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MAGNOLIA BANK VA FIXED RATE Product Summaries contain eligibility guidelines only
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VA FIXED RATE
1. PRODUCT
DESCRIPTION
i VA Fixed Rate Mortgage i 10 to 30 years in 5 year increments i Fully amortizing
2. PRODUCT CODE
i VA Fixed Rate 10 Year (Y27) i VA Fixed Rate 15 Year (075) i VA Fixed Rate 20 Year (Y26) i VA Fixed Rate 30 Year (076)
3. INDEX
N/A
4. MARGIN
N/A
5. ANNUAL/
ADJUSTMENT CAP
N/A
6. LIFE CAP
N/A
7. RATE AT
ADJUSTMENT
N/A
8. CONVERSION
OPTION
N/A
9. CONVERSION
FEE
N/A
MAGNOLIA BANK VA FIXED RATE Product Summaries contain eligibility guidelines only
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10. DELIVERY
Refer to Magnolia Bank Broker/ Correspondent Lending Manual for acceptable delivery time frame
11. TEMPORARY
BUYDOWNS
Not permitted
12. QUALIFYING
RATE AND RATIOS
Qualifying Ratios • AUS Approve loans – Ratios evaluated by AUS • AUS Refer loans - 41%
• 41% <=50% require significant documented compensating factors: • Excellent credit history • Conservative use of consumer credit • Minimal consumer debt • Long-term employment • Significant liquid assets • Sizable down payment • The existence of equity in refinancing loans • Little or no increase in shelter expense • Military benefits • Satisfactory homeownership experience • High residual income • Tax credits for child care • Tax benefits of home ownership. Residual Income Requirements Table of Residual Incomes by Region (For loan amounts $79,999 and below) Family1 Size Northeast Midwest South West 1 $390 $382 $382 $425 2 $654 $641 $641 $713 3 $788 $772 $772 $859 4 $888 $868 $868 $967 5 $921 $902 $902 $1004
MAGNOLIA BANK VA FIXED RATE Product Summaries contain eligibility guidelines only
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Add $75 for each additional member up to a family of seven Table of Residual Incomes by Region (For loan amounts $80,000 and above)
Family1 Size Northeast Midwest South West 1 $450 $441 $441 $491 2 $755 $738 $738 $823 3 $909 $889 $889 $990 4 $1025 $1003 $1003 $1117 5 $1062 $1039 $1039 $1158
Add $80 for each additional member up to a family of seven Refer to #35 Special Requirements/Restrictions for a breakdown of states by region
13. TYPES OF
FINANCING
Purchase Mortgages Interest Rate Reduction Refinance Loan (IRRRL)1 • Appraisal required – See VA Refinance Options Matrix for appraisal requirements & LTV requirements • Magnolia Bank-to-Magnolia Bank IRRRL transactions do not require appraisal report or limit to LTV • VA to VA refinances only • No seasoning requirements of first mortgage Rate and Term/Cash-Out Refinance
• Not permitted in Texas • Subject property must have an existing lien • No seasoning of first mortgage or junior liens
Refinance of Construction Loans and Installment Land Sales Contracts • Loan amounts may not exceed the lesser of o The VA reasonable value plus the VA funding fee OR o The sum of the outstanding balance of the loan to be refinanced plus allowable closing costs (including the funding fee) and discount points
MAGNOLIA BANK VA FIXED RATE Product Summaries contain eligibility guidelines only
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• Loan must be set up as a purchase in the system to permit the LTV to exceed 90% of the reasonable value Refer to the VA Refinance Options Matrix for specific details
14. MAXIMUM
TOTAL LOAN AMOUNT (including financed Funding Fee)
All Transactions Continental U.S. 1 unit - $417,000 2 unit - $533,850 3 unit - $645,300 4 unit - $801,950 Alaska and Hawaii 1 unit - $625,500 2 unit - $800,775 3 unit - $967,950 4 unit - $1,202,925 Refer to the VA Refinance Options matrix for specific instruction on calculating the maximum loan amount
15. LOAN
AMOUNT AND LTV LIMITATIONS
Purchases & Interest Rate Reduction Refinances Continental U.S. (National Loan Limits) Units LTV* Max Total Loan Amount (including financed Funding Fee) 1 100% $417,000 2 100% $533,850 3 100% $645,300 4 100% $801,950 *For IRRRL loans only, LTV is calculated by Total Loan Amount (Base Loan amount plus VA Funding Fee) Magnolia Bank-to-Magnolia Bank IRRRL transactions do not require LTV limit Alaska and Hawaii (National Loan Limits) Units LTV* Max Total Loan Amount (including financed Funding Fee) 1 100% $ 625,500 2 100% $ 800,775 3 100% $ 967,950 4 100% $1,202,925
MAGNOLIA BANK VA FIXED RATE Product Summaries contain eligibility guidelines only
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*For IRRRL loans only, LTV is calculated by Total Loan Amount (Base Loan amount plus VA Funding Fee) Magnolia Bank-to-Magnolia Bank IRRRL transactions do not require LTV limit 1 Regardless of the number of units, the maximum guaranty VA will provide will be based on the total loan amount for a 1 unit dwelling. For Purchase transactions: If the total loan amount is greater than $417,000, a down payment may be required and the LTV may be reduced accordingly. Refer to attached Maximum Guaranty Calculation Worksheet.
