December 7, 2015
CA 2015-10: Underwriting Requirement Changes and Guide Updates
Effective December 7, 2015

We are expanding our underwriting requirements effective December 7, 2015 as a result of a comprehensive review of all Fannie Mae materials related to Fannie Mae's announcement SEL 2015-10 for HomeReady (previously MyCommunityMortgage) loans, high balance loans, and non-occupant borrowers. As mentioned with United Guaranty's general position on October 2, 2015 with CA 2015-07, United Guaranty would be issuing another announcement after conducting this comprehensive review.

The following provides a complete list of all underwriting requirement changes effective December 7, 2015. The detailed requirements below contain two minor adjustments in the Subordinate Financing row, as indicated with footnote 2. For high balance loans, we adjusted our LTV/CLTV to be consistent with the Fannie Mae product. For 2-unit properties, we are expanding our guidelines beyond what we initially announced in October.

Our Underwriting Requirements Guide will be updated with these changes along with the non-occupant borrower requirement change announced in CA 2015-07, effective October 5, 2015, and the Professional Program announced in CA 2015-08, effective November 16, 2015.

Topic New Requirement Previous Requirement

Non-Occupant Borrower

The loan will be qualified using the income and liabilities of all borrowers on the loan. There is no longer an occupant borrower DTI ratio requirement (this became effective October 5, 2015). There was a maximum 50% DTI for the occupying borrower(s).
The loan will be qualified using the assets of all borrowers on the loan. Funds from non-occupant borrowers can satisfy the minimum borrower contribution. The occupying borrower had to meet the minimum borrower contribution requirement unless:
  • The donor was the non-occupant borrower.
  • Maximum 45% DTI for occupant borrower.
  • All other United Guaranty gift/grant requirements applied.
Gifts/grants from eligible donors may be used to satisfy the borrower(s)' minimum contribution when United Guaranty's gift/grant requirements are met. Gifts/grants from donors other than the non-occupant borrower could not satisfy the occupying borrower's minimum contribution requirement.
2-unit primary residences up to $625,500, with a maximum 95% LTV will be eligible. 2-unit primary residences were ineligible.
New subordinate financing and existing subordinate financing (for which the CLTV exceeds the maximum base LTV per the transaction type) are eligible. New subordinate financing and existing subordinate financing (for which the CLTV exceeds the maximum base LTV per the transaction type) were ineligible.

Subordinate Financing

Loans with new subordinate financing and loans with existing subordinate financing (for which the CLTV exceeds the maximum base LTV per the transaction type) are eligible for the following:
  • 1-unit primary residences with loan amounts $417,001–$625,500 with a maximum 95%/100% LTV/CLTV.1, 2
  • 2-unit primary residences up to $625,500 with a maximum 95%/100% LTV/CLTV.1, 2
  • Renovation mortgages.
  • Non-occupant borrower transactions.
  • Use of 5% percentage point DTI variance may be considered (up to a maximum 50% DTI).
Loans with new subordinate financing and loans with existing subordinate financing (for which the CLTV exceeds the maximum base LTV per the transaction type) were ineligible for:
  • 1-unit primary residences with loan amounts $417,001–$625,500.
  • 2-unit primary residences.
  • Renovation mortgages.
  • Non-occupant borrower transactions.
  • Use of 5% percentage point DTI variance.

Investment Properties

Maximum loan amount increased to $625,500. Maximum loan amount was $417,000.
Renovation Mortgages The following are eligible for renovation mortgage loans:
  • 2-unit primary residences up to $625,500, with a maximum 95% LTV.
  • New subordinate financing and existing subordinate financing (for which the CLTV exceeded the base LTV per the transaction type).
The following were ineligible for renovation mortgage loans:
  • 2-unit primary residences.
  • New subordinate financing and existing subordinate financing (for which the CLTV exceeded the base LTV per the transaction type).

Minimum Borrower Contribution Requirement

Minimum borrower contribution requirements for 2-unit primary residences:
  • 80.01–85% LTV: 3%
  • 85.01–95% LTV: 5%
Minimum borrower contribution requirements for 2-unit primary residences:
  • 5% for all LTVs.

Gifts/Grants

  • Use of 5% percentage point DTI variance may be considered (up to a maximum 50% DTI).
  • Additional requirements for non-occupant borrower loans eliminated.
  • Use of 5% percentage point DTI variance was ineligible.
  • For gifts/grants to be considered the borrower's minimum contribution requirement for loans with non-occupant borrowers, the following applied:
    • The donor had to be the non-occupant borrower.
    • Maximum 45% DTI for occupant borrower.
    • All other United Guaranty gift/grant requirements applied.

Reserves

Minimum reserves requirements for 2-unit primary residences:
  • For loans receiving a DU® Approve/Eligible or LP® Accept/Eligible Recommendation we align with the DU/LP reserve requirements.
  • For all other loans: 6 months' PITIA
Minimum reserves requirements for 2-unit primary residences:
  • 6 months' PITIA for all 2-unit primary residences.

Third-Party Review Appraisal

A third-party review appraisal is no longer required for loan amounts $625,501 to $850,000. A third-party review appraisal was required for loan amounts $625,501 to $850,000.

1 For CLTVs 95.01% to 100%, the subordinate financing must meet Fannie Mae's Community Seconds® or Freddie Mac's Affordable Seconds® requirements. The loan must be identified as an Affordable Housing loan within the MI submission.

2 This requirement has been amended from what was announced within CA 2015-07.

As a reminder, we will be aligning with Fannie Mae's new requirements announced within SEL 2015-10 for the following effective December 7, 2015. Because we are aligning with Fannie Mae, there are no changes required to our Guide for these requirements:

Please contact your United Guaranty Account Representative if you have questions concerning this announcement.

For questions regarding underwriting requirements or submissions, contact our Underwriting Customer Service Team at 877.MI.CHOICE (877.642.4642) or email UGC:customerservice.

© United Guaranty Corporation 2015. All rights reserved. United Guaranty is a registered mark. United Guaranty is a marketing term for United Guaranty Residential Insurance Company and United Guaranty Mortgage Indemnity Company. Coverage is available through admitted company only. Community Seconds, MyCommunityMortgage, HomeReady, Desktop Underwriter, and DU are marks of Fannie Mae. Affordable Seconds and LP are marks of Freddie Mac.

CA2015-10

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