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TRANSCRIPT
FAIRWAY ADVANTAGE PROGRAM Lender Paid Mortgage Insurance
November 2018
Agenda
1 Types of
Mortgage Insurance
2 Pros and
Cons
3 Product Offering
4 LPMI
Process
5 Pricing & Locking
6 Product Codes
2
FAQs & Resources
7
Types of Mortgage
Insurance
3
Mortgage Insurance is required on all loans with LTV over 80%. Borrower Paid (BPMI)
• Monthly – No premium is required at closing. Mortgage insurance premiums are included with borrower’s mortgage payment via escrow payments.
• Annual/Single – This is a one-time, up-front mortgage insurance premium. The entire premium is paid at closing. o The borrower paid single premium can also be financed into the loan
amount. • Split – This is a combination of both up-front and monthly premium. A part of
the mortgage insurance premium is paid up front, resulting in a lower monthly payment for the premium than a standard monthly premium.
Types of Mortgage
Insurance, contd.
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Lender Paid (LPMI) • Monthly – The lender does not collect a monthly mortgage insurance premium
from the borrower, but covers the cost by charging a slightly higher interest rate on the mortgage
• Annual – The lender may pay the single premium (LPMI Single), covering the cost of the premium by charging a slightly higher interest rate or discount points on the mortgage
• Split – Under these plans, a lender may increase the borrower’s note rate or charge discount points to cover the cost of the mortgage insurance coverage. A part of the mortgage insurance is paid upfront, or financed into the loan, and the rest of the mortgage insurance is paid monthly. This is to lower the amount of the monthly MI payments.
Financed Mortgage Insurance
• A portion (split) or all of the Single Premium is financed into the loan amount.
Pros and Cons
of LPMI PROs of LPMI CONs of LPMI
Eliminates Mortgage Insurance from the Borrowers monthly payment
A slight interest rate increase
May provide a lower monthly mortgage payment option for the Borrower Cannot be cancelled
May be included as an annual tax deduction It is not refundable
FAIRWAY ADVANTAGE LPMI
No waiting for the MI Cert prior to closing. The MI Cert is ordered after closing. Competitive Priced!
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Product Offering
Fixed Rate
High Balance
HomeReady
Fixed & ARMs (5/1, 7/1 & 10/1)
Super Conforming
Home Possible
11/20/2018 7
LPMI Process
• The LPMI Disclosure must be executed by the Borrowers with the initial disclosures.
• Fairway Advantage LPMI is obtained by Fairway. All adjustments for LPMI will be included in the rate.
• Once the loan has been underwritten the Fairway internal LPMI Condition will be added:
“LPMI – product code_________________. Cert will be obtained post-closing”
• There is no waiting for the MI Cert prior to closing. Once the loan is closed, Secondary will price the MI and post closing will obtain the MI Certificate.
11/20/2018 8
LPMI Process
Once you have imported the 3.2 file to create a loan, be sure that “Lender Paid Mortgage Insurance” is checked in Section I of the Loan Application.
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LPMI
Pricing/Locking
When Pricing or Locking the loan, be sure to select “No” in the “Borrower Pays MI” field in the First Lien Search Criteria section of Optimal Blue.
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LPMI
Pricing/Locking
The eligible products for the scenario will display at the top of the page.
