AMX / Land Home Financial Services Wholesale Lending Division

Transcription

1 SECTION: 1 PAGE: 1 of 13 VA MORTGAGE LIMITS FOR ALL AREAS: Regardless of loan amount, the VA guaranty plus cash/equity must be equal to at least 25% of the purchase price or Notification of Value (NOV), whichever less, on purchases and non-irrrl refinances. * Conforming loans inclusive of funding fee over the maximum loan limit are considered high balance and must meet high balance guidelines. PURCHASE GVXX-000 CONFORMING BALANCE RATE/TERM REFINANCE 1 GVXXRT-000 CASH-OUT REFINANCE GVXXCO-000 Max LTV/CLTV MIN FICO Max LTV/CLTV MIN FICO Max LTV/CLTV MIN FICO 1 unit 100% 580 / NO FICO 2 100%/Unlimited /95% units 100% 580 / NO FICO 2 100%/Unlimited /90% For purposes of program coding Rate/Term is technically a VA refinance of a non-va loan, with no cash out for non-mortgage debt allowed. Technically this is a cash out transaction in accordance with VA guidelines and the transaction type for this loan will be cash out in the loan origination system. 2 No FICO is permitted on purchase transactions only-aus to be run but will reflect ineligible due to lack of traditional credit. Manual underwriting guidelines would apply. PURCHASE GVHBXX-000 Up to $700,000 GVJHBXX-000 Over $700,000 Max LTV/CLTV Total Loan Amount MIN FICO HIGH-BALANCE RATE/TERM REFINANCE GVHBXX-000 Up to $700,000 GVJHBXX-000 Over $700,000 Max LTV Total Loan LTV/CLTV 1 Amount MIN FICO CASH-OUT REFINANCE GVHBXXCO-000 Up to $700,000 GVJHBXX-000 Over $700,000 Max LTV/CLTV 1 Total Loan Amount MIN FICO 1-4 units Based on entitlement /100% >$417,000 to <=$700, % 100% >$417,000 to <=$700, /90% >$417,000 to <=$700, Based on entitlement /100% >$700,000 to <=$1,000, % 100% >$700,000 to <=$1,000, /90% >$700,000 to <=$1,000, Based on >$1,000,000 to % 100% >$1,000, /90% >$1,000,000 entitlement <=$1,500,000 to to /100% <=$1,500,000 <=$1,500,000 1 For subordinate liens that are HELOCs, the CLTV is determined by the FULL amount of the accessible credit line OR current balance, whichever is greater 700

2 SECTION: 1 PAGE: 2 of 13 INTEREST RATE REDUCTION REFINANCE (IRRRL) CONFORMING BALANCE IRRRL GVIRRRLXX IRRRL GVIRRRLXX IRRRL GVIRRRLXXNA-000 Max Occupancy MIN FICO Max Occupancy MIN FICO Max LTV/CLTV 1 Occupancy MIN FICO LTV/CLTV 1 LTV/CLTV 1 1 unit 100% Primary % Primary 620 Unlimited 100% Non- 620 No AVM Primary % Primary % Primary 620 Unlimited units 100% Non- 620 No AVM Primary 1 IRRRL loans are exempt from CLTV restriction Primary 660 Primary 660 HIGH-BALANCE GVHBIRRRLXX-000 Max LTV/CLTV 1,2 Occupancy Total Loan Amount MIN FICO 1-4 units 100% / N/A >$417,000 to <=$700, % / N/A Primary / Non-Primary >$700,000 to <=$1,000, % / N/A >$1,000,000 to <=$1,500, IRRRL loans are exempt from CLTV restriction Drive-by with value required to support LTV determination MANUFACTURED HOMES CONFORMING LOAN AMOUNTS ONLY PURCHASE MHVAXX-000 RATE/TERM REFINANCE MHVAXX IRRRL loans are exempt from CLTV restriction 2 MH IRRRLs require a 2055 drive-by appraisal with value. IRRRL MHVAIRRRL3XX-000 CASH-OUT REFINANCE MHVAXX-000 Max LTV/CLTV MIN FICO Max LTV/CLTV MIN FICO Max LTV/CLTV 1,2 MIN FICO Max LTV/CLTV MIN FICO 100% % % % 640

3 SECTION: 1 PAGE: 3 of 13 Purchases LTV Base loan amount may be up to 100% of the lesser of the purchase price or appraised value. The Veteran s entitlement must be sufficient to guarantee a minimum of 25% of the total loan amount including any financed VA Funding Fee. Conforming loans must be inclusive of funding fee at $417,000, all loan amounts over $417,000 are considered high balance and must meet high balance guidelines. Interest Rate Reduction Refinance (IRRRL) VA product offerings to include VA Interest Rate Reduction Loans (IRRRL) that qualify for Safe Harbor Protection under the VA s Ability-to-Repay Standards and Qualified Mortgage (QM) Definition Under the Truth in Lending Act Interim final rule that was published in the Federal Register 38 CFR Part 36 on VA IRRRLs, under the new VA QM Definition, must meet the following requirements to