My Community Mortgage &
Flexible Mortgage Training
Offered through
First Mortgage’s Wholesale Division
Agenda
• My Community Mortgage
▫ Introduction
▫ Eligibility Guidelines
▫ Eligible Programs
▫ Underwriting Guidelines
▫ Community Solutions
▫ Community HomeChoice
▫ MCM Program Highlights
• Flexible Mortgage
▫ Introduction & Highlights of Program
▫ Eligibility Guidelines
▫ Underwriting Guidelines
▫ Eligible Programs
▫ Flex Program Highlights
• Interest Rates & Fees
• Marketing Tools, Training & Support
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4/13/2015
MY COMMUNITY MORTGAGE
Introduction to First Mortgage Corporation
Introduction & Eligible Borrowers
Suite of “Community Mortgage Options”
My Community Mortgage Product Features
Introduction
• First Mortgage Corporation is an independent residential Mortgage Banking firm
with branch offices located throughout the west.
• Founded in 1975, FMC is a direct-lending mortgage banker approved as a lender
and/or loan servicer by the Federal Housing Administration (FHA); the Veterans
Administration (VA); the Federal National Mortgage Association (Fannie Mae); the
Federal Home Loan Mortgage Corporation (Freddie Mac); the Government National
Mortgage Association (Ginnie Mae); the California Housing Finance Agency
(CalHFA); the Nevada Housing Division; the California Public Employees’
Retirement System (CalPERS); the California Teachers’ Retirement System
(CalSTRS); and many other major secondary market institutions.
• Having funded in excess of $12 billion in residential real estate loans, FMC has
assisted more than sixty thousand families with their mortgage needs. FMC enables
families to enjoy the American Dream of Homeownership…“it’s the only thing we
do.”
• FMC has a longstanding tradition of providing unparalleled customer service and a
reputation built on adding value to the home loan process. That’s why FMC should
be considered…“YOUR FIRST LENDING RESOURCE”.
What is the MCM Program?
Penetrating minority and other underserved markets is a core
element of future growth and business success.
• The MyCommunityMortgage (MCM) loan program is Fannie Mae’s
program designed to help Lenders and Brokers meet the needs of low &
moderate income homebuyers in your communities.
• Market Restrictions: All 50 states (CA, NV, WA, OR, AZ for FMC)
2 Main Objectives of the program:
1. AFFORDABILITY
2. FLEXIBILITY
• Little to no cash
required
• UW Flexibilities
•Borrower Options
Targeted Borrowers
Low to Moderate Income Borrowers with…
Limited Savings
and/or Cash Assets
Ideal for borrowers with limited funds
for down payment and/or closing costs
Non-Traditional
Credit
Non-Traditional
Income Sources
Borrowers needing extra
flexibilities because they do
not have credit
Borrowers needing extra
flexibilities on income
sources
What is the current market doing?
• The market continues to slow down
• Product availability continues to shrink making it a challenge
to find alternative financing solutions
• Non-Agency products continue to experience liquidity issues
• Purchases, refinances and new home construction are
declining
• Overall home values are either flat or depreciating throughout
the country
• There is a shift in the market from Agency products to
Government products
• Agency and Government products may be a better alternative
to increase originations, lessen risk, and grow market share in
this turbulent environment
Opportunity
• There are still borrowers who:
▫
Are 1st Time Homebuyers
▫
Have non-traditional credit
▫
Have blemished credit and/or a low credit score
▫
Have limited cash for down payment or closing costs
▫
Have low-to-moderate income
▫
Receive income from government benefits
▫
Have boarder income from non-family members
▫
Have cash-on-hand for closing
▫
Community service professionals who could use extra flexibilities
▫
Want to realize the benefit of homeownership
Solution
• Provide qualified borrowers an affordable, stable homeownership
solution with MCM, by offering:
▫ Loans to qualified FTHB, low-to-moderate income borrowers and other
underserved markets
▫ No minimum down payment for qualified borrowers
▫ Up to 100% LTV and 105% CLTV
▫ Non-traditional credit to those who need flexible credit options
▫ Flexibility to use cash-on-hand for down payment and closing costs
▫ Flexible options for sources of income
▫ Up to 6% seller contributions on loans between 90.01-100% LTV
▫ Lower initial monthly payments with optional temporary subsidy buydown
plan
▫ Fixed rates up to 40-year terms and adjustable rate mortgages (ARMS)
▫ Community 2nds up to 105% CLTV
▫ Low mortgage insurance (MI) coverage – maximum of 20%
▫ No Area Median Income (AMI) limits in Fannie Neighbors areas
▫ Interest only option available on 30 and 40 year fixed mortgages and 5/1
adjustable rate mortgage
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4/13/2015
Suite of “Community” Mortgage
Options
Community 97 is a 97 percent loan-to-value (LTV) mortgage option with flexible credit
guidelines. The core features, which can be customized, include NO minimum borrower
contribution (1 Unit only), no monthly reserves, and a higher single qualifying ratio.
