Modular vs. Manufactured…..what is the difference

I always used to get confused on these two but this is a nice short explanation……….enjoy

Modular vs Manufactured…..what is the difference

Modular homes are residences constructed entirely in factories and transported to their sites on flatbed trucks. They are built under controlled conditions, and must meet strict quality-control requirements before they are delivered.

Manufactured is the most recent label for what were once called “mobile homes” or “trailers.

Manufactured Homes are now allowed on Conventional loans.

mobile

General Requirements:

    • Designed and constructed to meet the Federal Manufactured Construction and Safety Standards

 

  • Designed as a single family dwelling and classified as real estate

 

  • Constructed after June 15, 1976
  • Must have a permanent foundation system in accordance with manufacture’s requirements for anchoring, support, stability, and maintenance. Must meet local and state codes
  • Towing hitch or running gear must be removed (including tongues, axles, brakes, wheels and lights)
  • Must be permanently connected to a septic tank or other sewer system and other utilities according to local and state requirements
  • Manufactured home installed on site for less than one year is not allowed unless borrower is:
  • the 2nd purchaser of the property  OR
    • Refinancing their current manufactured home
    • Seller cannot be the builder/contractor or manufactured housing dealer who installed the unit on site

Rules Get looser with Fannie…

Here is some great news.  Most of you know that Fannie Mae, Freddie Mac and now FHA have raised the loan limits in Monterey County to the following:

  • 1 unit $529k
  • 2 units $677,200
  • 3 units $818,600
  • 4 units $1,017,300

……..………so yes, a 3-plex in Monterey County that sells for $1,091,466 with a 25% down payment and new loan of $818,600 is a “Conforming Loan” (NOT a jumbo loan). 

But now Fannie has also gotten with the program and allows non-occupant co-borrowers (that’s like when mom and dad want to co-sign) instead of making the occupant qualify on their own.  Time for your buyers to a call their parents……………

Cliff Notes Version: 

  • Fannie Mae Blended Ratios now ok
  • C/O on High Balance no longer limited to 60%

Long Version:

Non-occupant Borrower Policies in Desktop Underwriter

Historically, when considering non-occupant borrowers on a mortgage loan, DU only considered the credit and assets of such borrowers, and not the income or liabilities.

In an effort to simplify Fannie Mae’s underwriting requirements and provide greater access to mortgage credit, DU will be updated to consider the income and liabilities of all borrowers on all principal residence mortgage transactions, including two- to four-unit properties. No separate calculation of the DTI ratio for the occupying borrower will be required, as the DTI ratio calculation will be based on the income and liabilities of all borrowers on the mortgage loan. 

High-Balance Mortgage Loan Eligibility

Fannie Mae has aligned the eligibility of high-balance mortgage loans with Fannie Mae’s standard eligibility requirements with LTV, CLTV, and HCLTV ratios up to a maximum of 95%. Many of the policy overlays that previously applied only to high-balance loans have been removed and a new policy has been implemented requiring all high-balance loans to be underwritten through DU.

Notable policy revisions with this Guide update include:

  • 5% minimum borrower contribution no longer applies, allowing all borrowers to be eligible to use gifts, grants, and Community Seconds® to fund all required down payment and closing costs on one-unit principal residence transactions with LTV ratios greater than 80%;
  • field review of property requirement for loan amounts greater than $625,500 with an LTV, CLTV, or HCLTV ratio greater than 80% has been removed;
  • appraisals no longer need to include two comparable sales from outside of the subject project when the loan is secured by a condominium; and
  • LTV, CLTV, and HCLTV ratio maximums for borrowers with 5-10 financed properties align with the requirements for loans subject to the general loan limits.

The existing high-balance loan policy overlays that remain in place include:

  • a field review is required for properties valued at $1,000,000 or more with an LTV, CLTV, or HCLTV ratio greater than 75%; and
  • all borrowers must have traditional credit. 

