fees. For this example, we will include the unpaid principal balance of $428,609.68 + 60 days interest ($5,905.42/3 x 2) $3,936.95 for a total of $432,546.63. 2b. Maximum UFMIP - The unearned UFMIP can be found on line 4(h) of the refinance authorization. In our example, the amount is $2,605.40. New Estimated UFMIP – Multiply line 2a by 1%. In our example, the amount is $4,323.46. 3a. Maximum Base Mortgage – Line 3a will be calculated by utilizing the payoff amount as described in line 1a minus the lesser of the unearned UFMIP or the new UFMIP. In this case, our unearned UFMIP is less so we would subtract $2,605.40 from our payoff amount of $432,546.63 to get a new base loan amount of $429,941.23. 4a. UFMIP (if Financed) – Multiply line 3a by 1%. 4b. Total New Mortgage Amount – This is the maximum new mortgage that can be utilized in the FHA streamline. Notes:


It is important to remember that if the borrower in this example was to make their 3/1 payment prior to funding, the payoff amount would change and you would need to recalculate the loan amount based on 30 days of interest only.



Faxed to: 555-555-1212 (FHA)

PAYOFF CALCULATION


Uncollected Late Charges 135.84 Mortgage Insurance Premium 390.14

Total Amount Required to Release Lien (As of April 2, 2012 $435,041.08 Payoff Statement Via Facsimile Fee 5.00

Total Amount Due $435,046.08AMENDED DEMAND STATEMENTS ARE SENT AUTOMATICALLY IF THE TOTAL AMOUNT DUE INCREASES BEFORE MARCH 30, 2012

PAYOFF INSTRUCTIONS

Payoff funds must be made payable to Bank of America, N.A. and will be accepted by WIRE or CERTIFIED FUNDS ONLY. They MUST reference the YOUR BANK loan number, property address and borrower’s name in the OBI (Originator Beneficiary Information) field of the wire transfer or on the face of the check and must be sent per the instructions below. Failure to do so may cause delays resulting in additional interest due or the return of the funds to the remitter. Funds received after 4:00 p.m. Central Time may be posted the following business day.







STATEMENT VOID AFTER April 2, 2012




FHA CONNECTION




Pricing LTV: $96.50


360 1.000% TBD


New Case Old Case

Borrower Name:

Address:

Lender ID: 2475100005 13065
















DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

WASHINGTON, DC 20410-8000

ASSISTANT SECRETARY FOR HOUSING-

FEDERAL HOUSING COMMISSIONER

1

Date: March 6, 2012

To: All Approved Mortgagees

Mortgagee Letter 12-4

Subject Single Family Mortgage Insurance: Annual and Up-Front Mortgage

Insurance Premium – Changes

Purpose This Mortgagee Letter (ML) announces changes to the FHA Single

Family Annual Mortgage Insurance Premium (Annual MIP) and Up-

Front Mortgage Insurance Premium (UFMIP). Changes are applicable

to all Single Family (SF) Forward Mortgage programs except those

noted in the section below titled, “Exceptions to Announced Premium

Changes”. Current Annual MIP and UFMIP remain unchanged for those

excepted programs and products at this time.

Effective Date These changes are effective for FHA case numbers assigned on or

after April 9, 2012, unless otherwise specified below.

Mortgagees must continue to comply with the requirements of

ML 2011-10 concerning requests for, and cancellation of, FHA case

numbers. Specifically, mortgagees must:

request case numbers only when they have an active loan application

for the subject borrower and property; and

certify at the time of requesting a case number that they have an

active loan application for the subject borrower and property; and

provide the subject borrower’s name and social security number for

all new construction (proposed construction and existing

construction less than one year old).

Continued on next page

2

Mortgagee Letter 12-4, Continued

Affected Topics Below is a list of the blocks in the subject handbook that are affected.

HUD 4155.2 Lender’s Guide to Single Family Mortgage Insurance

Process

7.3.e, Reference Chart: UFMIP and Annual MIP for Mortgages with

Terms More Than 15 Years

7.3.f, Annual Premiums for Mortgages with Terms More Than 15

Years

7.3.g, Reference Chart: UFMIP and Annual Premiums for Mortgages

with Terms Less Than 15 Years

Increase to

Annual

Mortgage

Insurance

Premium

On December 23, 2011, the President signed into law the Temporary

Payroll Tax Cut Continuation Act of 2011 (Public Law 112-78), which

requires FHA to increase the Annual MIP it collects by 10 basis points

(bps). This change is effective for case numbers assigned on or after

April 9, 2012.

