Conforming Fannie Mae Matrix (Wholesale) Lender Paid Mortgage Insurance

Transcription

1 SFR / PUD/Condos 2 2 units 3-4 Units 2 80/80% (Fixed) SFR / PUD / Condos 75/75% (ARM) 2-4 Units Purchase & Rate/Term Refinances Owner Occupied Second Home Max LTV/CLTV Min FICO Max LTV/CLTV Min FICO Max LTV/CLTV Min FICO 30yr= 2011, 25yr= 2018, 20yr= 2012, 15yr= 2013, 10yr= /1 ARM= 2019, 7/1 ARM= 2020, 10/1 ARM= 2021 LPMI Purchase & Rate/Term Refinances Owner Occupied Second Home Max LTV Min FICO Max LTV Min FICO Max LTV Min FICO SFR / PUD/Condos 2 2 units 2 Florida- Condominiums (See condo Project guideline for specific requirements) 1 Unit 3 Texas: Cash out refinance transactions are ineligible West Virginia: Max LTV/CLTV is 100%. An appraisal (exterior/interior) is required. 2 Unit 3 unit 4 unit $533,850 $645,300 $801,950 5 to 10 financed properties: Allowed meeting the following matrix- See Detailed guidelines for program requirements. Pricing should be based off of the M4 program-fixed rate options only* Transaction Units LTV/CLTV Min FICO Transaction Type Units LTV/CLTV Min FICO Purchase & R & T Refinance Purchase & R & T Refinance 97/97% 1 -Purchase (Fixed-30) 95/95% 1-(Fixed) 90/90% 1 (ARM) 85/85% 1 (Fixed) 75/75% (ARM) 95% 1 (Fixed) 90% 1 (ARM) 85/85% 1 (Fixed) 75/75% (ARM) Lender Paid Mortgage Insurance LPMI Fixed Rate 1 unit 75/75% units 70/70% 720 Program Codes 90% 1 (Fixed) 80% (ARM) 1 Subject to MI Approval from MI Provider & their guidelines & requirements (Max LTV/CLTV may be reduced depending on the county/state) Note: 97% LTV Purchase Only, 30 Yr Fixed, First Time Homebuyer Only. See specifics including MCM requirements 90/90% 1 (Fixed) 80/80% (ARM) Cash Out (Meeting Delayed Financing) Cash Out (Meeting Delayed Financing) 1 unit Conforming Fannie Mae Matrix (Wholesale) 9/22/2015 Program Codes Fixed Rate M4 (5-10 Financed) Fixed Period ARM's 30 Year=2000, 25 Year=2001, 20 Year=2002, 15 Year=2003, 10 Year= % STAND=2034, 97%MCM= Year Fixed=2005, 20 Year Fixed=2006, 15 Year Fixed=2007, 10 Year Fixed= /70% (Fixed) 60/60% (ARM) LPMI Fixed Period ARM's Maximum Loan Amount (All states except Hawaii) $417,000 70/70% units 65/65% 720 5/1 ARM=2401, 7/1 ARM=2402, 10/1 ARM= /85% 1 -Purchase (Fixed) %/80% - Purchase(Fixed) 75/75% - Refinance (Fixed) 75/75%- Purchase (ARM) 65/65%-Refinance (ARM) Cash-Out Refinances 3 Owner Occupied Second Home Max LTV/CLTV Min FICO Max LTV/CLTV Min FICO Max LTV/CLTV Min FICO

2 Loan Terms Fixed: 10, 15, 20, 25, 30 Year Minimum Loan Amount ARMS's: 5/1, 7/1 and 10/1 ARM Information. Loan Term- 30 Year Amortization. Fixed Period- 5/1, 7/1 and 10/1. Margin Index- 1 Year Libor. Caps- 5/1 = 2/2/5 7/1 = 5/2/5 10/1 = 5/2/5. Floor- Can never be lower than the margin. Qualify at 2% over the Note rate for 5/1. 7/1 and 10/1 qualify at the Note Rate Ineligible Property Type Co-ops, Hobby Farms, Log Homes, Mixed Use, Manufactured Homes, Condotel, Timeshare, Non-warrantable Condos, Properties exceeding 40 acres or more- See detailed guidelines for additional ineligible properties SFR, PUD (attached and detached) meeting PUD guidelines, Condominiums (attached and detached) meeting Condominium guidelines, 2-4 unit properties, Eligible Properties Modular Homes, Leasehold Estates, Deed Restricted Properties (subject to a clause in the deed that Foreclosures are exempt from the restriction), Construction to Permanent. See detailed guidelines for specifics Eligible Borrowers U.S Citizens & Permanent and Non-Permanent Resident Aliens are allowed with a valid social security number. Non-Resident Aliens (foreign nationals) are not allowed. Underwriting Method DU AUS only (Manual Underwrites are not allowed). Max DTI Ratio Per DU findings Age of Credit Documents Credit documents cannot be older than 90 days from the funding date. These documents include credit report, employment, income, and asset. Prelim is good for 90 days. Appraisals are good for 120 days (Note: A recert of value from will only be required if the appraiser states the property area is not stable or is declining) All loans with LTV > 80% are subject to MI approval %* MCM %* Standard 18% 35% * % 25% 30% % 12% 25% % 6% 12% Mortgage Insurance Approved MI Companies (Borrower Paid-Monthly) : Essent, MGIC, National, Radian or UGI (United Guaranty) Approved MI Companies (Lender Paid-Single Premium) : Radian & UGI ( United Guaranty) All loans with MI are required to establish an escrow account for Taxes and Insurance. Borrower Contribution: Down payment can be in the form of a gift (Subject to MI company approval) Maximum interested party contribution: 3% (LTV %) or 6% (LTV 90%) Max DTI: Per DU Reserves: Per DU Eligible Properties: SFR, PUD, Condominiums and 2 Units (see matrix) Transaction Types: Purchase and R/T Refinance, Cash