Table of Contents - MWF Wholesale · The HomeStyle Payoff Program allows the borrower to payoff the...

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Table of Contents

TABLE OF CONTENTS ........................................................................................................... 1

1. PROGRAM GUIDELINES .............................................................................................. 3

2. HOMESTYLE PAYOFF PROGRAM ............................................................................... 3

2.1. Product Codes ............................................................................................. 3

2.2. Eligible States .............................................................................................. 3

2.3. LTV/CLTV .................................................................................................... 3

2.4. Loan Purpose .............................................................................................. 3

2.5. Occupancy .................................................................................................. 3

2.6. Financing Energy Improvements ................................................................... 3

2.7. Contingency ................................................................................................. 3

2.8. Loan Amount Calculation .............................................................................. 3

2.8.1. Sample Calculation...................................................................... 3

2.8.2. Sample Calculation (PACE Loan) ................................................. 4

2.9. Underwriting ................................................................................................ 4

2.9.1. AUS Decision Requirements ........................................................ 4

2.9.2. Manual Underwriting .................................................................... 4

2.9.3. Specific DU Messaging ................................................................ 5

2.10. Special Feature Code .............................................................................. 5

2.11. Pay Off Existing Debt .............................................................................. 5

2.12. Energy Report ........................................................................................ 5

2.13. Energy Contract and Contractor ............................................................... 5

2.14. Appraisal ................................................................................................ 5

2.15. Escrow Account ...................................................................................... 5

2.16. Fees....................................................................................................... 5

2.17. Mortgage Insurance Coverage ................................................................. 5

2.18. Escrow/Impound Rollover ........................................................................ 5

3. HOMESTYLE IMPROVEMENTS PROGRAM ................................................................ 7

3.1. Product Codes ............................................................................................. 7

3.2. Eligible States .............................................................................................. 7

3.3. LTV/CLTV .................................................................................................... 7

3.4. Loan Purpose .............................................................................................. 7

3.5. Occupancy .................................................................................................. 7

3.6. Financing Energy Improvements ................................................................... 7

3.7. Contingency ................................................................................................. 7

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3.8. Loan Amount Calculation .............................................................................. 8

3.8.1. Purchase .................................................................................... 8

3.8.2. Limited Cash Out......................................................................... 8

3.8.3. Sample Calculation Purchase....................................................... 8

3.8.4. Sample Calculation Refinance ...................................................... 9

3.9. Underwriting .............................................................................................. 10

3.9.1. AUS Decision Requirements ...................................................... 10

3.9.2. Manual Underwriting .................................................................. 10

3.9.3. Specific DU Messaging .............................................................. 10

3.10. Special Feature Code ............................................................................ 10

3.11. Pay Off Existing Debt ............................................................................ 11

3.12. Types of Improvements ......................................................................... 11

3.13. Resiliency and Repairs .......................................................................... 11

3.14. Energy Report ...................................................................................... 11

3.15. Energy Contract and Contractor ............................................................. 11

3.16. Appraisal .............................................................................................. 12

3.17. Escrow Account .................................................................................... 12

3.18. Fees..................................................................................................... 12

3.19. Mortgage Insurance Coverage ............................................................... 12

3.20. Escrow/Impound Rollover ...................................................................... 12





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1. Program Guidelines HomeStyle Payoff Program

HomeStyle Improvements Program

2. HomeStyle Payoff Program

2.1. Product Codes

Code Description

CF15DHSEP CF30DHSEP CF30JDHSEP

CONF FIXED 15YR DIRECT HOMESTYLE ENERGY PAYOFF CONF FIXED 30YR DIRECT HOMESTYLE ENERGY PAYOFF CONF FIXED 30YR HB DIRECT HOMESTYLE ENERGY PAYOFF

2.2. Eligible States Eligible States Matrix

2.3. LTV/CLTV See Matrix

2.4. Loan Purpose Limited cash-out refinance paying off PACE/HERO/or other energy debt ONLY.

2.5. Occupancy All one- to four-unit existing properties are eligible except manufactured

homes.

All occupancy types are permitted.

2.6. Financing Energy Improvements Not Applicable

2.7. Contingency Not Applicable

2.8. Loan Amount Calculation Limited cash-out refinances may include the payoff of existing financing (such as unsecured loans or credit card debt) incurred for prior energy-related improvements made to the property up to 15% of the “as completed” appraised property value.

