600 SERIES - CMG Financial

Revised 12/18/2014
600 SERIES
Loan Program Matrix
Product Eligibility Grid
Click Here for Full Guidelines
Click Here for HOA Questionairre
Click Here for Condo Certification (CMG UW USE ONLY)
Revised October 7, 2014
Copyright © 2014 CMG Mortgage, Inc.
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TABLE OF CONTENTS
1.
NON-CONFORMING Non-Agency PRODUCT ......................................................................................... 3
1.1
NON-CONFORMING Non-Agency PRODUCT ELIGIBILITY MATRIX ............................................................. 3
1.2
NON-CONFORMING Non-Agency PRODUCT GUIDELINES ........................................................................ 4
1.3
CONDOMINUM AND PUD PROJECTS……………………….……………………………………………………………………………..11
1.4
NON-WARRANTABLE CONDOMINIUM PROJECTS……………………………………………………………………………………12
1.5
CONDOTEL PROJECTS………………………………………………………………………………………………………………………………14
Copyright © 2014 CMG Mortgage, Inc.
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1.
NON-CONFORMING Non-Agency PRODUCT
1.1
NON -CONFORMING Non-Agency PRODUCT ELIGIBILITY MATRIX
Loan Amount
Maximum
LTV/CLTV/HCLTV
Minimum
FICO
Reserves
(Months)
Maximum
DTI
Primary (1-Unit)
Purchase / Rate Term
Cash-Out
$417,001-$1.0 Million
80%
720
6
43%
$417,001-$1.0 Million
75%
700
6
43%
$1,000,001-$1.5 Million
80%
740
12
43%
$1,000,001-$1.5 Million
75%
720
12
43%
$1,500,001-$2.0 Million
70%
720
18
43%
$2,000,001-$2.5 Million
65%
720
18
43%
$417,001-$1.0 Million
75%
700
9
43%
$1,000,001-$1.5 Million
70%
720
12
43%
$1,500,001-$2.0 Million
55%
720
18
43%
Second Home
Purchase / Rate Term
Cash-Out
$417,001-$1.0 Million
75%
720
9
43%
$1,000,001-$1.5 Million
70%
720
12
43%
$1,500,001-$2.0 Million
65%
720
18
43%
$417,001-$1.0 Million
70%
700
9
$1,000,001-$1.5 Million
65%
720
12
43%
43%
$1,500,001-$2.0 Million
50%
720
18
43%
Primary (2-Unit)
Purchase / Rate Term
Cash-Out
$533,851-$1.0 Million
70%
700
12
43%
$1,000,001-$1.5 Million
65%
700
12
43%
$1,500,001-$2.0 Million
50%
720
18
43%
$533,851-$1.0 Million
70%
700
12
43%
$1,000,001-$1.5 Million
65%
700
12
43%
$1,500,001-$2.0 Million
50%
720
18
43%
18
43%
Approval:
Sellers must be approved to
deliver Non-Agency loans
to CMG.
Products:
15, 30-YR Fixed
5/1, 7/1, 10/1 ARM
ARM Summary:
5/1 caps – 2/2/5
7/1 caps – 5/2/5 or 2/2/5
10/1 caps – 5/2/5 or 2/2/5
Interest Rate Floor – margin
Margin – 2 ½%
(2 ¼ % w/ price adj)
Index – 1 yr LI BOR
Lookback – 45 days
Cash Out:
Maximum $300,000
Non-warrantable Condos:
Minimum loan amount is
$100,000
Condotels:
See Condotel Projects section
of the Seller Guide for
additional restrictions.
Condotels: Primary (1-Unit) and Second Homes
Purchase / Rate Term
$100,000-$1.5 Million
Copyright © 2014 CMG Mortgage, Inc.
65%
740
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1.2
NON -CONFORMING Non-Agency PRODUCT GUIDELINES
CMG Seller Guide
Refer to the CMG Seller Guide for full requirements.
Underwriting
All loans must be manually underwritten and fully documented. No documentation waivers based on Agency AUS recommendations are
permitted. All loans must be underwritten in compliance with the QM/ATR rule and standards set forth in Appendix Q. For additional
topics not specifically or fully addressed by Appendix Q guidance or herein, Fannie Mae underwriting guidelines should be followed.
Ability to Repay and
Qualified Mortgage
Rule
All loans must meet the Ability to Repay and Qualified Mortgage provisions of the Dodd-Frank Act.