Out for Primary residence only Mortgage/Rental History: Per AUS Deed in Lieu of Foreclosure/Short Sale: 4 years since the completion date Bankruptcy Chapter 7: 4 years from discharge date and re-established credit. (Chapter 13-2 Years if discharged- 4 years if dismissed) Foreclosure: 7 years since the completion date. Property Resale less than 90 days: Allowed pending supportive appraisal and MI company approval First Time Homebuyers First time homebuyers are eligible. First time homebuyer investment properties may not use rental income to qualify. Maximum Number of Financed The financed property limit applies to the borrower's ownership of one - to four- unit financed properties or mortgage obligations on such properties and is cumulative for all borrowers. These limitations apply to the total number of properties financed, not the number of mortgages on the property. Note: If ownership of a property held in the name of a LLC or partnership is greater than or equal to 25%- this must be included in the total # of financed properties regardless of Properties the entity (or borrower) that is the obligor on the mortgage Principal Residence- No limitations Multiple Loans to One Borrower (Number of Properties Finance of America Mortgage will Finance) 5-10 Financed Properties (Second Home and Investment) None Mortgage Insurance Coverage LTV Second Home or Investment- The borrower may own or be obligated on or up to 10 financed properties Finance of America Mortgage may finance up to Four (4) properties (include joint or total ownership) with a Maximum of $1.5 million (excluding Jumbo) No more than 2 in any condo project 2nd home or Investment: Allowed up to 10 Financed properties, including primary residence (Include Joint or total ownership) for purchase & refinance transactions Refer to rate sheet for additional pricing. (Product Codes 30 yr= 2005, 20 yr= 2006, 15 yr= 2007, 10 yr= 2008) Eligibility for Investment & 2nd home with 5-10 financed properties Units LTV/CLTV FICO Cash Out Units LTV/CLTV FICO Purchase & *Allowed only if Delayed 1 unit 75/75% 720 R & T Refinance Financing Exception 1 unit 70/70% units 70/70% 720 guideline is met* 2-4 units 65/65% 720 Additional Underwriting Requirements for Investment & 2nd home with 5-10 financed properties Income Reserves (Manual Calculation required) 10,15,20 Year 30 Year Regardless of DU findings, 2 year most recent tax returns must be provided. 2nd home/ - 6 mos for each additional 2nd home and NOO Page 1 of 6

3 Borrowers who purchased the subject property within the past six months are eligible for a cash-out refinance if all of the following requirements are met: Cash Out Refinance The original purchase transaction was an arms-length transaction Delayed Financing Exception For this refinance transaction, the borrower(s) must meet the borrower eligibility requirements (i.e.-borrowers who are natural persons that have reached the age at which the mortgage note can be enforced in the jurisdiction where the property is located). The borrower(s) may have initially purchased the property as one of the following: A natural person An eligible inter vivos revocable trust, when the borrower is both the individual establishing the trust & the beneficiary of the trust or an LLC or partnership in which the borrower(s)have an individual or joint ownership of 100% The original purchase transaction is documented by a HUD-1 Settlement Statement, which confirms that no mortgage financing was used to obtain the subject property. (A recorded trustee's deed [or similar alternative] confirming the amount paid by the grantee to trustee may be substituted for a HUD-1 if a HUD-1 was not provided to the purchaser at time of sale.) The sources of funds for the purchase transaction are documented (such as bank statements, personal loan documents, or a HELOC on another property Owner Occupied: Subject to the Maximum LTV/CLTV ratios for a standard Cash Out transaction. 2nd Home or Investment with 1-4 Financed properties: Subject to the Maximum LTV/CLTV ratios for a standard Cash Out transaction. 