Community 100 Plus is a 100 percent loan-to-value (LTV) mortgage option with flexible
credit guidelines. The core features, which can be customized, include NO minimum
borrower contribution, no monthly reserves, and a higher single qualifying ratio.
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4/13/2015
PROGRAM TYPES
1ST Mortgage Programs
1st Program Types
• FIXED
▫ Conventional Agency Fixed Rate
 10-40 year terms
▫ Conventional Agency Fixed Rate Interest Only (10/20)
 30 year term1
• ARMS
▫ Conventional Agency T-Bill ARM (5/1, 7/1 and 10/1)
 30 year term
▫ Conventional Agency LIBOR ARM (5/1, 7/1 and 10/1)
 30 to 40 year terms
Fully Indexed FIXED Programs
Topic
Description
Program Types
Conforming 10, 15, 20, 25, 30, 40 Year Fixed
Interest Rate
Interest Rate is Fixed and payment is Fully Amortized for the entire term of the loan.
Term
10 – 40 Years
Max LTV
See Max LTV/CLTV page
Max CLTV
See Max LTV/CLTV page
Maximum Loan Amount
Fannie Mae Conforming Loan Limits
Loan Purpose
Purchase
Rate & Term Refinance
Occupancy
Owner Occupied
Minimum Fico Score
AUS: No minimum FICO – Determined by DU (NO BK or FC in last 24 months)
Manual: See Max LTV/CLTV page
Interest Only FIXED Programs
Topic
Description
Program Types
Conforming 30, 35, 40 Year Interest Only Fixed Programs
Interest Rate
Interest Rate is Fixed for the entire term of the loan.
Qualifying Rate
Qualify borrower at the Fully Amortized Rate (PITI)
Term
1.
2.
3.
30 Year Term: Interest-only payment for the first 10 years, followed by a 20-year
fully amortized payment
35 Year Term: Interest-only payment for the first 5 years, followed by a 30-year
fully amortized payment
40 Year Term: Interest-only payment for the first 10 years, followed by a 30-year
fully amortized payment
Max LTV
See next page
Max CLTV
See next page
Maximum Loan Amount
Fannie Mae Conforming Loan Limits
Loan Purpose
Purchase
Rate & Term Refinance
Occupancy
Owner Occupied
Minimum Fico Score
Minimum 620 regardless of DU decision
ARM Programs
Topic
Description
Program Types
Conforming 5/1 (2/2/5 caps only), 7/1, 10/1 T-Bill ARM
Conforming 5/1 (2/2/5 caps only), 7/1, 10/1 Libor ARM
Interest Rate
Initial Interest rate and monthly payment are low, but these may change during the life
of the loan based on the fluctuation of the 1-year T-Bill and the LIBOR Indices, Margin
and Caps.