i For purchase transactions, total loan amounts > $144,000 and <= $417,000 VA will provide guaranty of 25% of the total loan amount subject to Veterans available entitlement
i The 25% minimum guaranty is considered satisfied for Interest Rate Reduction Refinance Loans regardless of the dollar amount of guaranty being transferred from the previous loan.
i Refer to VA Refinance Options Matrix. Rate and Term /Cash-Out Refinance Continental U.S. (National Loan Limits) Units LTV Max Total Loan Amount (including financed Funding Fee) 1 90% $417,000 2 90% $533,850 3 90% $645,300 4 90% $801,950
16. SECONDARY
FINANCING
i Permitted. However, secondary financing cannot be used to offset required down payment, pay closing costs or cover any portion of the purchase price that exceeds the reasonable value i Must be Magnolia Bank approved i Secondary financing must meet requirements in VA Lender Handbook, for Secondary Borrowing, Chapter 9, Section 4. i The second lien should not restrict the veteran’s ability to sell the property (i.e. assumability feature) i The total CLTV should never exceed 100% of the lesser of the sales price or appraised value.
17. PROPERTY
TYPES
Eligible Property Types • 1-4 units
i See #35 Special Requirements/Restrictions for restrictions regarding 2 - 4 unit properties
MAGNOLIA BANK VA FIXED RATE Product Summaries contain eligibility guidelines only
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• PUDs– VA or Magnolia Bank approved • Condos – VA approved • Modular Pre-Cut/Panelized housing Ineligible Property Types i Co-ops i Manufactured homes
18. OCCUPANCY
Primary Residence
19. GEOGRAPHIC LOCATIONS/ RESTRICTIONS
Continental US. Hawaii and Alaska
20. ASSUMPTIONS
Permitted- Credit worthy borrowers only
21. ESCROW
WAIVERS
Not Permitted
22. PREPAYMENT
PENALTY
None
23. UNDERWRITING
• Underwritten by a VA Automatic & LAPP approved underwriter employed by Magnolia Bank or a Magnolia Bank VA Delegated Lender • May follow AUS decision and documentation requirements
i Refer to Section 27 Credit for restrictions i If loan requires VA’s prior approval, additional underwriting turnaround time is required
VA Prior Approval Required For i Joint loans involving a veteran and non-veteran who is not the veteran’s spouse (Not on IRRRL loans). i Joint loans involving two or more veterans who intend to use their entitlement and take title jointly (Not on IRRRL loans). i Loans to veterans in receipt of VA non-service related pension (Not on IRRRL loans). i Loans to veterans rated incompetent by VA (Not on IRRRL loans). Underwriting Prior Approval Loans
MAGNOLIA BANK VA FIXED RATE Product Summaries contain eligibility guidelines only
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i The Magnolia Bank or Delegated Correspondent VA Automatic Underwriter must first underwrite the loan and issue a credit decision i The Magnolia Bank or Delegated Correspondent VA Automatic Underwriter is required to access the VA Information Portal at https://vip.vba.va.gov and enter specific Loan analysis data in VA WebLGY system and submit data to the VA. i Submit a copy of the loan file to the VA Regional Loan Center that has jurisdiction over the property state i Files submitted to the VA for prior approval must be labeled “PRIOR APPROVAL” i Additional documentation is required for Interest Rate Reduction Refinance Loans involving delinquencies of 30 days or more past due since date of application. Refer to the VA Refinance Options Matrix for details VA Reserves or National Guard Certification
i All veteran applicants whose income is being used to qualify for the loan transaction must complete and sign a VA Reserves or National Guard Certification form.
i The VA Underwriter must then use this information to determine the veteran borrower’s true monthly qualifying income.