be considered a Safe Harbor Qualified Mortgage: The loan being refinanced was originated and funded at least six months before the new loan s closing date, and The Veteran has not been more 30 days past due during the six months (6) preceding the new loan s closing date, and The recoupment period for all allowable fees and charges financed as part of the loan or paid at closing does not exceed thirty-six (36) months, and All other VA requirements for guaranteeing an IRRRL are met. In order to assure Safe Harbor Qualified Mortgage compliance, AMX / Land Home Financial Services has established the following underwriting and documentation overlays for the VA IRRRL product: In order to calculate a recoupment period for the transaction, all IRRRLs must have a monthly payment decrease from the previous VA mortgage. IRRRLs that have monthly payment increases are not eligible. A minimum of a 0 X 30 mortgage payment history within the six month period preceding the IRRRL closing date. See product summary for other mortgage payment history requirements. VA Form is required to calculate the maximum loan amount. VA IRRRL Qualified Mortgage Certification is required. Maximum loan term is the original term of the VA loan being refinanced plus 10 years, but not to exceed 30 years and 32 days No 30 day or greater mortgage late payments within last 12 months, as determined by application date. A minimum of a six month payment history on the current mortgage Source of funds are not required on an IRRRL Disbursed cash out to the borrower cannot exceed $500 New subordinate financing is not permitted. The borrower must be the same except: o for the removal of a non-veteran spouse due to death or divorce (provide supporting documentation indicating event occurred at least 12 months before the time of application). There will be no exceptions granted to this requirement. o only new spouses can be added

4 SECTION: 1 PAGE: 4 of 13 Rate/Term Refinance Maximum incidental cash back to borrower = $500 (principal reductions are not permitted) Proceeds may be used to pay off existing 1 st mortgage liens and properly seasoned secondary liens Secondary liens being paid off through the VA refinance must be seasoned at least 12 months and may not have had any draws totaling $1000 or more in the most recent 12 months or the transaction will be considered one in which the borrower consolidates non-mortgage debt. However, if the draws used in the last 12 months were used for documented home improvement which can be substantiated by receipts and supported in the appraisal, the transaction will not be considered consolidation of non-mortgage debt. New subordinate financing is not permitted. Cash-Out Refinance Cash-out funds may be used to pay off non-seasoned secondary liens, other non-mortgage debt, or to put cash in borrower s hand. New subordinate financing is not permitted There must be a lien of record and the veteran must occupy the property. Minimum 6 months of occupancy no exceptions. (borrowers relocating into current investment property will not be eligible for a cash out loan) Manual underwriting not allowed on cash out transactions. VA Funding Fee Table LOAN TYPE VETERAN RESERVIST/NATIONAL GUARD Purchase Zero Down 2.15% 2.40% Subsequent Use Zero Down 3.30% 3.30% Purchase & Subsequent Use 5% Down 1.50% 1.75% Purchase and Subsequent Use 10% Down 1.25% 1.50% Refinance Loan 2.15% 2.40% Refinance Loan Subsequent Use 3.30% 3.30% IRRRL.50%.50% Entitlement- Maximum Guaranty The Maximum Guaranty, when the Veteran has full entitlement, is shown in the table below Loan Amount Maximum Potential Guaranty Up to $45,000 50% of the loan amount $45,001 to $56,250 $22,500 $56,251 to $144,000 40% of the loan amount, with a maximum of $36,000 $144,001 to 417,000 25% of the loan amount Greater than $417,000 The lesser of 25% of the VA County loan limit; or 25% of the loan amount The percentage and amount of guaranty is based on the loan amount including the funding fee portion when the fee is paid from the loan proceeds.

