Announcement Number: 2011

We hope that all of our broker partners and your families are safe following Hurricane Irene.
We understand the aftermath is a very stressful time and we want to help out as much as we can.

Effective for all new FHA loans we receive on or after August 5, 2011, the maximum allowable debt-to-income ratio is limited to 45.0%.

If you have any questions, please contact your AE.

Effective for all government loans (FHA/VA/USDA) we receive on or after July 18, 2011, the following loan size price adjustments will apply:

Unless otherwise specified, the incentives paid for scores and loan amounts can be combined, both with each other and with any current price special (such as a temporary 0.25 incentive paid for purchases).

If you have any questions, please contact your AE.

Effective for all government loans (FHA/VA/USDA) we receive on or after 12:00pm EST June 15, 2011, the following price adjustments will apply:

Unless otherwise specified, the incentives paid for 740+ scores and $300K-$417K loan amounts can be combined, both with each other and with any current price special (such as a temporary 0.25 incentive paid for purchases).

If you have any questions, please contact your AE.

Effective for all loans we receive on or after June 15, 2011, we will require the broker to order IRS transcripts through REALEC (www.realec.com).  We have partnered with LSI Verification Bureau and Settlement One to provide two vendor choices for obtaining the actual transcript.

The benefits of this new procedure are:

• REMN will continue to pay for the transcripts; there is no cost to the broker.
• The broker controls when the transcripts are ordered (prior to file submission, or after the approval is issued).
• The broker will know quickly if the IRS rejects the request and can correct the issue and re-order.
• The broker will get real time status emails directly from REALEC.

All of our approvals will continue to include a condition for transcripts; however, now the broker is responsible for obtaining them.  After placing the order, the results are sent to us directly from REALEC.

For all government loans (FHA/VA/USDA), we will require the two most recent years and for Conventional loans we will require the number of years specified by the DU findings.

Your Account Executive will be contacting you in the coming days to supply you with you login credentials for the REALEC Site and to answer any questions you may have.  Here are the instructions for using the REALEC and LSI sites.

If you have any questions, please contact your AE.

This announcement describes significant changes to the following:

(1) Elimination of overlays for 620-639 scores on FHA loans

(2) Acceptance of FHA loans with scores between 600-619

(3) New FHA price adjusters for loans with scores below 640

(4) Elimination of FHA “thin credit” guidelines

(5) Elimination of FHA gift donor relationship documentation requirement

(6) Acceptance of FHA property transfers less than 91 days

(7) Acceptance of gifts for purchase flipped properties for FHA loans

(8) Increase of maximum LTV for conventional condos

(9) Acceptance of conventional 2-4 unit NOO properties

(10) Increase of conventional max LTV on NOO and second homes

ELIMINATION OF UNDERWRITING OVERLAYS FOR FHA LOANS WITH 620-639 SCORES

THIS GUIDANCE HAS BEEN REPLACED BY OVERLAYS DETAILED IN ANNOUNCEMENT 12-02

Effective immediately, the existing underwriting overlays described in Announcement 11-04 are hereby eliminated for files with DU Approve/Eligible findings.  Keep in mind that although there are no longer REMN overlays, we will still analyze the borrower’s credit history when underwriting the loan; while Approve/Eligible findings allow the income ratios to exceed 31/43 with no compensating factors, they do not guarantee a credit approval by the underwriter.  This is true for all FHA loans, regardless of score.

No manual underwriting is permitted below 640.  Not applicable to high-balance loans.  This guidance affects loans already in the REMN pipeline.

NEW UNDERWRITING OVERLAYS FOR FHA LOANS WITH 600-619 SCORES

Effective immediately, REMN will accept new submissions of FHA loans with scores between 600-619 with the following restrictions:

(1) DU Approve/Eligible only (no manual underwriting).

(2) Cannot exceed standard county statutory limit (no High-Balance loans).

(3) Housing history must be 0x30 last 12 months.

(4) Maximum LTV as follows:

(5) Documented housing history is defined as canceled rent checks, money orders, or institutional VOR (or mortgage rated on credit report or canceled mortgage checks).

(6) Two months PITI reserves.

(7) No major derogatory credit in the last 24 months.  “Major derogatories” are defined as judgments, tax liens, non-medical collections, or any account 60+ days delinquent.

(8) Payment shock not to exceed 50%.

(9) Gifts cannot be used for down payment.

