WHEDA Home News - July 2008

Recap of 2008 Home Program Changes

The following guidelines are applicable in stable real estate markets. See the “Declining Markets” section below for additional restrictions.

Eligible Property Types

Detached single family
*See “Credit” section below for LTV/Indicator Credit Score parameters
Condominiums
- Warrantable existing
- Non-warrantable new construction and conversion projects**
- 95% / 100% CLTV
**Contact Pat Multerer or Gene Weittenhiller at 800-334-6873 for approved Condo Conversion projects.
Manufactured
- Existing and completed new construction, subject to our current manufactured housing property standards
2-Unit (5 years or older)
- 90.01% - 95% LTV - No consideration given to rental income from the second unit
- 90% LTV or less - 75% of the rent from the second unit may be added to the borrower’s income for qualifying
Deed Restricted (Land Trusts and Tribal Land)
- A duplicate loan package must be submitted to the pool mortgage insurer for review. The loan application must be marked as follows:
  010 – Survives foreclosure
  011 – Does not survive foreclosure
Ineligible properties
- Manufactured (Construction-to-Permanent)
- 3-4 Unit

Land Value/Acreage

A change to our April 2008 announcement, a home located on more than five acres of land must meet the following requirement:

The appraised value of the residence should be at least 60% of the total property value.

Eligible Borrowers

All borrowers must contribute a minimum of $500 of verified funds into the transaction
Section 8 Home Ownership Voucher Program
- The voucher payment may be used as a reduction to the PITI to determine qualifying ratios.
Veterans
- Permanent exemption from the first-time home buyer requirement.

Credit

A minimum indicator credit score of 620 is required for all borrowers. The “indicator” score is the middle of three or the lessor of two scores. If the borrower has a “thin file” credit report (less than three 12-month traditional credit references), additional non-traditional credit references are required.

Maximum LTV by Indicator Credit Score:

680 - 95.01% - 97%
680 - 95% Construction-to-Permanent (stick built only)
620 - 95% and below

Borrowers who have an Indicator Credit Score of Zero:

Must have 3 non-traditional credit references, each reflecting a 12-month payment history and payment required monthly
Not eligible to purchase a home in a declining/distressed market
Maximum LTV/CLTV 95%
LTVs greater than 90% require a duplicate loan package to be sent to the pool mortgage insurer for review

Desktop Underwriter and Loan Prospector

Risk recommendations made by an Automated Underwriting System (AUS) including Fannie Mae’s Desktop Underwriter® (DU) and Freddie Mac’s Loan Prospector® (LP) are not acceptable at this time. In light of the recent and forthcoming changes to these AU Systems, WHEDA continues to review their risk recommendations for future acceptability.

All loan applications must be submitted to WHEDA for a manual underwrite.

CLTV

103% - If down payment assistance is a forgivable or deferred grant (no periodic repayment required)
100% - If using Easy Close (scheduled monthly repayment begins immediately)

Declining/Distressed Markets

The declining/distressed market restrictions apply when:

The property is located in a market identified as declining/distressed by the pool mortgage insurer
The subject property appraisal report contains negative comments or other indications of being in a declining market (including but not limited to oversupply, over six (6) months marketing time, or declining markets check box noted)
The lender has a policy or other knowledge which indicates the property is in a declining/distressed market

Underwriting restrictions:

Maximum LTV/CLTV - 95%/100%
Condos - Maximum LTV/CLTV - 90%/90%
Indicator Credit Score 680 for loans 90.01% - 95% LTV
Until July 14, 2008, LTVs greater than 90% require a duplicate loan package to be sent to the pool mortgage insurer for review. A duplicate package is not required with packages received on or after July 14, 2008.

Ineligible:

Zero “Non-traditional” credit score borrowers
2-4 unit properties
Construction-to-Permanent financing
Gateway to Home Ownership

Primary and Pool Mortgage Insurance

The current pool insurer is Genworth Mortgage Insurance Corp. (www.gemortgageinsurance.com)
WHEDA will select the primary mortgage insurer at the time of underwrite. Standard Housing Finance Authorities (HFA) mortgage insurance premiums apply

Debt-to-Income Ratios:

Standard 33%/38%
Higher ratios may be acceptable based on the borrower’s credit history and indicator credit score. The maximum total debt-to-income ratio is 45%.

If you have any questions regarding the information in this e-mail, contact Pat Multerer at 1-800-334-6873 or via e-mail atpat.multerer@wheda.com.