VA Eligible Product Guides (IRRRL) - CCMC Correspondent Lending

VA Eligible Product Guides / IRRRL Cherry Creek Mortgage Company's VA Program is Designed for the Rate and Term Refinance of Primary Residences Maximum Loan Amount

Units

$750,000

1

LTV Loan Amount > $417,000: Maximum 100% calculated using AVM and Total Loan Amount (Base loan amount + VA funding fee) Loan Amount ≤ $417,000: Maximum 115% calculated using AVM and Total Loan Amount (Base loan amount + VA funding fee)

Lesser of $750,000 or VA County Loan Limit

2-4 Maximum 125% CLTV for existing, subordinate financing

Minimum FICO Score (See Credit section for additional requirements)

ATR/QM Rule

620 For loans subject to the ATR/QM rule, Cherry Creek Mortgage Company will only purchase loans that comply with the ATR/QM requirements.  Correspondents are responsible for providing evidence of compliance with the ATR/QM rules. 

Clear itemization of fees and application of all credits that indicate paid by/to is required on all loans.

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VA Fixed Rate 15 year and 15-year High Balance (base loan amount >$417,000)

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VA Fixed Rate 30 year and 30-year High Balance (base loan amount >$417,000)

Products

A Certificate of Eligibility (COE) and VA Form 26-8937 are not necessary for IRRRL s

Certificate of Eligibility

If a lender successfully requests a VA case number for an IRRRL, a COE is not required

by VA If the case number also shows the Veteran is exempt from the funding fee, VA Form 268937 is not required

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Veteran who served the minimum duty with other than a dishonorable discharge Active duty with at least 181 days of duty Un-remarried surviving spouse of eligible veteran (COE) Reservists/National Guard Joint loans involving a veteran and a non-veteran who is not the veteran’s spouse (VA prior-approval required. Refer to Special Requirements/Restrictions for more details) Joint loans involving two unmarried veterans (VA prior-approval required. Refer to Special Requirements/Restrictions for more details) Inter Vivos Revocable Trust. A Power of Attorney is not allowed for properties held in a Trust

©2014 Cherry Creek Mortgage NMLS ID 3001. THIS INFORMATION IS SOLELY FOR MORTGAGE PROFESSIONALS AND SHOULD NOT BE PROVIDED TO CONSUMERS OR THIRD-PARTIES. INFORMATION IS ACCURATE AS OF 07/17/2014 AND IS SUBJECT TO CHANGE WITHOUT NOTICE.

Co-borrowers Entitlement/Guaranty

All borrowers must occupy the subject property Guaranty is 25% for IRRRLs

Occupancy

Primary Residence

Seasoning

6 months seasoning is required

Secondary Financing

Existing financing is eligible:  Must be approved by CCMC  No cash back to the Veteran from either mortgage is allowed  The second lien should not restrict the Veteran’s ability to sell the property (i.e. assumability feature)  Maximum 125% CLTV for existing, subordinate financing Secondary Financing must meet guidelines in VA Lender Handbook, Ch. 9, Section 4

A credit report or tri-merge in-file is required on loans where the P&I will increase more than 20%.

If a tri-merge credit report is provided, it must be analyzed to ensure there are no serious delinquent obligations in the last 12 months. If present, loans may be subject to further review and a12-month income verification.

Credit

Housing (Mortgage/Rental) Payment History Requirements  It may be necessary to verify the current and previous mortgage to establish a 12-month payment history.

Housing (Mortgage/Rental) Payment History (PITIA) is inclusive of all liens, regardless of position or occupancy type  All loans must be current  12-month payment history, or life of loan if property is owned less than 12 months, is required. Credit report, cancelled checks, or VOM must reflect 0x30 during the previous 12 months.

Non-traditional credit is ineligible

Qualify at Note rate

Qualifying Rate and Ratios

The principal and interest payment on an IRRRL must be less than the principal and interest payment on the loan being refinanced with the following exceptions:  The IRRRL is refinancing an ARM loan  The term on the IRRRL is shorter than the term of the loan being refinanced Continued…

©2014 Cherry Creek Mortgage NMLS ID 3001. THIS INFORMATION IS SOLELY FOR MORTGAGE PROFESSIONALS AND SHOULD NOT BE PROVIDED TO CONSUMERS OR THIRD-PARTIES. INFORMATION IS ACCURATE AS OF 07/17/2014 AND IS SUBJECT TO CHANGE WITHOUT NOTICE.

Qualifying Rate and Ratios Cont.

