20-12-21 Announcement—December 21 2020 Program Guidelines Update

12/21/2020

All policy changes and updates are referenced to the appropriate section below. These policy changes are effective 12/21/2020 unless otherwise noted.

Additionally, CBCMA has compiled all of its announcements related to COVID-19 into one section immediately following this Recent Updates and Announcements section in the Correspondent Lending Guide. To review the program guidelines changes made December 7 or earlier, please follow this link to the archived Program Guidelines.

 

Due to changing industry needs, we retired our FHA Classic product on October 1, 2020. CBCMA will no longer accept registrations for this program. The FHA Classic product will remain on our Product Matrix for reference purposes until January 1st, 2021.

 

New COVID announcement, 20-22: Correspondents will be required to immediately repurchase a loan if, after CBCMA has purchased the loan, the correspondent authorizes a forbearance agreement without coordinating with CBCMA. To coordinate forbearance agreements, please reach out to servicing@chenoafund.org.

 

The Chenoa Fund Product Matrix has been reformatted to improve readability and information accessibility. The new Chenoa Fund Product Matrix will be posted at the same time that the FHA Classic product is removed from the Chenoa Fund Product Matrix (around the beginning of the new year).

 

We have two new sub-sections that will go under section 7.18 (Real Estate Taxes Due The Following Month After Loan Purchase): 7.18.1 (Existing Construction) and 7.18.2 (New Construction)

7.18.1 (Existing Construction): CBC Mortgage Agency recommends using the actual assessed property tax figure per the county’s assessment/tax rolls; however, if property taxes will increase or decrease significantly from the current assessment after purchase (e.g., the former owner had a senior citizen tax exemption), it is recommended that an estimated value be used that will result in the most likely payment for the borrower. The property tax value used for qualifying the borrower should be consistent throughout the file, including the 1003, AUS, CD, IEADS, and First Payment Letter.

7.18.2 (New Construction): CBC Mortgage Agency recommends using a property tax estimate based on multiplying the purchase price (less any homeowner’s exemptions) by the mill rates (the tax rates per the county website) that will be in effect in order to determine the payment; this will result in the least amount of payment variation once the property is assessed by the taxing authority. This property tax value (monthly tax payment) used for qualifying the borrower should be consistent throughout the file, including the 1003, AUS, CD, IEADS, and First Payment Letter.

We do understand that, due to local tax collection practices, property taxes may increase significantly during the borrower’s first year of homeownership, resulting in the need to prorate taxes at closing based on a much lower figure than what will need to be included in the borrower’s monthly payment. We also understand that, in calculating closing figures, the unassessed value may be used to lower the borrower’s cash to close and eliminate the collection of excessive tax escrow. In these circumstances, based on most document preparation services’ limitations, a First Payment Letter that does not match the 1003, CD, and initial IEADS may be used to reflect the most accurate payment to the borrower; however, the First Payment Letter must match the AUS qualification figures. In addition, a new IEADS reflecting the accurate collection and disbursements of tax payments should be included in the file along with an LOX from the lender.

 

The recently-introduced section 5.37 (Loss Payee Clause) is being merged with 7.24 (Hazard Insurance) as one of the section’s bullet points. The bullet points will now read as follows:

  • For purchase transactions, CBC Mortgage Agency requires hazard insurance policy with a paid receipt for one (1) year or an invoice and sufficient funds collected to pay the invoice
  • Even if a policy is issued for one (1) year, CBC Mortgage Agency requires proof that the premium for the year is paid in full
    • Proof may be in the form of a receipt signed by an authorized individual of the insurance company; otherwise, the premium is to be paid at closing and indicated on the HUD-1 Settlement Statement
    • The same premium as shown on the policy is reflected on either the paid receipt or HUD-1
  • If, on the date of purchase of the mortgage loan by CBC Mortgage Agency, there are less than thirty (30) days to policy expiration, CBC Mortgage Agency requires a thirty-day binder or evidence that the policy has been renewed for one year
  • Prior to purchase of the first mortgage and reimbursement of the second mortgage, the loss payee clause must be in the lender’s name and include the verbiage “Its Successors and/or Assigns ATIMA.” (ISAOA/ATIMA is an acceptable abbreviation of this verbiage.)
    • Alternatively, correspondents may use CBCMA’s loss payee clause on the second mortgage only. If this option is used, the second mortgage loss payee clause should be:

CBC Mortgage Agency ISAOA/ATIMA

912 W. Baxter, Suite 150

South Jordan, UT 84095

 

With the new Loss Payee Clause section moved, the new section 5.38 (Disaster Certificates) has become section 5.37.

 

Section 5.12 (Undisclosed Debt Monitoring and Soft-Pull Credit Refreshes) has been clarified. The 10-day period should refer to calendar days, not business days. The new text will read “ten (10) calendar days”.

 

Section 5.15 (Payment Shock) has had its last sentence reworded to clarify that alternative qualification requirements do not apply to borrowers with no present housing payment: “… borrowers in the 620–639 FICO band and with no current housing payment cannot use alternative qualification requirements, but are not required to meet payment shock requirements.”

 

We will no longer require a seller-signed CD, but we will still require a copy of the CD provided to the seller. This will affect the following sections:

5.34.8 (Seller’s CD): Reworded, “A copy of the CD provided to the seller at closing is required on all transactions.”

8.9 (CD and Settlement Documentation): The bullet point regarding the seller’s CD has been reworded, “Closing Disclosure provided to the seller at closing/Seller’s Transaction.”

The first sentence of the final paragraph has been reworded, “CBC Mortgage Agency requires the borrower’s or borrowers’ signatures on the Closing Disclosure provided at closing. CBC Mortgage Agency also requires a copy of the CD provided to the seller at closing, but it does not have to be signed.”

8.9.1 (Preparation of the Closing Disclosure for a Seller): Reworded, “For a purchase transaction, the settlement agent is required to provide the seller with the CD reflecting the actual terms of the seller’s transaction. The settlement agent may comply with this requirement by providing the seller with a copy of the same CD provided to the consumer (buyer) if it also contains information relating to the seller’s transaction. CBC Mortgage Agency does not require the seller’s signature on the CD containing both buyer and seller transactions, even if a separate seller-signed CD is not provided, but CBCMA will still require a copy of the CD provided to the seller at closing. Alternatively, the settlement agent may provide the seller with a separate disclosure including only the information applicable to the seller’s transaction on the CD. If the seller’s disclosure is provided in a separate document, the settlement agent will provide the correspondent with a copy of the CD provided to the seller; CBCMA will require a copy of this document, but it does not have to be signed. The settlement agent will provide the seller its copy of the CD no later than the day of consummation.”

 

Pairing with the above, we will require the final settlement ALTA statement, which must be signed by the settlement agent. This has been added to the list of required documents in section 7.22 (Documentation—General Requirements).

 

Section 7.22.3 (Loans Where Property Taxes Are Due the Following Month After Purchase) has been deleted. The same information can be found in section 7.18 (Real Estate Taxes Due The Following Month After Loan Purchase) in more detail.

The post 20-12-21 Announcement—December 21 2020 Program Guidelines Update appeared first on Chenoa Fund – Down Payment Assistance.

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