SONYMA Conventional PlusCorrespondent Program IntroductionOctober 25, 2012

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Presentation OutlineI. Sales FocusII. Conventional Plus HighlightsIII. Underwriting GuidelinesIV. Mortgage InsuranceV. DPAL DetailsVI. MCC EligibilityVII. Example ScenariosVIII. Secondary MarketingIX. Operational & Delivery ConsiderationsX. Questions

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Sales Focus• Conventional Plus is a 30 year fixed rate mortgage

– Originated and funded by an approved correspondent• Underwritten to FNMA’s MyCommunity Mortgage guidelines

– Purchased by M&T Bank and sold to Fannie Mae• M&T sets daily loan pricing

– Serviced by M&T • As a result of SONYMA’s housing finance agency

status, the following borrower benefits include:– No loan level price adjustments– Lower mortgage insurance coverage requirements– Ability to finance closing costs, prepaids and mortgage

insurance for both Purchases and Refinances– Mortgage credit certificate availability for certain borrowers

With this product, we are selling payment, not rate

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Conventional Plus• 1-4 family primary

including co-ops are eligible

• Standard GSE loan limits

• All loans must be underwritten through DU – PIW’s are not eligible

• Non-traditional credit is NOT permitted

• No other properties may be owned simultaneously

• At least one borrower must complete pre-purchase counseling

• For 1 unit, maximum 97% LTV, 105% CLTV, 620 score

• For 2-4 unit, maximum 95% LTV, 105% CLTV, 680 score

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Conventional Plus - Underwriting• 1 unit DP – no minimum

borrower’s own funds– Remainder may be

funded by DPAL, soft second, unsecured loan from an approved source, or gift from family member

• 2-4 unit DP – 3% own funds required

• Cash-on-hand eligible except for reserves

• Reserves per DU

• Maximum 40 / 45% ratios no matter DU response

• Vacancy factors of 75% (2 unit) and 65% (3-4 unit) for rental income

• Boarder income is allowed

• MCC tax credit is NOT factored into income

• Standard 3% and 6% guidelines for concessions

Per FNMA guidelines

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Conventional Plus – Mortgage Insurance• Lower coverage requirements apply:

• The DPAL may be used to pay a one-time upfront mortgage insurance premium

• Primary mortgage insurance is required from either Genworth or SONYMA’s Mortgage Insurance Fund (MIF)

• Financed and monthly plans are eligible. The financed premium and adjusted LTV must not exceed the stated minimum for the program.

LTV Required Coverage, Factors

Standard Coverage, Factors

95.01% - 97% 18%, 65 bps 35%, 115 bps

90.01% - 95% 16%, 54 bps 30%, 67 bps

85.01% - 90% 12%, 39 bps 25%, 49 bps

80.01% - 85% 6%, 30 bps 12%, 32 bps

[Payment factors for 720 FICO]

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Conventional Plus – Project Reviews• All co-ops and condos must be

reviewed by M&T’s project review team if a project is not on M&T’s approved lists

• Co-ops must meet FNMA’s NYC Pilot guidelines

• Questionnaires and project documents must be submitted to projectreview@mtb.com

• A Correspondent’s co-op closing doc set must be approved by M&T

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Conventional Plus – SONYMA ‘isms• Borrowers are NOT required to be first-time homebuyers

– Restrictions do apply to MCC loans• Income Limits apply (see SONYMA Website)

– Separate limits apply for loans with MCCs• Low Interest Rate Program Purchase Price Limits do

NOT apply– Purchase price limits apply for loans with MCCs

• Income utilized is based on qualifying income, NOT household income– SONYMA’s standard household income calculation applies for

loans with MCCs• Pool insurance from MIF is NOT required

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Conventional Plus – Other• Community Solutions Option

– For teachers, law enforcement officers, firefighters and emergency response personnel

– 1-2 unit properties– Reserves may be gifted (1 month for 1-unit, 2 months for 2-unit)– Part-time/OT income of less than 2 years permitted

• Community HomeChoice– For handicapped borrowers– 1-2 unit properties– For 1-unit, no reserves required when DTI is less than or equal to

43%– Reserves may be gifted (1 month for 1-unit, 2 months for 2-unit)– Non-occupant co-borrowers allowed to maximum 33 / 38% ratios

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• Second mortgage that can be used for down payment, closing costs, prepaids or to pay MI

• Maximum assistance is three percent (3%) of the home purchase price (not the loan amount). – For refinances, the DPAL must not be greater than the amount of

the MI premium and cannot exceed 3% of the lower of the UPB or the appraised value.

