Underwriting Guidelines

GMG LLC Underwriting Guide

Compliance

ECOA/Truth In Lending Act (15 USC 1601)

1601: Congressional Findings and Declaration of Purpose (1/3/07)

1602: Definitions and rules of construction (1/3/07)

1603: Exempted Transactions (1/3/07)

1604: Disclosure guidelines (1/3/07)

1605: Determination of finance charge (1/3/07)

1606: Determination of annual percentage rate (1/3/07)

1607: Administrative enforcement (1/3/07)

1608: Views of other agencies (1/3/07)

1609: Repealed (1/3/07)

1610: Effect on other laws (1/3/07)

1611: Criminal liability for willful and knowing violation (1/3/07)

1612: Effect on Government Agencies (1/3/07)

1613: Annual reports to Congress by Board (1/3/07)

1614: Repealed (1/3/07)

1615: Prohibition on use of "Rule of 78s" in connection with mortgage refinancings and other consumer loans (1/3/07)

HEOPA/Section 32

ECOA/Truth In Lending Act (15 USC 1601) 2

1601: Congressional Findings and Declaration of Purpose (1/3/07) 2

1602: Definitions and rules of construction (1/3/07) 2

1603: Exempted Transactions (1/3/07) 2

1604: Disclosure guidelines (1/3/07) 2

1605: Determination of finance charge (1/3/07) 2

1606: Determination of annual percentage rate (1/3/07) 2

1607: Administrative enforcement (1/3/07) 2

1608: Views of other agencies (1/3/07) 2

1609: Repealed (1/3/07) 2

1610: Effect on other laws (1/3/07) 2

1611: Criminal liability for willful and knowing violation (1/3/07) 2

1612: Effect on Government Agencies (1/3/07) 2

1613: Annual reports to Congress by Board (1/3/07) 2

1614: Repealed (1/3/07) 2

1615: Prohibition on use of "Rule of 78s" in connection with mortgage refinancings and other consumer loans (1/3/07) 2

Consumer Price Index

HOEPA (Sec. 32) Fees Matrix

Section 32 High Cost Calculations

Yield on Treasury Securities

High Cost Tests/Matrix

FNMA 5% Test Matrix

FNMA Total Points & Fees

Tangible Net Benefit Matrix

Effect of MIP on State High Cost Tests

Effect of Discount Points on High Cost Tests

Impact of Non-Borrower Paid Mortgage Broker Compensation on High Cost Loan Tests

FNMA Conforming Loan Limits

Updates

7/23/2009 - Disputed Accounts on Credit Reports (Conventional)

6/9/2009 - Eligibility Matrix/Overlays

6/9/2009 - PMI - Private Mortgage Insurance

6/7/2009 - Required HVCC Borrower Forms

6/7/2009 - Appraisal Notification & Acknowledgement Form

6/7/2009 - Appraisal Report Delivery Disclosure

6/7/2009 - Declining Markets Eligibility

6/7/2009 - Areas Identified as Declining Markets

6/7/2009 - Appraisal Report Delivery & Borrower Acknowledgement

6/3/2009 - Wholesale Gov'y HVCC Compliance

5/1/2009 - HVCC Compliant Appraisal Order Process

4/9/2009 - Processing Fees 2

4/8/2009 - FHA Manual Underwrites No Longer Eligible

3/11/2009 - FHA/VA Streamline Require 620 Fico Minimum

2/6/2009 - Signing Off On 4506 Transcripts and MERS Results

12/19/2008 - All Locked Loans Must Have Property Address

Forms

Required HVCC Borrower Forms

Appraisal Notification & Acknowledgement Form

Appraisal Report Delivery & Borrower Acknowledgement

Subordination Agreement (template)

State Specific Forms

Verbal VOE

FNMA

Eligibility Matrix/Overlays

PMI - Private Mortgage Insurance

Announcements

Home Valuation Code of Conduct

Appraisal Update - 3/1/2009

Appraisal

Introduction

Property Inspection Waiver (PIW)

