SUMMARY: FHLMC Five (5) year balloon amortizing over thirty years, 60 payments with a
balloon balance; with a conditional option to modify at the end of five years to a 25 year
fixed.
FHLMC/FNMA Seven (7) year balloon amortizing over thirty years, 84 payments with a balloon
balance; with a conditional option to modify at the end of seven years to a 23 year fixed.
PRICING: - Additional 1/2% discount fee on 80.01%-95.00% LTVs
LOAN AMOUNT: MAXIMUM Maximum conforming 1-2 family loan limit
MINIMUM $20,000
LTV LIMITATIONS:
Primary Residence Second Home
PURCHASE PURCHASE
1 unit 95% 1,2,6 (7 Yr.) 1 unit 95% 1,4,6 (FHLMC 7 Yr.)
2 unit 80% 3 (7 Yr.) 1 unit 80% 4,7
1-2 unit 80% 2 (5 Yr.)
RATE & TERM REFINANCE RATE & TERM REFINANCE
1 unit 90% 6 (7 Yr.) 1 unit 70% 4
2 unit 80% 3 (7 Yr.)
1-2 unit 80% 3 (5 Yr.)
CASH-OUT REFINANCE CASH-OUT REFINANCE
1 unit 75% 3,7 (7 Yr.) Not Allowed
2 unit 75% 3 (FHLMC 7 Yr.)
1-2 unit 70% 3 (5 Yr.)
MAXIMUM LTV FOR FHLMC 5 YEAR BALLOON PURCHASES AND RATE/TERM REFINANCES IS 80.00%
NOTES:
1. Must receive "Accept" or "Accept Plus" response with no minimum
credit score, or "Refer" response with a minimum 680 credit score from Loan
Prospector.
2. FNMA: Must receive "Approve/Eligible" or "Refer/Eligible" response
from Desktop Underwriter.
3. Subordinate financing is permitted on primary residences on purchase and rate/term
refinance transactions for FNMA/FHLMC 7 year balloons up to a maximum 75% LTV/90% CLTV,
and for FHLMC 5 year balloons up to a maximum 75% LTV/80% CLTV.
Subordinate financing is not permitted on cash-out refinance transactions. Subordinating
lender must be aware of balloon first mortgage financing.
4. No subordinate financing. Appraisal must indicate property is not in a soft area,
marketing time must be less than 6 months.
5. Additional 1/2% discount fee on 80.01-95.00% LTV's.
6. FNMA cash-out refinances between 70.01 - 75%, the original mortgage must be at least 12
months old.
7. Maximum LTV in New York is 70%.
MODIFICATION: Borrower may modify at the end of five/seven years to a fixed rate for
$250.00 plus costs of updating title without requalifying provided:
1. The borrower is still the owner and occupant of the property.
2. The borrower must be current on the mortgage and not have any 30 day late pays in the
last twelve months.
3. No additional liens have been placed on the property.
4. Lender is not obligated to modify if the new note rate will be more than 5 percentage
points above the original note rate.
5. The borrower must make written request to the holder as provided in Section 5 of the
balloon note addendum.
6. The rate will be 1/2% over the FHLMC/FNMA 60 day mandatory commitment at the time of
modification rounded to the nearest 0.125%.
INVESTMENT PROPERTY: Not allowed
TEMPORARY BUY DOWNS: 2-1 buy down allowed on FNMA 7 Year Balloon only up to a maximum LTV
of 90%. Refer to document # 6105, page 1 for further temporary buy down guidelines..
UNDERWRITING: All loans will be underwritten FHLMC/FNMA and Flagstar Bank current
applicable guidelines, unless otherwise stated. (Refer to underwriting guidelines.)
MORTGAGE INSURANCE: Up to and Including:
30-yr:
90.01 - 95.00% Fixed Rate Coverage 35% (FNMA 7 Year Balloon only)
90.01 - 95.00% Fixed Rate Coverage 30% (FHLMC 7 Year Balloon only)
85.01 - 90.00% Fixed Rate Coverage 25%
80.01 - 85.00% Fixed Rate Coverage 12%
70.01 - 75.00% Cash-Out Refinance 17% (FNMA 7 Year Balloon only)*
70.01 - 80.00% Second Home 17% (FNMA 7 Year Balloon only)**
* FNMA requires a 5 Year MI Continuing Coverage Requirement
** FNMA requires a 7 Year MI Continuing Coverage Requirement