5 SECTION: 1 PAGE: 5 of 13 Table of Residual Income Requirements Table of Residual Incomes by Region For Loan Amounts of $79,999 and below Family Size Northeast Midwest South West 1 $390 $382 $382 $425 2 $654 $641 $641 $713 3 $788 $772 $772 $859 4 $888 $868 $868 $967 5 $921 $902 $902 $1,004 Over 5 Add $75 for each additional member up to a family of 7 For Loan Amounts of $80,000 and above Family Size Northeast Midwest South West 1 $450 $441 $441 $491 2 $755 $738 $738 $823 3 $909 $889 $889 $990 4 $1,025 $1,003 $1,003 $1,117 5 $1,062 $1,039 $1,039 $1,158 Over 5 Add $80 for each additional member up to a family of 7 FEES THAT MAY NEVER BE CHARGED TO THE VETERAN (Regardless of whether an origination fee was paid) Termite Inspection Fee for PURCHASE TRANSACTIONS Broker Fee Real Estate Agent/Brokerage Fees/Commissions Including Short Sale Negotiation/Transaction Coordinator Fees Any portion of the seller s lien(s) on short sale purchases (no short sale fees of any kind may be paid by the Veteran) Pre-payment penalties financed through the refinance transaction Veteran MAY pay for this fee out of their own funds only these fees may NOT be financed VA Inspection Fees for builders (Normal new construction inspection fees may be paid for by the Veteran when required by the VA Appraiser) Purchases (including REO purchases): Cost of required repairs/inspections must be paid for by the seller. The Veteran is only allowed to pay for MINOR termite damage repairs **The Non-Allowable Fees that are listed above can ONLY be paid for by the Veteran IF there is NO ORIGINATION FEE CHARGED AND the fee(s) is/are NOT listed as one of the fees that the Veteran may never pay, up to a MAXIMUM aggregate of 1% of the purchase price.

6 SECTION: 1 PAGE: 6 of 13 ALLOWABLE CLOSING COSTS Veteran may pay any of the following reasonable closing costs/fees: 1% Origination Fee (calculated off of the TOTAL loan amount including VA Funding Fee) Reasonable Discount Points Credit Report Fees VA Appraisal Fees &VA Compliance Inspector Fees Recording Fees Pre-paids (impounds for taxes/insurance) Flood Certification Well/Septic Certification Fees Surveys (not acceptable for condominiums) Title Fees: Insurance, examination, endorsements, searches, owner s policy EPA Endorsements Mortgage Electronic Registration System Fee (MERS) Termite on REFINANCES ONLY Veteran may NOT pay for this fee on a purchase transaction Closing protection letter (not to exceed, $35) Fraud Protection Report VA Funding Fee Non-Allowable Veteran-Paid Closing Costs Lender s appraisal (I.E. secondary appraisals for reconsiderations of value) Lender s inspections (except for construction loan inspections as required by the appraiser/nov) Attorney Fees Assignment Fees Notary Fees Tax Service Fees Loan Closing/Settlement Fees Escrow Fees Interest Rate Lock-In Fees Fax, , Copying, Postage, Stationary, Telephone, or Other Overhead Charges Commitment Fees or Marketing Fees of Secondary Purchasers Trustee Fees 3 rd Party Fees, regardless of affiliation with the lender

7 SECTION: 1 PAGE: 7 of 13 Appraisal Automated Underwriting AVM for IRRRL (Manufactured Housing requires a 2055 appraisal) The Core Logic GeoCoreAVM or FHLMC HVE must be no more than 90 days old on the date the note is signed. Quick Reference Chart Loan Amounts <= $650,000: VA Appraisal Required Loan Amounts $650,001 to $1,000,000: VA Appraisal Required, plus enhanced desk review (additional comps and market data analysis) Loan Amounts > $1,000,000: VA Appraisal Required, plus field review. The CRV/NOV is valid for 6 months and FNMA Form 1004MC is required for all appraisals. Any repairs that impact safety, livability, or habitability must be completed. The property condition must be rated average or better. Ratings of "fair" or less are not acceptable. LP or DU response required on ALL VA loans, except IRRRL. Credit Risk / Ratios determined by AUS acceptability Current Market Value is determined as follows: 1) Core Logic GeoAVM Core; GeoAVM Core Report Summary: "Estimated Value"; or 2) FHLMC HVE; HVE Report Valuation Results: "Estimated Market Value"; or 3) Drive by appraisal (2055E for SFRs or 1075 for condos) The drive by appraisal can be used for any LTV/CLTV up to the program maximum. 