Exercise a PIW option

PIW Disclosure

Declining Markets Policy

Announcements

Home Valuation Code of Conduct 2

Appraisal Update - 3/1/2009 2

Appraisal

Introduction 2

Property Inspection Waiver (PIW) 2

Exercise a PIW option 2

PIW Disclosure 2

DU Refi Plus

Introduction 2

Eligibility Criteria 2

Ineligible programs for FU Refi Plus 2

Additional Restrictions 2

Pricing 2

Areas Identified as Declining Markets

DU Refi Plus

Introduction

Eligibility Criteria

Ineligible programs for FU Refi Plus

Additional Restrictions

Pricing

FHA (Section 184 Indian Housing)

Program Overview

Introduction

Program Overview

Key Program Policies/Requirements

Land Ownership in Indian Country

Roles and Processing Steps

Definitions

Eligible Activities & Properties

Overview

Eligible Properties

Modest Housing

Rehabilitation of Existing Structures with Existing Debt

New Construction

Rental Housing

Property Standards

Architectural Exhibits

Contractor/Architect Selection

Manufactured Housting

Home Inspections

Qualification of Borrower

Determining Ability To Pay

Borrower's Investment in the Property

IHA/TDHA or Tribal Loans

IHA/TDHE or Tribal Applications for Subsequent Sale

IHA/TDHE or Tribal Ongoing Property Ownership

IHA/TDHE or Tribal Multiple Unit Projectss

Loan Processing

Requesting A Case Number

Loan Parameters

Maximum Mortgage Amount

Closing Costs

Additinoal Items To Be Added To Sales Price

Items To Be Subtracted From Sales Price

Items Added Directly To The Mortgage Amount

Land Value

Transactions Affecting Maximum Mortgage

Firm Commitment Submission

FHA

Gateway Guideline Overlays

Appraisal Requirements

Refinance - No Cash Out

Refinance - Cash Out

Refinance - Streamline

Product Matrix

4155.1 Mortgage Credit Analysis for Mortgage Insurance

Chapter 1: Underwriting Overview

1.1 General Information on the Undewriting Process (5/10/09)

1.2 General Documentation Standards (5/10/09)

1.3 Required Documents for Mortgage Credit Analysis (5/10/09)

1.4 General Information on Traditional and Non-Traditional Credit Reports (5/10/09)

1.5 Three Repository Merged Credit Report (TRMCR) (5/10/09)

1.7 Non-Traditional Credit Report (NTMCR) Requirements (5/10/09)

1.6 Residential Mortgage Credit Report (RMCR) (5/10/09)

Chapter 2: Maximum Mortage Amounts/Cash Investment Requirements

Section A: Calculating Maximum Mortgage Amounts on Purchase

1. Maximum Mortgage Amounts on Purchases

2. Calculating Maximum Mortgage Amounts on Purchases

3. Interested Third Party Contributions

4. Inducements to Purchase

5. Additions to the Mortgage Amount for Repair and Improvement

Section B: Transactions Affecting Maximum Mortgage Calculations

1. General Information on Transactions Affecting Maximum Mortgage Calculations

2. Identify of Interest Transactions

3. Non-Occupying Borrowers

4. Transactions Involving Three and Four Unit Properties

5. Loan Transactions for Building on Own Lans

6. Loan Transactions for Paying Off Land Contracts

7. Transactions Involving Properties for Proposed Construction, Under Construction or Existing Construction Less Than One Year Old

Chapter 3: Maximum Mortgage Amounts on Refinance Transactions (5/10/09)

Section A. Refinance Transaction Overview

1: General Information on Refinance Transactions

Section B. Maximum Mortgage Amounts on No Cash Out/Cash Out Refinance Transactions

1. No Cash Out Refinance Transactions With an Appraisal

2. Cash Out Refinance Transactions

Section C. Maximum Mortgage Amounts on Streamline Refinances

1. General Information on Streamline Refinances

2. Streamline Refinances Without an Appraisal

3. Streamline Refinances With an Appraisal (No Credit Qualifying)

Chapter 4: Borrower Eligibility and Credit Analysis (5/10/09)

