Chapter 10 – Mortgage Loan Products
Fixed-Rate Mortgage Loans…. ............................................................................................ 2
Construction to Permanent…. .............................................................................................. 2
Manufactured Housing… ..................................................................................................... 3
Condominiums ..................................................................................................................... 4
PUDs…... ............................................................................................................................. 7
Mortgage Insurance…. ........................................................................................................ 7
Fannie Mae Only.................................................................................................................. 8
DU Refi Plus…… ................................................................................................................. 9
My Community Mortgage Loans. ....................................................................................... 11
Freddie Mac Only............................................................................................................... 12
Adjustable Rate Mortgages ................................................................................................ 12
Open Access – Freddie Relief Loans ................................................................................. 13
Home Possible…. .............................................................................................................. 16
Home Possible Advantage…. ............................................................................................ 17
Rural Development. ........................................................................................................... 18
Revised 3/31/15
1
Chapter 10 – Mortgage Loan Products
Fixed-Rate Mortgage Loans
Features
Fannie Mae and Freddie Mac purchase a variety of fixed-rate mortgages (new originations
and seasoned loans) for borrowers who want a stable monthly payment over the life of their
loan. Fixed-rate mortgages protect borrowers from interest rate increases and provide a
predictable payment and amortization schedule. Available from a 10-year amortization up to
a 30-year amortization, it gives the borrower the option of a 10- 15- or 20-year mortgage to
build equity more quickly or take advantage of the lower monthly payment with a 30-year
mortgage.
 Please refer to the Product Matrix in Chapter 9 for additional eligibility guidelines.
 All Loan Level Price Adjustments may be found in Chapter 11, LTV and LLPA charts.
 See Fannie Selling Guide and Freddie Seller Servicer Guide for detailed information.
Construction to Permanent Loans
Two-Closing Transactions
 Please refer to the Product Matrix in Chapter 9 for additional eligibility guidelines.
 All Loan Level Price Adjustments may be found in Chapter 11, LTV and LLPA charts.
 See Fannie Selling Guide and Freddie Seller Servicer Guide for detailed information.
Two-closing construction to permanent mortgage transactions utilize two separate loan
closings. The first closing is for the construction financing which is originated, disbursed, and
held at the originating bank; and the second is the end loan used to pay off the interim
construction loan. The permanent financing can be closed as a limited cash-out or a cashout refinance transaction. The end loan will be serviced by Merchants. The borrower must
have held title to the lot for at least six months prior to the closing of the permanent mortgage
for cash-out transactions.
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Mortgages must be submitted as “construction-permanent” through Desktop
Underwriter and receive an “Approve/Eligible” recommendation, or through LP as a no
cash-out or cash-out and receive an “Accept/Eligible”.
The appraised value will be used to determine the LTV.
The subject property should be listed in the REO section of the application and should
show “refi of current residence” for primary residences or “subject of the loan” for a
second home.
Verification documents are good for 120 days.
The construction of the subject property must be completed prior to delivery of the
mortgage.
A copy of the construction HUD should be provided with the end loan to verify all
short-term financing guidelines have been met.
Ineligible loans:
*Manufactured Homes
*Investment Properties
*Condominiums
*One-time closing transactions
See Construction Examples and Tips in the Manuals tab on the Merchant Bank landing page.
Revised 3/31/15
2
Manufactured Housing
A manufactured home is defined as any dwelling unit built on a permanent chassis and
attached to a permanent foundation system, to include connection to a septic tank, sewage
system or public sewer and other utilities in accordance with local, state, and federal
requirements.
 Please refer to the Product Matrix in Chapter 9 for additional eligibility guidelines.
 All Loan Level Price Adjustments may be found in Chapter 11, LTV and LLPA charts.
 See Fannie Selling Guide and Freddie Seller Servicer Guide for detailed information.
Manufactured Housing Land & Home Ownership Requirements
Cash-Out
In order to do a cash-out on a manufactured home, the
borrower must have owned the land and the home for at least
12 months. If they do not meet both of these conditions, the
loan is not eligible.
Limited Cash-Out
When doing a limited cash-out and the borrowers have
owned the home and the land for 12 months, the appraised
value will be used in determining the LTV. If the borrowers
have not owned both the home and the land for 12 months,
the lender will need to document the acquisition costs. The
lower of the acquisition costs or the appraised value will be
used in determining the LTV.