(10) Max ratios 31/43

NEW PRICE ADJUSTERS FOR FHA LOANS WITH SCORES BELOW 640

Effective for all new submissions beginning May 6, 2011, the following adjusters will apply:

ELIMINATION OF FHA THIN CREDIT GUIDELINES

Effective immediately, the existing “thin credit” overlays described in Announcement 10-04 are hereby eliminated for files with DU Approve/Eligible findings.  Manually-underwritten files still must meet the existing guidelines.  This guidance affects loans already in the REMN pipeline.

ELIMINATION OF FHA GIFT DONOR RELATIONSHIP DOCUMENTATION

Effective immediately, the existing requirement to document the relationship between a borrower and a donor that is a non-immediate family member, as described in Announcement 09-26, is hereby eliminated.  This guidance affects loans already in the REMN pipeline.

FHA PROPERTY FLIPS WITH TRANSFER OF OWNERSHIP IN LESS THAN 91 DAYS

Effective immediately, REMN will accept new submissions of FHA loans with a property transfer occurring in less than 91 days with the following restrictions:

(1) The transfer time is measured from the date the seller acquired title to the property and the date the Contract was executed.

(2) “Simultaneous” closings and/or “Contract Assignments” are prohibited.  The seller on the Contract of Sale must be the owner of record prior to settlement.

(3) Arms-length transactions only.  There can be no relationship between the buyer and seller outside the transaction.

(4) The borrower’s occupancy of the subject property must be deemed reasonable, at the sole discretion of REMN.  There will be substantially less latitude in this area than there would be with a standard purchase.

(5) Multiple transfers are prohibited.

(6) The amount of repairs must be sufficient to justify the increase in value.  For example, new paint and carpet would not justify a large increase in sales price.  All repairs must be documented with receipts and substantiated by the appraiser.

(7) Per FHA guidelines, a full home inspection is required.  Any repairs not listed by the appraiser, but affecting health or safety, must be completed and a final inspection from the appraiser must be obtained.

(8) Two full FHA appraisals must be obtained, both firmly supporting value.  If the values differ, the lower value must be used.

(9) All FHA guidelines, as described in the Waiver issued by the FHA, must be adhered to for this type of transaction. [wp_lightbox_prettyPhoto_anchor_text_pdf link=”http://ww3.remnwholesale.com/documents/FlipWaiver.pdf” width=”800″ height=”1100″ title=”Waiver” text=”Click Here to View the Waiver”]
(10) Minimum score 640.

(11) 2-4 Unit property and rowhouses are ineligible.

(12) All other REMN guidelines pertaining to property transfers occurring in less than one year still apply

USE OF GIFTS TO PURCHASE FLIPPED PROPERTIES USING AN FHA LOAN

Effective immediately, the existing REMN overlay prohibiting the use of gifts to purchase a property being transferred in less than one year is eliminated.  However, if a gift is being utilized, the donor’s bank statement must be provided, evidencing that the gift funds have been seasoned for at least thirty days.  This is in addition to the standard FHA gift documentation requirements.

MAXIMUM LTV FOR CONVENTIONAL CONDOMINIUMS

Effective immediately, REMN has increased the maximum LTV from 80% to 95% LTV for standard conventional loans, in all states except Florida.  Please note, all loans over 80% LTV will require MI approval of the condominium.  MI approval will be sought after all other REMN underwriting conditions have been cleared.  These changes do not apply to high-balance loans.

ELIGIBILITY AND MAX LTV FOR CONVENTIONAL NOO AND SECOND HOMES

Effective immediately, our maximum LTVs and eligibility for standard conventional loans are as described below:

These changes do not apply to high-balance loans.

If you have any questions, please contact your AE.

Due to the legal delays associated with the new Reg Z Compensation Rules, REMN Wholesale is continuing operations under our existing rate sheet format and pricing structure in effect as of March 31, 2011. All new loans received by REMN Wholesale during the period in which a final ruling is pending will be subject to current rates and pre-4/1/11 pricing structure. Once this matter is finalized, we will implement our revised policies accordingly.

As many of you have likely heard by now, the Compensation Rules set to go into effect today are delayed while the US Court of Appeals (District of Columbia ) reviews the associated case. The Appeals Court is proceeding under its rules for an expedited process and briefs are due Monday by the Federal Reserve and Tuesday by the Associations (NAMB and NAIHP). It is expected that the Appeals Court will schedule a hearing and rule quickly. Please find this link with a copy of the order. http://www.namb.org/images/stay-of-rule.pdf

If you have any questions, please contact your AE.