2nd Home or Investment with 5-10 Financed properties: Subject to MAX LTV/Fico requirements under the 5-10 financed section Credit Credit Inquiries: The report must list all credit inquiries that were made in the previous 120 days. Credit: All borrowers must have minimum of (2) fico scores on the credit and sufficient credit experience regardless of DU findings. Minimum Trade lines: Per AUS findings with Approve/ Eligible Collections / Charge-off Accounts: Judgments, Garnishments and Liens Delinquent credit (including taxes, judgments, tax liens, mechanics' or materialmen's liens) that have an affect on Finance of America Mortgage's 1st lien position must be paid at closing Mortgage History: - 0x60x12 (Regardless of DU) Monthly Debt Obligations HELOC Payment: - Current monthly payment reflected on the credit report may be used for qualifying ratios. - If the amount is not shown on the credit report, use the payment reflected on the billing statement Installment Debts: - Payments on installment debts with more than 10 months of remaining payment must be included in the DTI. If the source of funds used to acquire the property was an unsecured loan or a loan secured by an asset other than the subject property (such as a HELOC secured by another property), the HUD-1 for the refinance transaction must reflect that all cash-out proceeds be used to pay down, if applicable, the loan (unsecured or secured by an asset other than the subject property) used to purchase the property. Any payments on the balance remaining from the original loan must be included in the debt-to-income ratio calculation for the refinance transaction. (Gift funds used to purchase the property may not be reimbursed with the proceeds of the new loan) The new loan amount can be no more than the actual documented amount of the borrower's initial investment in purchasing the property plus the financing of closing costs, prepaid fees, and points on the new mortgage loan (subject to the maximum LTV/CLTV/HCLTV ratios for the cash out transaction based on the current appraised value). All other Cash Out refinance guidelines apply and must be met Authorized User Account: Per AUS findings with Approve/ Eligible Disputes: If DU does not issue a message specific to the tradeline with a dispute, it is not required to be addressed. If DU offers a "disputed tradeline message" and the dispute does belong to the borrower with a derogatory reported within the last two years, a new credit report must be provided evidencing the dispute has been removed from all repositories. AUS must be re-run with the new credit report clearing the disputed message. If the dispute is not the borrowers, documentation to support must be provided. Accounts do not have to be paid off at or prior to closing if the balance of an individual account is less than $250 or the total balance al all accounts is $1000 or less. *Accounts that exceed the above limits do not have to be paid at closing, provided the underwriter determines and documents a strong credit profile and meaningful financial reserves* - Installment debts may be paid off or paid down to 10 or fewer monthly payments for qualifying. (Unless the monthly debt obligation significantly affects the borrower's ability to meet their credit obligations).*note: Pay downs may be Limited to One installment debt per borrower/loan application if the borrower does not have sufficient liquid funds in the bank to cover the remaining balance. *All pay downs require liquid funds to support the remaining balances of each debt being paid down to qualify the loan* 30 Day Accounts - Document that the borrower has sufficient funds to cover the unpaid balance of all 30-day charge accounts. DU will include the balance of all 30-day charge accounts in the Total Funds to be Verified. Deferred Installment Debts: Deferred Installment debts must be included in Debt Ratios as follows: - For deferred installment debt, other than Student loans, if minimum payment is not shown on credit report, then use: - a copy of the payment letter; or - forbearance agreement that reflects a future monthly payment - For Student Loan Deferment - Use the greater of the following: - 1% of the outstanding balance; or - the actual documented payment Lease Payments: - The lease payment must be included in the DTI regardless of the remaining number of payments. Co-signed Debts (Contingent Liability) - Copy of the note, agreement, or any document to evidence the borrower is the co-signer, not the primary obligor - Evidence the primary obligor has made payments as agreed for the last 12 months (Provide copies of 12 month canceled checks) - No history of delinquencies in the last 12 months Debts paid by Business for Self-employed borrowers: Debts paid by business for self employed borrowers may be excluded from the monthly obligation when all of the following requirements are met. - No late payments in the last 12 months and no more than 1x30 in the last 24 month period. - Evidence, such as 12 months canceled checks, that the debt has been paid out of company funds - The underwriter may condition for CPA or borrower to prepare P&L (Cash Flow Analysis) that the business took the payment of the debt into consideration. Revolving Accounts: - Use the monthly payment shown on the credit report. If not available, use the greater of $10 or 5% of the outstanding balance. Payoff of Revolving Accounts - In order to qualify without the monthly payment on the current balance, evidence of pay off is required. Page 2 of 6