Purchase transactions or limited cash-out refinances may include the payoff of PACE liens on the property with no dollar amount limit (LTV ratios apply).

2.8.1. Sample Calculation

The borrower wants to complete a limited cash-out refinance and include the payoff of their existing energy loan for $30,500.


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The “As-Is” Appraised Value came in at $300,000.

The HomeStyle Payoff Program allows the borrower to payoff energy related debt (appraised value $300,000 x 15% = $45,000).

The energy loan being paid-off is less than the maximum allowance, so it may be possible finance the entire payoff of the energy debt as long as the total loan amount does not exceed 97% LTV.

$250,000 1st Trust Deed Payoff

$30,500 HERO/PACE Payoff

$4,500 Prepaids & Closing Costs

$285,000 Total Transaction Cost

Since the “As-Is” appraised value came in at $300,000, the maximum loan amount at 97% LTV is $291,000. In this example, the borrower could use the HomeStyle Payoff program to refinance the property with no additional funds due at closing.

2.8.2. Sample Calculation (PACE Loan)

The borrower wants to complete a limited cash-out refinance and include the payoff of their existing PACE loan for $50,000.

The “As-Is” Appraised Value came in at $300,000.

The HomeStyle Payoff Program allows the borrower to payoff the entire PACE energy related debt (not subject to 15% maximum) as the total loan amount does not exceed 97% LTV.

$235,000 1st Trust Deed Payoff

$50,000 HERO/PACE Payoff

$4,500 Prepaids & Closing Costs

$289,500 Total Transaction Cost

2.9. Underwriting

2.9.1. AUS Decision Requirements

DU Approve/Eligible

DU Approve/Ineligible

Disregard the "ineligible" recommendation from DU that may result if the borrower pays off unsecured loans or credit card debts (for prior energy improvements) that exceed the limited cash-out 2%/$2,000 maximum cash-back policy.

2.9.2. Manual Underwriting

Not Allowed





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2.9.3. Specific DU Messaging

Since DU cannot determine if the loan casefile contains energy-related features, DU will not issue any specific messages related to HomeStyle Energy.

2.10. Special Feature Code SFC 375 must be used

2.11. Pay Off Existing Debt Limited cash-out refinances may include the payoff of existing financing

incurred for prior energy improvements made to the property (such as PACE & HERO liens, unsecured loans, or credit card debt).

No portion of the loan proceeds may be used as a reimbursement for prior energy improvements that were paid for in cash.

2.12. Energy Report An energy report is not needed for refinances of existing consumer debt incurred to purchase or install energy-related improvements that a borrower pays off in the transaction.

2.13. Energy Contract and Contractor Not Applicable

2.14. Appraisal Appraiser must complete an “AS IS“ appraised value appraisal.

2.15. Escrow Account Not Applicable

2.16. Fees Not Applicable

2.17. Mortgage Insurance Coverage

LTV Coverage for ≤ 20 Years

Coverage for > 20 years

80.01% - 85.00% 6% 12%

85.01% - 90.00% 12% 25%

90.01% - 95.00% 25% 30%

Note: MWF only utilizes approved MI Companies and approved MI forms/endorsements.

2.18. Escrow/Impound Rollover Allowed on MWF to MWF refinances only.





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3. HomeStyle Improvements Program

3.1. Product Codes

Code Description

CF15DHSEI CF30DHSEI CF30JDHSEI

CONF FIXED 15YR DIRECT HOMESTYLE ENERGY IMPROVEMENTS CONF FIXED 30YR DIRECT HOMESTYLE ENERGY IMPROVEMENTS CONF FIXED 30YR HB DIRECT HOMESTYLE ENERGY IMPROVEMENTS

3.2. Eligible States Eligible States Matrix

3.3. LTV/CLTV See Matrix

3.4. Loan Purpose Limited cash-out refinance with new energy improvements financed

Purchase with new energy improvements financed

3.5. Occupancy All one- to four-unit existing properties are eligible except manufactured

homes.

All occupancy types are permitted.

3.6. Financing Energy Improvements Up to 15% of “as completed” appraised property value.

100% of the funds must go toward the energy improvement costs (which may include the cost of the energy report, if paid for by the borrower).