24. PROCESSING STYLES
i Standard i Streamline (IRRRL)
25. BORROWER
ELIGIBILITY
i Must be a veteran who served the minimum duty with other than a dishonorable discharge i Active duty with at least 181 days of duty i Un-remarried surviving spouse of eligible veteran (COE) i Reservists/National Guard i Certificate of Eligibility must have sufficient entitlement to meet minimum 25% guarantee i Joint loans involving a veteran and a non-veteran who is not the veteran’s spouse (VA prior approval required. Refer to #35 Special Requirements/Restrictions for more details) i Joint loans involving two unmarried veterans (VA prior approval required. Refer to #35 Special Requirements/Restrictions for more details)
26. CO-
BORROWERS
i All borrowers must occupy the subject property i Non-Veteran co-borrower permitted. Refer to #35 Special Requirements/Restrictions for special restrictions
27. CREDIT
i VA Credit Standards apply
MAGNOLIA BANK VA FIXED RATE Product Summaries contain eligibility guidelines only
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Housing (Mortgage/Rental) Payment History (PITIA) is inclusive of all liens regardless of position, as well as all occupancy types. i AUS Approved loans – Credit evaluated by AUS i AUS Refer and manually underwritten loans i VA Credit Standards apply i For purchase transactions: 12 month housing payment (mortgage/rental) history via a credit report, cancelled checks or VOM to reflect no more than 0 x 30 in the previous 12 months. i For refinance transactions: Refer to Refinance Options Matrix for housing payment history requirements Minimum Fico Score Requirements i Regardless of AUS Decision: 640 i Refer to VA Refinance Options Matrix for additional requirements for IRRRL transactions i Non-traditional credit is ineligible
28. ASSETS
Minimum Borrower Investment i No minimum borrower investment is required for loan amounts up to $417,000 or $625,500 in AK & HI provided the Veteran has full entitlement. i For 2-4 unit dwellings, if the total loan amount is greater than the limit for a one unit dwelling, a down payment may be required. Refer to Section 15, Loan Amount and LTV Limitations. Seller Contributions i Seller can pay 100% of discount points and borrower’s non-recurring closing costs i Seller can provide an additional amount not to exceed 4% of the estimated reasonable value to assist the borrower payment of prepaid expenses and funding fee Gifts
i Acceptable i Gift of Equity is acceptable but cannot be applied as down payment purposes to reduce VA Funding Fee
Cash Reserves i 1 unit – No reserves required i 2 – 4 units when rental income is not being used to qualify – no reserves required i 2 – 4 units when rental income is being used to qualify – 6 months PITI required i When retaining current principal residence as 2nd Home – 6 months PITI required for both properties required OR 2 months PITI required for each if 30% equity in existing principal residence is documented i When converting current principal residence to rental property – 6 months PITI required for both properties
MAGNOLIA BANK VA FIXED RATE Product Summaries contain eligibility guidelines only
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required OR No reserves required if one of the following circumstance is met: veteran is relocating outside geographic area and has secured tenant for property or 30% equity in existing principal residences is documented. i When pending sale of other real estate is scheduled after the purchase date of current principal residence. – 6 months reserves required for both properties OR 2 months reserves required if 30% equity in existing residence is documented.
29. LIMITATIONS
ON OTHER. R.E. OWNED
i None i See Special Requirements /Restrictions and Assets regarding converting current principal residence to rental property or second home
30. APPRAISER RE-
QUIREMENTS
i VA Approved/VA Fee panel appraisers i IRRRL Loans do not require VA Fee panel appraisers
31. APPRAISAL RE-
QUIREMENTS
i LAPP - Notification of Value (NOV) to be issued by Magnolia Bank - LAPP Approved Underwriter via The
Appraisal System (TAS) at https://tas.vba.va.gov i VA Notice of Value issued by VA i IRRRL transactions require HVCC-compliant conventional appraisal – See VA Refinance Options Matrix i VA REO’s
Properties purchased as VA Real Estate Owned (REO’s) are not eligible for LAPP Appraisals. The VA will issue the Notice of Value (NOV) if the Liquidation Appraisal issued by the VA is less than 6 months old
i To request a NOV from the VA submit a completed paper copy of VA Form 26-018-5 to the VA Regional Loan Center. VA will then transfer the appraisal from the current servicer, if applicable, to Magnolia Bank and issue a new case number
i The VA underwriter still needs to perform complete credit underwriting on these transactions
32. FUNDING FEE
i VA Funding Fee applies unless veteran is exempt Refer to attached chart for specific percentages i Down payment must be made in liquid funds. Gift equity, borrowed funds or seller-equity is not an acceptable Down payment to reduce the funding fee
33. ENGENIOUS
ELIGIBILITY/RE-
Loans are not eligible for submission to Engenious.
MAGNOLIA BANK VA FIXED RATE Product Summaries contain eligibility guidelines only
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QUIREMENTS
34. INVESTOR
ELIGIBILITY
Veterans Administration (VA)
35. SPECIAL RE-
QUIREMENTS/ RESTRICTIONS
Form 4506-T must be processed prior to closing. • A new IRS Form 4506 T is required to be signed with the closing package as well as at application even when the form has been processed. i Refer to the Magnolia Bank Broker Manual/ Correspondent Funding Client Guide for eligibility guidelines. CAIVR System must be checked For loan amounts up to and including $144,000: The maximum amount of available entitlement minus the amount of entitlement currently in use equals the remaining amount of available entitlement. In our example ($36,000 - $7500 = $28,500). This means the veteran can obtain another zero down payment VA loan for no more than $114,000 ($28,500 x4 = $114,000). BONUS ENTITLEMENT Bonus Entitlement is available: i Only for loan amounts greater than $144,000, up to $417,000 or $625,500 in AK & HI i For veterans with full basic entitlement available i For veterans with partial entitlement available Bonus Entitlement when the Veteran has FULL Entitlement If the veteran has full entitlement, Bonus Entitlement or additional entitlement is calculated as follows: $417,000 x 25% = $104, 250 - $36,000 = $68,250 (Continental US). $625,500 x 25% = $156,375-$36,000 = $120,375 (AK & HI) It is this bonus entitlement that allows a veteran to purchase a zero down payment home for greater than $144,000 and still received full VA guaranty up to $417,000 or $625,500 in AK& HI.