4 Bankruptcy Foreclosure Deed in Lieu, Pre-Foreclosure, Short Sale Restructured or Modified Loans Extenuating circumstances are not eligible. Chapter 7 or 11-4 years from discharge date Chapter 13-2 years from discharge date (A borrower who was unable to complete the Chpt. 13 and received a dismissal date will have a 4 year waiting period) Multiple Bankruptcy within 7 years - 5 years from most recent discharge or dismissal date. Extenuating circumstances are not eligible. 7 years from completion Extenuating circumstances are not eligible. 4 years from completion date or settlement Only eligible when the borrower(s) have made a minimum of 24 consecutive months of timely mortgage payments on the restructured loan before closing on the refinance mortgage loan. A signed 4506-T and validated Tax Transcripts are required on all transactions. Transcripts may not be used in lieu of returns for self employed borrowers or borrowers that receive rental income. Note: 2106 expenses need to be taken in consideration only for borrowers earning commission income that is 25% or more of annual employment income Salaried Borrowers: 30 day paystub + W-2 covering most recent year. W-2 Transcripts permitted on all loan transactions for borrowers whose sole source of qualifying income is from W-2 income (See detailed guides ) Note: If tax returns are provided, they will be evaluated. Second Job (Not self employed) Paystub + W-2's covering most recent two year period Income Self-employed Borrower: Personal and business tax returns covering most recent two year period If the most recent signed personal tax return cannot be provided and validated due to a filing of an extension, the following documentation must be provided *Note- to use 2014 income for a self employed borrower, the income must validate * - Copy of the most recent federal tax extension, proof of payment (Finance of America Mortgage will pull the tax transcript reflecting "No Record Filed") - A copy of the previous two year's tax returns Earnings from a Corporation (1120) can only be taken into consideration if the borrower owns 100% of the business. Borrowers with 5-10 Financed Properties: Most recent 2 years Tax returns are required, regardless of AUS findings, and a signed 4506-T will be processed for two years. Rental Income 24 months of landlord history is not required. In order to use rental income, the following requirements apply. Verbal Verification of Employment 1. Subject Property: - Provide appraisal form 1025 (2-4 units) OR 1007 (1 unit) - Schedule E or copy of lease agreement (if the property is not on the Schedule E because it was acquired subsequent to filing tax returns). If the borrower is qualified with the entire payment without use of rental income, the following is required: - A signed lease or a statement from the borrower indicating the gross monthly rent being charged (or to be charged) for the property. The monthly rental amounts must be stated separately for each unit in a two- to four-unit property. The disclosure from the borrower must be in the form of one of the following: - a written statement from the borrower, or - an addition to the Uniform Residential Loan Application (Form 1003) and 1008 If the borrower qualifies with the use of rental income from the subject property, Form 1007 is required. 2. N/O/O property owned that is not the subject property: - Schedule E or copy of lease agreement (if the property is not on the Schedule E because it was acquired subsequent to filing tax returns). 3. Primary Residence converting to : - Provide Rental Survey (Form 1007) - Copy of fully executed lease agreement - Receipt of a security deposit from the tenant and deposit into the borrower s account Verbal Verification of Employment is required for all borrowers: - Salaried and commission income - Verbal VOE within 10 days prior to note date. - Self-employed income - Verbal VOE within 30 days prior to note date. - If a borrower is in the military, a military Leave of Earnings Statement dated within 30 days of Note date is acceptable. Business Funds Borrower must be 100% owner of the business and owner of the account Assets & Reserves A CPA or accountant to confirm the following on letterhead: Evidence that the borrower has full use of the funds and no repayment is required. A cash flow analysis on the business and, CPA letter explaining use of business funds does not negatively affect the business. If a CPA letter is not available, the underwriter must review the financial position (cash flow analysis) of the company and the impact the cash withdrawal will have. (Significant withdrawals should be carefully considered) Require 2 months