REGULATION KEY POINTS:

• The loan originator’s compensation may not be tied to the interest rate and the compensation may not be increased by raising the borrower’s interest rate.
• Compensation may be based on an established percentage of the principal loan amount.
• The loan originator may receive compensation from either the borrower or the lender but not from both.  The loan originator will have the choice of borrower paid or lender paid compensation and this can be determined on a transaction-by-transaction basis.

EFFECTIVE DATE:

Applications received by REMN (lender) before April 1^st will be paid under current compensation format.  Applications received on or after April 1^st will be paid under new compensation rules.  Please utilize our litefile submission process (Announcement 09-23) to ensure that any loan locked in March will not be subject to the new policy.

COMPENSATION SUMMARY:

Borrower Paid Compensation:

• Compensation is negotiated directly between the borrower and the broker.
• The borrower may pay the broker in cash or by financing the amount into the loan.
• Any pricing adjustments will affect the borrower’s premium credit or discount points paid directly to REMN.  The premium credit given to the borrower can only be used to pay third party costs and no portion of the credit can be applied to the broker compensation.
• Under borrower paid compensation, the broker may give a credit to cover closing costs or to comply with any high cost restrictions.
• A principal of your company will be required to attest that the company has established LO compensation agreements with each of your loan officers in accordance with all applicable rules and regulations as they pertain to borrower paid compensation.
• An example of borrower paid compensation as it will appear on the daily price sheet is below:

Lender Paid Compensation:

• Compensation is paid to the broker by REMN.
• The broker will have the ability to select from a range of compensation percentages (BPS) between 100 bps and 350 bps.  Compensation percentages will impact broker pricing, therefore it is important that the broker chooses with both anticipated revenue and pricing taken into consideration. It is your responsibility to be able to justify your chosen fee structure and to identify the factors considered such as: overhead, region, service provided to consumers etc… We recommend that you seek counsel to ensure compliance.
• The compensation selection form must be completed on our website by 03/23/2011.  This can be accessed by choosing the “Broker Comp” option from the front page of our website.  NOTE: In the event that you do not complete this process, your compensation percentage will be assigned the default level of 250 bps.
• The selected amount will not be amended by our lock desk on individual lock requests, so you must also consider any high cost implications of your selection.  Lender Paid Compensation may not be reduced for any reason, and you may not credit any of your Lender Paid compensation to the borrower’s closing costs.
• A principal of your company will be required to attest that the company has established LO compensation agreements with each of your loan officers in accordance with all applicable rules and regulations.
• You will be able to update your chosen Compensation Percentages on a monthly basis. This will be based on a set schedule effective the 1^st day of each calendar month.  Your updated election must be received by REMN no later than the 25^th day of the month preceding the requested change (For example: if you want to change for June 1^st, you must submit a Compensation Selection update form no later than 5/25/11). NOTE: That if you request a change, the updated percentage will apply to applications received by REMN on the 1^st of the month the change is requested for, not for existing loans in the pipeline.
• An example of lender-paid compensation as it will appear on the daily price sheet is below:

BORROWER-PAID vs. LENDER-PAID COMPENSATION COMPARISON

Effective for all loans we receive on or after March 14, 2011, we will require final DO/DU findings to be assigned to REMN. In order to facilitate the opening and underwriting of your file, please make sure this is taken care of in advance.

If you have not already added REMN as a sponsor in your DO, please make sure that you do so at this time.

To add REMN as a sponsor, please go to: https://apps.efanniemae.com/OriginatorAdmin

For detailed instructions on how to add sponsors to your existing DO account, please go to:http://www.remnwholesale.com/documents/DOadditionalsponsership.pdf

If you have any questions, please contact your AE.

New guidelines for FHA loans with scores between 620-639

PURCHASE

90% LTV:

If no gift/grant, then no further restrictions

If gift/grant, then either 31/43 max OR 12 months canceled rent checks

96.5% LTV:

Choose any three of the four following restrictions:

(1)    12 months canceled rent checks 0x30

(2)    Down payment all borrower funds (no gift, no grant)

(3)    No “thin credit”

(4)    31/43 max

No gifts of equity or manual underwriting at any LTV

REFINANCE

Rate and Term:  90% LTV

Cash-Out:  75% LTV

0x30 last 24 months

if less than 24 month history, must have at least 12 month history (no paying “ahead” to meet guideline)

36/43 ratios OR 6 months PITI reserves required

New FHA score adjusters

If you have any questions, please contact your AE.