MAGNOLIA BANK VA FIXED RATE Product Summaries contain eligibility guidelines only
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Bonus Entitlement when the Veteran has PARTIAL Entitlement If veteran only has partial entitlement, meaning he still has an open VA loan, he may still be able to obtain another VA loan for more than $144,000, using bonus entitlement, provided he intends to occupy this property. Example – For loan amounts over $144,000* Current entitlement in use $7500. Veteran’s wishes to purchase a home for $250,000. • $250,000 X 25% = $62,500 (Purchase Price x 25% as required by Ginnie Mae) • $104,250 - $7500 (in use)= $96,750 --Maximum amount of available entitlement for the new loan • The maximum loan amount the veteran can obtain without a down payment is $96,750 x 4 = $387,000. • In this case the borrower is able to purchase this property without a down payment. Joint Loans • Joint loans must be underwritten by Magnolia Bank and then forwarded to the VA for FINAL approval before closing • A joint loan is a loan made to: • The veteran and one or more non-veterans (not spouse) • The veteran and one or more veterans (not spouse) who will not be using their entitlement • The veteran and one or more veterans (not spouse) ALL of who will use their entitlement. Example: Two unmarried veterans • The veteran and the veteran’s spouse who is also a veteran and both entitlements to be used i A loan involving a veteran and his/ her spouse will not be treated as a joint loan if the spouse is not a veteran or is a veteran who will not be using his/her entitlement on the loan Guaranty Guidelines • The maximum guaranty amount for loans up to and including $144,000 is $36,000. • The maximum guaranty amount for loans above $144,000 is calculated as Sales Price/Appraised Value (whichever is less) x 25%. • The minimum guaranty of 25% must be based on the lesser of the purchase price or appraised value. • VA’s guaranty will be limited to that portion of the loan allocable to the veteran’s interest in the property i The veteran must qualify for his or her percentage of ownership interest in the property; i.e., if ownership interest is 50/50, the veteran must qualify for half (50%) of the PITI plus his or her portion of other personal debts VA Funding Fee
MAGNOLIA BANK VA FIXED RATE Product Summaries contain eligibility guidelines only
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i The funding fee is calculated on the veteran’s portion of the loan. If a reduced funding fee percentage is required as a result of a down payment requirement, the veteran benefits from this reduction as the funding fee will be calculated on his/her portion of the loan
2 - 4 Unit Properties • Prospective rental income may only be included in effective income if both of the following are met • Evidence indicates the borrower has a reasonable likelihood of success as a landlord i Documentation to support the borrower's prior experience managing rental units or other background involving both property maintenance and rental must be provided i It can be verified that borrower has cash reserves totaling minimum 6 months PITI i The amount of rental income to include in effective income is based on 75% of either i Verified prior rent collected on the units of existing properties OR i The appraiser’s opinion of the subject property’s fair monthly rental for new construction Converting Current Principal Residence to Second Home or Rental property i Qualify veteran with both the current PITI and proposed PITI for new loan. i Rental income can only be used to offset the PITI for current principal residence if veteran is relocating to new geographic area (MSA) due employment OR if 30% equity is documented. i When retaining current principal residence as 2nd Home – 6 months PITI required for both properties required OR 2 months PITI required for each if 30% equity in existing principal residence is documented i When converting current principal residence to rental property – 6 months PITI required for both properties required OR No reserves required if one of the following circumstances is met: veteran is relocating outside geographic area and has secured tenant for property or 30% equity in existing principal residences is documented. Pending Sale of Real Estate i Qualify veteran with both PITI for Pending Sale and PITI for new property i Omit PITI of Pending Sale from qualifying DTI, if financing contingencies to purchase home have been cleared and documented and cash reserves described below are met. i When pending sale of other real estate is scheduled after the purchase date of current principal residence. – 6 months reserves required for both properties OR 2 months reserves required if 30% equity in existing residence is documented. Maintenance and utility costs for all regions: • 14 cents per square foot • Example: 1500 square foot home X .14 = $210.00 / mo