Bank statements or Verification of Deposit (VOD) with 2 month average balance Large deposits that exceed 50% of the total monthly qualifying income for the loan must all be sourced and explained. *See detailed guidelines for documentation requirements in relation to large deposits* Note: Documentation or explanation for large deposits is not required for refinance transaction, however the underwriter must ensure that any borrower funds, including any related liabilities are considered *Accounts opened within 90 days of the application date that are considerably higher than the current average balance must be sourced & explained* Bonus, Overtime and Commission Income (less than 25%) : 30 day paystub + W-2's covering most recent two year period Commission income greater than 25% requires two years tax returns in addition to the paystub and W2's Alimony & Child Support Income: Documentation of a minimum "6" months receipt of income required "Other Income Types"- See Finance of America Mortgage detailed guidelines for a specifics May be used for down payment, closing costs and reserve requirements. Reserves are calculated per DU Findings, in addition to those required by DU are: Owner occupied 1 unit - Per DU Owner Occupied- 2-4 Unit - 6 months reserves 2nd home/ - 2 months additional PITI reserves on every other financed 2nd home & NOO 5-10 Financed Properties - Refer to 5-10 Financed section on previous page. Page 3 of 6

5 Gift Funds Owner occupied and 2nd home is allowed for purchase and refinance transactions. Gift donor must be blood or legal relative, domestic partner, or fiancé. Gift letter must contain the amount of the gift, donor's name, address, phone number and relationship. The donor should state that repayment is not expected. When LTV/CLTV <= 80%, the entire down payment may come from a gift. (LTV's greater than 80% gifts are acceptable pending MI company approval) If gift has already been deposited into borrowers account, provide copy of cancelled check and deposit slip. If the gift funds have not been deposited in the borrowers account, the borrower must provide evidence of transfer of funds from the donor to the borrower with copies of cancelled checks, bank statements etc. from each party. If the gift is deposited into escrow directly, copy of cashiers check with donors name will be required. Gift of Equity A gift of equity is permitted for principal residence and Second Home purchase transactions. The donor must provide a gift letter. HUD-1 Settlement Statement listing the gift of equity. Interested Party Contribution (IPC) Property Listed for Sale Condo Projects (Excluding FL) Condo Projects Located in Florida Maximum allowable contribution from seller, builder, realtor, broker, or an affiliate who may benefit from the sale of the property: - LTV 75 or less is 9% - LTV to 90% is 6% - LTV greater than 90.01% TO 97% is 3% - is limited to a maximum of 2% regardless of LTV/CLTV Rate/term or Cash Out refinances are eligible. Note: Cash out refinances are limited to 70% LTV if listed within the 180 days regardless of listing cancellation.. Borrower must provide written confirmation that they intend to occupy the subject property (for principal residence transactions). HOA Cert: Required on all Project reviews (Full and/or Limited) Full Review: *If the property will be used as an, at leas 50% of the total number of the project must have been conveyed to purchasers who occupy their unit as a primary residence or second home. Note: This requirement does not apply if the subject mortgage is for a primary residence or second home. *Delinquencies for HOA dues may not exceed 15% (total unit dues cannot be more than 60 days delinquent) *No single entity may own more than 10% of the total units (or 1 unit in a 2 to 4 unit project) *No more than 25% commercial usage *Pending litigation is in-eligible, however if a minor matter and non-structural, this is acceptable subject to the underwriter's review of the litigation item and overall parameters of the complex. (FNMA project standards department may be used to support the underwriting decision) *see detailed guides for specifics* *At least 90% of the total units in the project have been conveyed to the unit purchasers *The project is 100% complete (including all units and common elements), *The project is not subject to phasing or annexation *Control of the homeowners association has been turned over to the unit owners * Private transfer fees are not allowed unless established prior to 02/08/11 or if provides direct benefit and is paid to HOA. Limited Review: Please refer the Limited Condo Certification for requirements located on the Wholesale website If the DU findings reflect the message " A limited review can be performed " see the chart below for LTV restrictions for a Limited review HOA cert. The following are the Maximum allowed LTV/CLTV/ HCLTV (Purchase/R & T). Note: Full review of projects follow the eligibility matrix (LTV) on the cover page Properties located in all States excluding Florida *Limited Review Requirements* Occupancy LTV/CLTV/HCLTV Primary 80%/80% (Fixed) Second Home 75%/75% Investment Ineligible Insurance- Copy of the Master/Blanket Hazard Policy is required (To include fidelity coverage). If the blanket policy does not provide "walls in" coverage (aka- HO6 coverage), the borrower will need to obtain it separately. Non-Owner Occupied properties allowed with a Full HOA Review only. LTV's over 80% are subject to MI company approval 2-4 Unit Condo complexes are eligible with a Full HOA cert and meeting all other Fannie Mae requirements All refinance transactions require that the property be taken off the market at least one day prior to the date of the application as evidenced by the listing cancellation. Additional Requirements for New Projects or Newly Converted Condos: - 50% Pre-sale Requirement: For a specific legal phase or phases in a new project, at least 50% of the total units in the subject legal phase(s), considered together with all prior legal phases, must have - been conveyed or be under contract for sale to principal residence or second home purchasers. For the purposes of this review process, a project consisting of one building cannot have more than one legal phase. - Finance of America Mortgage reserves the right to limit its exposure to 20% in any condo project or 1 unit in a 2 to 4 unit project. Projects located in Florida must be in an Established Project. Properties located in the state of Florida * Properties located in the state of Florida * *Limited Review Requirements* *Full Review Requirements * Occupancy LTV/CLTV/HCLTV Occupancy LTV/CLTV/HCLTV Primary 75%/75% Primary 95%/95% Second Home 70%/70% Second Home 90%/90% Investment Ineligible Investment 85%/85% HOA Cert: Required on all Project reviews (Full and/or Limited) Full Review: *If the property will be used as an, at leas 50% of the total number of the project must have been conveyed to purchasers who occupy their unit as a primary residence or second home. Note: This requirement does not apply if the subject mortgage is for a primary residence or second home. *Delinquencies for HOA dues may not exceed 15% (total unit dues cannot be more than 60 days delinquent) *No single entity may own more than 10% of the total units (or 1 unit in a 2 to 4 unit project) *No more than 25% commercial usage *Pending litigation is in-eligible, however if a minor matter and non-structural, this is acceptable subject to the underwriter's review of the litigation item and overall parameters of the complex. (FNMA project standards department may be used to support the underwriting decision) *see detailed guides for specifics* *At least 90% of the total units in the project have been conveyed to the unit purchasers *The project is 100% complete (including all units and common elements) *The project is not subject to phasing or annexation *Control of the homeowners association has been turned over to the unit owners * Private transfer fees are not allowed unless established prior to 02/08/11 or if provides direct benefit and is paid to HOA. Limited Review: Please refer the Limited Condo Certification for requirements locate don the Wholesale website Insurance- Copy of the Master/Blanket Hazard Policy is required (To include fidelity coverage). If the blanket policy does not provide "walls in" coverage (aka- HO6 coverage), the borrower will need to obtain it separately. New and Newly Constructed Condos are In-Eligible Page 4 of 6

6 Appraisal Requirements Transferred appraisals are not permitted. Properties with Solar Panels Non-Permitted Additions and Garage Conversions Accessory Unit (Unpermitted illegal units) Property Resale less than 90 days Primary Residence Conversions to Second Homes, a Pending Sale, or Conversion to A full appraisal must be ordered through one of Finance of America Mortgage approved Appraisal Management Companies. Max 40 Acres If a 1004D (Appraisal update and/or Completion Report) is required, the appraiser must provide a photograph of the front of the subject property (in addition to the photos of the update/completion item(s)) to validate that the appraiser has inspected the exterior of the property when he/she performed the appraisal update. If the property owner is the owner of the solar panels, standard eligibility requirements apply (for example, appraisal, insurance, and title). If the property owner leases the solar panels from a third party- additional requirements apply (see detailed guidelines