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Important Program Updates

To:      VHDA Originating Lenders

Date:   December 13, 2007

Re:      Important Program Updates

Delinquent Closing Interest and Escrows – Must be received by December 28, 2007

Many lenders have not responded to VHDA’s weekly request for delinquent closing interest and escrows.  Therefore, any lender that fails to provide delinquent interest and escrows funds by December 28, 2007 will be temporarily suspended from the VHDA Reservation System.  Also, per diem interest and escrows for recently closed loans are expected to be provided to VHDA within 10 days after closing and no later than January 10, 2008.  Receipt of closing interest on all loans closed in 2007 is required for VHDA to meet the IRS requirement for Form 1098 reporting to our borrowers.

VHDA- FasTrak System – Access Eliminated December 15th, 2007

VHDA has received notification from our service provider that the FasTrak automated underwriting system will no longer be available after December 15th.  We apologize for any inconvenience that this may cause. 

Homeownership Education – Required for All Loans Beginning January 1, 2008

Lenders are reminded that the completion of a VHDA homeownership education course will be required prior to loan approval for all VHDA loan programs with new reservations beginning January 1, 2008.  Course completion will be required regardless of prior homeownership or credit score.  VHDA will require evidence that the course has been completed prior to the issuance of a loan commitment or delegated approval confirmation.  If the completion has been recorded in VHDA’s homeownership education tracking system, VHDA will verify the information without the need for the certificate to be faxed with the delegated approval notice.  If the information is not available in our system, then the Delegated Underwriter will be contacted and requested to fax the certificate of completion.  The certificate must be included in the final loan package submitted to VHDA after loan closing.  All on-line reservation confirmations beginning January 2, 2008 will reflect the requirement of homeownership education.

Mortgage Insurance Coverage Requirements Changes – Effective January 1, 2008

Lenders are reminded that mortgage insurance coverage requirements will be increased for all loans reserved beginning January 1, 2008.  The new coverage requirements are as follows:

                        95.01% - 100.00% LTV                      35% coverage

                        90.01% - 95.00%   LTV                      30% coverage

                        85.01% - 90.00%   LTV                      25% coverage

                        80.00% - 85.00%   LTV                      12% coverage

Flex Advantage 104% & Conventional Insured 103% - Suspended January 1, 2008

Lenders are reminded that the Flex Advantage 104% loan and Conventional Insured loans exceeding 100% loan to value will be suspended for new reservations beginning January 1, 2008.  VHDA’s Flex 100 and Conventional Insured 100% will still be available.

Rate Lock In’s

VHDA’s rates are available each morning until approximately 10:00 am, but may be changed earlier if volatile market conditions warrant an immediate adjustment.  This time frame allows lenders adequate time to make loan reservations for applications taken after hours.  The VHDA on-line reservation system is available 24 hours a day.  VHDA will no longer grant any exceptions to loans that are not reserved prior to a rate change.

Revised Documents

VHDA is in the process of updating the Delegated Approval Notice, Flex Alt Program Disclosure and Single Family Loan Program Disclosure to incorporate the changes regarding Homeownership Education and the elimination of the Flex Advantage Program.  These updated forms will be available on the forms section of vhda.com in early January.  Lenders may continue to use the existing forms until these documents are available.

Declining Markets – Use of Loan Prospector and Desktop Underwriter Decisions

When using Loan Prospector and Desktop Underwriter Decisions, lenders must apply the maximum loan to values applicable to that system.  If the property is determined to be in a declining market – the maximum loan to value for VHDA loans is 95.00%. In accordance with Fannie Mae’s guidelines – this reduced loan to value in these markets will become effective with application dates on or after January 15, 2008. 

Lender Performance

In consideration of the current market conditions, VHDA has increased the review and assessment of lender performance.  Lenders are required to perform thorough reviews of all loans prior to loan approval and loan closing, including credit qualification and appraisal assessment to ensure that all VHDA and insurer criteria are followed and documentation is obtained.  Lender performance will be carefully monitored and lenders demonstrating a lack of compliance or failure to promptly submit complete and accurate closing and post closing documentation will be subject to suspension from future originations.

We recognize the challenges that these changes and requirements create for our lending partners and appreciate your efforts to integrate them in your procedures.