MAGNOLIA BANK VA FIXED RATE Product Summaries contain eligibility guidelines only
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Geographic Regions for Residual Income Guidelines Northeast Midwest Midwest Connecticut Illinois Missouri Maine Indiana Nebraska Massachusetts Iowa North Dakota New Hampshire Kansas Ohio New Jersey Michigan South Dakota New York Minnesota Wisconsin Pennsylvania Rhode Island Vermont South West WEST Alabama Alaska Arkansas Arizona Delaware California District of Columbia Colorado Florida Hawaii Georgia Idaho Kentucky Montana Louisiana Nevada Maryland New Mexico Mississippi Oregon North Carolina Utah Oklahoma Washington Puerto Rico Wyoming South Carolina Tennessee Texas Virginia West Virginia
36. INTERNET
LINKS
i The Appraisal System. Order Case Numbers, Appraisals and obtain Automated Certificates of Eligibility. http://tas.vba.va.gov.TAS/index.html i VA Lenders Handbook Loan Guaranty Service, Home Page (U.S. Department of Veterans Affairs) i VA Lender's and Servicer's Home Page Loan Guaranty Service - Lenders, Servicers and Real Estate Professionals (U.S. Department of Veterans Affairs)
MAGNOLIA BANK VA FIXED RATE Product Summaries contain eligibility guidelines only
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i VA Regional Loan Centers http://www.homeloans.va.gov/rlcweb.htm
Product Summaries contain eligibility guidelines only. 04-27-11 - Page 13
VA FIXED RATE
VA FUNDING FEE TABLEEffective for loans closed on or after January 1, 2004
PURCHASE TRANSACTIONS
TYPE OF VETERAN/MILITARY STATUS
DOWN PAYMENT* PERCENTAGE FOR FIRST TIME USE
PERCENTAGE FOR SUBSEQUENT USE1
Expires 9/30/2011 Expires 9/30/2011
None 2.15% 3.30%
5% or more (up to 10%) 1.50% 1.50%Regular Military
10% or more 1.25% 1.25%
None 2.40% 3.30%
5% or more (up to 10%) 1.75% 1.75%Reserves or National Guard
10% or more 1.50% 1.50%
Disabled Veteran n/a 0.00% 0.00%
CASH OUT REFINANCE
TYPE OF VETERAN PERCENTAGE FOR FIRST TIME USE PERCENTAGE FOR SUBSEQUENT USE1
Expires 9/30/2011Expires 9/30/2011
Regular Military 2.15%
3.3%
Reserves or National Guard 2.40% 3.30%
INTEREST RATE REDUCTION LOANS AND ASSUMPTIONS
TYPE OF LOAN PERCENTAGE FOR EITHER TYPE OF VETERAN WHETHER FIRST TIME OR SUBSEQUENT USEInterest Rate Reduction Refinancing Loans
0.50%
Assumptions 0.50%
1The higher subsequent use fee does not apply to these types of loans if the veteran’s only prior use of entitlement was for a manufactured home NOTclassified as real estate
Funding Fee Calculations All loans EXCEPT IRRRLS - Apply the appropriate funding fee percentage to the loan amount IRRRLs - Calculate the funding fee by completing VA Form 26-8923-VA Interest Rate Reduction Refinancing Worksheet
Joint Loans: Apply the appropriate funding fee percentage to any portion of the loan allocable to a veteran using his/her entitlement who is not exempt from the funding fee.
* Does not include down payment from gift of equity or equity earned from lease-to-purchase transaction.
VA ENTITLEMENT CODES
Product Summaries contain eligibility guidelines only. 04-27-11 - Page 14
VA FIXED RATE
VA ENTITLEMENT CODES
Entitlement Code Meaning01 World War II 02 Korean03 Post Korean04 Vietnam05 Entitlement Restores06 Un-remarried Surviving Spouse 07 Spouse of POW/MIA 08 Post World War II 09 Post Vietnam10 Persian Gulf War 11 Selected Reserves
Product Summaries contain eligibility guidelines only. Page 15 3-2-11
GMAC BANK WHOLESALE MORTGAGE LENDING VA FIXED RATE
REQUIRED CASH DOWNPAYMENTAND PERCENTAGE OF GUARANTY CALCULATION WORKSHEET
FOR LOAN AMOUNTS up to $417,000(or $625,500 in AK & HI)
Purchase Transactions
Refer to 2011 VA County limits If the county name does not appear on this list, the VA limit is set at $417,000
The primary goal is to verify that the minimum guaranty required by Ginnie Mae is satisfied through veteran’s available entitlement/maximum VA guaranty and or cash down payment.
Special reminders:
No portion of the cash down payment may be derived from borrowed funds.
Minimum Guaranty required by Ginnie Mae is calculated as 25% of the lesser of the sales price or Appraised Value.
Maximum VA Guaranty/Available Entitlement is based on the loan amount including the funding fee, if financed into the loan. Refer to table below.