1) If LTV/CLTV < 100%, the estimated market value can be used to calculate the LTV regardless of the Forecast Standard Deviation (FSD). 2) If LTV/CLTV >100%, for the estimated market value to be utilized the following conditions apply: a) For the GeoAVM Core the FSD must be 20 or less, or b) For the HVE the confidence score must be M or H. 3) For property that cannot be valued with an AVM product a drive-by appraisal will be required. Borrower Eligibility 1. Non-Veteran Co-borrowers that are not married to the Veteran are ineligible. 2. Must be a veteran with eligibility documented with a Certificate of Eligibility (COE), which will also indicates the Veteran's Entitlement. 3. Resident Alien permitted as long as primary borrower is a veteran. 4. Any Eligible Veteran who served on active duty in any of the armed forces (including Coast Guard) and if separated from service, was discharged under conditions other than dishonorable. 5. Members of the Reserves and National Guard (upon completion of a minimum of 6 years of service) 6. Unmarried surviving spouses of deceased Veterans who died as a result of service or service related causes. Credit 1) All borrowers must have valid social security number and a minimum of one valid credit score for AUS UW. 2) Non-Traditional credit allowed for purchase transactions only conforming loan sizes. No credit scores allowed. 3) If the subject property is located in a community property state and the borrower has a non-purchasing spouse, a credit report for the non-purchasing spouse must also be ordered. 4) Cannot be delinquent on any Federal Debt unless the delinquent account has been brought current or a satisfactory arrangement has been made - Check CAIVRS 5) LOE required for all credit inquiries for the past 90 days Credit Significant Derogatory (Conforming purchase only - See Refinances for additional requirements) Please note: High Balance requirements addressed in Overlays. Waiting Period is determined by disbursement date of new loan. High Balance is determined by the application date Debt Ratio Departing Residence 1) Foreclosure: Home was given back to the bank No owner participation a) 2 years from date foreclosure completed and transferred back to the bank. 2) Deed in Lieu: Home returned to the lender in exchange for canceling loan a) Less than 2 years, but not less than 12 months from the date of foreclosure completed and transferred back to the bank may be acceptable if the result of acceptable extenuating circumstances. 3) Short Sale: Home sold but sales price didn t cover the amount owed a) 2 years from date sale closed and transferred to new owner. 4) Chapter 7 BK - Debts are discharged through BK, client does not pay any debts owning a) 2 years from discharge date with re-established credit paid as agreed or no new credit obligations incurred. b) Less than 2 years but not less than 12 months from discharge date may be acceptable if the bankruptcy was caused by acceptable extenuating circumstances, and borrower has since exhibited a documented ability to manage financial affairs in a responsible manner. 5) Chapter 13 BK - Debts are paid back on a monthly scheduled payment plan by client a) 1 year payout period under bankruptcy has elapsed and the borrower s payment performance has been satisfactory and all required payments made on time. 6) All judgments must be paid in full or subject to a repayment plan with a history of timely payments. Ratios determined by AUS acceptability. Any allotments reflected on the LES or paystubs must be investigated, to determine if the allotment has an affiliated debt. Pending Sale Both the current and proposed mortgage payments must be included in qualifying the Borrower for the new transaction Converting to 2 nd Home Both the current and proposed mortgage payments must be included in qualifying the Borrower for the new transaction Converting to Investment Property Up to 75% of the rental income per 1007 may be used to offset the mortgage for qualifying

