Announcement 2021- 094 - Smart Series Product Update

SmartVest Update

Topic

Current Guideline

New Guideline

Prepayment Penalty

Pennsylvania prepayment penalty not permitted for 1–2-unit properties with loan amounts less than $263,975 on the Smart Vest transactions

Pennsylvania prepayment penalty not permitted for 1–2-unit properties with loan amounts less than $278,204 on the Smart Vest ARM transactions

Effective for loans closed on or after January 1, 2022

Maximum Cash Out Seasoning

NA

For cash-out refinance transactions, the application date must be dated at least six (6) months after the previous Note date of the last Smart Series cash-out refinance loans with Newrez

Condos

NA

Minimum 500 square feet

Ineligible Property Types

Properties with less than 600 square feet

·    Condos with less than 500 square feet

·    Minimum 600 square feet for all properties, excluding condos

Appraisal Photographs

Original photographs, electronic images, copies from MLS, or copies from appraiser's files

All photographs must be in color. Black and white photographs are not permitted

Eligibility Matrix

Second Home: LTV 85%. Loan amounts up to $3,000,000 require a 740-credit score

Second Home: LTV reduced to 80%. Loan amounts up to $3,000,000 require a 740-credit score

Maximum Cash Out Seasoning

NA

For cash-out refinance transactions, the application date must be dated at least six (6) months after the previous Note date of the last Smart Series cash-out refinance loan with Newrez

Incidental Cash Back

Cash out amount on a rate and term refinance not to exceed the lesser of $2,000 or 2% of the loan amount

·    Cash out amount on a rate and term refinance not to exceed the lesser of $2,000 or 2% of the loan amount

·    Texas homestead properties with a lien subject to 50(a)(6) may not receive any ($0) cash back at closing. Refer to Texas 50(a)(6) Product Profile

Texas Property Restrictions

There can only be one outstanding Texas 50(a)(6) loan on a property at any given time

There can only be one outstanding Texas 50(a)(6) loan on a property at any given time and when present, a Texas 50(a)(6) loan can be the only loan secured by the subject property

Ineligible Property Types

·    Properties with less than 750 square feet

·    Condos: Units with less than 500 square feet

·    Condos with less than 500 square feet

·    Minimum 600 square feet for all properties, excluding condos

HPML Loans

Connecticut loan amounts are limited to $417,000

Revised to the following:

·    Connecticut

o  When the loan is an HPML primary residence refinance transaction with a loan amount ≤ $417,000, homeownership counseling from an independent third-party nonprofit organization approved by the HUD is required when refinancing a Special Mortgage, defined as an FHA, VA, USDA loan, or a bond loan provided by a Housing Finance Agency

Added the following second appraisal requirements

·    A second appraisal, at no cost to the borrower, is required when both:

o  The seller acquired the dwelling within 180 days prior to the date of the borrower’s purchase agreement; and

o  The price reflected in the purchase agreement is higher than the seller’s acquisition price:

§ More than a 10% price increase if the seller acquired the property in the past 90 days; or

§ More than a 20% price increase if the seller acquired the property in the past 91 to 180 days

·    Refer to the Smart Guide for transactions that are exempted from the additional appraisal requirement

Self-Employed Income

·    Most recent two (2) months’ business bank statements confirming cash flow and revenue trend is consistent with qualifying income and gross receipts appearing on the tax returns.

·    The statements must include an account history ending within 30 business days of the Note date

·    If the borrower operates a small business, use of a personal account showing business-related deposits to support cash flow maybe accepted

Bank statements are no longer required

Appraisal Photographs

Original photographs, electronic images, copies from MLS, or copies from appraiser's files

All photographs must be in color. Black and white photographs are not permitted

Maximum Cash Out

NA

For cash-out refinance transactions, the application date must be dated at least six (6) months after the previous Note date of the last Smart Series cash-out refinance loan with Newrez

Incidental Cash Back

Cash out amount on a rate and term refinance not to exceed the lesser of $2,000 or 2% of the loan amount

·    Cash out amount on a rate and term refinance not to exceed the lesser of $2,000 or 2% of the loan amount

·    Texas homestead properties with a lien subject to 50(a)(6) may not receive any ($0) cash back at closing. Refer to Texas 50(a)(6) Product Profile

Expense Factor

The underwriter must review the bank statements or 1099 statements and will use the Smart Product Business Impact and Continuity Attestation tool to assess the business operation

The underwriter uses the information on the bank statements or 1099 statements and what the borrower disclosed on the Smart Product Business Impact and Continuity Attestation to assess if additional information is needed to validate if the appropriate expense factor (+/- 50% or 70%) is being used

Texas Property Restrictions

There can only be one outstanding Texas 50(a)(6) loan on a property at any given time

There can only be one outstanding Texas 50(a)(6) loan on a property at any given time and when present, a Texas 50(a)(6) loan can be the only loan secured by the subject property

Condo Requirements

NA

Minimum 500 square feet for all condos

Ineligible Property Types

Properties with less than 600 square feet

·    Condos with less than 500 square feet

·    Minimum 600 square feet for all properties, excluding condos

HPML Loans

Connecticut loan amounts are limited to $417,000

Revised to the following:

·    Connecticut

o  When the loan is an HPML primary residence refinance transaction with a loan amount ≤ $417,000, homeownership counseling from an independent third-party nonprofit organization approved by the HUD is required when refinancing a Special Mortgage, defined as an FHA, VA, USDA loan, or a bond loan provided by a Housing Finance Agency

Added the following second appraisal requirements

·    A second appraisal, at no cost to the borrower, is required when both:

o  The seller acquired the dwelling within 180 days prior to the date of the borrower’s purchase agreement; and

o  The price reflected in the purchase agreement is higher than the seller’s acquisition price:

§ More than a 10% price increase if the seller acquired the property in the past 90 days; or

§ More than a 20% price increase if the seller acquired the property in the past 91 to 180 days

·    Refer to the Smart Guide for transactions that are exempted from the additional appraisal requirement

Appraisal Photographs

Original photographs, electronic images, copies from MLS, or copies from appraiser's files

All photographs must be in color. Black and white photographs are not permitted