Qualifying Rate
Qualify borrower at the Fully Indexed Fully Amortized Payment (PITI)
Term
T-Bill: 30 Year Term
LIBOR: 30 – 40 Year Term
Max LTV
See Max LTV/CLTV page
Max CLTV
See Max LTV/CLTV Page
Maximum Loan Amount
Fannie Mae Conforming Loan Limits
Loan Purpose
Purchase
Rate & Term Refinance
Occupancy
Owner Occupied
Minimum Fico Score
AUS: No minimum FICO – Determined by DU (NO BK or FC in last 24 months)
Manual: See Max LTV/CLTV page
Max LTV / CLTV & Fico
Purchase and Rate & Term
Program
Units
Maximum LTV
Community 100 Plus
1/
CLTV
2
Minimum Credit Score
(Manual UW)
100 / 105%
620
97 / 105%
600
97 / 105%
620
95 / 105% 3
660 3
1 Unit
Community 97
Community 2 Units
2 Units
Community 3-4 Units 3
3-4 Units 3
Maximum LTV/CLTV may be
reduced by 5% in areas
experiencing Declining
Markets/Values
1
Cooperatives: Maximum LTV is 90%
2
Only community 2nds and closed-end 2nds are allowed
3
3-4 Units: A DU Approve/Eligible certificate is required
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4/13/2015
ELIGIBILITY REQUIREMENTS
Eligibility Borrowers
Eligible Properties
Eligible Borrowers
Topic
Eligible Borrowers
Non Citizen Borrowers
Description
 U.S.citizens
 Permanent Resident Aliens
 Non-Permanent Resident Aliens
Most common types of cards and stamps:
 Social Security Card
 Permanent Resident or “Green” Card
 Employment Authorization Card
 Immigrant Visa & Entry Stamp
 I-551 Stamp in Passport
Usage of ITINs
ITINs are issued to individuals by the Internal Revenue Service without
regard to their immigration status. Therefore, the ITIN does not provide
any information about whether a person is residing in the US legally or not.
Non Occupant CoBorrowers
Not Allowed
Other
Borrower may not own any other residence at time of closing
Eligible Properties
Topic
Eligible
Properties
Description








Attached SFR’s
Detached SFRs1
Attached PUDs
Detached PUDs1
Low-Rise Condos
High-Rise Condos
Cooperatives
2-4 Units2
1 Includes modular, panelized & prefabricated classifications of factorybuilt housing
2 3-4 Units: Ineligible with the Community Solutions option. A DU
Approve/Eligible certificate is required.
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4/13/2015
INCOME REQUIREMENTS
Borrower Income Requirements
Other Income Requirements
Overtime and Part-Time Income
Boarder Income
Rental Income
Co-Borrowers Income
Income Requirement
Topic
Description
Borrower Income Limit
The borrower’s income is limited to 100% of the annual
HUD AMI (area median income) in which the property is
located with the following exceptions:
 CA: 140%
HUD AMI
 WA & OR (Several Counties): 120%
 Non-Metropolitan Counties: 115%
 All Other Areas: 100%
Exception
Median income limits do not apply if:
1. If the subject property is located in a FannieNeighbors
area including border regions :
www.efanniemae.com
OR
2. When a public agency, housing finance agency, non-profit
organization or an employer provides down payment or
closing cost assistance. The income limits imposed by
those organizations will apply.
Other Income Requirements
Topic
Description
Boarder Income
(related or not related)
 1-2 Unit Only
 Boarder may not be obligated on the note
 Boarder has lived with the borrower and paid rent for the past 12 months
 Border income does not exceed 30% of the total qualifying income
 Boarder provides documentation to demonstrate a history of shared residency
that shows the boarder’s address as the same as the borrower’s, and proof of
rental payments for the past 12 months
 Drivers license with property address
 Bank Statements
 Cancelled checks or bank deposits
MCM 97 & MCM 100
Only
Rental Income (2-4
Units)
FNMA Form 216
required
 If one or more of the units is rented or is intended to be rented, rental income
for the units may be added to the borrower’s income when calculating the debt
ratios based on the following:
 For 2 units, 75% of the gross rents may be used
 For 3-4 units, 65% of the gross rents may be used
 Allowed only on LTVs <= 97
Co-Borrower’s
Income
If there are multiple occupying co-borrowers, and any of the occupying coborrowers have no credit score due to an insufficient credit record with the
repositories, no credit analysis on those borrowers is required, as long as their
combined income is not greater than 30% of the total qualifying income (50% if
approved through DU).