Loan Amount (Base Loan plus Financed Funding Fee)
Maximum Potential Guaranty (subject to veteran’s available entitlement)
Up to $45,000 50% of the loan amount
$45,001 to $56,250 $22,500
$56,251 to $144,000 40% of the loan amount
$144,001 to $417,000 25% of the loan amount or 25% of the county limit, whichever is less
Example 1: Veteran has Full Entitlement
Property is located in:
VA County Limit for Montgomery County
Sales Price (SP)
Appraised Value (AV)
Veteran Funding Fee factor) First Time Use of entitlement) Borrower is requesting Loan Amount (Base + Financed FF)
Min Guaranty required by GNMA ( 25% of $300,000 (SP)
Maximum VA Guaranty/Available Entitlement = 25% of $306,450 Since the Min Guaranty required by GNMA is less than the maximum guaranty VA will provide, no cash down payment is required from the borrower and the requested loan amount is acceptable
Montgomery County, PA
$417,000
$300,000
$300,000
2.15% $306,450
$ 75,000
$ 76,612.50
Product Summaries contain eligibility guidelines only. 04-27-11 - Page 16
VA FIXED RATE
Example 2 – Veteran has Partial Entitlement Available
(Veteran has used $36,000 of entitlement on a prior loan, which may not be restored)
Property is located in
VA County Limit for Montgomery :
Property Appraised for
Sales Price
Veteran Funding Fee factor (Subsequent Use of entitlement) Borrower is requesting Loan Amount of (Base + Financed FF)
Min Guaranty required by GNMA = 25% of $320,000 (AV)
Maximum VA Guaranty/(Remaining) Available Entitlement = 25% of $417,000 = $104,250 less $36,000
Since the Min Guaranty required by GNMA is greater than the maximum guaranty VA will provide less the entitlement in use, the veteran needs to have a cash down payment to meet the GNMA requirement
Down payment = Minimum GNMA Requirement less RemainingAvailable Entitlement
$80,000 less $68,250
Since a down Payment is required, the base loan amount must be reduced by the amount of the down payment
Adjusted base loan amount = Sales Price less Down Payment $320,000 less $11,750
Percentage of Guaranty = Available Entitlement plus cash down payment divided by sales price
$68,250 plus $11,750 = $80,000 divided by $320,000
Montgomery County, PA
$417,000
$320,000
$320,000
3.3% $330,560
$80,000
$68,250
$11,750
$308,250
25% Min Guaranty is met – loan is saleable
Adjusted Funding Fee = Base Loan Amount X applicable factor $308,250 X 3.3% $10,172.50Adjusted Total Loan Amount = Base Loan Amount plus Funding Fee
$308,250 plus $10,172.50 $318,422
Product Summaries contain eligibility guidelines only. Page 17 3-2-11
GMAC BANK WHOLESALE MORTGAGE LENDING VA FIXED RATE
REQUIRED CASH DOWNPAYMENTAND PERCENTAGE OF GUARANTY CALCULATION WORKSHEETFOR LOAN AMOUNTS GREATER THAN $417,000
(or $625,500 in AK & HI)
Purchase Transactions
Refer to 2011 VA County limits for High Balance Loans
The primary goal is to verify that the minimum guaranty required by Ginnie Mae is satisfied through the veteran’s available entitlement/maximum VA guaranty and or cash downpayment.
As a reminder, no portion of the cash down payment may be derived form borrowed funds.
Minimum Guaranty required by Ginnie Mae is calculated as 25% of the lesser of the sales price or Appraised Value.
Maximum VA Guaranty/Available Entitlement is lesser of 25% of county limit or 25% of the loan amount.
Example 1: Veteran has Full Entitlement
Property is located in:
VA County Limit for Pike County
Sales Price (SP)
Appraised Value (AV)
Veteran Funding Fee factor (First Time Use of entitlement)
Borrower is requesting Loan Amount (Base + Financed FF)
Min Guaranty required by GNMA = 25% of $1,000,000 (SP)
Maximum VA Guaranty/Available Entitlement = 25% of $747,500 (County Limit) = (Since $747,500 is less than $1,000,000 – VA will not guarantee more the county limit)
Since the Min Guaranty required by GNMA is greater than the maximum guaranty VA will provide, a cash down payment is required from the borrower and the loan amount needs to be reduced by the amount of the down payment.