Purchase or Limited CashOut without 12 months of
Ownership
When doing a purchase or limited cash-out and the borrower
has not owned both the home and the land for 12 months, the
lender will need to provide the appraiser with a copy of the
executed Purchase Agreement for the manufactured home
and land. If the home and the land are being purchased
separately, the appraiser will need both Purchase
Agreements. The lender must provide the appraiser with a
copy of the dealer invoice if the manufactured home is new.
The appraiser must analyze the purchase contract(s) and
summarize his/her analysis in the appraisal report.
Revised 3/31/15
3
Manufactured Housing Eligibility Requirements
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The certificate of title to the manufactured home must be surrendered to the
appropriate government authority.
The home must be attached to a permanent foundation on the land and comply
with state and jurisdictional requirements for affixation.
A mortgage, deed of trust or security deed must be recorded in the land records
and must identify the encumbered property as including both the home and the
land and both must be classified as real property.
Primary residence and second homes only.
Manufactured homes built prior to June 15, 1976 are ineligible.
Single wide manufactured homes are not eligible. Homes must be at least 600
sq. ft. in gross living area.
The unit must have not have been previously installed or occupied at any other site
or location (except at the dealer’s lot as a new unit).
Manufactured homes that have an addition or have had a structural modification
are eligible under certain conditions. If the state in which the property is located
requires inspection by a state agency to approve modifications to the property, then
the lender is required to confirm that the property has met the requirement.
However, if the state does not have this requirement, then the property must be
inspected by a licensed professional engineer who can certify that the addition or
structural changes were completed in accordance with the HUD Manufactured
Home Construction Safety Standards.
Condominiums
 Please refer to the Product Matrix in Chapter 9 for additional eligibility guidelines.
 All Loan Level Price Adjustments may be found in Chapter 11, LTV and LLPA charts.
 See Fannie Selling Guide and Freddie Seller Servicer Guide for detailed information.
Project bylaws, declarations and the Condominium Limited Review Warranty and Checklist
form (which is available in the documents tab on Merchants Bank Landing page) should be
provided with your underwriting package submission along with liability, HO6 and fidelity
insurance (if applicable).
Project Types
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New Projects
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Less than 90% of the total units have been conveyed to the unit purchasers;
OR
Project is not fully completed; OR
HOA control is not turned over to unit owners
Revised 3/31/15
4
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Established Projects
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90% or more of the total units in the project have been conveyed to the unit
purchasers; AND
Project is 100% complete; AND
HOA control turned over to unit owners
If any of these three requirements are not met, then the project would be
considered new.
Ineligible Projects
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Condotels – any project that is managed and operated as a hotel or motel, even
though the units are owned individually;
Projects with non-residential or commercial space that exceeds 25%
Investment securities – projects that have documents on file with the Securities
and Exchange Commission, or projects where unit ownership is characterized
or promoted as an investment opportunity;
Common interest apartments – any project or building that is owned by several
owners as tenants-in-common or by a homeowners association in which
individuals have an undivided interest in a residential apartment building and
land, and have the right of exclusive occupancy of a specific apartment in the
building;
Timeshare or segmented ownership projects;
Houseboat projects;
Multi-dwelling unit condominiums;
Condominium projects that represent a legal, but non-conforming, use of the
land, if zoning regulations prohibit rebuilding the improvements to current
density in the event of their partial or full destruction;
Any project for which the owner’s association is named as a party to current
litigation or, for any project that has not been turned over the association or
corporation, for which the project sponsor or developer is named as a part to
current litigation that relates to the project;
Any project for which a single entity owns more than 10% of total units in the
entire project (21 units or more), or owns more than 1 unit in a project with 2 to
4 units, or 2 units in a project with 5 to 20 units.
New projects where the seller is offering sale or financing structures in excess
of Fannie or Freddie eligibility policies (for example, builder/developer
contributions, sales concessions, HOA assessments, payment abatements, or
contributions not disclosed on the HUD)
Projects with mandatory upfront or periodic membership fees for the use of
recreational amenities (membership fees paid for the use of recreational
amenities owned exclusively by the HOA or master association are acceptable).
Projects that are managed and operated as a hotel or motel, even though the
units are individually owned.
Projects with covenants, condition, and restrictions that split ownership of the
property or curtail an individual borrower’s ability to utilize the property.
Any project that is owned or operated as a continuing care facility.
Projects with non-incidental business operations owned or operated by the
HOA including but not limited to a restaurant, spa or health club.