Section A: Borrower Eligibility Requirements

1. Borrower, Coborrower and Cosigner Eligibility Requirements

2. Ineligible Borrowers

3. Citizenship and Immigration Status

4. Living Trusts

5. Non-Purchasing Spouses

6. Eligibility Requirements for Nonprofit Organizations and State and Local Government Agencies

7. Eligibility for Federally Related Credit

8. Using CAIVRS to Determine Eilgibility for FHA-Insured Mortgage Transactions

Section B: Property Ownership Requirements and Requirements

1. General Information on Property Requirements and Restrictions

2. Eligibility Requirements for Principal Residences

3. Eligibility Requirements for Secondary Refinances

4. Investment Property Eligibility and Underwriting Requirements

Section C: Borrower Credit Analysis

1. General Guidelines for Analyzing Borrower Credit

2. Guidelines for Credit Report Review

3. Evaluation Non Traditional Credit and Insufficient Credit

4. Borrower Liabilities: Recurring Obligations

5. Borrower Liabilities: Contingent Liability

6. Borrower Liabilities: Projected Obligations and Obligations Not Considered Debt

Section D: Borrower Employment and Employment Related Income

1. Stability of Income

2. Salary, Wage and Other Employment Related Income

3. Borrowers Employed by a Family Owned Business

4. General Information on Self Employed Borrowers and Income Analysis

5. Income Analysis: Individual Tax Returns (IRS Form 1040)

6. Income Analysis: Corporate Tax Returns (IRS Form 1120)

7. Income Analysis: "S" Corporation Tax Returns (IRS Form 1120S)

8. Income Analysis: Partnership Tax Returns (IRS Form 1065)

Section E: Non Employment Related Borrower Income

1. Alimony, Child Support, and Maintenance Income

2. Investment and Trust Income

3. Military, Government Agency, and Assistance Program Income

4. Rental Income

5. Non Taxable and Projected Income

Section F: Borrower Qualifying Ratios

1. General Information on Borrower Qualifying

2. Debt to Income Ratios

3. Compensating Factors

Chapter 5: Borrower Funds to Close (5/10/09)

Section A: Settlement Requirements

1. General Information on Settlement Requirements

2. Settlement Requirements Needed to Close

Section B: Acceptable Sources of Borrower Funds

1. General Information on Acceptable Sources of Borrower Funds

2. Cash and Savings/Checking Accounts as Acceptable Sources of Funds

3. Investments as an Acceptable Source of Funds

4. Gifts as an Acceptable Source of Funds

5. Gift Fund Required Documentation

7. Loans and Grants as Acceptable Sources of Funds

8. Employer Programs as Acceptable Sources of Funds

Section C: Borrower Secondary Financing

1. General Information on Secondary Financing

2. Permissible Borrower Secondary Financing

3. Government Agency Secondary Financing

4. Nonprofit Agency Secondary Financing

5. Organizations and Private Individuals Providing Secondary Financing

6. Family Member Secondary Financing

7. Secondary Financing for Borrowers 60 Years of Age and Older

Chapter 6: Special Underwriting (5/10/09)

Section A: Special Underwriting Instructions

1. FHA's Total Mortgage Scorecard

2. Temporary Interest Rate Buydowns

3. Construction Permanent Mortgage Program Eligibility

4. Construction Permanent Mortgage Program Requirements

5. Construction Permanent Mortgage Documentation Requirements

6. Mortage Insurance for Disaster Victims

7. Energy Efficient Homes

8. Restriction on Advanced Mortgage Payments

9. Condominium Units Utility Expenses

Section B: ARMS

1. Terms and Conditions

2. General Information on ARMs

3. ARM Underwriting Requirements

4. Interest Rate Index

5. Calculating Interest Rate Adjustments

6. Computing the Monthly Installment Payment

7. Annual Adjustment Notice Requirement

8. Failure to Provide a Timely/Accurate Annual Adjustment Notice

9. ARM Assumptions and Transfers of Servicing

10. Tracking ARMs

Section C: Streamline Refinances

Section A: Calculating Maximum Mortgage Amounts on Purchase 2

1. Maximum Mortgage Amounts on Purchases 2

2. Calculating Maximum Mortgage Amounts on Purchases 2

3. Interested Third Party Contributions 2

4. Inducements to Purchase 2

5. Additions to the Mortgage Amount for Repair and Improvement 2

Section B: Transactions Affecting Maximum Mortgage Calculations 2

1. General Information on Transactions Affecting Maximum Mortgage Calculations 2

2. Identify of Interest Transactions 2

3. Non-Occupying Borrowers 2

4. Transactions Involving Three and Four Unit Properties 2

5. Loan Transactions for Building on Own Lans 2

6. Loan Transactions for Paying Off Land Contracts 2

7. Transactions Involving Properties for Proposed Construction, Under Construction or Existing Construction Less Than One Year Old 2