for specifics) Appraiser to comment that the addition or conversion was completed in a workmanlike manner Appraiser to comment if there are any health and safety issues Appraiser to comment that the addition conforms to the homes structure Appraiser to comment if there is a second kitchen ( If there is an illegal 2nd kitchen, loan must meet all of the accessory unit guidelines below) The illegal unit (addition) conforms to the subject neighborhood and to the market Property must be appraised based on its current use and must report that the improvements represent illegal use Borrower cannot use rental income to qualify from the illegal 2nd unit Appraiser to comment that the improvements are typical for the market area by supporting this with "3"comparable properties that have the same illegal use Hazard insurance policy must include the total square footage of the property (including the illegal unit) & note that any future claims will not jeopardize the property A second appraisal is required when: Any increase over 50% regardless of documented upgrades The increase is 25% or more unless the appraiser comments and documents the upgrades The following requirements must be met (Reserve requirements must be manually calculated for all DU 9.1 case files: Conversion to 2nd Home Primary Residence is a pending sale Conversion to 2 mos. reserves for both properties 2 mos. reserves for both properties 2 mos. reserves for both properties Both current and proposed PITI must be Rental income cannot be used. Both current and proposed PITI must be used used for qualifying. Both current and proposed PITI must be used for qualifying * To use rental income, it must be documented for qualifying per FNMA including: Rental Survey- Form 1007 is required and 25% Vacancy Factor applied and Copy of fully executed lease agreement and Receipt of security deposit from the tenant 97% Purchase Transactions Borrower Eligibility Education and Counseling Requirement Loan Type Property and Occupancy Underwriting Method DU only Minimum Borrower Contribution Standard contribution requirements apply Standard MCM contribution requirements apply. Mortgage Insurance 35% 18% Reserves 6 month title seasoning is required. Between % Purchase - Non MCM No Income limit requirement Not Required Purchase Transactions only At least one borrower must be a first time homebuyer Fixed Rate loan with 30 year term only 1-Unit principal residence only Reserves requirements will be determined by DU. Other All other policies apply. See Detail Guides All other MCM requirements apply. * All other policies and requirements apply, see detailed guides for full requirements Up to 97% MCM- My Community Mortgage (FNMA) MCM area median income limits apply One borrower must complete an acceptable pre-purchase homebuyer education and counseling program Note: If the borrower inherits or is legally awarded (by divorce, dissolution of a domestic partnership etc.) a property- it is exempt from the 6 month waiting period Note: If the property was purchased by the borrower within the 6 months preceding the application for new financing, the borrower is ineligible for a cash-out refinance. Cash Out Refinance Continuity of Obligation must be demonstrated on Cash out Refinances unless one of the following conditions is met: The borrower was added to title 24 months or more prior to the disbursement date of the new loan, or There is no existing mortgage on the subject property as a result of the borrower either purchasing the property with cash having paid off any prior mortgage The LTV calculation for a Cash-out refinance: Purchase Date within 6-12 months More than 12 months LTV Calculation Use the current appraised value Use the current appraised value Rate & Term Refinance No seasoning required. If the first mortgage being paid off with this transaction was used to payoff any subordinate financing that was not used to acquire the property and that mortgage has not been seasoned for at least 6 months prior to the date of the application, the loan is ineligible for Rate & Term Refinance. The LTV calculation for a Rate and Term Refinance: When calculating LTV for Rate and Term Refinance, current appraised value will be used, regardless of the subject acquisition date. Note: Texas loans for refinance as a rate and term do not allow: Any principal reductions/ curtailments. Impounds may not be added to new loan calculation if they are not netted from the payoff. POC fees may not be refunded when financed into the loan amount, and loan must be recalculated due to any payoff reductions, (Ex. - Borrower made a payment, now payoff reduced) will not be eligible. Page 5 of 6