Effective Date

This update will be effective with DU Version 9.3 the weekend of December 12, 2015

NEW FHA Mortgage Loan Requirements

CaptureComing September 15, 2015, the Federal Housing Administration will be changing some of the FHA mortgage loan requirements regarding its single family home loan program. Some of the changes are specified below:

 

Large Deposits

For accounts that have recently opened and for accounts that have had recent deposits, large deposits will be defined as more than 1% of the adjusted value. The adjusted value is the lesser of purchase price minus seller concessions or the appraised value of the home. For example, if a $200,000 home that has a $5,000 seller concession is appraised for $200,000 or more, then a large deposit would be calculated as more than $1,950 (200,000 – 5000 = 195,000. 195,000 x 0.01 = 1,950).

Part Time Income

Two years of uninterrupted part-time income will be required. Your average over that two-year period will be used in calculations. However, if you received a pay increase, you can instead calculate your average over the past 12 months.

Self-employed Declining Income

You cannot use your income if it has had more than a 20% decline except in extenuating circumstances, and it has been either stable or increasing during the past 12 months. However, you need to qualify using your lower income.

Frequent Job Changes

If you have moved more than three times in the past 12 months for work, then the FHA mortgage loan requirements require you to show proof that the moves either advanced your income or benefits, or that you needed the training and can document that fact.

Overtime and Bonus Income

You can include a two-year history of overtime and bonus income in your loan application. You will be allowed to use a 1-2 year history if you have earned overtime and/or bonuses consistently during that time, and are likely to continue doing so.

Rent Obtained from Retained Primary Residence

When relocating for work, the FHA mortgage loan requirements specify that your new residence must be at least 100 miles from your current property. You also need at least 25% equity in the current property, unless the rental income history is on your last tax return.

Non-taxable Income

You can include non-taxable income, such as social security and disability, in your qualifying income, up to a gross maximum of 15% or that income at its actual tax rate.

Deferred Loans

Loan payments must be calculated and included in debt-to-income ratios regardless of their status. You must use the actual monthly payment, but if the actual payment is $0, then you need to use your outstanding balance as your monthly payment.

Installment Debt with Less than 10 Months

According to FHA mortgage loan requirements, you can exclude such accounts from debt-to-income ratios if the total remaining payments due is less than 5% of your gross monthly income.

30 Day Accounts that Require Payment in Full

You can exclude such accounts from your debt-to-income ratio if you can document your payments in full for the last 12 months. If you have had any late payments in that time, then 5% of that balance will be included in your debt ratios.

Authorized User Accounts

If you are the primary holder of an account, and have made payments on time on that account over the last 12 months, then you can exclude that account from your ratio. This helps ensure that debt will not be counted against people who had their parents help them establish credit and who are still listed on an account, but no longer use that account.

Multiple FHA Loans

You can obtain a second FHA loan for your primary residence if you are relocating for work when your workplace is more than 100 miles from your current home. This change does not account for high traffic areas where commutes can take exceptionally long times.

Acceptable Mixed Use Properties

A minimum of 51% of a building’s square footage must be intended for residential use. This is an increase in the allotment of mixed use from the previous rules.

Rental Income for 2-4 Units

When buying a property that has between 2-4 units, you can add the rental income from the other units to your qualifying income. Specifically , you can use 75% of either the appraiser’s estimate of fair market rent or the rent based on the rental agreement.

This change lowers the amount you can specify when qualifying for the purchase of a multi-family property.

Streamlined Refinancing – Net Tangible Benefits

A reduction in term will be deemed an acceptable net tangible benefit as long as the total of the principal, interest, and mortgage insurance is no more than $50 a month higher than your current loan.

 

As always be sure to consult with your Licensed Loan Officer for answers regarding your situation in an effort to ensure the home you’re looking at is priced right for you.

FHA – Change to the Flip Rule

A quick heads up regarding a change with all FHA loans effective January 1, 2015………(don’t shoot the messenger).

  • Anyone working with a seller that acquired a property less than 90 days ago and is “flipping” it to a new buyer using an FHA loan
  • or any buyer negotiating a purchase of a home from a seller who acquired the property less than 90 days ago and wants to use their FHA loan to buy

We don’t see this come up much anymore, but it does still happen from time to time…………

FHA FLIPS – PROPERTIES BEING RESOLD WITHIN 90 DAYS OF PREVIOUS ACQUISITION.