Eligible for Purchase: Safe Harbor QM
Not Eligible for Purchase: Rebuttable Presumption QM (HPML) and Non-QM
*Exception: CMG will purchase Non-Agency loans for non-warrantable condos and condotels that are Higher-Priced Covered Transactions as
defined under TILA.
Age of Documents
90 days: Credit Report, Income, Assets, Title Commitment
120 days: Appraisal, Power of Attorney
Assumptions
Not assumable; except for ARMS, which may be assumable after the initial fixed rate period.
Borrowers
− U.S. citizens
− Permanent resident aliens
Eligible
Borrowers
Ineligible
Conversion Option
− Inter-Vivos Revocable Trusts
− Illinois Land Trust
− First time homebuyers
All borrowers must have a valid social security number
− Foreign Nationals
− Non-Permanent Resident Aliens
− Non-occupant co-borrowers
− Irrevocable trusts
− Land trusts, except for Illinois Land Trusts
− Limited partnerships, general partners, corporations, and limit liability companies
− Borrowers party to a non-arm’s length transaction
− Borrowers with only an individual taxpayer identification number (ITIN)
Not allowed
Copyright © 2014 CMG Mortgage, Inc.
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1.2
NON -CONFORMING Non-Agency PRODUCT GUIDELINES
Credit
Minimum Standards
Derogatory Credit
DTI / Qualifying
A minimum of 3 trade lines open for at least 24 months is required.
− At least 2 of the trade lines must show activity within the past 12 months;
− At least 1 trade line must be a mortgage for non-first time homebuyers, and for first time homebuyers, 1 trade line must be an
installment line;
− First time homebuyers must have a satisfactory VOR for at least 24 months;
− Credit history must be established for at least 5 years, and be consistent with the borrower(s) occupation and financial activity.
Fewer than 3 trade lines open for at least 24 months may be considered if
− Credit history is established for at least 10 years, and no fewer than 10 trade lines reported, one of which must be a mortgage;
− At least 1 trade line is open and shows activity within the past 12 months.
Authorized user accounts and non-traditional credit are not considered as acceptable trade lines.
− No bankruptcies or foreclosures, short sales, deed in lieu or modification within the last 7 years
− Generally public records within the past 24 months. Refer to the CMG Seller Guide for additional guidance.
− No significant derogatory ratings on any trade line activity within the last 36 months (including installment or revolving accounts)
The debt-to-income ratio must be determined in accordance with the ATR/QM Final Rule and its Appendix Q. Per those requirements,
Debt includes:
− the monthly payment on the subject loan
− the monthly payment for Mortgage-Related Obligations
− the monthly payment for any simultaneous loan that the Seller knows or has reason to know will be made
− the current debt obligations including alimony and child support
− any existing monthly liabilities
− any future liabilities based on credit inquiries or otherwise disclosed by the borrower
Income includes verified gross monthly income, meaning the sum of the Borrower’s current or reasonably expected income, including
any income from verified assets.
Qualifying rates by product:
− 15, 30-YR Fixed Note Rate
− 5/1 ARM
Greater of fully indexed rate or Note Rate + 2%1
− 7/1, 10/1 ARM
Note Rate
At all times, the qualifying rate must equal the maximum interest rate that may apply during the first five years (subject to any rate
adjustment caps) after the date on which the first regular periodic payment will be due.
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1.2
NON -CONFORMING Non-Agency PRODUCT GUIDELINES
Employment
Any gaps in employment spanning ≥ 1 month must be explained and documented by the Borrower in writing.
A written Verification of Employment (VOE) will be required when income detail relied upon to determine a borrower’s repayment ability
is not clearly documented and/or itemized on W-2 forms or paystubs. This may be applicable for income sourced from commissions,
bonus, overtime, or other income.
Escrows
Verification of employment or self-employment confirmation which confirms the borrower’s employment status is required for all
borrowers whose income is used for qualifying purposes.
− For wage income, a verbal verification of employment (VVOE) must be completed within 10 business days before the Note date (or
funding date for escrow states);
− For self-employed income, verification of self-employed businesses by third-party sources must be obtained within 30 calendar days
from the Note or funding date.