Overtime &
Part Time Income
 Need to verify 24 month history of this income type
• Borrower’s eligible under Community Solutions can qualify with a 12month history
Section 8 Voucher income allowed
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4/13/2015
GENERAL GUIDELINES
Underwriting Options
Underwriting Guidelines
Other General Guidelines
Fannie Mae Geocoder
Mortgage Insurance
Underwriting Options
DU/DO
• 3-4 Units require an
Approve/Eligible Certificate
only
Approve/Eligible
EA-Level I
• Community Solutions not
available through DU; must be
manually underwritten
Manual
• Follow standard Fannie Mae
Guidelines
MCM DU Guidelines
Topic
Advantages of
using DU
Reasons for
using Manual
UW
Description
•
•
•
•
•
•
Quicker approval
Limited waiver of reps and warrants
Co-borrower with no credit can contribute up to 50% of the qualifying income
Possible reduced documentation
Possible higher ratios than with manual underwriting
Possible lower credit score than with manual underwriting




DU recommendation of EA-I eligible with limited waiver of reps and warrants
Standard EA loan-level price adjustments (LLPAs) do not apply
Up to 100% LTVs with 3% seller contributions
Use of DU not required, but strongly encouraged
 Broker is not a DU/DO subscriber
 Goal should be to transition to DU
 Broker not participating in Expanded Approval (Refer with Caution)
 Under the following DU Recommendations:
 “Approve/Ineligible,” “Refer/Ineligible,” “EA-II”, “EA-III,” “Refer with
Caution IV,” “Refer with Caution,” or “Out of Scope”
 Nontraditional credit history borrowers (Out of Scope)
 Borrowers with extenuating circumstances
 Borrowers needing additional flexibility through a targeted borrower option
(Community Solutions)
Credit Score
• Minimum Credit Score requirements:
▫ DU - No minimum credit score required except for IO loans (620)
• Manual Underwrite:
Purchase and Rate & Term
Program
Units
Maximum LTV
Community 100 Plus
1 Unit
Community 97
Community 2 Units
2 Units
Community 3-4 Units 3
3-4 Units 3
1/
CLTV
2
Minimum Credit Score
(Manual UW)
100 / 105%
620
97 / 105%
600
97 / 105%
620
95 / 105% 3
660 3
1
Cooperatives: Maximum LTV is 90%
2
Only community 2nds and closed-end 2nds are allowed
3
3-4 Units: A DU Approve/Eligible certificate is required
Credit History
Borrowers who do not meet the minimum credit score requirement or lack credit
history may be eligible if they meet the following requirements:
NO Credit Score
Manual UW ONLY!
LESS than required
credit score
A non-traditional credit report is acceptable:
 One rental housing expense source (If no rental payment exists, then other credit
references can be utilized as long as a total of four sources are documented for at least
12 months)
 One utility payment source such as telephone service or cable television service
 One additional utility or other credit source (medical, auto, life, school tuition,
insurance policy or household/renter’s)
The borrower has an insufficient credit score due to insufficient traditional
credit history the credit will be considered acceptable provided the borrower has
all of the following:
 Minimum credit history of 3 tradelines at least 2 years old
 No more than nine accounts currently open (Accounts closed six months or more at
application are not counted).
 No history of bankruptcy, foreclosure, collections or judgments.
 No history of delinquency in housing debt.
 No delinquencies for revolving accounts in the last 12 months and no more than one
account 1x30 days in the 1 months before
 No delinquencies for installment accounts in the last 24 months, and no more than
one account 1x30 days in the 12 months before
 Outstanding revolving account balances representing no more than 50% of
aggregate credit lines at application. The account may not be paid off or paid down to
qualify the borrower.