7 Continuity of Obligation Continuity of Obligation occurs on a refinance transaction when at least one of the borrower(s) on the existing mortgage is also a borrower on the new refinance transaction secured by the subject property. All refinance transactions must: Comply with the definition above meet one of the permissible exceptions described below, or comply with the limited eligibility parameters (see below) Note: These requirements do not apply when there is no existing mortgage on the subject property as a result of the borrower either having purchased the subject property with cash or when any prior mortgage for which the borrower was an obligor was paid in full, Note: All time period references are measured from the date of the event (i.e.- transfer of title) and end with the disbursement date of the new refinance If the refinance does NOT meet the Continuity of Obligation, the new refinance will be eligible and not bound to the limited eligibility if any of the following apply: The borrower on the new refinance was added to title 24 months or more prior to the disbursement date of the new refinance transaction The file is documented that the borrower acquired the property through inheritance or was legally awarded the property (i.e.- divorce, dissolution of a domestic partnership) There is no minimum waiting period as to when the borrower acquired the property before completing a new refinance transaction The borrower on the new refinance has been added to title through a transfer of a trust, LLC, or partnership. If true- the following are required: The borrower must have been a beneficiary creator (trust) or a 25% or more owner of the LLC or partnership prior to the transfer, and The transferring entity or borrower has had consecutive ownership (on title) for at least the most recent 6 months prior to the disbursement of the new loan Note: Transfer of ownership from a corporation to an individual does not meet the continuity of obligation requirement The borrower has been on title for at least 12 months but is not obligated on the existing mortgage(s) that is being refinanced and the borrower meets at least one of the following requirements: has been residing in the property for at least 12 months has paid the mortgage for at least 12 months, or can demonstrate a relationship with the current obligor (i.e.- relative or domestic partner) All other refinance transactions that do not meet either a continuity of obligation or permissible exception must comply with the following LTV/CLTV ratio restrictions regardless of the occupancy. (LTV/CLTV is based off the current appraised value) Limited Liability Less than 6 months on title = Ineligible Greater than 6 months on title but less than 24 months = Limited to 50% LTV/CLTV Greater than 24 months on title = No additional restrictions Impounds per state law: Escrow / Impounds California: Escrow / impounds may be waived for loans with the LTV less than 88.99% Escrow Hold Backs Escrow Hold Backs are ineligible in all states States other than California: Escrow / impounds may be waived for loans with the LTV less than or equal to 80%. (80.00 or lower) A power of attorney is acceptable provided it is "specific" and meets the following: Power of Attorney * Reference the subject property address (in addition to a legal description) * Authorize the attorney-in-fact to enter into a real estate transaction and indicates that the mortgagor specifically appoints that specific person * Match the legal name(s) on POA to the typed name(s) & signature(s) for the borrower. If legal signature is different from typed, a notarized name affidavit required * Borrowers must sign and date the POA and it must be notarized * Must be recorded prior to, or concurrent with, the date of the security instrument * Must not contain any blank fields and is approved by the title company On ALL transactions, the initial application must contain signatures of all borrowers (Not the POA) to the transaction unless the following occur: * Military Personnel- Lender needs to obtain the absent borrowers signature on the application by mail or fax * Incapacitated Borrowers (*Where required by applicable law): The lender must obtain a copy of the documents making the appointment of the guardianship Note: Not eligible on Cash out Transactions or Texas 50(a) (6) loans Funding into the Month Allowed through the 5th calendar day of the following month. AL, AR, AZ, CA, CO, CT, DC, DE, FL 1, GA, IA, IL, IN, KS, KY, LA, MA, ME, MD, MI 3, MN, MO, NC, NH, NJ, NM, OH, OK, OR, PA, RI, SC, TN, TX 2, UT, VA, VT, WA, WI, WV 4 Approved States 1 Florida: See Condo Restrictions 2 Texas: Cash out refinance transactions are ineligible 3 Michigan: The Minimum loan amount allowed is $10,000 4 West Virginia: Max LTV/CLTV is 100%. An appraisal (exterior/interior) is required. Page 6 of 6