Required Down Payment = Minimum Guaranty less maximum available entitlement
($250,000 - $186,875)
Adjusted Base Loan Amount = Sales Price less required cash down payment:
($1,000,000 less $63,125)
Adjusted Base Loan Amount plus Financed FF = $936,875 + $20,142)
Percentage of Guaranty = Available Entitlement plus cash down payment divided by lesser of sales price or Appraised value
o ($186,875 +$63,125 = $250,000 divided by $1,000,000)
Pike County, PA
$747,500
$1,000,000
$1,200,000
2.15%
$1,021,500
$ 250,000
$ 186,875
$63,125
$936,875
$957,017
25%
Example 2 – Veteran has Partial Entitlement Available
Product Summaries contain eligibility guidelines only. 04-27-11 - Page 18
VA FIXED RATE
(Veteran has used $104,250 of entitlement on a prior loan, which may not be restored)
Property is located in
VA County Limit for TETON :
Property Appraised for
Sales Price
Veteran Funding Fee factor (Subsequent Use of entitlement)
Borrower is requesting Loan Amount of (Base + Financed FF)
Min Guaranty required by GNMA = 25% of $815,000 (AV)
Maximum VA Guaranty/Available Entitlement = 25% of $703,750 = $175,937 less $104,250
Since the Min Guaranty required by GNMA is greater than the maximum guaranty VA will provide minus the entitlement in use, the veteran needs to have a cash down payment to meet the GNMA requirement
Down payment = Minimum GNMA Requirement less Remaining Available Entitlement
$203,750 less $71,687
Since a down Payment is required, the base loan amount must be reduced by the amount of the down payment
Adjusted base loan amount = Sales price less Down Payment $815,000 less $132,063
Percentage of Guaranty = Available Entitlement plus cash down payment divided by sales price
$71,687 plus $132,063 = $203,750 divided by $815,000
TETON, WY
$703,750
$815,000
$815,000
3.3%
$841,895
$203,750
7$1171,687
$ 71,687
$132,063
$682,937
25%
Adjusted Funding Fee = Base Loan Amount X applicable factor $757,000 X 3.3% $22,536Total Loan Amount = Base Loan Amount plus Funding Fee
$757,000 plus $24,981 $705,473
Product Summaries contain eligibility guidelines only. Page 19 3-2-11
GMAC BANK WHOLESALE MORTGAGE LENDING VA FIXED RATE
VA CASH-OUT REFINANCE REQUIRED EQUITY AND PERCENTAGE OF GUARANTY CALCULATION WORKSHEET
LOAN AMOUNTS up to $417,000
Bonus Entitlement is available for Cash Out Refinance loans closed on or after 1/1/09 Your primary goal is to verify that:
1. Ginnie Mae’s required minimum 25% guaranty is met (Ginnie Mae requires a minimum of 25% of Appraised Value in the form of entitlement and/or Equity in the property)
2. The base LTV does not exceed 90% of Appraised Value (While VA permits LTV on a cash-out to 100%, GMACM/GMACB continues to restrict the LTV to 90% of the appraised value)
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Maximum VA Guaranty Amount / Veteran’s Available Entitlement provided by VA:
Loan Amount Maximum Potential Guaranty (subject to veteran’s available entitlement)
Up to $45,000 50% of the loan amount $45,001 to $56,250 $22,500$56,251 to $144,000 40% of the loan amount $144,001 to $417,000 25% of the loan amount
2011 VA County Limits Greater than $417,000For all counties not appearing on this list, the VA Limit is $417,000
Example 1: Veteran has Full Entitlement
Property is located in: Montgomery County, PA
VA County Limit for Montgomery County $417,000
Appraised Value (AV) $300,000
Veteran Funding Fee factor (First Time use of entitlement - Reservist) 2.4%
Borrower is requesting Loan Amount (Base + Financed FF) 90% of Appraised + FF ($270,000 + $6,480)
$276,480
Min Guaranty required by GNMA ( 25% of $300,000 (A) $ 75,000
Maximum VA Guaranty/Available Entitlement = 25% of $276,480
Since the Min Guaranty required by GNMA is greater than the maximum guaranty VA will provide, the borrower must have sufficient equity in the property to help meet the minimum required guaranty and the requested base loan amount must be reduced.
$ 69,120
Equity is calculated as appraised value less base loan amount $300,000 less $270,000 $30,000
Minimum required Equity = $75,000 less $69,120
Since additional Equity is required, the base loan amount must be reduced by the amount of the min required equity
$5,880
Percentage of Guaranty = Available Entitlement plus Minimum Required equity divided by Appraised Value $69,120 + $5880 = $75,000 divided by $300,000
25% Min Guaranty is met – loan is saleable
Adjusted base Loan Amount = Requested Base Loan Amount less Required Equity ($270,000 less $5,880)
$264,120
Adjusted Funding Fee = Adjusted Base Loan Amount X applicable factor ($264,120 x 2.4%)
$6,338.88
Adjusted Total Loan Amount = 6,338.88) $270,458
Example 2 – Veteran has Partial Entitlement Available
Product Summaries contain eligibility guidelines only. 04-27-11 - Page 20
VA FIXED RATE
(Veteran has used $27,500 of entitlement on a prior loan, which may not be restored)
Property is located in: Montgomery County, PA
VA County Limit for Montgomery County $417,000
Appraised Value (AV) $320,000
Veteran Funding Fee factor (Subsequent Use of entitlement) 3.3%
Borrower is requesting Loan Amount of (Base + Financed FF) Appraised Value x 90% + FF
$288,000 + $9,504 $297,504
Min Guaranty required by GNMA ( 25% of $320,000 (SP) $ 80,000
Maximum VA Guaranty/(Remaining) Available Entitlement = 25% of $417,000 = $104,250 less $27,500