8 SECTION: 1 PAGE: 8 of 13 Disaster Policy Documents (Age) Entitlement Escrow/Impound Account Funding Fee High Balance Overlays Loan Amounts in greater than or equal to $700,000 require investor approval prior to docs. No exceptions. HPML Note: High Cost Loans are not eligible Joint Loan (Dual Entitlement) (Must be submitted to VA for prior approval allow 10 business days extra to underwriting turn time) Occupancy Power of Attorney Property Types - Eligible 2 months PITI reserves for BOTH properties (Or, 6 months reserves when the Veteran is purchasing a 2-4 unit property (Gifts are NOT acceptable for reserves) Rental income earned can only be used to offset the existing mortgage payment. Extra positive cash generated may NOT be used as qualifying income A post-disaster inspection will be required when the appraisal occurred before the incident date of the disaster. 120 days for existing construction from the date the note is signed, 180 days for the appraisal. Entitlement is the amount of VA Guaranty available to a Veteran for use on a loan. The amount of entitlement will be displayed near the center of the COE. Veterans with partial entitlement are allowed provided the loan conforms to GNMA secondary market guidelines which include the minimum 25% coverage requirement. Coverage is a combination of VA provided entitlement plus cash down payment/equity. Compromised Entitlement is acceptable as long as the event that caused the compromise occurred more than three years prior to the date of the application The COE will never reflect any additional specific entitlement amount over $36,000 for loans greater than $144,000, but will reflect "Available*" Required for all VA transactions regardless of Loan to Value. The Funding Fee may be financed in the loan. The following Veterans are exempt from paying the funding fee: Veterans receiving VA compensation for service connected disabilities Veterans who would be entitled to receive compensation for service connected disabilities if they did not receive retirement pay Veterans who are rated by VA as eligible to receive compensation as a result of pre-discharge disability exam and rating Veterans entitled to receive compensation, but who are not presently in receipt of the compensation because they are on active duty Surviving spouses of veterans who died in service or from service-connected disabilities, whether or not such surviving spouses are veterans with their own entitlement and whether or not they are using their own entitlement on the loan. 1. The minimum Loan Score is 620 for all VA High Balance loans. 2. The maximum CLTV for purchase Loans is 100%. 3. Borrowers must have 3 valid credit scores, and minimum of three satisfactory trade lines, aged 12 months. 4. Regular cash-out and rate/term refinancing loans are available for up to 90% of the appraised value of a home, and not eligible for the increase to 100% announced in VA Circular For VA IRRRL - Minimum 2055 exterior conventional appraisal is required. Value must be supported and be equal to or greater than the total loan amount. 6. Secondary financing is not allowed except for Interest Rate Reduction Refinance Loan (IRRRL) with existing secondary financing that will be re-subordinated to the new first mortgage. There is no CLTV limit under this scenario. 7. Temporary interest rate buydown not allowed. 8. Non traditional credit not allowed. 9. High Balance Loan Amounts over $417,000 up to $700,000 2 years elapsed since the discharge of Ch. 7, Ch. 13 Bankruptcy or Deed in Lieu/Short Sales when the borrower was not delinquent at transfer. 3 years elapsed since completion of Foreclosure, Deed in Lieu/Short Sale when the borrower was delinquent at time of transfer 10. Loan Amounts equal to or greater than $700,000 - No foreclosure, deed in lieu, loan modification or bankruptcy in last 7 years. 11. Waiting Period for Significant derogatory credit or mortgage late payments is determined by the application date. 12. No housing payment 30 days or more past due in the last 12 months. 