22-01-20 Announcement—January 20 2022 Program Guidelines Update

Version 11.9

All policy changes and updates are referenced below to the appropriate section of the CLG. These policy changes are effective 01/20/2022 unless otherwise noted.

To review the program guidelines changes made December 9, 2021, or earlier, please follow this link to the archived Correspondent Lending Guides.

These updates apply to everyone using the Chenoa Fund program—correspondents and TPO.

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Announcement

CBC Mortgage Agency will accept the FNMA Homeview® homeownership education course to meet Chenoa Fund requirements. However, the course offered by Money Management International is still required for borrowers with a credit score below 620 using the DPA Edge program. (See section 5.20, Homeownership Education.)

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Guidelines Updates

Section 5.13 (Minimum Credit Score) has been updated to clarify how to correctly price loans for borrowers with a credit score below 620 when using Chenoa Fund DPA with a conventional FNMA loan:

All Conventional Programs: 620 FICO. Per FNMA guidelines for loans with multiple borrowers, the middle scores of all borrowers on the loan may be averaged to determine whether this 620 FICO requirement is met. Loan requirements determined by FICO score will match the 620–659 FICO requirements if any individual borrower on the loan has a qualifying FICO score lower than 620. In addition, if any individual borrower on the loan has a qualifying FICO score lower than 620 the pricing will be based on a 620 FICO pricing.

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Section 5.17 (Present Housing Expense & Verification of Rent) had its first sentence clarified: we will only accept the higher of two FICO scores to determine verification of housing requirements if the two borrowers have been living together for at least 12 months prior to the application date. The updated text is below:

All DPA Edge Products: Chenoa Fund overlays for present housing expense verification may be determined by the occupying borrower with the highest middle FICO score if the two borrowers on the file have been living together for at least twelve (12) months prior to the application date—otherwise, the requirements are determined by the borrower with the lowest middle FICO score. All other Chenoa Fund overlays are determined by the occupying borrower with the lowest middle FICO score.

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Section 5.20 (Homeownership Education) had its language clarified to show that the FNMA Homeview® education course meets Chenoa Fund requirements for the HomeReady® DPA product. The updated language is provided below:

  • At least one borrower on each HomeReady® purchase mortgage must do one of the following:
  • Complete a FNMA-approved education course (such as Framework® or Homeview®)
  • Receive housing counseling from a HUD-approved, non-profit housing counseling agency (evidenced by a signed Certificate of Completion of Housing Counseling or form 1017) prior to the borrower signing a purchase contract
  • Have already completed housing counseling (as evidenced by a completed Fannie Mae™ form 1017)

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Homeview® and Framework® also meet Chenoa Fund homeownership education requirements for borrowers using a DPA Edge product, provided the borrower’s FICO score is 620 or higher.

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Section 6.2.3 (Structural Engineering Report [Engineer’s Certification on Foundation Compliance Report]) for manufactured homes has been updated to allow the Correspondent’s DE underwriter to clear the Structural Engineering Report, provided FHA guidelines are met. The section’s text will be changed to the following:

A Structural Engineering Report is required—see HUD Manual for details. The following is an excerpt from the HUD manual:

“For Manufactured Housing, the appraisal must be conditioned upon the certification of an engineer or architect that the foundation is in compliance with the permanent Foundations Guide for Manufactured Housing.”

Note that all correspondent lenders are fully delegated and are subject to reps/warrants. Lenders in pre-purchase review will be expected to meet all FHA guidelines before CBC Mortgage Agency purchases the loan.