Since the Min Guaranty required by GNMA is greater than the maximum guaranty VA will provide less the entitlement in use, the veteran needs to sufficient equity in the property to meet the GNMA requirement
$ 76,750
Equity is calculated as appraised value less base loan amount $320,000 less $288,000 $32,000
Min Required Equity = Minimum GNMA Requirement less Remaining Available Entitlement (80,000 - $76,750)
Since additional Equity is required, the base loan amount must be reduced by the amount of the min required equity
$$3,250
Adjusted base Loan Amount = Requested Base Loan Amount less Required Equity ($288,000 less $3,250)
$284,750
Percentage of Guaranty = Available Entitlement plus Minimum Required equity divided by Appraised Value
$76,750 plus $3,250 = $80,000 divided by $320,000
25% Min Guaranty is met – loan is saleable
Adjusted Funding Fee = Adjusted Base Loan Amount X applicable factor ( $284,750 X 3.3%) $9,396.75
Adjusted Total Loan Amount = Base Loan Amount plus Funding Fee ($284,750 plus $9,396.75)
$294,146
Product Summaries contain eligibility guidelines only. Page 21 3-2-11
GMAC BANK WHOLESALE MORTGAGE LENDING VA FIXED RATE
VA CASH-OUT REFINANCE REQUIRED EQUITY AND PERCENTAGE OF GUARANTY CALCULATION WORKSHEET
FOR LOAN AMOUNTS Greater than $417,000
Bonus Entitlement is available for loans closed on or after 1/1/09 Your primary goal is to verify that:
1. Ginnie Mae’s required minimum 25% guaranty is met (Ginnie Mae requires a minimum of 25% of Appraised Value in the form of entitlement and/or Equity in the property)
2. The base LTV does not exceed 90% of Appraised Value (While VA permits LTV on a cash-out to 100%, GMACM/GMACB continues to restrict the LTV to 90% of the appraised value)
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Maximum VA Guaranty Amount provided by VA:
Loan Amount greater than $417,000 the maximum guaranty varies depending on the location of the property and is calculated as:
Lesser of 25% of the loan amount or 25% of the VA County Limit for a one family dwelling , provided the veteran has full basic entitlement available
Example 1: Veteran has Full Entitlement
Property is located in: Westchester, NY
VA County Limit for Westchester County $681,250.
Appraised Value (AV) $1,000,000
Veteran Funding Fee factor (Subsequent use of entitlement)
3.3%
Borrower is requesting Loan Amount (Base + Financed FF)90% of Appraised + FF ($900,000 + $29,700)
$929,700
Min Guaranty required by GNMA ( 25% of $1,000,000) $ 250,000
Maximum VA Guaranty/Available Entitlement = 25% of $681,250.Since the Min Guaranty required by GNMA is greater than the maximum guaranty VA will provide, the borrower must have sufficient equity in the property to help meet the minimum required guaranty and the requested base loan amount must be reduced.
$ 170,312
Equity is calculated as appraised value less base loan amount ($1,000,000 less $900,000)
$100,000
Minimum required Equity = Minimum required GNMA Guaranty less VA Guaranty/Available entitlement ($250,000 less $170,312.)
$79,688.
Since proposed equity of $ 100,000. is greater than minimum required equity calculated above, no further reduction or adjustment in loan amount is required.
Proceed to test below
Percentage of Guaranty = Available Entitlement plus equity divided by Appraised value $170,312 + $100,000. ($270,312) divided by $1,000,000
27% Minimum Guaranty of 25% is met – Loan is GNMA eligible
Product Summaries contain eligibility guidelines only. 04-27-11 - Page 22
VA FIXED RATE
Example 2 – Veteran has Partial Entitlement Available (Veteran has used $104,250 of entitlement on a prior loan, which may not be restored)
Property is located in: Teton County, WY
VA County Limit for Teton County $703,750.
Appraised Value (AV) $815,000
Veteran Funding Fee factor (Subsequent use of entitlement)
3.3%
Borrower is requesting Loan Amount (Base + Financed FF)90% of Appraised + FF ($733,500 + $24,205.50)
$757,705
Min Guaranty required by GNMA ( 25% of $815,000) $ 203,750
Maximum VA Guaranty/Available Entitlement = 25% of $703,750. (VA County Limit) minus $104,240 (un-restorable entitlement), This is the partial entitlement available.
Since the Min Guaranty required by GNMA is greater than the maximum guaranty VA will provide, the borrower must have sufficient equity in the property to help meet the minimum required guaranty and the requested base loan amount must be reduced.
$ 71,697
Equity is calculated as appraised value less base loan amount ($815,000 less $733,500)
$81,500
Minimum required Equity = Min required Guaranty less VA Guaranty/Available entitlement ($203,750 less $71,697)
Since $132,053. is more than proposed equity of $ 81, 500., additional Equity is required, the proposed base loan amount must be reduced by the difference ($50,553) between required minimum equity amount of $ 132,053 and proposed equity amount of $81,500 from initial Base Loan amount.
$132,053
New Adjusted Base Loan Amount - $733,500 minus $50,553. = $682,947. For New Base Loan Amount.
$682,947.
NEW Equity Amount = $815,000 minus $682,947. $132,053.
New Adjusted Total Loan amount = Base Loan amount plus VA Fee of 3.3% ($682,947. PLUS $ 22,537.)
$ 705,484
Test for New Loan amount : Percentage of Guaranty = Available Entitlement plus Min required Equity divided by Appraised value $71,697. + $132,053.= $203,750,000 divided by $815,000
25% Min Guaranty is met – loan is saleable
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