Revised 3/31/15
5
Condominium Review Processes
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Limited Review
Use a limited review when:
 Findings indicate file is eligible for a limited review
 All established PUD and condominium projects are eligible
 New attached PUD projects eligible
 New detached condominium projects are eligible
The limited review consists of the following:
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Project is not an ineligible project
the mortgage may not be secured by a manufactured home
the units, common areas, and facilities must be 100% complete
the project must meet insurance requirements
The file must be submitted with a Limited Review Warranty and Checklist
completed by the HOA and signed by the HOA and the lender.
Note: Mortgages secured by attached condominium units that are investment properties
are not eligible for a limited review. New attached condominium projects are also
ineligible.
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CPM Expedited Review
Used to provide lender specific acceptance for attached and detached, new and
established, and 2 – 4 unit condo projects (all condo projects except manufactured
homes) – not PUD’s. Projects are entered into Condo Project Manager based on
information contained in the appraisal and on the Condominium Certification and
Warranty.
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complete Condominium Certification and Warranty
provide HOA budget for all projects (except 2-4 unit projects). The
budget must be adequate and provide for the funding of
replacement reserves for capital expenditures and deferred
maintenance (at least 10% of budget), and provide for adequate
funding of insurance deductibles.
For an established project, no more than 15% of HOA payments
can be more than 1 month delinquent
CPM determines project eligibility. Merchants Bank Underwriter will submit the file
through CPM as part of the underwriting process.
The file must be submitted with an appraisal and a completed Condominium
Certification and Warranty.
Revised 3/31/15
6
Planned Unit Developments (PUDs)
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New Projects
Planned Unit Developments that are still under the control of the developer regardless
of their construction status (proposed construction, under construction, or completed
construction).
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Established Projects
Planned Unit Developments in which control of the owners’ association has been
turned over to the unit purchasers. There is no specific length of time that the unit
purchasers must have been in control.
General Guidelines for Submission
● If the subject property is a detached unit, no project reviews are necessary.
● If the unit is an attached unit in a PUD project, then the project must not be located in
an ineligible project.
● The individual unit securing the mortgage must be substantially complete.
Mortgage Insurance Information
All conventional loans with a loan to value greater than 80% must qualify for mortgage
insurance according to the mortgage insurance investor guidelines. These guidelines are
separate from Fannie Mae and Freddie Mac eligibility guidelines.
Please refer to each mortgage insurance company’s web sites for their independent
guides. All mortgage insurance certificates will be obtained through the Merchants Bank
underwriting department.
MGIC – https://www.mgic.com
Genworth - http://mortgageinsurance.genworth.com
United Guaranty – https://www.ugcorp.com
Arch – https://micu.archcapgroup.com (credit unions only)
Revised 3/31/15
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Fannie Mae Only
DU Refi Plus
My Community Mortgage (MCM)
Revised 3/31/15
8
DU Refi Plus-Fannie Mae Only
Du Refi Plus is a refinance of an existing Fannie Mae loan by any lender using Desktop Originator
(DO) or Desktop Underwriter (DU) for underwriting. This program expires December 31, 2015.
Applications taken after this date are not eligible.
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Please refer to the Product Matrix in Chapter 9 for additional eligibility guidelines.
All Loan Level Price Adjustments may be found in Chapter 11, LTV and LLPA charts.
See Fannie Selling Guide for detailed information.
Features for DU Refi Plus include:
Required Borrower Benefit
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There must be a benefit to the customer: A reduced P&I payment or a more stable mortgage
product, such as an ARM to a fixed-rate.
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The Fannie loan being paid off at closing must have a note date prior to June 1, 2009.
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The new loan term cannot exceed 30 years (LTV’s > 105% are limited to fully amortizing fixed
rate mortgages.)
Borrower Eligibility
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The customer cannot be currently delinquent on their mortgage. There can be no late
payments in the past 12 months. If the customer is delinquent, they may qualify for the Home
Affordable Modification Program (HAMP). Contact Merchants Bank collection department for
more information if the loan is serviced by Merchants Bank.
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No minimum credit score is required. The borrower must meet the requirements for DU
underwritten loans.
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For DU Refi Plus, borrower(s) may be removed through the refinance transaction, provided
that at least one of the original borrowers is retained on the new loan.
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Significant derogatory events – lenders are not required to comply with the standard waiting
periods.
Property Eligibility
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All Fannie eligible property types are permitted.
Revised 3/31/15
9
Mortgage Proceeds
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No maximum LTV, CLTV or HCLTV.