13. For loan amounts > $1,000,000, including IRRRLs, be sure to request a certified appraiser when requesting the appraiser assignment from VA. VA qualifying and non-credit qualifying IRRRL loans are ineligible if a High Priced Mortgage Loan. HPML is acceptable on all other VA loans subject to validation of the borrower's ability to repay through verification of income, liabilities and assets in accordance with full documentation requirements. Please see HPML requirements for detailed information. A joint loan refers to a loan made to a veteran and another person(s). All parties will be liable, and all will own the property. A joint loan is a loan made to: 1) A veteran and one or more non-veterans (other than the spouse). 2) A veteran and one or more veterans (not including a spouse) who will not be using entitlement. 3) A veteran and the veteran s spouse, who is also a veteran, where both entitlements will be used. 4) A veteran and one or more other veterans (not including a spouse), all of whom will use their entitlement. Owner Occupied only Second Homes not allowed (except IRRRL up to 100% maximum) Investment Properties not allowed (except IRRRL up to 100% maximum) All POA s must be reviewed and approved prior to loan documents. If Veteran is currently deployed, an alive and well statement from their commanding officer will be required. SFR, PUD, 2-4 Units, Manufactured (Conforming Only Please see VA Manufactured Guidelines) Condos VA Approved. The approval condo list is available at IRRRLs do not require a condo approval.

9 SECTION: 1 PAGE: 9 of 13 Property Types - Ineligible Purchase/Sales Contract Recently Listed Properties Reserves Residual Income Seller Contributions/Concession State Restrictions Subordinate Financing Underwriting Type - AUS Underwriting Type - Manual Unpermitted Property Additions Verbal VOE Requirements Condominium/PUD Insurance Requirements Interior Walls In (HO-6) Requirements Loans that are in attached projects (including 2-4 unit projects) require coverage for 100 percent of the insurable value for the complete project (interior and exterior units). The walls in policy must be sufficient to repair the interior of the unit, including any additions, improvements and betterments to its original condition in the event of a loss. If the HOA Master Policy does not provide coverage for the interiors of the project units, a walls in (HO-6 or its equivalent) policy for the individual unit is required. 2-4 Unit Condominium Insurance Requirements HOA insurance is required for 2-4 Unit Projects. Should exterior damage occur, the individual unit coverage may not be sufficient to cover the claims, therefore, individual homeowners insurance will not be accepted in lieu of an insurance policy in the name of the HOA. Co-ops, condotels, non-warrantable condos, condos not approved by VA, earth berm homes, board & care homes, working farm/ranches, vacant land, unique properties, properties with less than 600 sq feet (high balance). Re-negotiated purchase agreements that increase the sales price after the original appraisal has been completed will not be accepted if: 1. the appraised value is higher than the contracted sales price provided to the appraiser, and 2. the new purchase agreement and/or addendum used to modify the sales price is dated after the appraisal is received, and 3. the only change to the purchase agreement is an increase in sales price. If the purchase agreement is re-negotiated subsequent to the completion of the appraisal, the loan-to value will be based on the lower of the original purchase price or the appraised value, unless: 1. Re-negotiation of only seller paid closing costs and/or pre-paids when seller paid closing costs/pre-paids are common and customary for the market and supported by the comparables. These seller-paid closing costs and/or prepaids cannot exceed the allowable guidelines, or 2. An amended purchase agreement for new construction property is obtained due to improvements that have been made that impact the tangible value of the property. In the event of such changes, an updated appraisal must be obtained to verify the value of the modifications/changes. VA IRRRL / Rate & Term - the listing must have been expired