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PRODUCT OVERVIEW: FHA

6.23.2017

CMG FINANCIAL

A Division of CMG Mortgage, Inc. NMLS #1820

© 2017 CMG Financial, All Rights Reserved. CMG Financial is a registered trade name of CMG Mortgage, Inc.,

NMLS# 1820 in most, but not all states. CMG Mortgage Inc. is an equal opportunity lender, licensed by the Department

of Business Oversight under the California Residential Mortgage Lending Act No. 4150025. Offer of credit is subject to

credit approval. For more information on our company, please visit www.cmgfi.com. To verify our complete list of state

licenses, please visit www.cmgfi.com/corporate/ licensing and www.nmlsconsumeraccess.org. Not intended to serve

as a business solicitation in Massachusetts. For Wholesale and Mortgage Professionals only.

3160 Crow Canyon Road, Suite 400, San Ramon, CA. 94583 | 925.983.3000 | NMLS #1820 | www.cmgfi.com

http://www.cmgfi.com

© 2017 CMG Financial, All Rights Reserved. CMG Financial is a registered trade name of CMG Mortgage, Inc., NMLS# 1820 in most , but not all states. CMG Mortgage Inc. is an equal opportunity lender, licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act No. 4150025. Offer of credit is subject to credit approval. For more information on our comp any, please visit www.cmgfi.com. To verify our complete list of state licenses, please visit www.cmgfi.com/corporate/ licensing and

www.nmlsconsumeraccess.org. For Wholesale and Mortgage Professionals only.

Program Overview

• Eligible Terms – Fixed 15, 20, 25 & 30; ARM 5/1

• Eligible Transactions – Purchase, Rate & Term Refinance, Cash out Refinance, Simple Refinance & Streamline Refinance

• Loan Amount Limits – No minimum loan amount

• Maximum loan amount $1,000,000

• Maximum loan amount vary by county and determined by HUD

• Occupancy: Purchase, Rate/Term & Cash Out Owner occupied, primary residence & HUD approved secondary residences only. Simple refinances owner occupied. Streamline refinances owner occupied and non owner occupied

• Seller Contribution: Max 6%

• Property Types: 1-4 Units, PUD, Townhomes, Modular, Manufactured, HUD approved condominiums, Row homes and Leaseholds.

• Qualifying Ratios: AUS Approved max DTI is per AUS

• Manual underwrites per FHA requirements

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www.nmlsconsumeraccess.org. For Wholesale and Mortgage Professionals only.3

FHA Loan Matrix



600-619 & Credit Depth

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HUD Compensating Factors

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Collateral

• Property Flips: 90 day rule

• Second appraisal required if value exceeds previous sales price by 100% or more within 180 day period

• Broker orders the second appraisal and the broker, realtor or seller is permitted to pay

• Newly executed contact of sale can be taken >90 days from the seller’s closing date

• Condos: HUD Approved condos only

• Property Condition: All repairs affecting safety, livability must be completed prior to closing

• Properties Listed for Sale:

• R/T Refinance – Off the market 1 day prior to application

• Cash Out Refinance – Off the market 6 months prior to application

• Rate Term and Simple Refinances:

• They must be seasoned for 12 months from date of purchase to use current appraised value or must go off of original sales price.

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Purchase

• First time homebuyers

• HUD REO

• HUD REO $100 Down

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HUD REO Properties

• 15 & 30 year fixed only

• Owner Occupied transactions only

• HUD REOS –

• Standard 203(b) purchase

• $100 Down

• HUD Repo with Repair Escrow



HUD REO’s with $100 Down

• Availability is dependent on the subject property state and HOC determines eligibility.

• HUD Home Sales incentives: http://www.Hudhomestore.com

• The executed sales contract must indicate $100 down on line 4 in addition to allowing FHA insured financing. All terms stated within the sales contract MUST be followed, an executed addendum is required if any changes have been agreed upon, and the mandatory 3.5% minimum investment requirement does not apply in this situation.

• The $100 down sales incentive permits a borrower to purchase a HUD REO property with FHA-insured financing with a minimum down payment of $100. The UPMIP may be financed. For more details click on this link and refer to page 96: http://docs.cmgfi.com/guidelines/CMG-WS-4000.1-FHA-Guidelines.pdf

• Mortgagees must calculate the maximum mortgage amount by subtracting $100 from the sum of the Adjusted Value plus 110 percent of the estimated cost of repairs, not to exceed $11,000.

http://www.hudhomestore.com/

http://docs.cmgfi.com/guidelines/CMG-WS-4000.1-FHA-Guidelines.pdf



HUD REO’s with Repair Escrow

• On a HUD Real Estate Owned (REO) 203b property

• The HUD REO Property does not meet HUD’s MPR in its as-is condition, but if repairs of no more than $10,000 are completed, the HUD REO property would meet HUD’s MPR. Max 30 day holdback period.