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No payoff of subordinate financing is allowed with the subject loan proceeds. Second
mortgages must be resubordinated. The DU Refi Plus loan can be used to pay closing costs
and receive cash back up to $250.00.
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New subordinate financing is only permitted in conjunction with a DU Refi Plus transaction if it
replaces existing subordinate financing, and the new 2nd is limited to the unpaid principal
balance (closing costs or interest cannot be included).
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Property valuation criteria will be determined by DU for the DU Refi Plus. A property fieldwork
waiver (PIW) will be received more often for DU Refi Plus program than on a regular limited
cash out refinance. If you have an appraisal, even if you receive a PIW, you must use the
appraisal if you have one.
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Mortgage Insurance Requirements on a DU Refi Plus
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If the existing mortgage does not have mortgage insurance, the new loan will not require
mortgage insurance, even if the loan exceeds 80% LTV.
If the existing loan has MI, the lender must obtain either the amount of the existing MI or
standard MI. Merchants Bank will not allow the transfer of existing MI certificates that were not
originated by Merchants Bank.
Revised 3/31/15
10
My Community Mortgage Loans (MCM)
MCM is a conventional lending mortgage that offers underwriting flexibilities to qualified borrowers who
meet specific income criteria
 Please refer to the Product Matrix in Chapter 9 for additional eligibility guidelines.
 All Loan Level Price Adjustments may be found in Chapter 11, LTV and LLPA charts.
 See Fannie Mae Selling Guide for complete details.
Loan features:
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Purchase or limited cash-out refinances for 1-4 unit primary residence (manufactured
homes not eligible).
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The property must be owner-occupied and the borrower may not have an ownership
interest in any other residential dwelling at the time of loan closing.
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Refer to the Fannie Selling Guide for complete details – section B5-6.
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Lender must count the income from all of the borrowers on the note when determining
income eligibility.
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Home buyer education is required for First Time Home Buyers.
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Area Median Income (AMI) is used to determine income eligibility. AMI’s are available
on Fannie’s site at https://www.fanniemae.com/singlefamily/originating-underwriting.
Revised 3/31/15
11
Freddie Mac Only
Adjustable Rate Mortgages
Open Access Relief Refinance (HARP)
Home Possible/Home Possible Advantage
Rural Development
Revised 3/31/15
12
Adjustable Rate Mortgage Loans (ARM)
Features
This product is for borrowers who understand their rate may increase after the initial period but
want the benefit of a lower initial rate and monthly payment because they don’t anticipate holding
on to the property for the full term of the mortgage and/or they expect their income to increase
within the next couple of years.
 Please refer to the Product Matrix in Chapter 9 for additional eligibility guidelines.
 All Loan Level Price Adjustments may be found in Chapter 11, LTV and LLPA charts.
 See Freddie Seller Servicer guide for detailed information.
First Rate Adjustment
Margin
Annual Rate Cap
Lifetime Cap
This is the date on which the rate will adjust. Payment changes the
following month after the rate change. Your borrower will generally
have more than one full year at the initial rate.
Fill in this date on the Note and Rider and use it to calculate the
payment stream on your TIL
This is the percent over the 1-year Treasury Index that the future rate
will be. Both programs are tied to the 1-year Treasury Index. This
margin will be added to that index on the adjustment date to
determine what the new rate will be.
The maximum the rate can increase each year is 2% (based on the
movement of the Treasury Index). It may not go up to 2%, but if the
index plus the margin is over 2% than the initial rate, the most the
new rate will be is 2% higher.
This is the maximum the rate can increase over the life of the loan.
Additional Information
Additional documents needed are:
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ARM Note
ARM Rider (must be recorded with the mortgage)
ARM Endorsement to the Title Insurance
Consumer Handbook must be given at application
Initial ARM Program Disclosure must be given at application
Truth in Lending
The TIL needs to be completed with the first payment (up to and including the first adjustment
date) at the initial rate. The rest of the payments should be at current index value plus margin. If
the 2% cap kicks in, you have to keep showing the payment stream changes until your rate is at
the current index plus margin.
Remember, PMI can affect your payment stream disclosures.
Revised 3/31/15
13
Calculating Borrower Ratios for ARMs
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For 1, 3 and 5-year ARMs the borrower must be qualified using no less than the greater
of the note rate plus two percentage points, or the fully indexed rate.
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For 7/1 and 10/1 Arms the borrower must be qualified on no less than note rate.