Proposed energy improvements must be cost effective. Energy improvements are determined to be cost effective when the cost of improvements, including maintenance, is less than the present value of the energy saved over the useful life of the improvements as indicated in the HERS energy report.

Note: The cost effectiveness of the improvements may be assessed in the aggregate rather than assessing each individual improvement separately.

3.7. Contingency A 20% contingency of the cost of the energy improvements must be

financed into the loan amount. Example $10,000 in energy improvements x 20% = $2,000 contingency

The loan amount including the cost of the improvements plus the contingency CANNOT exceed the applicable LTV.


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Once the work is completed, ALL excess funds must be applied to the principal balance of the loan.

No additional work can be completed with the remaining contingency funds.

Excess funds MAY NOT be used as a reimbursement for the value of sweat equity and/or 'Do It Yourself' improvements.

3.8. Loan Amount Calculation

3.8.1. Purchase

Purchase Price + cost of energy improvements divided by the LESSER OF the “AS COMPLETED” Value OR the Purchase Price + the cost of energy improvements.

3.8.2. Limited Cash Out

Existing debt + Cost of energy improvements divided by the “AS COMPLETED” appraised value.

3.8.3. Sample Calculation Purchase

The borrower is purchasing a new home for $300,000 and wants to finance multiple energy improvement repairs.

The borrower has obtained a HERS Energy Rating Report which identifies cost-effective energy improvements for the subject property.

The borrower obtains a contractor’s bid for the proposed energy improvements shown in the HERS report showing the total cost for repairs at $29,000.

After reviewing the HERS report and contractors bid, the appraiser has determined the “As-Completed” property value is $330,000.

Note: improvement costs may not result in a dollar-for-dollar increase to the appraised value

Step 1: Determine the maximum allowable amount of energy related repairs. The borrower is allowed to finance up to 15% of the “As-Completed” appraised value in energy related improvement costs (Appraised Value $330,000 x 15% = $49,500).

The maximum allowed in this example is $49,500 based on the “As-Completed” Appraised Value.

Step 2: Determine the total cost of the energy related repairs $29,000 Energy Repairs from Contractor's Bid

$5,800 20% Required Contingency Fee ($29,000 x 20%)

$375 HERS Energy Report Fee

$300 1004D Re-Inspection Fee

$100 122 Title Endorsement Fee





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$250 MWF Draw Administration Fee

$35,825 Total Cost of Energy Related Repairs

Step 3: Determine the maximum allowable mortgage amount In order to determine the maximum allowable mortgage amount, two calculations are required and the LESSER value of the two calculations will be used.

Calculation #1 Purchase Price $300,000 + Total Energy Package Cost (from step 2) $35,825 = $335,825 x 97% Max LTV = $325,750

Calculation #2 “As-Completed” Appraised Value ($330,000) X 97% = $320,100

In this example, the LESSER amount of the two calculations is $320,100. This is the maximum allowable mortgage amount for the transact ion.

3.8.4. Sample Calculation Refinance

The borrower wants to refinance the existing mortgage on their home and wants to include multiple energy improvement repairs.

The borrower has obtained a HERS Energy Rating Report which identifies cost-effective energy improvements for the subject property.

The borrower obtains a contractor’s bid for the proposed energy improvements shown in the HERS report showing the total cost for repairs at $29,000.

After reviewing the HERS report and contractors bid, the appraiser has determined the “As-Completed” property value is $330,000.

Note: improvement costs may not result in a dollar-for-dollar increase to the appraised value

Step 1: Determine the maximum allowable amount of energy related repairs. The borrower is allowed to finance up to 15% of the “As-Completed” appraised value in energy related improvement costs (Appraised Value $330,000 x 15% = $49,500).

The maximum allowed in this example is $49,500 based on the “As-Completed” Appraised Value.

Step 2: Determine the total cost of the energy related repairs $29,000 Energy Repairs from Contractor's Bid

$5,800 20% Required Contingency Fee ($29,000 x 20%)

$375 HERS Energy Report Fee

$300 1004D Re-Inspection Fee





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$100 122 Title Endorsement Fee

$250 MWF Draw Administration Fee

$35,825 Total Cost of Energy Related Repairs

Step 3: Determine the maximum allowable mortgage amount “As-Completed” Appraised Value ($330,000) X 97% = $320,100.