• Both first and DPAL must be registered with M&T– One package is required for both first and DPAL – GFE is required (recording fee & mtg tax); a TIL is NOT required

• Loans are NOT registered through Lender Online nor is SONYMA approval required

• DPALs are serviced by M&T in SONYMA’s name

Down Payment Assistance Loan (DPAL)

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• MCCs allow eligible buyers to convert 20% of their annual mortgage interest into a tax credit that can be deducted dollar for dollar from their Federal tax liability. – The remaining 80% of the interest continues to qualify as an

itemized tax deduction for the life of the mortgage loan. • Eligibility:

– First-time homebuyers with a household income of 80% of AMI or less; OR

– US military veterans (including non FTHBs); OR– Active duty US military including National Guard and reservists

(must be FTHB unless purchasing in a Target Area); OR– FTHBs purchasing a home in communities impacted by 2011’s

severe flooding

Mortgage Credit Certificates (MCC)

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• The flood-impacted communities are: – Counties of Broome, Delaware, Greene, Schoharie, and

Tioga; and – Cities of Port Jervis and Middletown and Village of Goshen

(Orange County); and– Towns of Hurley, Olive, Shandaken, Shawangunk, Ulster

and Wawarsing (Ulster County).• Income and Purchase Price Limits apply• The tax credit is not factored into the underwriting• Lenders submit all required documents and the

required fee directly to SONYMA; SONYMA then issues the MCC directly to the homebuyer and Lender

• Lenders must file Form 8329 with IRS annually.

MCCs - continued

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Example Scenario - Purchase

(1) Credit Score of 680-719. Higher credit scores have lower rates.(2) Rates as of 10/12/12.(3) For MCC loans, this figure represents 80% of the total mortgage interest.(4) Based on a household of 2 persons.(5) From Federal tax tables.

  

Notes:

Monthly MI Upfront MI Monthly MI Upfront MILoan Details FHA (1) Conv Plus w/DPAL Conv Plus w/DPAL Conv Plus Conv PlusMaximum LTV 96.50% 97% 97% 97% 97%Sales Price $274,000 $274,000 $274,000 $274,000 $274,000Note Rate (3) 3.500% 4.625% 4.625% 3.875% 3.875%Base Mortgage Amount $264,410 $265,780 $265,780 $265,780 $265,780MI Premium (Upfront %) 1.75% 0% 2.70% (2) 0% 2.70% (2)MI Premium (Annual %) 1.25% 0.85% (2) 0% 0.85% (2) 0%Gross Mortgage Amount $269,037 $265,780 $265,780 $265,780 $265,780Total P&I $1,208 $1,366 $1,366 $1,250 $1,250Monthly MIP $275 $188 - $188 -Unsecured Loan Payment - - - - -Total Mortgage Payment $1,483 $1,554 $1,366 $1,438 $1,250

Monthly Savings (Compared to FHA) - ($71) $117 $45 $233Annual Savings (Compared to FHA) - ($852) $1,404 $540 $2,796

MCC CalculationEstimated First Year's Mortgage Interest $9,416 $12,292 $12,292 $10,299 $10,299Annual Borrower Income $77,900 $77,900 $77,900 $77,900 $77,900Deductions Mortgage Interest (4) $9,416 $9,834 $9,834 $8,239 $8,239 Annual Real Estate Taxes $6,758 $6,758 $6,758 $6,758 $6,758 Exemptions (5) $7,400 $7,400 $7,400 $7,400 $7,400Taxable Income $54,326 $53,908 $53,908 $55,503 $55,503

Tax Liability (6) $7,299 $7,239 $7,239 $7,479 $7,479 MCC Credit (20%) - $2,458 $2,458 $2,060 $2,060Modified Tax Liability $7,299 $4,781 $4,781 $5,419 $5,419

Annual Savings - $2,518 $2,518 $1,880 $1,880Monthly Savings - $210 $210 $157 $157

MONTHLY SAVINGS - $139 $327 $202 $390TOTAL ANNUAL SAVINGS - $1,666 $3,922 $2,420 $4,676

Assets RequiredRequired Down Payment $9,590 $8,220 $8,220 $8,220 $8,220Closing Costs/Prepaids (8% of Sales Price) $21,920 $21,920 $21,920 $21,920 $21,920Upfront MIP - - $7,176 - $7,176MCC Fee - $500 $500 $500 $500Required Cash to Close $31,510 $30,640 $37,816 $30,640 $37,816Allowed Seller Concessions $8,220 $8,220 $8,220 $8,220 $8,220DPAL Amount - $8,220 $8,220 - -Unsecured Loan from M&T - - - - -Net Cash Required $23,290 $14,200 $21,376 $22,420 $29,596CLTV 98.19% 100.00% 100.00% 97.00% 97.00%

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Example Scenario - Refinance

(1) Credit Score of 680-719. Higher credit scores have lower rates.(2) Rates as of 10/12/12.

Notes:

Monthly MI Upfront MI Monthly MI Upfront MILoan Details FNMA Conv Plus w/DPAL Conv Plus w/DPAL Conv Plus Conv PlusMaximum LTV 97% 97% 97% 97% 97%Appraised Value $274,000 $274,000 $274,000 $274,000 $274,000Unpaid Principal Balance (UPB) $243,860 $243,860 $243,860 $243,860 $243,860Financed Closing Costs (8% of Appraised Value) $21,920 $21,920 $21,920 $21,920 $21,920DPAL Cap (3% of UPB) - $7,316 $7,316 - -Note Rate (2) 3.875% 4.625% 4.625% 3.875% 3.875%Base Mortgage Amount $265,780 $258,464 $265,780 $265,780 $265,780MI Premium (Upfront %) 0.00% 0% 2.70% (1) 0% 2.70% (1)MI Premium (Annual %) 1.36% 0.85% (1) 0% 0.85% (1) 0%Total P&I $1,249 $1,331 $1,369 $1,249 $1,249Monthly MIP $301 $183 - $188 -Total Mortgage Payment $1,550 $1,514 $1,369 $1,437 $1,249