State-related Escrow Waivers:
− California: Escrows may be waived at borrower request without conditions;
− District of Columbia: Escrows may be waived at borrower request without conditions;
− Other States: May be waived at borrower request, subject to:
. A review of title work for evidence of tax liens or other evidence of failure to pay tax obligations;
. File cannot reflect evidence of lapsed hazard insurance coverage;
. To the extent the borrower has previously obtained mortgage loans without escrow requirements, the loan documentation
should support a history of timely independent payment of escrow items. Borrowers with a prior history of delinquent taxes or
lapses in homeowner’s coverage are not eligible to waive escrows.
Loans without escrows are subject to a loan-level price adjustment. At a minimum, taxes and hazard insurance must be escrowed in
order to avoid the loan-level price adjustment.
Escrow Holdbacks
Not eligible except, loan may be originated with escrow holdbacks but all items must be completed and escrows disbursed prior to sale
to CMG.
Financing & Sales
Concessions
Interested party contributions may not exceed 6% of the loan amount. Amounts contributed may only be used for closing costs or for
prepaid items.
For any financing and sales concessions beyond the 6% limit, both the appraised value and sales price must be reduced by the concession
amount for purposes of calculating the LTV/CLTV/HCLTV.
Fraud
Electronic fraud detection/QC report is required for each Purchase Package. Report must cover standard areas of quality control
including borrower validation, Social Security verification, property information and MERS.
Copyright © 2014 CMG Mortgage, Inc.
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1.2
NON -CONFORMING Non-Agency PRODUCT GUIDELINES
Funds to Close
Minimum 5% required from borrower(s) own funds.
All borrower funds must be documented with 2 most recent months’ asset statements or VOD covering a minimum of 60 consecutive
days.
− A written VOD may only be used as supporting documentation and cannot be used in lieu of asset statements.
Gift Funds
High Cost / HPML and
Rebuttable
Presumption
Income
Documentation
Salaried Income
Business funds may be used for down payment and/or closing costs, not for purposes of calculating reserves. Cash flow analysis required
using 3 months business bank statements to determine no negative impact to business based on withdrawal of funds.
− Borrower must have access to funds
− The borrower must be the sole proprietor or 100% owner of the business (or all borrowers combined own 100%)
− CPA letter must be included in the file confirming that the withdrawal will not harm the financial strength of the business
Use of gift funds subject to the following:
− Primary residence purchase transactions only.
− Provided borrower meets 5% minimum down payment from his or her own personal funds, gift funds may be used to lower the LTV
further.
− Gift funds are not allowed to meet reserve requirements.
− Gift funds can be applied towards closing costs/pre-paids above minimum required investment.
− Gift letter, signed by the donor that includes the amount of the gift, date the funds were transferred, a statement that no
repayment is expected, the donor’s name/address/phone number and relationship to the borrower source of funds.
− The Loan File must verify that sufficient funds must be verified to cover the gift either in the donor’s account or transferred to the
borrower’s account in accordance with the Seller Guide.
− The donor must be a relative or domestic partner (domestic partner donors must live with borrower).
CMG will not purchase:
− Mortgage loans that meet the definition of a High-Cost Mortgage Loan or a Higher-Priced Mortgage Loan as defined in TILA;
− Mortgage loans that meet the definition of a Higher-Priced Covered Transaction or QM with Rebuttable Presumption
− Mortgage loans that are classified and/or defined as a “high cost,” “threshold,” “higher-priced mortgage loan,” “predatory high risk
home loan” or “covered” loan (or similarly classified loan using different terminology under a law imposing additional legal liability
for mortgage loans having high interest rates, points, and/or fees) under any applicable federal, state or local law.
Exception: CMG will purchase Non-Agency loans for non-warrantable condos and condotels that are Higher-Priced Covered
Transactions as defined under TILA.
W-2 forms or personal tax returns, including all schedules, for prior two years;
Most recent year-to-date computer generated paystub up through and including the most recent pay period (at the time of application).
Paystub must cover at least 30 days.
Copyright © 2014 CMG Mortgage, Inc.
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1.2
NON -CONFORMING Non-Agency PRODUCT GUIDELINES
Income
Documentation
Self-employed Income
Income
Documentation
Tax Transcripts
Loan Amounts
Sole Proprietorship
− Personal tax returns, including all schedules for the most recent two tax years;
− Year-to-date P&L statement and balance sheet signed and dated by the borrower.
