Date: August 11, 2022

REMN is pleased to announce the availability of Temporary Buydowns on FNMA, FHLMC, FHA, and VA products. This feature is available for new applications and existing pipeline transactions on or after August 11th, 2022.

*NOTE: Pipeline transactions will require an applicable CoC if a Buydown option is applied

Temporary Buydowns enable a portion of the borrower’s monthly Principal and Interest payment to be subsidized (via seller credit) and decreases their monthly payment for the first 1-2 years (depending on the buydown selected).

The temporarily decreased payment allows borrowers to free up cash-flow for initial moving expenditures, such as purchasing furniture or appliances, landscaping, home improvements, etc.

A Temporary Buydown Calculator is available and can be downloaded by clicking here: REMN Temporary Buydown Calculator.

Buydown programs available are: 2/1, 1/1, and 1/0:

  • 2/1: Borrower payments for first year based on Note Rate minus 2%; Payments for second year based on Note Rate minus 1%; all other payments fully-amortized at Note Rate.
  • 1/1: Borrower payments for first year based on Note Rate minus 1%; Payments for second year based on Note Rate minus 1%; all other payments fully-amortized at Note Rate.
  • 1/0: Borrower payments for first year based on Note Rate minus 1%; all other payments fully-amortized at Note Rate.

Temporary Buydown Example:

A 2-1 Buydown will decrease payments for a total of 2 years:

  • The borrower’s payment for the first year (first 12 months) will be calculated with an interest rate 2% lower than the Note Rate
  • The borrower’s payment for the second year (months 13-24) will be calculated with an interest rate 1% lower than the Note Rate
  • The third year of payments will be fully amortized and shall remain so for the remainder of the loan duration
  • Amortized payments are not affected; The total difference between the borrower’s decreased payment and the fully amortized payment for years 1 and/or 2 (*depending on Buydown selected) will be subsidized by a seller credit for that specific dollar amount.
  • The seller-paid subsidy for the Temporary Buydown is held in an escrow account. A portion of this subsidy is applied to each monthly payment during the buydown period.
  • The borrower’s decreased payment + monthly subsidy = the amount of the fully amortized payment

Eligibility Notes:

  • Borrowers are qualified at the Note Rate (never the bought-down rate)
  • REMN will accept seller-funded Temporary Buydowns on purchases ONLY
  • Buydowns are eligible on FNMA, FHLMC, FHA or VA loan products (fixed rate only)
  • 1-4 Unit Primary Residence & 1 unit Second Homes are eligible
  • Interested party contributions limits apply per program requirements
  • Buydown funds will be deposited in an escrow account; the Servicer will disburse funds from the escrow account every month to make a complete mortgage payment

The following features/programs are ineligible:

  • Lender, Borrower, or Realtor paid buydowns
  • Refinance transactions
  • Manufactured homes
  • Investment properties
  • Multiunit second homes
  • USDA, ARM, Renovation, Jumbo, or Non-QM Products

Broker Required Action in the HUB:

On the Short Application screen, go to the Mortgage Type section and select the applicable buydown type from the “Documentation Type” drop-down menu (1/0, 1/1, or 2/1, respectively)

Documentation Requirements

Loan Estimate – The LE will reflect the following:

  1. Projected Payments: The P&I will show the reduced monthly payment based on the Buydown features
  2. Adjustable Interest Rate (AIR) Table Section: The AIR table will reflect rate change information based on the Buydown features

Closing Disclosure – The CD will reflect the following:

  1. Projected Payments: The P&I will show the reduced monthly payment based on the Buydown features
  2. Loan Costs: Section A will reflect the cost of the buydown and applies this amount to seller-paid costs at closing
  3. Adjustable Interest Rate (AIR) Table Section: The AIR table will reflect rate change information based on the Buydown features

Buydown Agreement:

Brokered Loans

  • REMN-prepared initial disclosures: A preliminary Buydown Agreement will be provided with the disclosures. This must be fully executed by the borrower.
  • Broker-Prepared initial disclosures: A preliminary Buydown Agreement will be provided with the REMN redisclosure package. This must be fully executed by the borrower.
  • Final Buydown Agreement: Will be provided with closing documents. The final agreement must be fully executed by the Borrower, Seller, and Lender.

Emerging Bankers

  • Emerging Bankers must provide an initial Buydown Agreement fully executed by the Borrower.
  • Emerging Bankers who prepare their own closing documents must provide a copy of the Buydown Agreement that is fully executed by the Borrower, Seller, and Lender.

A PDF fillable version of the Buydown Agreement may be accessed here: Buydown Agreement

Updated guidelines will be posted shortly on the REMN website.

**Please contact your Account Executive with any questions**