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COMING JULY 2014!
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WHEDA Advantage Conventional FAQs 


DISCLOSURE

What line on the Good Faith do we insert the borrower fees? HM_black_top.gif 

Click here to see WHEDA's examples of how to complete the Good Faith Estimate for both table funded and closed loan channels.


How often will the interest rate change? HM_black_top.gif 

The interest rate is subject to change daily. Check our website often.


Is WHEDA required to report Home Mortgage Disclosure (HMDA) data? HM_black_top.gif 

WHEDA is considered a non-profit and therefore is exempt from HMDA reporting.


What is the lender compensation for this product? HM_black_top.gif 

  • WHEDA will pay the lender the greater of $1,500 or 1.75% of the loan amount not to exceed $3,500 
  • The lender may charge soft costs (i.e. processing fee, underwriting fee, etc.) if the loan is submitted as a Closed Loan Purchase.

What is the adverse market fee? HM_black_top.gif 

The adverse market fee is paid to Fannie Mae when WHEDA delivers the loan. Loan applicants are required to pay this fee regardless of the property location. The adverse market fee is .25% of the loan amount.


COMPLIANCE

Does a displaced homeowner qualify as a first-time home buyer? HM_black_top.gif 

No. Displaced homeowners are not exempt from the first-time home buyer requirement.


If a borrower owns recreational real estate, do they have to sell it? HM_black_top.gif 

The borrower may not own other residential dwellings. If the recreational real estate is land only, they do not have to sell it to qualify for this loan.


If income has decreased due to change in employment, does WHEDA use the higher income from the previous job or current income for compliance?HM_black_top.gif 

WHEDA would use the current income projected forward 12 months.


RATE LOCK

If the rate lock expires, how soon can I relock the interest rate?  HM_black_top.gif 

If the subject property has not changed, the rate may be relocked 45 days after the initial expiration date.


ASSETS

Is there a minimum borrower contribution requirement? HM_black_top.gif 

A 3% contribution from the borrower's own funds is required for 2-unit properties. For 1-unit properties WHEDA has no requirement. However, if the loan requires private mortgage insurance, the mortgage insurer may have their own minimum borrower contribution requirement that must be met.


What funds count toward the minimum borrower contribution? HM_black_top.gif 

Prepaid closing costs such as the credit report, first year hazard insurance premium, home inspection or earnest money can be used to satisfy this requirement. The minimum borrower contribution must come from the borrower’s own funds that must be seasoned for at least two months.


If the borrower has paid costs outside of closing (i.e. homeowners insurance, home inspection, earnest money, lenders application/credit report/appraisal fees, can they receive their earnest money back at closing? HM_black_top.gif 

No. In the event a borrower has paid prepaid closing costs, the loan amount should be reduced to ensure the borrower does not receive any cash back at closing.


Can an income tax refund or the sale of some personal property be used as seasoned funds without being seasoned for the required 2 months? HM_black_top.gif 

Yes. Refer to Borrower Eligibility – Assets section of the Origination Guide.


Does the borrower need a cash reserve? HM_black_top.gif 

The borrower needs 2 months PITI in reserve if they are purchasing a 2-unit property. Reserve requirements for a single family property vary by product, pricing option and private mortgage insurance company, if applicable, requirements. Borrowers with a cash reserve are more likely to receive an Approve/Eligible DU decision at higher loan-to-values.


Can down payment assistance be used? HM_black_top.gif 

Yes, as long as the source and amount are verified. Acceptable sources of down payment assistance must qualify under Fannie Mae Community Seconds.


DEBT TO INCOME RATIO

Do I have to count the student loan payments in the total debt ratio? HM_black_top.gif 

Yes. All student loans must be underwritten using a fully amortized monthly payment regardless of when repayment begins.


How to verify what the student loan payment is? HM_black_top.gif 

If the payment amount is not listed on the credit report, the applicant should have a Payment Letter from the student loan provider to verify the estimated monthly payment on their loan.


Can the borrower pay off outstanding debt in order to meet the total debt-to-income ratio? HM_black_top.gif 

Installment debt can be paid in full. Provide documentation in the application package to verify the source of the funds that will be used to pay the loan in full. Prepayment of installment payments to less than 10 months is not acceptable.