Step 4: Determine total transaction cost including required cash to close

$270,000 Payoff Of Existing 1st Mortgage

$35,825 + Total Cost of Energy Related Repairs

$7,675 + Prepaid & Closing Costs

$313,500 = Total Transaction Cost

$313,500 Total Transaction Cost (from Step 4)

$313,500 - Maximum Allowed Mortgage(from Step 3)

$0 = Funds Required from borrower at closing

3.9. Underwriting

3.9.1. AUS Decision Requirements

DU Approve/Eligible

DU Approve/Ineligible

Disregard the "ineligible" recommendation from DU that may result if the borrower pays off unsecured loans or credit card debts (for prior energy improvements) that exceed the limited cash-out 2%/$2,000 maximum cash-back policy.

3.9.2. Manual Underwriting

Not Allowed

3.9.3. Specific DU Messaging

Since DU cannot determine if the loan casefile contains energy-related features, DU will not issue any specific messages related to HomeStyle Energy.

3.10. Special Feature Code SFC 375 must be used





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3.11. Pay Off Existing Debt Limited cash-out refinances may include the payoff of existing financing incurred for prior energy improvements made to the property (such as PACE & HERO liens, unsecured loans, or credit card debt) PLUS new energy improvements.

3.12. Types of Improvements Energy Related Improvements such as Attic and Wall Insulation, Duct

Sealing and Replacement, Weather-stripping and caulking to seal air gaps, High performance windows and sliders, High efficiency furnaces & air conditioners, and Solar panels

Radon Remediation

Home resiliency for environmental disasters such as floods, storms, and earthquakes, or to repair damage from these types of disasters.

3.13. Resiliency and Repairs May be used for storm or environmental disaster repairs and resiliency/preventative improvements to either repair natural disaster damage or improve the home’s ability to withstand hurricanes, tornados or wind storms, earthquakes, flooding, landslides, wildfires, and the like. No energy report is required.

3.14. Energy Report An energy report is not needed for refinances of existing consumer debt incurred to purchase or install energy-related improvements that a borrower pays off in the transaction.

An energy report is not needed for certain energy-related improvements (such as water efficiency devices, solar panels, radon remediation).

Other improvements require one of the following reports is required (except when using the $3500 basic weatherization and water efficiency option):

HERS report completed by a HERS rater ( See RESNET website), OR

Department of Energy ( DOE) Home energy Score Report completed by an independent 3rd-party energy assessor.

o A comparable rating report completed by an independent and certified home energy consultant or assessor if permitted under a local or state-level home energy certification or evaluation program.

3.15. Energy Contract and Contractor Energy contractor must supply bid for proposed energy improvements.

Borrower and contractor must sign energy improvement contract.

Contract must indicate work must be completed within 120 days or less AND contractor will only be paid when work is completed.





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Contractor must provide signed W9, current license, and insurance coverages (such as all-risk, public liability, workmen’s compensation, and automobile liability).

3.16. Appraisal Appraiser must be provided a copy of HERS/DOE report and the contractor

bid PRIOR to the appraisal inspection.

Appraisal must complete an “AS Completed “ appraised value appraisal subject to” energy improvements.

Appraiser must prepare a 1004d once the improvements are complete including photos of the completed improvements.

3.17. Escrow Account All funds will be disbursed at funding into a MWF escrow account.

Energy improvements funds will be disbursed in no more than two disbursements after work has been completed.

Work must be completed within 120 days of funding.

An escrow agreement stating how the escrow account will be managed and how funds will be disbursed will be issued to the borrower.

No more than two draws – INTERIM and FINAL.

3.18. Fees $375 - Energy Report Fee

$300 - 1004D Fees after work is completed (2 Required at $150/ea)

$100 - 122 Title Endorsement Fee

$250 – Draw Administration Fee

3.19. Mortgage Insurance Coverage

LTV Coverage for ≤ 20 Years

Coverage for > 20 years

80.01% - 85.00% 6% 12%

85.01% - 90.00% 12% 25%

90.01% - 95.00% 25% 30%

Note: MWF only utilizes approved MI Companies and approved MI forms/endorsements.

3.20. Escrow/Impound Rollover Allowed on MWF to MWF refinances only.


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