QM/Non-QM
What are the qualifications for a QM loan?
Bonus: What are the different threshold amounts and applicable fees?
3 3's
No BIN
Bonus: 3% for >/=$109,898 loan, $3,297 for >/=$65,939 & <$109,898, 5% for >/=$21,980 & <$65,939, $1,099 for >/=$13,737 & <$21,980, 8% for <$13,737
A funding fee is required on ____ and _____ loans
Bonus: How is a funding fee calculated?
VA and USDA
Bonus: Sliding scale
True or false - A fixed rate loan interest rate can never change.
Bonus: what part of your payment can change?
True
Bonus: taxes
How can the risk of a balloon mortgage be minimized?
Bonus: What are the 3 most common labels for a balloon mortgage?
Conditional refinance provision
Bonus: 5/25, 7/23, 180/360
When a homeowner defaults on an FHA loan, the funds are drawn from where in order to repay the lender?
Mutual Mortgage Insurance Fund (MMIF)
What are the types of qualified mortgages?
Conventional
FHA
VA
A VA loan must be able to refinance _____ months after closing.
Bonus: What are the 2 VA refinances?
36
Bonus: IRRRL (Interest rate reduction refinance loan) and Cash Out
This loan type has various factors which determine the interest rate at certain intervals. One of which includes a fully indexed rate. What loan type is this?
Bonus: what makes up a fully indexed rate?
ARMs
Bonus: margin plus index
What are some other terms for a second mortgage?
Bonus: What is the most common arrangement for a loan structure that includes a second mortgage and why?
Subordinate lien
simulatenous loan
Piggyback loan
Bonus: 80-10-10; avoid paying PMI
How long will a borrower pay MIP if their original LTV is 94%?
The full term of the loan
What mortgage products are offered for only non-qualified mortgages?
IO
Balloon
Negative amortization
What HUD handbook states the standards, requirements and policies for a FHA loan?
Single Family Housing Policy Handbook
What loan type requires a CHARM disclosure and counseling approved by HUD prior to consummation?
Bonus: What does CHARM stand for?
ARMs
Bonus: Consumer Handbook on Adjustable Rate Mortgages
What are the different reduced documentation loans and their meanings:
Bonus: What regulation now renders these illegal?
No ratio: dti ratios were not considered
No income, no assets (NINA): no income or asset info provided, only employment verified
Stated income, stated assets (SISA): income and assets info provided but only employment verified
No income, verified assets (NIVA): no income info provided but assets and employment verified
Stated income, verified assets (SIVA): income info provided but only assets and employment verified
No doc: only documentation used is credit report and appraisal
Bonus: ATR Rule under Regulation Z - TILA
What law was implemented to cancel unnecessary PMI?
Bonus. When can PMI be removed/cancelled?
Homeowners protection Act
Bonus: LTV = 78% is automatically removed, LTV = 80% borrower can request
When can a QM have a balloon payment?
When issued by a small creditor serving a rural or underserved area.
Has a fixed interest rate
A term 5 years or longer
Held by small creditor for at least 3 years unless it sells the loan to another small creditor
What are the 2 types of loans the USDA provides?
Bonus: Which loan is funded by a private Lender?
Guaranteed and direct
Bonus: Guaranteed
True or False: Fixed rate mortgages are able to include pre-payment penalties OR be considered qualified.
Bonus: What are considered the allowable penalty amounts?
False - AND
Bonus: 2% within the first 2 years after consummation. 1% within the 3rd year after consummation. No prepayment penalty after 3 or more years.
What are the requirements and limits for a HECM loan?
At least 62 years old
Loan secured by principal residence
Existing mortgage must be paid off either before or through funds disbursed through the HECM
Applicant may not be in default on any federal debt
Must complete counseling that discloses financial implications, potential consequences, and other options to the borrower
Formation of 2 contracts - one between borrower and lender, one created by HUD to ensure that if the lender cannot make payments as required, payments are still made
Equity available, defined as the principal limit, is set at lesser of appraised value or home or 150% of the national conforming limit, and lender cannot release more than 60% of the principal limit with initial disbursements.
The amount paid for MIP depends on what 3 factors?
LTV Ratio, Length of Loan term, Base amount of loan
A borrower claims that his/her creditor failed to make a reasonable and good faith determination of repayment ability in issuing a qualified HPML mortgage. What makes this claim more challenging to prove?
Bonus: What would the answer be if the mortgage were not an HPML?
Rebuttable presumption of compliance
Bonus: Conclusive presumption of compliance
Morty puts a 15% down payment on a 250,000 dollar conventional loan. What is the max seller concession percentage Morty is limited to?
6%
HPMLs have special requirements. As a minimum, how long do their escrow accounts need to be maintained for?
Bonus: what are the percentage points over Average Prime Offer Rate to qualify for HPML status on a first lien loan?
5 years
Bonus: 1.5 percentage points within conforming limits ($510,400, or $765,600 in high cost areas), & 2.5 percentage points for jumbo loans
What are the types of reverse mortgages? Explain the purpose of each.
Zach, there are 4 types of reverse mortages. First is the single purpose reverse mortgage, which is only available for a purpose specified by the lender. Then there's the HECM (or the Home Equity Conversion Mortgage), which is regulated and insured by HUD, involves fixed monthly payments, credit line, or a combination of both. Next is proprietary mortgages, which are private loans for expensive homes that have a lot of equity, and are typically more expensive. Finally there's HELOCs, Home Equity Lines of Credit, these are open-end loan issued typically as a second mortgage, but can be a first mortgage if acquired through refinancing. They can be worth up to 85% of appraised value of the home minus the amount owed on a first mortgage, and may include a "draw period" during which money can be withdrawn.
A borrower takes out a loan for a property for $300K with an interest rate of 4.62%. If the borrower's original LTV = 91%, what is the amount of UFMIP that they will pay at closing?
$5,250