Section A. Refinance Transaction Overview 2

1: General Information on Refinance Transactions 2

Section B. Maximum Mortgage Amounts on No Cash Out/Cash Out Refinance Transactions 2

1. No Cash Out Refinance Transactions With an Appraisal 2

2. Cash Out Refinance Transactions 2

Section C. Maximum Mortgage Amounts on Streamline Refinances 2

1. General Information on Streamline Refinances 2

2. Streamline Refinances Without an Appraisal 2

3. Streamline Refinances With an Appraisal (No Credit Qualifying) 2

Section A: Borrower Eligibility Requirements

1. Borrower, Coborrower and Cosigner Eligibility Requirements 2

2. Ineligible Borrowers 2

3. Citizenship and Immigration Status 2

4. Living Trusts 2

5. Non-Purchasing Spouses 2

6. Eligibility Requirements for Nonprofit Organizations and State and Local Government Agencies 2

7. Eligibility for Federally Related Credit 2

8. Using CAIVRS to Determine Eilgibility for FHA-Insured Mortgage Transactions 2

1. General Informations on Streamline Refinances

2. Credit Qualifying Streamline Refinances

3. Streamline Refinance Borrower and Property Related Requirements

4. Types of Permissible Streamline Refinances

Section D: Energy Efficient Mortgage Program

1. General Information on the EEM Program

2. Basic EEM Program Requirements and Criteria

3. Home Energy Rating System (HERS) Report Requirements

4. Processing and Underwriting Requirements

Section E: FHA Secure Initiative

1. Overview of the FHASecure Initiative

2. FHASecure Eligibility

3. FHASecure UFMIP and Annual Premiums

4. The FHSSecure Maximum Mortgage Amount Calculation and CLTV Ratios

5. Subordinate Financing and FHASecure Mortgages

6. Underwriting the FHASecure Mortgage/Qualifying the Borrower

Section F: Hope for Homeowners (H4H) Program

1. General Information on the HOPE for Homeowners (H4H) Program

Chapter 7: Assumptions (5/10/09)

7.1. General Information on Assumptions

7.2 Creditworthiness Review

7.3 LTV Reduction Requirements

Chapter 8: Exhibits

8.1. Exhibit 1: Single Family HOC Jurisdictions

Chapter 9: Glossary (5/10/09)

9.1. Glossary of Handbook Terms

Mortgagee Letters

2008

2008-09

2009

ML 2009-17: Accuracy of Lender Date for FHA-Approved Mortgagees (5/22/09)

MP 2009-16: Manufactured Housing Policy Guidance - Property and Underwriting Eligibility (5/21/09)

MP 2009-15: Attachment 1: IRS Form 5405 (2/09) 2

ML 2009-15: Attachment 2: IRS Tax Credit Summary 2

ML 2009-14: Online Versions of Handbooks 4155.1, Mortgage Credit Analysis for Mortgage Insurance; and 4155.2, Lender' Guide to Single Family Mortgage Insurance Processing (4/09/09) 2

ML 2009-13: Guidance on FHA Model Mortgage Form for New Mexico (4/10/09) 2

ML 2009-12: Mortagee Monitoring (4/2/09) 2

Attachment: Required Investment Examples (3/27/09) 2

ML 2009-10: Home Equity Conversion Mortgage Program; Clarification of Home Equity Conversion Mortage Coulseling Issues (3/27/09) 2

ML 2009-09: Adoption of Market Conditions Addendum (Fannie Mae Form 1004MC) and Appraisal Reporting Requirements for Properties located in Declining Markets (3/23/09) 2

ML 2009-08: Limits on Cash-Out Refinances (3/12/09) 2

ML 2009-06: Temporary Authority for Multifamily Hubs to Process Waiver Requests Pertaining to the Three-Year Rule for Section 223(f) (2/6/09) 2

ML 2009-05: Project Liveline Initiative's Impact on FHA's Foreclosure Time Frames (1/16/09) 2