Expiration of the Federal Housing Administration’s Property Flipping

Temporary Waiver: FHA’s guidelines state properties resold within 90 days of the prior sale date are not eligible for FHA financing. FHA issued a “temporary waiver” to this ruling in February of 2010. FHA announced that the temporary waiver of FHA’s regulation that prohibits the use of FHA financing to purchase single family properties that are being resold within 90 days of the previous acquisition expires on December 31, 2014 and will not be extended.

What does this mean to you and your clients? Any FHA Purchase contract fully executed after 11:59 p.m. December 31, 2014 will require that at least 90 calendar days has passed since the last recorded sale of the subject property in order to be eligible for FHA financing.

What does “Fully Executed” mean? FHA deems a sales contract to be fully executed when all parties to the contract have signed the contract and the contract is enforceable under the law of the state the property is located in.

What to look for? When you receive an FHA transaction you will want to review the chain of title on your title report and look for the prior transactions. Look to see when the current seller acquired the property and do the math! Example:  Seller acquired the subject property on October 14th, 2014. If your new purchase contract is fully executed on or prior to January 12, 2015 your transaction would not be eligible for FHA financing. If your purchase contract was fully executed on or after January 13, 2014 your transaction would be eligible for FHA financing.

Please be mindful, once a contract is fully executed there is “no going back”.

Niche Stuff

Updated on NEW Jumbo products we recently rolled out –

90% Jumbo – No MI – 5/1 Arm up to $1.5 million

70% Non-owner Jumbo – Interest Only

80% 2nd Home – Interest Only

Or

Our Asset Depletion Program could be the perfect solution!

  • Retired and non-retired borrowers are eligible
  • No add-ons to your rate for using asset depletion income
  • Asset Depletion income can be coupled with other forms of income (pension, social security, w2 wages, self-employed income, etc.)
  • 75% max LTV (subject to occupancy type)
  • All occupancy types allowed
  • All collateral types allowed

And lastly a Bank Statement Loan for self-employed and over 10 financed properties loan……………….

VA Loans for Jumbo buyers?

Happy Hump Day –

Did you know that VA will allow the Veteran Buyer to pay for termite work required to obtain a clear termite report?  It’s true! The purchase contract must clearly state what work will be paid for by the Veteran/Buyer and at what cost.

As long as the details are clearly spelled out on the purchase contract, the amounts are listed on the HUD and the borrower has sufficient acceptable assets to do so, the Vet can pay for termite work. Keep in mind the Veteran Buyer can never be charged for the Termite/Pest inspection fee.

Don’t overlook the benefit of this great loan product.

•Zero down payment up to $500k purchase price in Monterey County
•No Mortgage Insurance
•$700k purchase price with approximately 7.5% down payment…. only $50k down
•Today’s (4/23/14) interests rates for these loans are:
            -Under $417k loan amount = “aprox.” 4.125% with no points (with about $1K credit back to the VET)
            -Up to $650k loan amount = “aprox.” 4.25% with no points (with over $1k credit back to the VET)

With Jumbo loans in Monterey County being anything over $484k, these VA loans can be a fantastic alternative to a jumbo loans for a VET.  Attached above is a user friendly buyer flyer.

Call or email if you have any questions or would like to know more about a VA loan.

 

VA Loans

Jumbo Buyer Loan Product / Asset Depletion Loan

“Every Loan is like a Snowflake”

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This is one of my favorite sayings at Blue Adobe Mortgage. You know that the people that live on the Central Coast are as unique as their homes. Unique situations call for flexible solutions.

 

Let our “Asset Depletion” loan help your high net-worth buyers

Example of Asset Depletion

-$2.5M in the bank
-$500k being used as reserves
-Remaining $2M being used as income via asset depletion (separation of money from actual accounts NOT required).
-Asset Depletion Calculation: $2,000,000 / 120 months = $16,666 monthly income.
-Depleting term of assets 10 years (although an Underwriter reserves the right to increase the term of depletion if necessary to offset other risk factors).
-Assets used for Income can NOT also be used for reserve requirements LTV will be limited to 75%.
-No other product exceptions will be considered when using asset depletion for income.

I am happy to discuss the program with any of your buyers who may fit this profile.  Have a great weekend!

Earning your business one buyer at a time……

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