or been withdrawn on or before the application date. Cash-Out Transaction - the listing must have been expired or been withdrawn 180 days prior to the application date. Reserves not required for standard SFR transactions. If using rental income to qualify on 2-4 unit property, 6 months PITIA reserves required Residual Income is the borrower's net effective income minus monthly shelter expenses Residual Income must be in accordance with regional table and is a required calculation in addition to DTI Please use for calculations Net Effective Income is taken from Line 41 of VA Form Monthly Shelter Expense is taken from Line 21 of VA Form All closing costs and discount points may be paid by the seller, regardless of the amount. All other interested party contributions are limited to 4% of the lesser of the purchase price or appraised value Texas cash out refinances are not eligible. Secondary financing must be financed by Government, Agency or non-profit institutions. No new secondary financing allowed for refinance transactions. LP or DU response required on ALL VA loans, except IRRRL. Credit Risk / Ratios determined by AUS acceptability Manual Underwriting (Conforming Loan Limits, Only) 1. Maximum qualifying ratio is 41%. This may be expanded with residual income of 120% or greater of the VA Regional Requirement for the family size 2. 2 months bank statements 3. Not eligible for cash out transactions Unpermitted Property Additions are eligible under the following conditions: 1) The subject addition complies with all VA guidelines; 2) The quality of the work is described in the appraisal and deemed acceptable ( workmanlike quality ) by the appraiser; 3) The addition does not result in a change in the number of units comprising the subject property (e.g. a 1 unit converted into a 2 unit). 4) If the appraiser gives the unpermitted addition value, the appraiser must be able to demonstrate market acceptance by the use of comparable sales with similar additions and state the following in the appraisal: a) Non-Permitted additions are typical for the market area and a typical buyer would consider the "unpermitted" additional square footage to be part of the overall square footage of the property. b) The appraiser has no reason to believe the addition would not pass inspection for a permit. A Verbal Verification of Employment (VVOE) is required on VA loans prior to closing. A verbal verification of employment is required for all borrowers. This policy applies to all income types with the exception of passive income. 1. For salaried borrowers, the verbal verification of employment must be completed within 10 days prior to note date. 2. For self-employed borrowers, the verbal verification of employment must be completed within 30 days prior to note date. 3. For military income, a military Leave and Earnings Statement dated within 30 days prior to note date is acceptable in lieu of a verbal verification of employment.

10 SECTION: 1 PAGE: 10 of T Requirements A fully complete and signed IRS Form 4506-T for each Borrower on the Loan is required. Tax Return Transcripts are required for all loans with the exception of VA IRRRL transactions. If an automated underwriting system (AUS) response requests more than the most recent tax transcripts, the additional transcripts are required. The most recent available tax transcripts are required to support the income used to qualify the borrower. Generally, when the documentation used to verify income is from the same calendar period as the tax transcript, the information must match exactly. However, if the income documentation is from the current calendar year and the transcript is from a prior year, there can be acceptable variances. If this variance exceeds 20%, document the rationale for using current income. If tax transcripts are not available (due to a recent filing) a copy of the IRS notice showing No record of return filed is required along with documented acknowledgement receipt (such as IRS officially stamped tax returns or evidence that the return was electronically received) from the IRS and the previous year s tax transcript.