Underwriting

Assignment of Mortgage

Minimum Loan Size

If the monthly payment (PITI) increases by 20% or more, the underwriter must creditqualify the borrower and the following parameters must be met:  50% maximum DTI  DTI ratios >41% <=50% require residual income exceeding 120% in addition to significant documented compensating factors such as:  Conservative use of consumer credit  Excellent credit history  Existence of equity in refinancing loans  Little or no increase in shelter expense  Long-term employment  Minimal consumer debt  Military benefits  Satisfactory homeownership experience  Significant liquid assets

Manual underwrites only. Ineligible for submission to AUS engines (DU/LP)

Loans delivered must be registered by the Sellers with MERS at time of delivery. A MERS transfer of beneficial rights (TOB) and transfer of servicing rights (TOS) must be initiated by the Seller to Cherry Creek Mortgage Company (ORG ID#1000302), within 48 hours of purchase by Cherry Creek Mortgage Company. $50,000 Eligible Properties:  1-4 units  Condos – VA approved  PUDs  Modular Housing

Property Eligibility

Employment/Income

Ineligible Properties:  Condotels  Co-ops  Manufactured Homes  Properties greater than 10 acres  Unique properties: dome homes, log cabins, Earth berms, underground homes  Leasehold properties  Recently listed – must be delisted at least 6 months prior to application

No income documentation required except for cases when the P&I payment increases 20%. In these cases, the following documentation must be provided: o Paystubs covering the most recent 30-day period o 2 years’ W2s o 2 years’ tax returns (self-employed borrowers) o Verbal VOE (VVOE) from the borrower’s current employer o 4506T must be executed Confirm the borrower has stable and reliable income to support the proposed housing payment and other recurring monthly obligations Colorado IRRRLs:  Income must be stated on the URLA (1003)  Verification of income is NOT required  Analysis of income is NOT performed

©2014 Cherry Creek Mortgage NMLS ID 3001. THIS INFORMATION IS SOLELY FOR MORTGAGE PROFESSIONALS AND SHOULD NOT BE PROVIDED TO CONSUMERS OR THIRD-PARTIES. INFORMATION IS ACCURATE AS OF 07/17/2014 AND IS SUBJECT TO CHANGE WITHOUT NOTICE.

Assets

No asset verification required

VA Funding Fee

VA funding fee applies unless Veteran is exempt

VA Case Number

Order from the VA Portal. *Note, on an IRRRL, order “Case Number Only”

Other Real Estate Owned Assumptions

Appraisal Requirements

Ineligible Features/Programs

Additional Notes

No limitations; however, CCMC will limit its purchase to 4 loans to any one borrower

Permitted : Credit-worthy borrowers only

An exterior-only appraisal (2055) with value is required

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Escrow Holdbacks / Waivers Temporary Buydown Prepayment Penalties Texas Cash-out 50(a)(6) Community Land Trusts Energy Efficient Mortgage

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3 months’ seasoning is required on the first mortgage New loan amount may include the following: o Unpaid principal balance o Allowable closing costs, refer to the Special Requirements/Restrictions section for ineligible costs o Prepaid expenses o Maximum of 2 discount points o Funding fee 25% guaranty is considered satisfied No cash back to the borrower is permitted. Adjustment s at closing not exceeding $500 is allowed No satisfaction of junior liens Premium pricing is permitted Complete the Interest Rate Reduction Refinancing Worksheet (VA Form 268923)

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Alaska, Georgia, Hawaii, Kentucky, Maine, Mississippi, New Hampshire, New York, North Carolina, and West Virginia State Exclusions State-specific regulatory requirements supersede all underwriting guidelines set forth by CCMC

Resources

Appraisals: Order case numbers, Appraisals, and obtain Automatic Certificates of Eligibility at VA Portal: https://vip.vba.va.gov/portal/VBAH/Home VA Lender’s Handbook: http://www.benefits.va.gov/warms/pam26_7.asp VA Lender Resources: http://benefits.va.gov/homeloans/lenders.asp VA Regional Loan Centers: http://www.homeloans.va.gov/rlcweb.htm VA Forms: http://www.va.gov/vaforms/

©2014 Cherry Creek Mortgage NMLS ID 3001. THIS INFORMATION IS SOLELY FOR MORTGAGE PROFESSIONALS AND SHOULD NOT BE PROVIDED TO CONSUMERS OR THIRD-PARTIES. INFORMATION IS ACCURATE AS OF 07/17/2014 AND IS SUBJECT TO CHANGE WITHOUT NOTICE.

Documentation Requirements Minimum document requirements are as follows:  VA IRRRL Case Assignment screen printout to confirm new case number – Veteran’s name and address must match the new application  All Veteran applicants whose income is used to qualify for the loan must complete and sign the VA Reserves or National Guard Certification o The VA Underwriter must use this information to determine the Veteran-borrower’s true monthly qualifying income and service pay 

Verification of VA Benefit (VA Form 26-8937) required if borrower or co-borrower is a surviving spouse of a Veteran who died on active duty or as a result of service-connected disability o Submit form to the VA Regional Loan Center having jurisdiction over property state o Final loan approval cannot be issued until the VA completes and returns the form or, o Loan cannot be submitted to the VA for prior approval unless the completed form is received from the VA

If the automated Certificate of Eligibility shows the Veteran is exempt from paying the funding fee, VA form 26-8937 is not required       