Other General Guidelines
Topic
Maximum DTI
DU
Manual
As determined
by DU
43%
Reserves
As determined
by DU
Homebuyer Education
 Community Solutions:
> 97% LTV: 45% DTI ;
=< 97% LTV: 50% DTI
MCM 100: NO RESERVES REQUIRED
MCM 97:
 1 Unit – NO RESERVES REQUIRED
 2-4 Units – 2 Months PITI (May not be gifted)
 Community Solutions 100 – No Reserves required
 Community Solutions 97 - Same as MCM 97 except Gift funds
are OK for reserves
1 Unit:
 Participation in a homebuyer education program is recommended but not required
2-4 Units:
 Homebuyer education is required for all borrowers and co-borrowers who are 1st Time
Homebuyers:
 All Income Properties: All borrower and co-borrowers must complete a landlord
education course
 Education programs can be taken through a community counseling organization and
require in-person, face-to-face tutorial, classroom, or workshop sessions. Participation in
an education program must be documented by a “Certificate of Completion” that is
submitted with the loan file
Prepayment Penalties
Not Available
Buydowns, Down Payment, Sources of Funds
Topic
Description
Temporary
Buydowns

Temporary B/D
Qualifying Rate
LTV > 95%: Qualify at Note Rate (DU or Manual)
LTV =< 95%: Qualify at Note Rate PLUS 1% DU (Bought Down rate if Manual UW)
Borrower
Contribution
 1 Unit: No minimum contribution required
 2 Units: The minimum down payment is 3% which must be from the borrower’s own funds
 3-4 Units: The minimum down payment is 5% of which 3% must be from the borrower’s own
funds
Interested Party
Contribution
 Loans > 90% LTV are eligible up to 3% interested party contributions (6% for 90% or less)
 Interested-party contributions may be used exclusionary to cover closing costs and prepaid
expenses
Acceptable Sources of
Funds for Down
Payment, Closing
Costs and Prepaid
Items:
 Borrower’s own funds, including checking, savings, certificate of deposit, Individual
Development Account (IDA)
 Proceeds from loans secured by the borrower’s own assets
 Gift Funds from relative, fiance / fiancee, or domestic partner
 Unsecured loans or grants from a non-profit organization, government agency, or the borrower’s
employer
 Cash-on-hand (allowed for 1-unit properties only)
 Approved Fannie Mae Community 2nds
Subordinate
Financing**
Only an Approved Fannie Mae Community 2nd is allowed
Community 2nd may be treated as a gift in DU rather than a Subordinate 2nd if:
1. Community 2nd is fully forgiven over time (both the P&I)
2. Payment is deferred for no less than 5-years
**Must be included as Subordinate financing in CLTV calculation and all system calculations.
2/1




& 1/1 Temporary Buydowns available
660 min. score
Purchase Transactions Only
Not permitted on 3-4 units
Not permitted on 5/1 ARM
Submitting an MCM loan through DU
Topic
Description
Step 1
Input 1003 as you would normally
Step 2
In left navigation panel, select Community Lending
Step 3
Input the Metropolitan area or Co. and HUD median Income. If you don’t, DU will
automatically fill it out for you
Step 4
Select “Yes” or “No” in Fannie Neighbors area
Step 5
Select “Yes” or “No” in Community Seconds Area
If the Community 2nds meet the 2 criteria below, select NO and input it as Gift Funds
1. Requires NO repayment within the first 5 years of the loan
2. It meets Fannie Mae eligibility requirements
If it doesn’t meet the above criteria, select YES and input it as a Community 2nd loan
Must enter funds as subordinate financing it in the DOT and payment in the proposed
housing section.
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4/13/2015
32
4/13/2015
Determining Income Eligibility with the
Fannie Mae Property GeoCoder
• No Income limits if property is located in a Fannie Neighbors area
www.efanniemae.com
• Workaround for new construction in a Fannie Neighbors census
tract
▫ For new construction (the address is not in the system), use the
Property Geo Coder to provide a printout for the loan file
showing an existing property in the same census tract
▫ The appraisal must provide evidence that the subject property is
in the same census tract
Mortgage Insurance
Reduced MI Rates – Use MI chart below regardless of DU recommendation. Reduced or
Custom MI is not acceptable. See sample combination below:
LTV RANGE
MCM Minimum Coverage
Standard Minimum
Coverage
97.01 – 100% LTV
95.01 – 97% LTV
90.01 – 95% LTV
85.01 – 90% LTV
80.01 – 85% LTV
20%
18%
16%
12%
6%
35%
35%
35%
30%
25%
Borrower paid MI may be financed into loan up to max 100% CLTV (including financed MI). Borrower
financed MI may be in whole or in part; check with MI company for availability of this option.