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Product Codes
CONV FIX 30 LPMI - Fannie Mae
CONV FIX 25 LPMI - Fannie Mae
CONV FIX 20 LPMI - Fannie Mae
CONV FIX 15 LPMI - Fannie Mae
CONV FIX 10 LPMI - Fannie Mae
CONV FIX 30 High Balance LPMI - Fannie Mae
CONV FIX 15 High Balance LPMI - Fannie Mae
CONV FIX 30 HomeReady LPMI - Fannie Mae
CONV FIX 20 HomeReady LPMI - Fannie Mae
CONV FIX 15 HomeReady LPMI - Fannie Mae
CONV FIX 10 HomeReady LPMI - Fannie Mae
CONV FIX 30 HomeReady High Balance LPMI - Fannie Mae
Fannie Mae
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Product Codes
Freddie Mac
CONV FIX 30 LPMI - Freddie Mac
CONV FIX 25 LPMI - Freddie Mac
CONV FIX 20 LPMI - Freddie Mac
CONV FIX 15 LPMI - Freddie Mac
CONV FIX 10 LPMI - Freddie Mac
CONV FIX 30 Super Conforming LPMI - Freddie Mac
CONV FIX 15 Super Conforming LPMI - Freddie Mac
CONV ARM 5/1 LIBOR LPMI - (2.25 Margin 2/2/5 Caps) - Freddie Mac
CONV ARM 7/1 LIBOR LPMI - (2.25 Margin 5/2/5 Caps) - Freddie Mac
CONV ARM 10/1 LIBOR LPMI - (2.25 Margin 5/2/5 Caps) - Freddie Mac
CONV ARM 5/1 LIBOR Super Conforming LPMI - (2.25 Margin 2/2/5 Caps) -
Freddie Mac
CONV ARM 7/1 LIBOR Super Conforming LPMI - (2.25 Margin 5/2/5 Caps) -
Freddie Mac
CONV ARM 10/1 LIBOR Super Conforming LPMI - (2.25 Margin 5/2/5 Caps) -
Freddie Mac
CONV FIX 30 Home Possible LPMI - Freddie Mac
CONV FIX 20 Home Possible LPMI - Freddie Mac
CONV FIX 15 Home Possible LPMI - Freddie Mac
CONV FIX 10 Home Possible LPMI - Freddie Mac
CONV ARM 5/1 LIBOR Home Possible LPMI - (2.25 Margin 2/2/5
Caps) - Freddie Mac
CONV ARM 7/1 LIBOR Home Possible LPMI - (2.25 Margin 5/2/5
Caps) - Freddie Mac
CONV ARM 10/1 LIBOR Home Possible LPMI - (2.25 Margin 5/2/5
Caps) - Freddie Mac
CONV FIX 30 Home Possible Advantage LPMI - Freddie Mac
CONV FIX 20 Home Possible Advantage LPMI - Freddie Mac
CONV FIX 15 Home Possible Advantage LPMI - Freddie Mac
CONV FIX 10 Home Possible Advantage LPMI - Freddie Mac
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FWL Resources -
Guidelines
14
FAQ
Fairway Advantage LPMI FAQ
Question: Answer:
Is there a specific MI
Company that is used?
No – LPMI is eligible through all Fairway approved MI providers.
How do I price LPMI? When Pricing or Locking the loan, be sure to select “No” in the “Borrower Pays MI” field in the
First Lien Search Criteria section of Optimal Blue. LPMI is built into Optimal Blue (OB) price.
Are there any new
Underwriting Conditions
for this new process?
Yes – Underwriting will add an internal condition as a reminder of the process for Fairway Advantage LPMI ordering: “LPMI---product code____. Cert will be obtained post-closing”
Do I add any information to
the LE or CD for LPMI?
No – LPMI is not disclosed on either the LE or the CD.
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Resources & Tools
Fairway Advantage LPMI FAQ
Question: Answer:
Is there a specific
disclosure needed?
Yes – As long as program name is an LPMI program and the LPMI Box is checked, the LPMI
Program Disclosure will be automatically added to your disclosure package for the borrower. The
LPMI Disclosure to the Borrower is the same process as it is today; nothing has changed.
Will I still use Lender
Credits to pay for LPMI?
No – the MI cost is built into the lock price and the MI is ordered after loan closing. Using Lender
Credits to pay for MI coverage will no longer apply.
Can the borrower cancel
LPMI?
No – The lender owns the MI policy and the MI is paid for through the cost of the loan. To
eliminate LPMI, the borrower must either refinance their loan, or pay their loan off in order to
terminate the coverage. The MI will otherwise remain on the loan, regardless of LTV.
Is LPMI tax deductible? Please advise your borrower to consult with a tax preparer / advisor for additional details
regarding this eligibility.
Is the cost of LPMI shown
on the lock confirmation?
No – the cost for LPMI is built into the base pricing received in OB.