Processing FHA 203(k) Refinance Loans in Encompass

Encompass? Quick Reference Guide

Processing FHA 203(k) Refinance Loans in Encompass

Encompass provides a comprehensive set of tools and forms for FHA 203(k) loans. Use the following workflow as a recommended starting point for processing FHA 203(k) refinance loans. Adjust the workflow to meet your business requirements. This guide describes the workflow and the entries required on each form for an FHA 203(k) refinance loan. For general instructions on completing each form, refer to the online help topic for the form. For information about creating a loan template with predefined data for FHA 203(k) loans, refer to the "Loan Templates" help topic.

Configure Settings

Have your administrator download the most recent FHA MI Tables and FHA County Limits. For detailed instructions, refer to the online help.

Borrower Summary

1. Select FHA for the Loan Type (field ID 1172). 2. 3. Use the Order Credit button to order a credit report.

1003 Loan Application

- On page 1, if gift funds were used for the down payment, select Gift Funds from the Source of Down Payment list in the Property Information and Purpose of Loan section.

- On page 2, in the Assets and Liabilities section, click Show all (VOD) to enter VODs for gift funds used to finance the loan.

Order An Appraisal

- On the Services tab, click Order Appraisal, and then follow the detailed instructions in the online help topic.

Note: If your administrator has configured the appraisal ordering process so you can select your own appraiser, select the appraiser you previously located using the Appraisal Lookup button on the FHA Management form. If the appraiser is not listed, add the appraiser, or ask your administrator to do it.

REGZ - LE

- In the Days Per Year section, select 365 from the Number of Days list. - At the bottom, in the Late Charge section, type 10 in the days late field, type

4 as the % charged, and select of the payment from the drop-down list. - In the Assumption section, select May, subject to conditions.

HUD 1003 Addendum

Most fields should be populated with information from other forms. Complete the information in the following sections: - Section 18: Indicate whether the borrower is a first-time home buyer. - Section 20: Select a check box to indicate the purpose of the loan.

HUD 929005b Conditional Commitment

Most of the information should be populated from other forms. - In the Improved Living Area field, enter the square footage. - Complete the remaining fields using information in the appraisal report. After completing the Conditional Commitment On the HUD 1003 Addendum, select an Occupancy option from line 25 (2) and select the two options for the appraised value below line 25 (3).

Configure Settings Borrower Summary 1003 Loan Application FHA Management

Order Appraisal REGZ-LE

1003 Addendum

HUD Conditional Commitment

FHA Management Form

The FHA Management form is a central location for managing FHA-related information and accessing forms for FHA loans. Complete any fields that are not already populated from the Borrower Summary and the 1003, and use the FHA-integration features on the Tracking tab to retrieve information from the FHA Connection database. Click the links on the title bar on the upperright to access information from related forms such as the 1003 and 2015 Itemization.

Basic Info Tab 1. In the Loan Information section, select 203(k) for Purpose of Loan. 2

Prequalification Tab Complete this tab as you would for any other FHA loan.

Tracking Tab Refer to FHA guidelines to determine if an As Is appraisal must be obtained. - If an As Is appraised value is obtained, select the As Is check box (field ID

4091) in the Appraisal section and enter the value of the property in its current condition with no improvements. - If both As Is and As Improved appraisals are obtained, select As Is only.

FHA 203(k) Tab Complete the FHA 203 (k) tab, based on the instruction provided in the Processing FHA 203(k) Loans in Encompass guide, available in the Guides & Documents section in the Encompass online help. Click the Itemization link on the upper right to open a Quick Entry pop-up window that enables you to view 2015 Itemization entries side-by-side with the FHA 203(k) entries. To be reflected in the closing costs, the following fees from the FHA 203(k) tab on the FHA Management form must be manually entered as Financed fees on the 2015 Itemization prior to disclosing the loan: - Step 1: A (lines 2-7), B, and C. - Step 4: A and E.

To Mark 2015 Itemization Fees as Financed: 1. On the 2015 Itemization form, click the Edit icon to the left of the fee to

open the Fee Details pop-up window. 2. In the Amount Paid By section, enter the fee amount in the Borrower

Financed field. After setting up the Financed fees, you also need to enter the Fees Associated with the new loan in Step 2C on the FHA 203(k) tab. These include the total of fees from the 2015 Itemization other than fees added specifically to support FHA 203k. Use the following calculation to determine this amount: -

FHA Loan Transmittal Summary

Most of the data on the FHA Loan Transmittal form should already be completed. Review the entries, make adjustments if necessary, and add underwriter comments as needed.