Financed MI allowed on 1 Unit up to 100% LTV. Max CLTV > 95% including financed MI must be
delivered using Special Feature Code 574.
Example:
Using standard MI
or A- MI rates
Standard Rate
$200,000 loan; 100% LTV, 30 Yr Fixed, 6.50% int. rate
20% MI
35% MI
Savings
MI Monthly Payment
$98
$160
$62 / Month
MI A- Rate, 619 score
$162
$237
$75 / Month
Mortgage Insurance
Reduced MI Rates – Use MI chart below regardless of DU recommendation. Reduced
or Custom MI is not acceptable. See sample combination below:
LTV RANGE
MCM Minimum
Coverage
Standard Minimum
Coverage
97.01 – 100% LTV
95.01 – 97% LTV
90.01 – 95% LTV
85.01 – 90% LTV
80.01 – 85% LTV
20%
18%
16%
12%
6%
35%
35%
35%
30%
25%
Borrower paid MI may be financed into loan up to max 100% CLTV (including financed MI).
Borrower financed MI may be in whole or in part; check with MI company for availability of this
option.
Financed MI allowed on 1 Unit up to 100% LTV. Max CLTV > 95% including financed MI must be
delivered using Special Feature Code 574.
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4/13/2015
Community Solutions
Community Solutions 100 & Community Solutions 97
•
Community Solutions a targeted borrower option under the MCM is
designed especially for America’s teachers, police officers, firefighters,
health care workers, and military personnel.
•
Community Solutions adds flexibilities to the MCM to help our country’s
valued workers overcome obstacles to homeownership.
•
The Community Solutions option may be especially attractive to borrowers
who have access to an Employer-Assisted Housing benefit to cover gifted
reserves, a temporary interest rate buydown, and/or down payment or
closing costs.
Community Solutions
Community Solutions was designed especially to add flexibilities to
MyCommunityMortgage to help our country’s valued workers overcome obstacles to
homeownership.
Eligible Borrowers
1.
2.
3.
4.
Education Professionals:
•
Public or private schools, kindergarten through post-secondary levels;
Public Safety:
•
State or local law enforcement agency, fire department, or other sworn
law enforcement or firefighting officers; or
Health Care Professionals:
•
Certified, accredited, or licensed healthcare workers such as nurses,
medical residents, pharmacists, technicians, or technologists.
Military Personnel
Qualifying Ratio
45% single qualifying ratio
 43% with temporary interest rate buydown
 50% with 2 months’ reserves and strong compensating factors (maximum
97% LTV)
Reserves
One month’s reserves; gifting acceptable
 2 months’ reserves for 50% qualifying ratio
Temporary Buydown
Underwritten at bought-down rate
43% single qualifying ratio
Other
 1-2 Unit Properties only
 Part-time and overtime income with 12 months’ history
 Manual underwriting required
37
4/13/2015
Community HomeChoice
•
Community HomeChoice is an option under
MyCommunityMortgage designed to meet the mortgage needs of
low-to-moderate income borrowers with disabilities or have a
family member with a disability.
•
It offers extra flexibilities for borrower income and qualifying
ratios, and allows a non-occupying co-borrower.
What is the Community HomeChoice
Community HomeChoice is an option under MyCommunityMortgage designed to meet
the mortgage needs of low-to-moderate income borrowers with disabilities or have a
family member with a disability.
Eligible
Borrowers
1.
2.