In general, revolving debt cannot be paid in full. Exceptions may be made depending on the number of revolving debts and the outstanding balance.


CREDIT

If utilities are included in the rent, can the rent payment be counted as two references? HM_black_top.gif 

No. This would only count as one credit reference.


Can a 12 month savings history be used as a credit reference? HM_black_top.gif 

Yes. A strong savings history may be acceptable as an alternative credit reference.


What if the borrower does not have three recent trade lines on their credit report? HM_black_top.gif 

The lender must supplement the loan application with additional credit references to meet the minimum requirement of three references with at least a 12-month history.


Does WHEDA have a minimum credit score requirement? HM_black_top.gif

Yes, but the score varies:

620 – If the borrower received a DU Approve/Eligible or EA-1/Eligible
660 – If the loan does not receive a DU Approve/Eligible or EA-1/Eligible and the loan is being submitted for a manual underwrite up to 97% loan to value. If the loan-to-value exceeds 80% refer to the private mortgage insurance company’s requirement.
 


If the loan applicant has no credit score and can provide a minimum of three 12-month alternative credit references, what is the maximum loan-to-value? HM_black_top.gif 

The maximum loan-to-value is 95% for applicants with non-traditional credit.


In the event a married person is applying for a loan individually and one spouse has good credit and the other spouse has poor credit, does the spouse with poor credit have to be on the loan? HM_black_top.gif 

No. A married person can apply for a loan individually. WHEDA will not use the credit score of a non-applicant in the underwriting decision; however, WHEDA will use marital debt in calculating the total debt ratio. Collection and judgments incurred during the marriage would need to be paid in full. The non-applicant’s income would be included to determine compliance with WHEDA income limits.


HOME BUYER EDUCATION

Is there a fee for home buyer education? HM_black_top.gif 

If the education is being provided face-to-face through a housing counseling agency, there may be a fee. The fee may not exceed $650 and may be paid by the seller. Face to face education is not required for the first mortgage loan. If the combined loan to value exceeds 97% education through a WHEDA approved counseling agency or eHomeAmerica.org is required.


How long is the home buyer education certificate valid? HM_black_top.gif 

The education must have been completed within the last 12 months.


What type of on-line education is acceptable? HM_black_top.gif 

On-line education through a WHEDA approved private mortgage insurance company website is acceptable if the combined loan-to-value does not exceed 97%.


CLOSING

Can the borrower receive cash back at closing? HM_black_top.gif 

The borrower may not receive cash back at closing. The only exception is if the borrower is purchasing a 2-unit property. In this case, the borrower may receive the security deposit from the second unit as long as it is confirmed as an initial investment by the property seller.


Whose name as the lender should be on the closing documents? HM_black_top.gif 

The originating lender must use their name as the lending institution. Once the loan is closed the Note and Mortgage are assigned to WHEDA.


POST CLOSING

If Fannie Mae has a concern with the loan post-closing will the lender have to repurchase the loan? HM_black_top.gif 

No, if the loan was underwritten by WHEDA before the loan closing. The only time WHEDA would require a repurchase of the loan is in the event of fraud or misrepresentation.


Does WHEDA calculate interest on a 365 or 360 day basis? HM_black_top.gif 

WHEDA calculates interest on a 360 day basis.


Does WHEDA offer bi-weekly payments? HM_black_top.gif 

Not at this time, however there is no prepayment penalty. A borrower can pay additional principal on any or all monthly payments.


OTHER

What if the appraiser notes repairs that need to be completed? HM_black_top.gif 

Repairs must be completed prior to closing. If they are minor in nature, the lender may provide an escrow agreement at 110% of the repair bid. All work must be completed within 15 days.


Does WHEDA require a home inspection? HM_black_top.gif 

Although we encourage buyers to request a home inspection, it is not a requirement for the loan.


Is there a fee to use Desktop Originator (DO)? HM_black_top.gif 

There is no fee to register for access to DO. When a loan application is scored there is a $15 fee charged to the lender.


What is the preferred method to submit loan applications to WHEDA? HM_black_top.gif 

Preapproval applications may be submitted via fax. Full loan applications must contain original documentation and should be sent by mail, express delivery or WHEDA Connect.