Open Access – Freddie Mac Relief Refinance
Freddie Mac Relief Refinance – Open Access is a refinance of an existing Freddie Mac loan by
any lender using Freddie’s automated underwriting system Loan Prospector (LP). This program
expires December 31, 2015. Applications taken after this date are not eligible.
 All Loan Level Price Adjustments may be found in Chapter 11, LTV and LLPA charts.
 Please refer to the Product Matrix in Chapter 9 for additional eligibility guidelines.
 See Freddie Seller Servicer guide for detailed information.
Relief Refinance Mortgages – Open Access must meet the following requirements:
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Have a note date on or before May 31, 2009
There must be a benefit to the borrower: A reduced P&I payment or a more stable
mortgage product.
Be a first lien, conventional mortgage currently owned by Freddie Mac.
Have a new loan term that doesn’t exceed 30 years (LTV’s > 105% are limited to fully
amortizing fixed rate mortgages).
There are no maximum TLTV/HTLTV ratios.
Mortgage Proceeds
 Payoff of 1st mortgage only (no secondary financing can be paid off with loan proceeds).
 Pay closing costs and prepaids not to exceed $5000.
 Cash back to the borrower not to exceed $250.
 New subordinate financing is only permitted if it replaces existing subordinate financing,
and the new 2nd is limited to the unpaid principal balance (closing costs or interest cannot
be included).
Revised 3/31/15
14
Borrower Eligibility
 The customer cannot be currently delinquent on their mortgage. If the customer is
delinquent, they may qualify for the Home Affordable Modification Program (HAMP). If
Merchants Bank is servicing, contact Merchants Bank’s collection department for more
information.
 No minimum credit score is required. The borrower must meet the requirements for LP
underwritten loans.
 Borrowers may be removed through the refinance transaction provided at least one of the
original borrowers is retained on the new loan.
 Significant derogatory events – lenders are not required to comply with the standard waiting
periods.
Property Eligibility
 All Freddie eligible property types are permitted.
Property Valuation
 New appraisal
 HVE (3-4 unit properties, leasehold estates and manufactured homes require a full
appraisal). HVE Forecast Deviation Factor shown on findings can be no greater than .20
and must have a Confidence Score of “H” or “M” (high or medium).
Mortgage Insurance Requirements
 If the existing mortgage does not have mortgage insurance, the new loan will not
require mortgage insurance, even if the loan exceeds 80% LTV.
 If the existing loan has MI, the lender must obtain either the amount of the existing
MI or standard MI. Merchants Bank will not allow the transfer of existing MI
certificates that were not originated by Merchants Bank.
Revised 3/31/15
15
Home Possible
Freddie Mac Home Possible Mortgages offer flexibility and opportunities to meet the home
financing needs of low- and moderate-income borrowers looking for low down payments and
flexible sources of funds.
 Please refer to the Product Matrix in Chapter 9 for additional eligibility guidelines.
 All Loan Level Price Adjustments may be found in Chapter 11, LTV and LLPA
charts.
 See Freddie Seller Servicer guide for complete details
Loan Features:
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Primary residence purchase or no-cash out refinance.
Subject can be a 1-4 unit property.
Condos, PUDs and Manufactured homes are eligible.
Fixed-rate mortgages, 7/1 & 10/1 ARMs if secured by a 1- or 2-unit primary
residence, 5/1 Arms if secured by a
1- or 2-unit primary residence other than
an manufactured home.
95% LTV/TLTV.
Borrowers must not own any other residential property as of the note date.
Income limits per Freddie guide section A34.7 must be met (LP will determine
income eligibility, or you can access Freddie’s Affordable Income Property
Eligibility tool at
http://ww3.freddiemac.com/ds2/sell/affgold.nsf/frmHomePage?OpenForm
Lender must count the income from all of the borrowers on the note when determining
income eligibility.
No minimum borrower contribution required for 1-unit primary residence (2-4 unit
properties with LTV > 80% require 3% borrower’s own funds contribution, manufactured
homes required 5% borrower’s own funds contribution).
No reserves required for 1-unit primary residence (two months reserves required for 2-4
units).
Secondary financing must meet general Freddie Mac guidelines.
Homebuyer education is required for at least one borrower if all borrowers are First Time
Homebuyers.
See the Home Possible: At-A-Glance program summary available at
http://www.freddiemac.com/learn/pdfs/mp/hp_glance.pdf
TLTV up to 105% allowed if the subordinate financing is an Affordable Second that
meets the requirements of Freddie guide section 25.1(g). The Affordable Second
cannot be a home equity line of credit.