Borrower
Income Limit
Borrower Income limit 115% of AMI
• See income limits page for higher income limit areas
Other
•
•
•
Borrower who are disabled
Borrower’s who have a family member(s) with
disabilities living with them purchasing their first home
 Defined as handicapped under the federal Fair
Housing Act
Non-occupying co-borrowers allowed
DU or Manual Underwriting in most cases
Manual underwriting: Higher ratios, gifted reserves
Highlights of the MCM Program
MCM Program Highlights
My Community 97 = 97/105% LTV/CLTV
My Community 100 Plus = 100/105% LTV/CLTV
Purchase and Rate & Term refinances
Flexibility on credit histories
 Non traditional credit accepted
Income Source flexibilities
 Boarder Income allowed (from relatives or non-relatives)
 Rental Income Allowed
Greatly Reduced Mortgage Insurance Premiums
Eg., 20% coverage for 100% LTV, 18% for 97%, 6-16 for other LTVs >80%
Community Solutions Program
Extra flexibilities with options to serve teachers/educational institution employees, police officers, firefighters,
health care workers and eligible military personnel (eligible for higher ratios and gifted reserves)
Community HomeChoice Program
Available for borrowers with a disability or borrowers with family members who have a disability living with
them purchase their first home who may need greater underwriting flexibilities, including non-occupying coborrowers
No minimum borrower contribution (1 unit)
MCM Highlights Cont’d…
MCM Program Highlights
No reserves required in most cases
No minimum Fico score with a DU approval
5/1, 7/1 and 10/1 Fixed Period ARMS
 30 and 40 year terms available
20, 25, 30 or 40-year Fixed Rate terms
10-year Interest Only option for 5/1 30 year term and 30 or 40-year Fixed
 Qualify at higher of note rate or fully indexed rate on fully amortized payment
Temporary Buydowns allowed for Fixed Rate, 7/1 and 10/1 ARMS
Available though DU or Manual Underwrite
Secondary financing only allowed with an approved Community 2nd
Qualifying community 2nds can be treated as a gift rather than a subordinate lien (DU only)
Owner-occupied primary residences only
 Borrower must not own any other property
2-4 Units allowed for borrowers who want to live in one and rent out the other
 3-4 Units: DU Approve/Eligible up to 95/105% LTV/CLTV
41
4/13/2015
FANNIE MAE FLEXIBLE 100
Introduction
Eligible Borrowers
Highlights of the Program
Down Payment / Source of Funds
What is the Flexible Mortgage Program?
• The Flexible Mortgage loan program is Fannie Mae’s reward program for
borrowers with average to above average credit history who have
experienced difficulty in saving a down program for a home.
• Market Restrictions: All 50 states (CA, NV, WA, OR, AZ for FMC)
Targeted Borrowers:
1. Limited Funds for
Down Payment
•Flex 100 (NO DP)
•Flex 97 (3% DP)
2. Use savings for
other investments
or expenditures
• Use savings for moving
expenses, etc.
2. Have Access to
alternative sources of
funds
• Gifts, grants, unsecured
loans from relatives,
employers, etc.
Eligibility Guidelines
Topic
Description
Eligible Borrowers
 U.S. Citizens
 Permanent Resident Aliens
 Non-Permanent Resident Aliens
Eligible Properties
 1 Unit SFR Detached or Attached
 PUD Detached or Attached
 Condominium
Income Limits
Not Applicable
Sales Price Limits
Not Applicable
Target Area/Fannie Neighbors
Not Applicable
Occupancy
Owner Occupied Only
Purpose
Purchase
Rate & Term
Interested Party Contribution
Up to 3% of sales price (Premium pricing may be used to fund closing
costs exceeding the minimum borrower contribution requirement)
Prepayment Penalty
Not Available
Underwriting Guidelines
Topic
Description
Underwriting Options
DU ONLY with Approve/Eligible, EA-I, EA-II, EA-III or Refer/Eligible
Minimum Credit Score
NO MINIMUM with a DU approval (IO loans require 620 Minimum)
Maximum DTI
As determined by DU
Reserves
As determined by DU
Temporary Buydowns
2/1 and 1/1 Eligible
Temporary Buydown
Qualifying Rate
 95% LTV – Qualify at the Note Rate
<= 95% LTV – Qualify at the Note Rate PLUS 1%
Down Payment / Sources of Funds
Topic
Description
Borrower Contribution
There isn’t a down payment required, however the borrower must contribute a minimum
amount based upon one of the two choices:
 Minimum of 3% of the purchase price which may be applied towards closing
costs and/or prepaid items for Flex 97 or 100. (The 3% can be paid by any
acceptable source of funds) OR
 Minimum $500 cash from own funds for Flex 100 or Flex with sub financing
(funds must be on deposit; acceptable sources of funds are checking, savings, CD
or other depository accounts). All other funds from the list of “acceptable sources”
of funds may not be included in the $500.