Monthly Savings (Compared to FNMA) - $36 $181 $113 $301Annual Savings (Compared to FNMA) - $431 $2,172 $1,356 $3,612

Assets RequiredUpfront MIP - - $7,176 - $7,176Required Cash to Close $0 $0 $7,176 $0 $7,176DPAL Amount - $7,316 $7,176 - -Net Cash Required $0 $0 $0 $0 $7,176CLTV 97.00% 97.00% 99.62% 97.00% 97.00%

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Process MapLender meets with borrower and takes

application

Eligible for MCC?

Lender registers loan in SONYMA’s Lender

Online

Lender registers Conventional Plus

and DPAL loans with M&T in MEME

YES

NO Lender processes loan, submits to DU,

and prepares the underwriting package

Lender submits loan to Genworth

Approved?

Approval certificate issued

Approved?

YES

Genworth forwards to SONYMA’s Mortgage

Insurance Fund

NOYES

NO Adverse Action Notice is issued by lender

Pre-closing underwriting review performed by M&T

Loan purchased by M&T

Collateral package forwarded to M&T

Conditions collected, loan scheduled and

closed by lender

Loan serviced by M&T

Comt Letter sent to Borrower by lender

MCC package sent to SONYMA by lender

Approval published on Lender Online

Post-closing pkg sent to SONYMA by lender

MCC sent by SONYMA to lender and borrower

“HFA Preferred” must be selected in the CommunityLending section of DU

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Secondary Marketing• Rates to be posted daily to MEME at

https://mortgageportal.mtb.com/– CPlus loans with DPAL priced with rate premium of ~0.625%

• Lender compensation:– Lender to earn 2 points– Additionally, lenders may charge up to $1,200 in ancillary fees

• MCC Fee (payable to SONYMA):– Loans amounts of $100,000 or less - $250– Loan amount greater than $100,000 - $500

• M&T Fees: – $350 Funding Fee, Flood Cert Fee of $8, Tax Service Fee of $75

• Document Review Fees for CEMAs or Co-ops may apply

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Secondary Marketing - continued• 60-day and 90-day rate locks will be available• Loans may be registered and float• Loans to be delivered on Best Efforts basis• Extensions may be granted, but charges may apply

depending on market conditions• Escrows required on all loans with LTVs in excess of

80%• Temporary buydowns are not permitted

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Operational & Delivery Considerations• Lenders must be approved correspondents of M&T Bank

– All lenders must sign a correspondent agreement with M&T– All lenders must also sign a tri-party agreement with M&T and

SONYMA• All Conventional Plus and DPAL loans must be registered

on M&T’s MEME website• All MCCs must be registered on Lender Online (LOL)

– M&T has no involvement with this transaction• DPAL and Conv Plus loans are NOT registered on LOL• All term sheets (3), the Operational Instructions (3

sections) and any required forms and exhibits will be posted on MEME as well as SONYMA’s website

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Operational & Delivery - continued• M&T performs a pre-closing underwriting review of the

credit package for all loans• The closed loan file must be delivered by the lock

expiration date; if not in fundable form a suspense notice will be issued

• Deficiencies must be cured and the loan cleared for funding by the later of the 5th business day from receipt of the Suspense Notice or the lock expiration date. Loans delivered or cleared after are subject to re-pricing at worst pricing (original or current).

• Non-collateral packages must be submitted via BlitzDocs at www.blitzdocs.net – first-time users must set up a password

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Important Exhibits on MEME• Exhibit 02-454 Conventional Plus Loan Submission

Checklist• Exhibit 03-016 Condominium Questionnaire• Exhibit 03-020 Co-operative Questionnaire• Exhibit 03-030 Visa Classifications• Exhibit 03-050 Approved Condominium List• Exhibit 03-051 Approved Co-operative List• Exhibit 02-204 FNMA MCM HomeChoice Worksheet• Exhibit 02-205 FNMA MCM HomeChoice Worksheet

Instructions

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M&T Loan Program Codes• SONYMA Conventional Plus

– 200• SONYMA Conventional Plus w/DPAL

– 201• SONYMA Conventional Plus w/DPAL & MCC

– 202• SONYMA Conventional Plus w/MCC

– 203• SONYMA Second Mortgage DPAL

– 878• Unique product codes do not apply for Community

Solutions or Community HomeChoice

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• Program Administration– James Ahrens; jahrens@mtb.com

• Sales Management– Jeff Mastro; jmastro@mtb.com

• Operations Management– Esther Farron; efarron@mtb.com

• Secondary Marketing (Daily Pricing & Extensions)– Mark Monile; mmonile@mtb.com

• Seller Administration (Correspondent Approvals)– Doug Crow; dcrow@mtb.com

• SONYMA – George Leocata; gleocata@nyshcr.org

Important Contacts

QUESTIONS ?