• Mortgagees must add to the amount resulting from that calculation the amount of an escrow account for the completion of repairs after closing. The maximum escrow amount must be based on the sum of the repairs required to meet the intent of HUD’s MPR, plus a 10 percent contingency. The total escrow amount, including the 10 percent contingency, must not exceed $11,000.

• HUD Repo with Repair Escrow combined with $100 Down Sales Incentive: Mortgagees must calculate the maximum mortgage amount by subtracting $100 from the sum of the Adjusted Value plus 110 percent of the estimated cost of repairs, not to exceed $11,000.

• Additional requirements in CMG’s - http://docs.cmgfi.com/guidelines/CMG-Escrow-Holdback-Guideline-Addendum.pdf

http://docs.cmgfi.com/guidelines/CMG-Escrow-Holdback-Guideline-Addendum.pdf



Refinance Transactions

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Refinance Transactions

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Income

• We no longer require W-2 transcripts on salaried borrowers

• Bonus/Overtime/Commission: Align with FHA if received less than two years/VOE required

• Part Time Income: 2 years on the job

• Job Gap (Back to work): Must be back to work for 6 months

• Case number can be ordered once back to work for 6 months

• Self Employed:

• 25% ownership

• 2 years personal and business tax returns required

• 1040 tax transcripts (personal & business)

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Income (Con’t)

• Projected Income: Loans involving a new job for the borrower beginning after closing require the below

• Purchase 1 unit primary

• 640 credit score

• Max DTI 50%

• Employment offer must be non contingent (signed accepted offer required)

• Cannot work for family business

• Reserves include 2 month PITI plus all other liabilities

• Job must begin 60 days post closing

• Post closing paystub

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Assets

• Identify borrower’s name and account number; Include statements covering 60 days/quarterly with ending balance; VOD’s not accepted

• Earnest money deposit must be verified if greater than 1% of the sales price or excessive based on the borrower’s history of accumulated savings

• Source large deposits if greater than 1% of the value

• Retirement accounts can use 60% of the value – the borrow must demonstrate eligibility to withdraw funds

• CMG aligns with FHA requirements in regards to sale of personal assets

• Cash on hand and custodial accounts are not acceptable source of funds

• Gifts must be provided by family member or a close friend with a clearly defined and documented interested in the borrower (cousins not considered family by HUD)

• Gift letter, donor’s bank statement and proof of transfer of funds

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How to Enter Gifts in DU

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How to Enter Gifts in LP

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Miscellaneous

• Max ratios 40/50 on manual underwrite with 2 compensating factors

• VOR required with limited trade lines

• Minimum 1 credit scores for each borrower with AUS approval

• CMG does not accept loans with a Mortgage Credit Rejects (MCR)

• On borrower paid FHA Streamlines, the borrower must pay the origination out of pocket at closing

• All deferred student loans must use 1% of the balance to determine the monthly payment

• Rate Term and Simple Refinances:

• They must be seasoned for 12 months from date of purchase to use current appraised value or must go off of original sales price.

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Miscellaneous

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• HUD permits 2 FHA loans only if the new property is greater than 100 miles in distance only if borrower is relocating for employment

• CMG aligns with HUD requirements for departing residence: • If Rental Income is being derived from the Property being vacated by the Borrower, the Borrower must be

relocating to an area more than 100 miles from the Borrower’s current Principal Residence. The Lender must obtain a lease agreement of at least one year’s duration after the Mortgage is closed and evidence of the payment of the security deposit or first month’s rent.

• In addition, new requirements as outlined in Rental Income: Rental Income from Other Real Estate Holdings must be met. This includes the requirement that where the Borrower does not have a history of Rental Income for the Property since previous tax filing, including Property being vacated by the Borrower, the Lender must obtain an appraisal evidencing market rent and that the Borrower has at least 25 percent equity in the Property. The appraisal is not required to be completed by an FHA Roster Appraiser.



Derogatory Credit Grid

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Resources

• Self Employed Form: https://mortgageinsurance.genworth.com/pdfs/Training/9113811.SAM.form.0116%20v2%20for%20B2B.pdf

• Case Number Request Form: http://docs.cmgfi.com/wholesale/fha-case-number.pdf

• CMG Guidelines: http://docs.cmgfi.com/guidelines/CMG-WS-4000.1-FHA-Guidelines.pdf

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https://mortgageinsurance.genworth.com/pdfs/Training/9113811.SAM.form.0116 v2 for B2B.pdf

http://docs.cmgfi.com/wholesale/fha-case-number.pdf

http://docs.cmgfi.com/guidelines/CMG-WS-4000.1-FHA-Guidelines.pdf


www.nmlsconsumeraccess.org. For Wholesale and Mortgage Professionals only.22

A Division of CMG Mortgage, Inc. NMLS #1820

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