Corporations, “S” Corporations, Partnerships (General, Limited), Limited Liability Companies
− Personal tax returns, including all schedules, for the most recent two tax years;
− K-1s from most recent two tax years, showing ownership percentage;
− Business tax returns, including all schedules, for the most recent two tax years;
− Year-to-date P&L statement and balance sheet.
A completed, signed, and dated IRS form 4506-T must be completed for all borrowers (whose income is used to qualify for the mortgage)
at closing;
− The 4506-T must be processed and tax transcripts obtained for each year requested;
− Tax transcripts must match documentation in the file;
− In the case where taxes have been filed and the tax transcripts are not available from the IRS, the IRS response to the request must
reflect “No Record Found.
Minimum Loan Amount: $417,001 or $1 above the conforming limits for # of units; loan amounts between Base Conforming loan limits
and Agency Super Conforming loan limits are eligible.
Maximum Loan Amount: See product grid above.
Non-Arms Length
Transactions
Occupancy: Eligible
Occupancy: Ineligible
Property
Appraisal
Not eligible, except in limited circumstances.
With appropriate documentation, following may be considered:
− Family sales or transfers;
− Borrower is an employee of the originating lender and the lender has an established employee loan program;
− Renter buying from landlord, with at least 24 months cancelled checks evidencing satisfactory pay history;
− Sellers or Buyers representing themselves as agent in the real estate transaction.
− Primary residences for 1-2 unit properties
− Second home residences for 1 unit properties
− Primary residences for 3-4 unit properties
− Second home residences for 2-4 unit properties
− Investment properties
≤ $1,500,000
One full appraisal
> $1,500,000
Two full appraisals
When 2 appraisals are required:
− Appraisals must be completed by two independent companies.
− The LTV will be determined by the lower of the two appraised values as long as the lower appraisal supports the value conclusion.
The final inspection and/or recertification of value must be for the appraisal with the lower value.
− Any inconsistencies between the two reports must be addressed by the underwriter and all discrepancies must be reconciled.
Copyright © 2014 CMG Mortgage, Inc.
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1.2
NON -CONFORMING Non-Agency PRODUCT GUIDELINES
Property
Eligible
−
−
−
−
−
−
−
−
−
Property
Ineligible
−
−
−
−
−
−
−
−
−
−
Property
Maximum Financed
Property
Recent Listings
1-2 Unit owner occupied properties
1 Unit second homes
Low/Mid/High-Rise Condominiums and detached (site) condos, Fannie Mae Warrantable
o Warrantable Types R, S, T or U
o New condominium projects with Condo Project Manager (“CPM”) or PERS approval are eligible, except in the state of Florida
o Limited Review Types P and Q are not eligible
Planned Unit Developments (PUDs), Fannie Mae warrantable
Non-warrantable Condos
Condotels
Modular homes
Properties with ≤ 20 acres
Properties with > 10 and ≤ 20 acres
o Must be typical for area as evidenced by recent comparables
o Maximum 35% land to value
o No income producing attributes
Accessory Units – must follow Fannie Mae requirements regarding Accessory Units and Additions without Permits
3-4 unit properties
− Commercial Enterprise (e.g. Bed and Breakfast, Boarding
House, Hotel)
Manufactured or mobile homes
− Zoning violations including residential properties zoned
Timeshares
commercial
Unique Properties (e.g. log homes, geodesic domes)
− Properties with less than 750 Sq. feet of living area.
Properties with values significantly in excess of the
− Mixed use properties
predominant value of the subject’s market area may be
− Properties with more than 20 acres
ineligible
− Properties held in a business name.
Working farm and ranches
− Properties located in Hawaii Lava Zones 1 & 2
Unimproved land and property currently in litigation
− Cooperatives
Leaseholds
Land Trusts – Including IL land trusts
The borrower(s) may own a total of four (4) financed 1-4 unit residential properties, including the subject property. All financed
residential properties, other than the subject property, require an additional six (6) months PITI reserves for each property.
Rate/Term Refinances: Cannot be listed for sale on date of loan application.
Cash Out Refinances: Cannot be listed for sale in prior 12 months from date of loan application.
Copyright © 2014 CMG Mortgage, Inc.
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NON -CONFORMING Non-Agency PRODUCT GUIDELINES
Purpose
−
−
−
−
−
−
Reserves
Purchase
Rate/Term Refinances
Cash Out Refinance
. Max $300,000
Delayed Purchase Refinance (purchased by borrower with cash within 6 months of loan application)
Construction to Permanent Financing
. Ineligible: Single Close Construction to Permanent Financing
Consolidation, Extension and Modification Agreement (CEMA), purchase or refinance.