Acceptable Sources of
Funds for Any Use
 Borrowers own funds – checking, savings, CD or other depository accounts
 Proceeds from loans secured by borrower’s assets
 Gift funds from a relative
 Grants from non-profit agencies that do not have to be repaid
 Unsecured loans from a non-profit community organization, government agency, or
the borrower’s employer
(Premium pricing is not an acceptable source of flexible funds)
Acceptable Sources of
Funds for Down Payment &
Closing Costs
 Interested party contributions limited to 3% of the lesser of the sales price or
appraised value
 Lender paid closing costs are limited to 2% of value
• Interested party contributions may not be applied to the borrower’s minimum
required contribution. The contributions and premium pricing may only cover
closing costs and prepaid items in excess of the borrower’s initial contribution
1st Program Types
• FIXED
▫ Conventional Agency Fixed Rate
 10-40 year terms
▫ Conventional Agency Fixed Rate Interest Only (10/20)
 30 year term1
• ARMS
▫ Conventional Agency T-Bill ARM (5/1, 7/1 and 10/1)
 30 year term
▫ Conventional Agency LIBOR ARM (5/1, 7/1 and 10/1)
 30 year term
▫ Conventional Agency LIBOR ARM Interest Only (5/1, 7/1 and 10/1)
 30 year term
Max LTV / CLTV
Topic
Flex 97
Maximum Loan Amount
Flex 100
Flex w/Sub
Financing
Fannie Mae Conforming loan limits apply
Maximum LTV/CLTV
• Purchase, R&T Refinance
97% / 105%
100% / 105%
95% / 105%
• With IO Feature
97% / 100%
100% / 100%
100% / 100%
• Cash Out Refinance
Not Eligible
Mortgage Insurance
Topic
Flex 97
Borrower Paid
Lower Cost
(Must receive a DU approve or
refer recommendation)
Flex 100
Flex w/Sub
25%
LTV > 80%: MI
Coverage is 18%
35%
18%
Highlights of the Program
Flexible Mortgage Program Highlights
Maximum 100% LTV (minimum 90% LTV without secondary financing)
 No minimum LTV required for loans with secondary financing
 On refinance transactions, minimum 95.01% LTV
Up to 105% CLTV when originated with an approved Community 2nd
Available to be underwritten through FNMA DU
Interest Only Option (for the 1st 10 years of the loan) available on 30
 Quality at higher of note rate or fully indexed rate on fully amortized payment
No Borrower Income restrictions
No Homebuyer Education required
Reserves determined by DU (usually 2 months)
Purchase and Rate & Term refinances
Owner-occupied primary residence only
Available Terms: 15, 20, 25, 30 year Fixed
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4/13/2015
INTEREST RATE, FEES,
MARKETING & SUPPORT
Interest Rate
Allowable Points
Fees / Costs
Marketing
Support
Interest Rate
Interest Rates for the MCM & Flexible programs
are available on the FMC website:
www.firstmtgcorp.com
OR
From your A/E
Points & Fees
Topic
Description
Origination Points
No Max Points – Negotiated between Broker/Borrower – Must
not violate laws
Discount Points
No Max Points – Negotiated between Broker/Borrower – Must
not violate laws
Premium Pricing
MCM – Must be used to cover Closing Costs & Prepaid Items
Flex - Allowed
Fees
See Standard Doc Order form on FMC Wholesale Website :
www.firstmortcorp.com
Broker can charge on top of FMC fees as long as it’s reasonable
and customary
Marketing & Tools
• Visit our website: www.firstmtgcorp.com for marketing
materials, tools, forms, training, etc.
• Weekly Trainings – Open Broker Web Trainings
available every Friday – Contact your AE for a schedule!
• Compare your 100% financing opportunities
• Resources are always available to help you find the
ideal mortgage for your borrower’s needs
• Compare guideline requirements for our various 100%
financing products
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4/13/2015
Thank you for joining our training
today and we hope the
information provided was
informative and will help you
build your business!