To: VHDA Originating Lenders
Re: Loan Program Updates
Date: November 26, 2007
VHDA continuously evaluates our programs to ensure affordable financing options are available to low-to-moderate income first-time homebuyers in Virginia. In addition, we constantly monitor the risk associated with these programs to ensure the long term availability of our programs and to best protect VHDA, our investors and most importantly our borrowers.
In consideration of the changing market environment and the increased demand for our loan programs, the following program changes will be implemented.
High Loan To Value Programs:
VHDA will suspend the First-time Homebuyer Conventional 103% insured program and the Flex Alt Advantage 104% program effective with new reservations beginning January 1, 2008. All reservations made prior to that date will be honored under the current program guidelines.
Increase in Minimum Conventional Mortgage Insurance Coverage:
VHDA will increase the minimum mortgage insurance coverage to the standard agency coverage requirements. These new coverage requirements will apply to all VHDA loan programs requiring mortgage insurance, regardless of the coverage indicated on automated underwriting decisions including loans with “My Community” and “Home Possible” approvals.
95.01 – 100% LTV 35% Coverage
90.01 – 95.00% LTV 30% Coverage
85.01 – 90.00% LTV 25% Coverage
85.00 – 80% LTV 12% Coverage
These new coverage requirements will become effective with VHDA loan reservations made on or after January 1, 2008. Please contact your mortgage insurance representative for premium rates for VHDA loans at these coverage levels.
Homeownership Education for Everyone:
VHDA will now require the completion of VHDA’s Intro to Homeownership course by all borrowers regardless of loan program, credit score or prior homeownership. VHDA believes that the completion of the course provides the borrowers with the information necessary to make informed decisions throughout the homebuying process; as well as once they become homeowners. The course may be completed in one of our scheduled classroom sessions offered throughout the state or through our eLearning online course. Please contact VHDA in the event your client is unable to complete one of the courses due to language or other communication constraints. This requirement will become effective for loan reservations beginning January 1, 2008. A certificate evidencing the completion of the course must be included in the VHDA loan package.
VHDA e Learning
VHDA’s free Intro to Homeownership class is now available online in both English and Spanish. Our eLearning site is available 24/7 and the class can be completed in more than one session to accommodate even the busiest schedule. After finishing the class users can print a Certificate of Completion.
To learn more, call 877-VHDA-123 or visit vhda.com
We have launched a new website to help Spanish-speaking Virginians learn about homeownership. Visitors will learn about VHDA’s free Intro to Homeownership class as well as find information on Preparing to Be a Homeowner, Buying Your House and Resources for additional assistance. The site provides a glossary of homeownership terms, a link to VHDA’s current interest rates and testimonials from families who purchased their own home with VHDA financing. We hope this site will be a valuable resource for your Spanish-speaking clients who are interested in beginning the homebuying process.
Property Evaluation and Assessment:
VHDA relies on the assessment of property values and market conditions from our lenders and on the information provided by local appraisers. We recognize that markets throughout the state are changing quickly and it is not possible to establish blanket criteria and guidelines for these changing and varying market conditions. We do expect all lenders to perform due diligence in the review of the appraisal and take additional precautions on properties located in markets or submarkets with declining values. In areas where values are continuing to decline it may not be prudent or in the best interest of the borrower to approve the maximum loan amount for the specific program. If the lender is using an automated loan decision that restricts the loan to value then we would expect that limitation to also be applied to the VHDA loan. If the automated decision identifies the property as being in a declining market or if the appraisal identifies the property in a declining market then the lender should obtain additional information including comparable pending sales and listings in the area to help support the current market value. All appraisals must be reviewed by the originating lender’s underwriting departments and standard guidelines and procedures must be applied prior to requesting a second review by VHDA. If a second review by VHDA is requested, the lender must submit all appraisal information in addition to the loan application, loan transmittal signed by the underwriter, credit report and underwriter appraisal comments. VHDA will consider all risk elements of the loan including the existence of mortgage insurance and the strength of the borrower as well as the appraisal information in determining the maximum loan eligible for the specific loan program.
VHDA will now require the full condominium homeowners association fee be included in the proposed housing expense for ratio qualification on our conventional manual underwritten (including Flex Alt) loans. Any amount documented by the association that is to be attributed to the payment of unit utilities may be excluded. Lenders must adhere to the mortgage insurer requirements and the automated underwriting system guidelines regarding condominium fees.
Questions regarding these changes may be directed to VHDA your assigned VHDA Business Development Officer or to the VHDA Underwriting Department.
Announcing VHDA’s RateWatch
Last Tuesday, November 20th, VHDA notified it’s Lending Partners of our new RateWatch feature that will notify registered Loan Officers and Reserve Contacts by email when VHDA changes its rates. The initial rollout of this application included all current Loan Officers and Reserve Contacts in our system. If you would like to subscribe to this service and did not receive the email announcement last week, please send your name, email address, company name and branch location to Sandy Redd If you have questions about RateWatch, please contact Sandy Redd at (804)343-5820.