Borrowers must disclose and lenders must verify all assets.
No more than 50% of total reserve requirements may come from retirement accounts (including 401K, IRA, SEP, and Keogh).
See reserve by loan amount and occupancy detail on matrix.
Secondary Financing
Secondary or subordinate financing allowed as limited by the product matrix above, and the following:
− Institutional financing only up to the maximum LTV/CLTV/HCLTV. Seller subordinate financing is not allowed.
− Subordinate liens must be recorded and clearly subordinate to the first mortgage lien.
− Seller must investigate whether Borrower has applied for any simultaneous loan or subordinate financing, including one that will
occur after consummation of the subject loan if the simultaneous loan will cover the closing costs of the first loan.
− Full disclosure must be made on the existence of new subordinate financing, any existing subordinate financing (to be resubordinated) and the subordinate financing terms.
− ATR/QM Final Rule repayment calculation method for simultaneous loans must be used.
− All subordinate loan obligations must be considered, verified, and taken into account when calculating the Borrower’s DTI.
Acceptable subordinate financing terms include:
− For closed-end fixed rate, fully amortizing simultaneous loans, the qualifying payment is the monthly payment; negative
amortization is not allowed;
− For amortizing ARMs, Seller must use monthly, substantially equal payments that are sufficient to fully amortize the loan over the
loan term;
− For interest-only loans Seller must use monthly, substantially equal payments over the term of the loan remaining as of the due
date of the last interest-only payment; and
− For a simultaneous loan with a balloon payment, the maximum payment scheduled during the first five years after the date on which
the first regular periodic payment will be due for a loan that is not a higher-priced covered transaction or the maximum payment in
the payment schedule, including any balloon payment, for a higher-priced covered transaction.
− Home Equity Line of Credit (HELOC), refer to the Seller Guide for complete requirements.
Copyright © 2014 CMG Mortgage, Inc.
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1.2
NON -CONFORMING Non-Agency PRODUCT GUIDELINES
Loans secured by properties in the following states/territories are ineligible for purchase:
− Puerto Rico
- NY
− US Territories, including Guam and Virgin Islands
- Massachusetts
State Restrictions
CMG only lends in states where they are licensed to do so; for more information please visit CMG’s NMLS Consumer Access
page www.nmlsconsumeraccess.org
Fee Simple with Title Vesting as
− Individual
− Joint Tenants
− Tenants in Common
Title / Ownership
Interest
1.3
CONDOMINIUM AND PUD PROJECTS
CMG will purchase Non-Agency loans secured by property located in Condominium or Planned Unit Development (PUD) projects, provided the
project meets Fannie Mae’s warrantability requirements described in their Single Family Seller Guide. Condominium projects require a Lender Full
Review; Limited Reviews are not permitted.
Seller may use the applicable CMG project questionnaire or use another version, provided the alternative version used by the Seller includes
substantially similar information. All loans secured by Condos and PUDs must include the CMG Certification of Project Eligibility. This
Certification must be completed by the Seller certifying under which review type and agency guidelines the project was reviewed and qualified.
At a minimum, the following documentation must be provided verifying full compliance with Fannie Mae warrantability requirements, including
insurance, for the particular project type:
Project
Detached PUDs
Attached PUDs
Minimum Documentation Requirements
•
•
•
•
•
•
•
Copyright © 2014 CMG Mortgage, Inc.
Form 1004, and
Certification of Project Eligibility, and
Documentation verifying insurance coverage in accordance with Fannie Mae guidelines
Form 1004, and
Certification of Project Eligibility, and
HOA/Project Questionnaire, and
Documentation verifying insurance coverage in accordance with Fannie Mae guidelines for the:
o Subject unit, and
o Project (if applicable)
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Project
Condominium
•
•
•
•
•
•
Minimum Documentation Requirements
Form 1073 or Form 1004 (detached condos only), and
Certification of Project Eligibility, and
HOA Questionnaire, and
Project’s Budget (if applicable), and
Project’s Legal Documents (if applicable), and
Documentation verifying insurance coverage in accordance with Fannie Mae guidelines for the:
o Subject unit, and
o Project
Restrictions:
• CMG maximum exposure is limited to 20% of the units in a project. For projects with ≤ 4 units, CMG limits it’s exposure to no more than
one (1) of those units.