Attachment: HUD's Tier Ranking System (TRS) - Round 34 (1/16/09) 2

Attachment 1: Shared Appreciation Notice 2

Attachment 2: Lender Insurance Program Model Pre-Insurance Review 2

Attachment 4: FHA HOPE for Homeowners Attachment to FHA Loan Underwriting and Transmittal Summary 2 2

Attachment 4: FHA HOPE for Homeowners Attachment to FHA Loan Underwriting and Transmittal Summary 3

Attachment 5: HOPE for Homeowners Consumer Disclosure and Certification Form (12/08) 3

Attachment 6: HOPE for Homeowners Certification 3

Attachment 7: Appreciation Worksheet 3

Credit Criteria in GMG's Rural Development GRH Program 3

ML 2009-15: Using First-Time Homebuyer Tax Credits (5/29/09)

MP 2009-15: Attachment 1: IRS Form 5405 (2/09)

ML 2009-15: Attachment 2: IRS Tax Credit Summary

ML 2009-14: Online Versions of Handbooks 4155.1, Mortgage Credit Analysis for Mortgage Insurance; and 4155.2, Lender' Guide to Single Family Mortgage Insurance Processing (4/09/09)

ML 2009-13: Guidance on FHA Model Mortgage Form for New Mexico (4/10/09)

ML 2009-12: Mortagee Monitoring (4/2/09)

ML2009-11: HECM for Purchase Program (3/27/09)

Attachment: Required Investment Examples (3/27/09)

ML 2009-10: Home Equity Conversion Mortgage Program; Clarification of Home Equity Conversion Mortage Coulseling Issues (3/27/09)

ML 2009-09: Adoption of Market Conditions Addendum (Fannie Mae Form 1004MC) and Appraisal Reporting Requirements for Properties located in Declining Markets (3/23/09)

ML 2009-08: Limits on Cash-Out Refinances (3/12/09)

ML 2009-07: Loan Limit Increases for FHA (2/24/09)

FHA Loan Limits for 2009

FHA Loan Limits for 2009 - Counties Between the Floor and Ceiling

ML 2009-06: Temporary Authority for Multifamily Hubs to Process Waiver Requests Pertaining to the Three-Year Rule for Section 223(f) (2/6/09)

ML 2009-05: Project Liveline Initiative's Impact on FHA's Foreclosure Time Frames (1/16/09)

ML 2009-04: Tier Ranking Scores - Incentive Round 34 (1/16/09)

Attachment: HUD's Tier Ranking System (TRS) - Round 34 (1/16/09)

ML 2009-03: HOPE for Homeowners Origination and Servicing Guidance Supplement (1/6/09)

Attachment 1: Shared Appreciation Notice

Attachment 2: Lender Insurance Program Model Pre-Insurance Review

Attachment 3: Shared Equity Note

Attachment 4: FHA HOPE for Homeowners Attachment to FHA Loan Underwriting and Transmittal Summary 2

Attachment 5: HOPE for Homeowners Consumer Disclosure and Certification Form (12/08) 2

Attachment 6: HOPE for Homeowners Certification 2

Attachment 7: Appreciation Worksheet 2

Credit Criteria in GMG's Rural Development GRH Program 2

Attachment 4: FHA HOPE for Homeowners Attachment to FHA Loan Underwriting and Transmittal Summary

Attachment 5: HOPE for Homeowners Consumer Disclosure and Certification Form (12/08)

Attachment 6: HOPE for Homeowners Certification

Attachment 7: Appreciation Worksheet

ML 2009-02: Co-branded Outreach Materials (1/7/09)

ML 2009-01: Annual Renewal of FHA Approval (1/6/09)

Product Matrix

Fees Matrix

Guidelines

Appraisal Requirements

Borrower Fees & Charges

Documentation

DTI Ratio

Eligible Property Types

Eligibility

Enlistment period ending in next 12 months

Refinance

Underwriting Method

Seller Contributions / Concessions

USDA (Rural Development)

Overview

SFH Guaranteed Loan Income Limits

Assumability

Borrower Eligibility

Program Features - Purchase

Program Features - Refinance

Property Eligibility

Required Repairs/Escrow Agreements

Income Verification/Requirements

Verification of Funds

Helpful Links

Frequently Asked Questions (FAQ)

Income & Ratio Calculation Worksheet

Homeownership Counseling

Credit Criteria in GMG's Rural Development GRH Program