Underwriting and Financing Residential Properties

Welcome
Group-04
11/25/2022 Underwriting and Financing Residential Properties 1

Meet our Group Members
Tapan Kumar Roy Mst. Esha Moni Akter Md. Arif Hossain Sobuz Uddin Molla
ID. No. 1920059 ID. No. 1920036 ID. No. 1920035 ID. No. 1820058
Md. Abdul Rahim Shoyon Kumar Saha Most. Sagorika Akter Roton Kumar Sen Md. Shofikul Islam
ID No. 1820028 ID. No. 1920027 ID No. 1920017 ID No. 1920041 ID No. 1820042

Underwriting and
Financing Residential
Properties
Group-04
Agenda
Underwriting
Mortgage Loan
Classification of Mortgage Loans
Underwriting Process
Closing Process

Overview
This topic deals with the process of seeking long-term mortgage
financing for owner-occupied residential properties. Here we
focused on two aspects of this process: loan underwriting and
closing.

What is Underwriting?
 Evaluating borrower’s loan request
 Performed by a loan officer
 Profitability and risk

Mortgage Loan
Classification of Mortgage Loans
Mortgage Loan
Type of loan used to purchase or maintain
 The borrower agrees to pay the lender over
time

Types of Mortgage Loans
Mortgage Loans
Insured
Conventional FHA Insured VA Guaranteed
Conventional
Mortgage Mortgage Mortgage Loan
Mortgage

Underwriting Process
Verification of
Borrower Assessment of
1 2 Borrower
3 4 Credit History
5
Income Assets
Estimated
Other Compensating
Housing
Obligations Factors
Expense
Underwriting
Process Illustrate
Conventional, Insured Conventional
Conventional and Insured Conventional
Mortgage
Name of Borrower: John and Jane J. Jones
Income TK 3542 monthly from salaried employment of both spouses, TK 42504
annually
Debts Installment obligations of TK 181 per month with 35 months remaining
Credit card obligations, Tk 50 per month with more than 12 months
remaining
Sale Price Tk 76700
Appraised value Tk 77,000
Estimated Property Tax Tk 797 annually
Hazard Insurance Tk 552 annually
Desired Mortgage FRM with a 30 year term, constant payment

Standards for Underwriting Conventional and
Insured Conventional Loans
Conventional Insured conventional
FRMs ARMs FRMs ARMs
Maximum ratios
allowed
Loan-to-value 80% 80% 95% 90-95%
Payment to 28 25-28 28 25-28
Income
Total Obligations 36 33-36 36 33-36
to income
11/25/2022 PRESENTATION TITLE 13

Computation of Borrower Qualification
Conventional Insured Conventional
Loan amount requested Tk 61,360 Tk 72865
Terms FRM 30 years, 9.25% FRM 30 yr, 9.5%
Loan to Value ratio 80% 95%
Borrower income (A) Tk 3542 Tk 3542
Housing Expenses:
Principal and Interest Tk 505 Tk 613
Property taxes 66 66
Hazard Insurance 46 46
Mortgage Insurance - 21
Housing Expenses(B) 617 746
Add:
Installment debt 181 181
Credit cards 50 50
Total Obligations(C) Tk 848 Tk 977
Housing expenses ratio(B÷A) 17% 21%
Total Obligation Ratio (C÷A) 24% 28%

Standard for FHA Insured
Conventional

Determination of Borrower Qualification (general VA
guaranteed loan example)

Summary of Underwriting Results

Closing Process
Fees and
Prorations,
Escrow costs and Statutory Costs
(RESPA
Expenses payment to Third
Parties )

Requirements under the Real Estate
Settlement and Procedures Act (RESPA)
Law passed by Congress to provide uniform set of procedures and
documents for buyer of residential real estate. RESPA fall into
seven areas that are used to facilitate discussion:
Consumer Information
Advance disclosure of settlement costs
Title Insurance placement
Prohibition of kickbacks and referral fees
Uniform settlement statement
Advance inspection of uniform settlement statement
Escrow deposits
Information for RESPA Closing Statement

Settlement Statement

Federal Truth-in-Lending(FTL)
Requirements
 Which deals with the cost of mortgage credit
 Have been a requirement affecting lenders since 1968

Summary
Underwriting means process of borrower’s loan request in terms of profitability and risk.
This function is usually performed by a loan officer. When a lender evaluate loan request,
the lender consider differents types of mortgages. Such as, Conventional, Insured
conventional, FHA insured and VA guaranteed mortgage loan. In Underwriting Process,
the lender considers borrower net income, Verification of borrower assets, Credit History
and so on. In closing process, property is being acquired, considers fees and expenses,
Prorations, Escrow costs and so on.

Thank you

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Welcome

11/25/2022 Underwriting and Financing Residential Properties 1

11/25/2022 Underwriting and Financing Residential Properties 2

11/25/2022 Underwriting and Financing Residential Properties 4

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 Evaluating borrower’s loan request

 Performed by a loan officer

 Profitability and risk

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11/25/2022 PRESENTATION TITLE 13

Total Obligation Ratio (C÷A) 24% 28%

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11/25/2022 PRESENTATION TITLE 17

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Advance disclosure of settlement costs

Title Insurance placement

Prohibition of kickbacks and referral fees

Uniform settlement statement

Advance inspection of uniform settlement statement

11/25/2022 PRESENTATION TITLE 20

11/25/2022 PRESENTATION TITLE 21

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