Refer to the Fannie Mae Single Family Selling Guide for complete requirements on Condominiums and PUDs.
1.4 N ON-WARRANTABLE CONDOMINIUM PROJECTS
Seller will purchase loans secured by property located in condominium projects that are not warrantable to Fannie Mae under specific expanded
project criteria. Non-warrantable condominiums must meet the Expanded CMG Criteria and all Standard Fannie Mae Criteria referenced below:
Expanded CMG Criteria
Commercial Space
Single Entity Ownership
Investor Concentration
Non-warrantable Condominium Projects
≤ 40% of project total space
≤ 20% of total units in project
Subject Property: Owner Occupied
& 2nd Homes
• Established Projects
• New Projects (Presale)
Minimum # units sold or under
contract (New Projects)
• N/A
• ≤ 65% of total units sold or under bona fide contract can be Non-owner Occupied
At least 25% of units in the project must be under bona fide contract. There is no minimum on the number of units
closed & funded in the project.
New & Established Projects
Follow Fannie Mae’s definition of New Projects and Established Projects
Standard Fannie Mae Criteria
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Delinquent on HOA dues
Insurance
Litigation
Budget Review
Legal Review
New Projects Only (as defined by
Fannie Mae)
Ineligible Projects
Non-warrantable Condominium Projects
≤ 15% of total units are ≥ 60 days delinquent
Follow Fannie Mae condo insurance requirements for:
• Hazard – HOA’s blanket/master policy
• HO-6 – if interior of unit is not covered by HOA’s master/blanket policy
• Liability – HOA’s commercial general liability policy
• Fidelity – if applicable, required only if the project has greater than 20 units
• Flood – if applicable
No pending litigation (If litigation does not affect safety, soundness or structural integrity of the property, will
consider case by case)
The HOA’s projected budget must be adequate, provide for the funding of replacement reserves for capital
expenditures and deferred maintenance (at least 10% of the budget). A reserve study may
be used in accordance with Fannie Mae guidelines.
In addition to representing and warranting that the condo project has been created and exists in full compliance
with the state law requirements of the jurisdiction where the condo project is located and all other applicable laws
and regulations, Sellers also must represent and warrant as follows with respect to the project's legal documents:
• Limitations on Ability to Sell/Right of First Refusal
• Rights of Condo Mortgagees and Guarantors
• First Mortgagee’s Rights Confirmed
• Amendments to Documents
With the exception of the items listed under the CMG Expanded Criteria, all non-warrantable condominium projects
must not be considered ineligible under Fannie Mae B4-2.1-02 Ineligible Projects.
Non-warrantable condominium projects require a Lender Full Review; Limited Reviews are not permitted. Seller may use the applicable CMG
project questionnaire or use another version, provided the alternative version used by the Seller includes substantially similar information. All
loans secured by non-warrantable condominiums must include the CMG Non-warrantable Certification of Project Eligibility. This Certification
must be completed by the Seller certifying under which review type and agency guidelines the project was reviewed and qualified. At a
minimum, the following documentation must be provided:
Project
Copyright © 2014 CMG Mortgage, Inc.
Minimum Documentation Requirements
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Project
Non-warrantable
Condominium
•
•
•
•
•
•
Minimum Documentation Requirements
Form 1073 or Form 1004 (detached condos only), and
Non-warrantable Certification of Project Eligibility, and
HOA Questionnaire, and
Project’s Budget (if applicable), and
Project’s Legal Documents (if applicable), and
Documentation verifying insurance coverage in accordance with Fannie Mae guidelines for the:
o Subject unit, and
o Project
Restrictions:
• CMG maximum exposure is limited to 20% of the units in a project. For projects with ≤ 4 units, CMG limits it’s exposure to no more than
one (1) of those units.
Refer to the Fannie Mae Single Family Selling Guide for complete requirements on condominiums.
1.5 CONDOTEL PROJECTS
Condotels are condominium projects which are managed or operated as a hotel with hotel like amenities. CMG will purchase loans secured by
property located in condotel projects that are not warrantable to Fannie Mae under specific expanded project criteria. Condotel projects must
meet the Expanded CMG Criteria and all Standard Fannie Mae Criteria referenced below:
Expanded CMG Criteria
Commercial Space
Single Entity Ownership
Investor Concentration
Subject Property: Owner Occupied
& 2nd Homes
• Established Projects
• New Projects (Presale)
Minimum # units sold or under
contract (New Projects)
Copyright © 2014 CMG Mortgage, Inc.