FHA Loan Transmittal Summary

- Subtract the total of the FHA 203(k) financed fees (Steps 1 A2-7, 1B, 1C, 4A, and 4E from the FHA 203(k) tab on the FHA Management form)

- Enter the resulting number in Step 2C on the FHA 203(k) tab.

? 2022 ICE Mortgage Technology. All rights reserved. Encompass? and the ICE Mortgage Technology logos are trademarks or registered trademarks of ICE Mortgage Technology or its subsidiaries. Other company and product names may be trademarks of their respective owners. Rev. 9/14/2017

Encompass? Quick Reference Guide

Processing FHA 203(k) Purchase Loans in Encompass ? Page 2

Complete the FHA 203(k) tab on the FHA management form as described below.

Step 1: Establishing Financeable Repair and Improvement Costs, Fees, and Reserves

Line A1. Enter construction and rehab costs, other than fees. - Click Copy to Alterations to copy the value to the Alterations field in the

Details of Transaction. This amount is exclusive of any borrower-paid fees associated with the current transaction that will be disclosed in closing costs per CFPB guidelines. Lines A 2-7. For each fee, enter the total amount to be included in the rehabilitation escrow account for the project. The fee amounts must also be manually entered on the 2015 Itemization to be reflected in closing costs. Line B. Enter the amount allowed to cover contingency reserves for the project. Refer to the FHA handbook for guidance. Line C. Enter the amount allowed to cover mortgage payment reserves. Refer to the FHA handbook for guidance. Line D1. Click the Edit icon to edit the amount. Line D2. Enter Discount points to be charged against repair and improvement costs to generate calculated total. Note: Encompass does not automatically synchronize fees from D1 and D2 to the 2015 Itemization. Work with your administration and compliance teams to define your fee mapping and rules.

Step 3: Calculating Maximum Mortgage Line C. Enter any credits for removing lead-based paint. Credits entered in this field

reduce the calculated maximum mortgage amount (Step 3D) by the amount of the credit. Line E. Enter applicable nationwide limit. Refer to the HUD website for current values. Click the Edit icon for lines A, B, and D to adjust the amounts.

Step 5: Calculating the LTV for Application of Annual MIP

Encompass automatically calculates the MIP LTV and the Case LTV ratios.

NOTE: The LTV in the Encompass header uses the value from the first field listed in the calculation portion of 3D (field ID MAX23K.X86) for property valuation.

Basic Info Prequalifica

tion Step 3

Step 4

Step 5

Step 2: Establishing Value

Capture total inducements to purchase. Refer to FHA guidelines for how this is calculated on a 203(k) vs standard 203(b).

Enter the value of the property in its current condition with no improvements. Refer to FHA guidelines to determine if an As Is appraisal must be obtained.

Note: If an As Is appraised value is obtained, enter information in the Appraisal section on the Tracking tab and select the As Is check box (field ID 4091). If both As Is and As Improved are obtained, select As Is only.

Line E. The calculation is based on the selection for the As Is check box (field ID 4091) on the Tracking tab. If the check box is selected, the As-Is Property Value from 2D is populated. If not, the field is populated with the Purchase Price Less Inducements to Purchase from 2C.

Line F. Enter the estimate value of the property after improvements.

Step 4: Additions to Base mortgage Amount

Enter the total amount for a financed solar energy system. Note: This amount is included in the rehabilitation escrow calculation.

Click the Edit icon to adjust the amount. To accurately render the Details of Transaction, and calculate the loan LTV, click Copy to Base Loan Amount when the tab is completed or modified.

Step 6: Establishing the Rehabilitation Escrow Account

- Line B is populated with the Energy Efficient Improvement Amount from line 4A, but can be edited as needed.

- In line D, enter the funds that the borrower is providing to the rehabilitation escrow account for contingency funds.

- In section F, enter the amounts related to the initial draw at close.

Step 6

? 2017 Ellie Mae, Inc. Ellie Mae?, Encompass?, Encompass360?, and the Ellie Mae logo are trademarks or registered trademarks of Ellie Mae, Inc. or its subsidiaries. All rights reserved. Other company and product names may be trademarks of their respective owners. Products, services and programs are subject to change without notice. Rev. 8/21/2017

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