Revised 3/31/15
16
Home Possible Advantage
Features
Home Possible Advantage mortgages are Home Possible mortgages with additional
flexibility of higher loan-to-value (LTV) and total loan-to-value (TLTV) ratio limits.
 Please refer to the Product Matrix in Chapter 9 for additional eligibility guidelines.
 All Loan Level Price Adjustments may be found in Chapter 11, LTV and LLPA charts.
 See Freddie Seller Servicer guide for complete details
Loan features:
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Primary residence purchase or no-cash out refinances.
Subject must be a 1-unit property (manufactured homes not allowed).
Fixed-rate mortgages.
Borrowers must not own any other residential property as of the note date.
Income limits per Freddie guide section A34.7 must be met (LP will determine
income eligibility, or you can access Freddie’s Affordable Income Property Eligibility
tool at http://ww3.freddiemac.com/ds2/sell/affgold.nsf/frmHomePage?OpenForm
Lender must count the income from all of the borrowers on the note when determining
income eligibility.
No minimum borrower contribution required.
Homebuyer education is required for at least one borrower if all borrowers are First Time
Homebuyers.
See the Home Possible: At-A-Glance program summary available at
http://www.freddiemac.com/learn/pdfs/mp/hp_glance.pdf
Subordinate financing must be an Affordable Second that meets the requirements of
Freddie guide section 25.1(g). TLTV up to 105% allowed. The Affordable Second
cannot be a home equity line of credit.
Revised 3/31/15
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Rural Development Guaranteed Loans
Merchants Bank is a Rural Development nationally approved lender.
Rural Development helps low- and moderate-income people living in rural areas purchase
adequate, modest, decent, and safe homes by providing guarantees for qualified loans that a
lender would not make without a guarantee. The program’s loan terms and conditions, which
are described below, are designed to ensure that the loans are used to acquire modest
homes and that the property will provide adequate security for the loan.
 All Loan Level Price Adjustments may be found in Chapter 11, LTV and LLPA charts.
 Please refer to the Product Matrix in Chapter 9 for additional eligibility guidelines.
 See RD’s websites for detailed information
https://usdalinc.sc.egov.usda.gov/USDALincTrainingResourceLib.do (RD guidelines)
and http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?NavKey=home@1
(income and property eligibility)
Rural Development has made some changes to their process and how lenders submit
files to them.
RD approved lenders can submit the files to Merchants Bank for underwriting by providing the
required documents as shown on the Rural Development Underwriting Package Submission
Form which is located in the Documents tab on Merchants Bank’s landing page. You would
submit your file through GUS, gather the applicable documentation, and send the underwriting
package to Merchants Bank. We will underwrite the package submitted, condition the file for the
RD Conditional Commitment (as well as any other necessary conditions) and approve the loan
once all conditions and the conditional comment are received. You would be responsible for
submitting your package to RD, remitting the guarantee fee and obtaining the loan note
guarantee.
Lenders who are not currently an RD approved lender have two options for file
submission. Merchants Bank offers a “Rural Development GUS only” submission option, or
a “Rural Development Processing” option.
There is a contract that needs to be signed for both of the processing options and there is a
fee associated with each option as well. The fees are as follows: Rural Development GUS
only - $250, Rural Development Processing - $485. Please contact your Account Executive
for additional information.
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Rural Development GUS Only option – You would process the file as you normally
would, and Merchants Bank will submit your file to GUS, obtain the conditional
commitment, remit the guarantee fee and obtain the note guarantee. You would follow
the Rural Development GUS Only Procedures document that is located on the
Merchants Bank landing page in the Manual tab.
Revised 3/20/15
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Rural Development Processing option – this includes processing of your file in addition
to submission to GUS, obtaining the conditional commitment, remitting the guarantee fee
and obtaining the note guarantee. You would follow the Rural Development Processing
Procedures document that is located in the Manual tab on the Merchants Bank landing
page.
You would remain responsible for your disclosures and your final closing documents regardless
of which option is utilized.
General Information
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2% Guarantee Fee
.5% annual guarantee fee
LTV can exceed 100% of the market value of the property only to the extent that the
excess represents a financed guarantee fee.
All loans are 30-year fixed rate mortgages
Borrower typically cannot own additional residential property at the time of loan
closing (there are certain exceptions where this is allowed per RD guide section 8.2)
Seller paid closing costs up to 6%
Income from all household members must be included when determining program
eligibility
Appraisal should be completed by an FHA roster appraiser.
Revised 3/20/15
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