May 15, 2009

DU Refi Plus™

Introduced in April 2009, DU Refi Plus™ is designed to provide several automated underwriting enhancements. The flexibilities within DU Refi Plus™ will include reduced documentation requirements for existing Fannie Mae borrowers, as well as expanded eligibility criteria. Some additional highlights of DU Refi Plus™ include:

• Maximum of 105% LTV
• Unlimited CLTV/HCLTV
• All property types are eligible, including co-ops, condos, manufactured homes and PUDs
• Primary homes and investments are eligible up to 4 units, while second homes are eligible for 1-unit properties only
• Properties limited in the past to 75% LTV/CLTV/HCLTV will become eligible to 80% LTV/CLTV/HCLTV (including 3- to 4-unit primary residences, 2-unit primary residences with high balances, second-home co-ops and investments)
• Minimum credit score of 580 will be waived if the LTV is 80% or less
• Minimum credit score of 680 will be waived if the LTV on an ARM is 80% or less
• Only one current pay stub and a verbal VOE will be required for salaried employees
• Only one-year tax returns will be required for self-employed or commissioned borrowers
• Appraisals may be waived in certain circumstances

The highlights presented in DU Refi Plus™ are numerous. However, DU Refi Plus™ also presents a few restrictions, as well. Some of the restrictions within DU Refi Plus™ include:

• No cash-out refinancing (limited to 2% of the loan size or $2,000)
• No new subordinate financing
• Pre-existing subordinations must be re-subordinated
• No paying off existing 2nds (cash-out refinancing prohibited)
• ARMs with fixed terms less than 5 years are prohibited
• Interest-only mortgages are prohibited
• Balloon mortgages are prohibited
• MyCommunityMortgages (MCM) are prohibited
• Texas 50(a)(6) mortgages are prohibited
• HomeStyle Renovation mortgages are prohibited

Enhancements to DU in the month of May (not yet confirmed) include

• Minimum 580 credit score will not be required on any DU Refi Plus™ loan
• Minimum 680 credit score will not be required on high-balance ARMs
• Maximum DTI will continue to be determined by DU
• If a loan goes beyond the maximum DTI, an Ineligible recommendation will be given
• Mortgage insurance is not required on a loan if the LTV is greater than 80% and if the existing mortgage does not have MI
• Mortgage insurance is only required if an LTV is greater than 80% and the existing Fannie Mae loan has MI (options for MI include obtaining the standard level of MI or obtaining the same coverage already in effect)
• Project reviews for condos, co-ops and PUDs are not required
• Condo or co-op hotels/motels are not eligible and will receive an Ineligible finding

The links below will provide more detailed information, directly from Fannie Mae, pertaining to DU Refi Plus™.

Fannie Mae Announcement 09-04 on DU Refi Plus™
https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/0904.pdf
The refinance initiative instituted by the Making Home Affordable program as announced by the U.S. Department of the Treasury has provided Fannie Mae the opportunity to establish and introduce DU Refi Plus™, a program that will make the refinance process as straightforward as possible.

Fannie Mae FAQ (DU Refi Plus™ included)
https://www.efanniemae.com/sf/mha/mharefi/pdf/refinancefaqs.pdf
More than 50 questions, including those on DU Refi Plus™, pertaining to the Making Home Affordable program are answered here.

DU Refi Plus™ April Enhancements
https://www.efanniemae.com/sf/guides/duguides/pdf/current/rndodu71aprupdupdated.pdf
Brian Faith, Managing Director of Communications for DU Refi Plus™, announced on February 4, 2009 that Fannie Mae’s effort to support the market and provide liquidity will include expanded refinance options through DU Refi Plus™. This link identifies the updates that will be included with the April release.

DU Refi Plus™ May Enhancements
https://www.efanniemae.com/sf/guides/duguides/pdf/current/rndodu71mayupd.pdf
Additional enhancements to DU Refi Plus™ that will be unveiled the weekend of May 2, 2009 are thoroughly represented on this Fannie Mae link.

With the increased flexibility offered within DU Refi Plus™, coupled with the near record-low mortgage interest rates, now might be the best time to refinance and PrivoCorp is positioned to process your loans faster than the rest.

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