11 SECTION: 1 PAGE: 11 of 13 VA MATRIX OVERLAYS Conforming ARM LOANS Minimum FICO 620. Not Available on IRRRLs. Maximum LTV/CLTV for all credit qualifying refinance transactions is 90%. Temporary interest rate buydown not allowed. Non traditional credit not allowed. Joint loans not allowed (a veteran borrower plus co-borrower spouse is not considered a joint loan) No manual underwriting. Significant Credit Derogs: 2 years elapsed since the discharge of Ch. 7, Ch. 13 Bankruptcy or Deed in Lieu/Short Sales when the borrower was not delinquent at transfer 3 years elapsed since completion of Foreclosure, Deed in Lieu/Short Sale when the borrower was delinquent at time of transfer All judgments must be paid in full or subject to a repayment plan with a history of timely payments. LOE required for all credit inquiries for the past 90 days All mortgages must have a mortgage history of 0 x 30 in the last 12 payments Cash out funds, including non-purchase money liens are limited to $100k. There must be an existing lien against the property. Recently Listed Property: Cash-Out Transaction - the listing must have been expired or been withdrawn 180 days prior to the application date. Joint Loans are not allowed. The Veteran must be a borrower. Loans located in Florida, Illinois and Nevada limited to 95% LTV/CLTV. No refinance transactions in Texas, purchase only. High Balance ARM LOANS Minimum FICO 620. Not Available on IRRRLs. Maximum LTV/CLTV for all credit qualifying refinance transactions is 90%. The maximum CLTV for purchase Loans is 100%. Borrowers must have 3 valid credit scores, and minimum of three satisfactory trade lines, aged 12 months. Temporary interest rate buydown not allowed. Non traditional credit not allowed. Joint loans not allowed (a veteran borrower plus co-borrower spouse is not considered a joint loan) No manual underwriting. LOE required for all credit inquiries for the past 90 days High Balance Loan Amounts over $417,000 up to $700,000 2 years elapsed since the discharge of Ch. 7, Ch. 13 Bankruptcy or Deed in Lieu/Short Sales when the borrower was not delinquent at transfer. 3 years elapsed since completion of Foreclosure, Deed in Lieu/Short Sale when the borrower was delinquent at time of transfer Loan Amounts equal to or greater than $700,000 - No foreclosure, deed in lieu, loan modification or bankruptcy in last 7 years. Waiting Period for Significant derogatory credit or mortgage late payments is determined by the application date. No housing payment 30 days or more past due in the last 12 months. Recently Listed Property: Cash-Out Transaction - the listing must have been expired or been withdrawn 180 days prior to the application date. Joint Loans are not allowed. The Veteran must be a borrower. Loans located in Florida, Illinois and Nevada limited to 95% LTV/CLTV.

12 SECTION: 1 PAGE: 12 of 13 No refinance transactions in Texas, purchase only. For loan amounts > $1,000,000, be sure to request a certified appraiser when requesting the appraiser assignment from VA. High Balance Fixed Rate Loans Minimum FICO 620. Maximum LTV/CLTV for all credit qualifying refinance transactions is 90%. The maximum CLTV for purchase Loans is 100%. Borrowers must have 3 valid credit scores, and minimum of three satisfactory trade lines, aged 12 months. Temporary interest rate buydown not allowed. Non traditional credit not allowed. No manual underwriting. LOE required for all credit inquiries for the past 90 days High Balance Loan Amounts over $417,000 up to $700,000 2 years elapsed since the discharge of Ch. 7, Ch. 13 Bankruptcy or Deed in Lieu/Short Sales when the borrower was not delinquent at transfer. 3 years elapsed since completion of Foreclosure, Deed in Lieu/Short Sale when the borrower was delinquent at time of transfer Loan Amounts equal to or greater than $700,000 - No foreclosure, deed in lieu, loan modification or bankruptcy in last 7 years. Waiting Period for Significant derogatory credit or mortgage late payments is determined by the application date. No housing payment 30 days or more past due in the last 12 months. Recently Listed Property: Cash-Out Transaction - the listing must have been expired or been withdrawn 180 days prior to the application date. Joint Loans are not allowed. The Veteran must be a borrower. Loans located in Florida, Illinois and Nevada limited to 95% LTV/CLTV. No refinance transactions in Texas, purchase only. For loan amounts > $1,000,000, including IRRRLs, be sure to request a certified appraiser when requesting the appraiser assignment from VA. Interest Rate Reduction Refinance (IRRRL) Minimum Credit Score 580 Please see chart for LTV Limitations, AVM requirements and FICO score requirements No foreclosure, deed in lieu, loan modification or bankruptcy in last 7 years for unlimited LTV IRRRL