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Original signed and completed Uniform Residential Loan Application Original HUD/VA Addendum to the URLA (VA Form 26-1802a) 12-month mortgage history Current payoff statement for existing mortgage Copy of the original Note VA Interest Rate Reduction Refinancing Worksheet (VA Form 26-8923) VA Loan Summary Sheet (VA Form 26-0286) CAIVRS information must be checked and noted in the Remarks section of the IRRRL Worksheet Nearest living relative information Initial Good Faith Estimate and Truth-In-Lending disclosures Affiliated Business Disclosure Counseling Checklist for Military Homeowners (VA Form 26-0592) required only for credit-qualifying streamline and active duty borrowers Federal Collection Policy Notice (VA Form 26-0503) VA Payment Comparison Letter and Lender Certification o Statement signed by the Veteran acknowledging the effect of the refinance loan on the Veteran’s loan payment and interest – the statement must show the interest rate and monthly payments for the new loan as compared to the loan being refinanced o The statement must also disclose to the borrower how long it will take the Veteran to recoup ALL closing costs – both those included in the loan and those paid outside of closing. o If the monthly mortgage payment (P&I) increases by 20% or more, a Lender’s Certification must also be completed by the VA underwriter. The VA Underwriter signs and certifies the Lender Certification that the “borrower qualifies for the new monthly mortgage which exceeds the previous payment by 20% or more” Provide all other applicable VA forms

Documents Required at Closing:  HUD/VA Addendum to the URLA  VA Transmittal List (VA Form 26-0285)  Report and Certification of Loan Disbursement (VA Form 26-1820)  Payment Comparison Letter must be signed at closing Hardest Hit Funds Various states are distributing Federal Hardest Hit Funds (HHF) to help borrowers who are underwater (mortgage is greater than the appraised value) by paying down the existing mortgage at the time of the refinance. This usually requires the borrower to sign an interest-free promissory note (not a lien on the property) that is forgiven after 5 years provided the borrower has maintained the subject property as their primary residence.

VA requires the Veteran to sign a lender-created simple statement of the terms of the promissory note. This statement must be part of the loan file when HHF funds are used.

©2014 Cherry Creek Mortgage NMLS ID 3001. THIS INFORMATION IS SOLELY FOR MORTGAGE PROFESSIONALS AND SHOULD NOT BE PROVIDED TO CONSUMERS OR THIRD-PARTIES. INFORMATION IS ACCURATE AS OF 07/17/2014 AND IS SUBJECT TO CHANGE WITHOUT NOTICE.

Special Requirements/Restrictions Typically, the parties obligated on the original VA loan must be the same parties on the new loan and the Veteran must still own the property; however, certain ownership changes may be eligible. A change in mortgagors is eligible with proper documentation:

Existing VA Loan

New Loan

Allowable?

Unmarried Veteran

Veteran and New Spouse

Yes

Unmarried Veteran

No Yes

Veteran and Spouse

Spouse Only-deceased Veteran Different Veteran who has substituted their entitlement Divorced Veteran Only

Veteran and Spouse

Veteran and Different Spouse

Yes

Veteran and Spouse

Spouse Only-deceased Veteran

Yes

Veteran and Spouse

Divorced Spouse Only

No

Veteran

Yes

Veteran and Spouse

Different Spouse Only-deceased Veteran

No

Veteran and Non-Veteran (joint obligators)

Veteran Only

Yes

Veteran and Non-Veteran (joint obligators)

Non-Veteran Only

No

Term Increase:  The term of the new loan may not exceed the original term by more than 10 years, subject to the maximum term of 30 years and 32 days.

Interest Rate Decrease:  The interest rate of the new loan must be less than the interest rate of the existing VA loan unless refinancing an ARM to a fixed rate.

Payment Increase:  P&I payment of the new loan must be less than the P&I payment of the existing VA loan unless: o Refinancing an ARM to a fixed-rate, OR o The term of the new loan is less than the term of the existing VA loan  If the P&I increases by 20% or more, the Veteran’s ability to repay must be documented General Guidelines:  The loan being paid off through the refinance must be the loan indicated on the IRRRL Case number. In some cases, a copy of the Note may be required to verify the VA loan number.  The minimum guaranty on an IRRRL is 25% regardless of the dollar amount of the guaranty being transferred from the prior loan  If the Veteran is deceased and the surviving spouse was a co-obligor, the spouse is considered a Veteran for the IRRRL. o The surviving spouse must own the property Fees ineligible to be Financed in the Loan Amount :  Flat fees charged by second-lien holders to subordinate existing secondary financing. The Veteran must pay with his/her own funds  Processing-type fees such as Subordination Prep charged by closing agents or other third parties to process subordination is ineligible to be charged to the Veteran

©2014 Cherry Creek Mortgage NMLS ID 3001. THIS INFORMATION IS SOLELY FOR MORTGAGE PROFESSIONALS AND SHOULD NOT BE PROVIDED TO CONSUMERS OR THIRD-PARTIES. INFORMATION IS ACCURATE AS OF 07/17/2014 AND IS SUBJECT TO CHANGE WITHOUT NOTICE.