The table below shows the new effective annual premium rates by

amortization term, base loan amount and LTV ratio. It also shows when

the new Annual MIP takes effect, based on FHA Case Number

assignment date.

Term > 15 Years

Base Loan Amount LTV Effective Annual MIP

Any Amount ≤ 95.00% April 9, 2012 120 bps

Any Amount > 95.00% April 9, 2012 125 bps

Term ≤ 15 Years with LTV above 78%

Any Amount ≤ 90.00% April 9, 2012 35 bps

Any Amount > 90.00% April 9, 2012 60 bps

Note: SF forward mortgages with amortization terms of 15 years or less,

and a loan-to-value (LTV) ratio of 78 percent or less, remain exempt

from the Annual MIP (see Mortgagee Letter 2011-35).


3


Increase to

Annual

Mortgage

Insurance

Premium on

Mortgages with

a High

Outstanding

Base Loan

Amount

FHA is also exercising its pre-existing statutory authority to add an

additional 25 bps to mortgages with base loan amounts exceeding

$625,500. This change is effective for case numbers assigned on or

after June 11, 2012.

The table below shows the new effective annual premium rates by

amortization term, base loan amount and LTV ratio. It also shows

when the new Annual MIP takes effect, based on FHA Case Number

assignment date.

Term > 15 Years

Base Loan Amount LTV Effective Annual MIP

≤ $625,500 ≤ 95.00% June 11, 2012 120 bps

≤ $625,500 > 95.00% June 11, 2012 125 bps

Above $625,500 ≤ 95.00% June 11, 2012 145 bps

Above $625,500 > 95.00% June 11, 2012 150 bps

Term ≤ 15 Years with LTV above 78%

≤ $625,500 ≤ 95.00% June 11, 2012 35 bps

≤ $625,500 > 95.00% June 11, 2012 60 bps

Above $625,500 ≤ 90.00% June 11, 2012 60 bps

Above $625,500 > 90.00% June 11, 2012 85 bps

Note: SF forward mortgages with amortization terms of 15 years or

less, and a loan-to-value (LTV) ratio of 78 percent or less, remain

exempt from the Annual MIP (see Mortgagee Letter 2011-35).

Decrease to

Annual

Mortgage

Insurance

Premium on

Certain

Streamline

Refinance

Transactions

For all SF Forward Streamline Refinance transactions that are

refinancing FHA loans endorsed on or before May 31, 2009, the

Annual MIP will be 55 bps, regardless of the base loan amount. The

endorsement date is on the Case Query screen in FHA Connection.

This change is effective for case numbers assigned on or after

June 11, 2012.


4


Increase to

Up-Front

Mortgage

Insurance

Premium

The UFMIP for affected SF forward mortgages will be increased from

1 percent to 1.75 percent of the base loan amount. This increase

applies regardless of the amortization term or LTV ratio. FHA will

continue to permit financing of this charge into the mortgage and will

continue to calculate actual premium charges against the base loan

amount before adding any financed UFMIP. This change is effective

for case numbers assigned on or after April 9, 2012.

Decrease to

Up-Front

Mortgage

Insurance

Premium on

Certain

Streamline

Refinance

Transactions

For all SF Forward Streamline Refinance transactions that are

refinancing existing FHA loans that were endorsed on or before

May 31, 2009, the UFMIP will decrease from 1 percent to 0.01

percent of the base loan amount. The endorsement date is on the Case

Query screen in FHA Connection. This change is effective for case

numbers assigned on or after June 11, 2012.

Exceptions to

Announced

Premium

Changes

The changes specified in this ML apply to all mortgages insured under

FHA’s Single Family Mortgage Insurance Programs except:

Title I

Home Equity Conversion Mortgages (HECM)

Section 247 (Hawaiian Homelands)

Section 248 (Indian Reservations)

Section 223(e) (Declining Neighborhoods)


5


Please address any questions about the topics in this Mortgagee Letter

to the FHA Resource Center at 1-800-CALLFHA (1-800-225-5342). Persons with hearing or speech impairments may reach this number via TTY

by calling the Federal Information Relay Service at 1-800-877-3339.

Signature

__________________________________

Carol J. Galante

Acting Assistant Secretary for Housing – Federal Housing Commissioner

fha streamline refinance guide - carrington wholesale … · cms fha streamline refinance . i....

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