Condotel Projects
≤ 35% of project total space
≤ 20% of total units in project
• N/A
• ≤ 50% of total units sold or under bona fide contract can be Non-owner Occupied
At least 25% of units in the project must be under bona fide contract. There is no minimum on the number of units
closed & funded in the project.
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Condotel Projects
Hotel
CMG Specific Criteria
Overlays
Condotels are exempt from the following ineligible criteria listed within the Fannie Mae Single Family Selling Guide:
B4-2.1-02, Ineligible Projects:
• Projects that are managed and operated as a hotel or motel, even though the units are individually owned
• Projects with names that include the word “hotel” or “motel”
• Projects that include registration services and offer rentals of units on a daily basis
•
•
•
•
•
•
•
•
•
•
•
Standard Fannie Mae Criteria
New & Established Projects
Delinquent on HOA dues
Insurance
Litigation
Budget Review
Copyright © 2014 CMG Mortgage, Inc.
Non-Agency Product only (Primary Residence & 2nd homes)
Loan Amount the lessor of current stated limits or $1,500,000
≥ 18 Months Reserves
≤ 65% LTV/CLTV/HCLTV
≥ 740 FICO
≤ 43% DTI : Qualify with the full PITIA w/out the benefit of Rental Income on the subject
Purchase/RateTerm only
Must be located in an area with demonstrated market acceptance of condotels
o Appraisal must include comparable Condotels from within the project and nearby competing projects
Standard condo project insurance; budget; legal documents
The subject unit must have a full kitchen (stove, oven, full-sized refrigerator)
Voluntary rental pools are acceptable only on second homes. Mandatory rental pools are not permitted.
Follow Fannie Mae’s definition of New Projects and Established Projects
≤ 15% of total units are ≥ 30 days delinquent
Follow Fannie Mae condo insurance requirements for:
• Hazard – HOA’s blanket/master policy
• HO-6 – if interior of unit is not covered by HOA’s master/blanket policy
• Liability – HOA’s commercial general liability policy
• Fidelity – required only if the project has greater than 20 units
• Flood – if applicable
No pending litigation (If litigation does not affect safety, soundness or structural integrity of the property, will
consider case by case)
The HOA’s projected budget must be adequate, provide for the funding of replacement reserves for capital
expenditures and deferred maintenance (at least 10% of the budget) and provide adequate funding for insurance
deductibles amounts.
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Revised 12/18/2014
Condotel Projects
Legal Review
In addition to representing and warranting that the condo project has been created and exists in full compliance
with the state law requirements of the jurisdiction where the condo project is located and all other applicable laws
and regulations, Sellers also must represent and warrant as follows with respect to the project's legal documents:
• Limitations on Ability to Sell/Right of First Refusal
• Rights of Condo Mortgagees and Guarantors
• First Mortgagee’s Rights Confirmed
• Amendments to Documents
With the exception of the items listed under the CMG Expanded Criteria, all non-warrantable condominium projects
must not be considered ineligible under Fannie Mae B4-2.1-02 Ineligible Projects.
New Projects Only (as defined by
Fannie Mae)
Ineligible Projects
Condotel projects require a Lender Full Review; Limited Reviews are not permitted. Seller may use the applicable CMG project questionnaire or
use another version, provided the alternative version used by the Seller includes substantially similar information. All loans secured by
condotels must include the CMG Non-warrantable Certification of Project Eligibility. This Certification must be completed by the Seller certifying
under which review type and agency guidelines the project was reviewed and qualified. At a minimum, the following documentation must be
provided:
Project
Condotel
•
•
•
•
•
•
Minimum Documentation Requirements
Form 1073, and
Non-warrantable Certification of Project Eligibility, and
HOA Questionnaire, and
Project’s Budget (if applicable), and
Project’s Legal Documents (if applicable), and
Documentation verifying insurance coverage in accordance with Fannie Mae guidelines for the:
o Subject unit, and
o Project
Restrictions:
• CMG maximum exposure is limited to 20% of the units in a project. For projects with ≤ 4 units, CMG limits it’s exposure to no more than
one (1) of those units.
Refer to the Fannie Mae Single Family Selling Guide for complete requirements on condominiums.
Copyright © 2014 CMG Mortgage, Inc.
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