Correspondent Business Channel FHLMC Conforming & Super Conforming Fixed Rate Loans Only T300, T301, T304, T300JLP, T301JLP

Transcription

1 LP Standard Fixed Rate Conforming Loan Limits PRIMARY HOME PURCHASE & RATE/TERM 1,2,3,4,5,6,7,8 Property Type 2 Max LTV w/o Sec Fin Max LTV w/ Sec Fin Max TLTV w/ Sec Fin Max HTLTV w/sec Fin Min Fico w/lp Accept Findings Max DTI 8 1 Unit Primary 95% 90% 95% 95% Unit Primary 80% 75% 80% 80% 620 LP/50% SECOND HOME PURCHASE & RATE/TERM REFINANCE 1,2,3,4,5,6,7 Second Home 85% 80% 85% 85% 620 LP/50% INVESTMENT PURCHASE 1,2,3,4,7 1 Unit Investment Purchase 2 4 Unit Investment Purchase 85% 80% 85% 85% 620 LP/50% 75% 70% 75% 75% 620 LP/50% INVESTMENT RATE/TERM REFI 1,2,3,5,6,7 1 Unit Investment Refinance 2 4 Unit Investment Refinance 75% 70% 75% 75% 620 LP/50% 75% 70% 75% 75% 620 LP/50% CASH OUT REFI 1,2,3,5,6,7 1 Unit Primary 80% 75% 80% 80% 620 LP/50% 2 4 Unit Primary 75% 70% 75% 75% 620 LP/50% 1 Unit Second Home 75% 70% 75% 75% 620 LP/50% 1 Units Investment 75% 70% 75% 75% 620 LP/50% 2 4 Units Investment 70% 65% 70% 70% 620 LP/50% 1 P a g e

2 LP STANDARD FIXED RATE CONFORMING LOAN LIMITS 1. This matrix is applicable to all standard conventional Fixed Rate loans decisioned in FHLMC Loan Prospector LP. 2. Florida Condos refer to Geographic Restrictions in Matrix for Maximum LTV, TLTV, & HTLTV 3. Terms 15 year, 20 year, and 30 years 4. Loans >80% LTV are subject to additional M.I. company requirements in addition to LTV/TLTV/HTLV parameters and other criteria stated in this product guide, SPM P&P requirements must also be met and could potentially supersede applicable M.I. company s guidelines for loans requiring M.I. Nevada condo s >80% LTV are not permitted (either attached or detached) 5. Continuity of Obligation requirements apply to ALL refinances 6. Six months ownership seasoning is required on all Cash Out Refinances. 7. For Loan Amounts up to $417,000 1 Unit, $533,850 2 Unit, $645,300 3 Unit, $801,950 4 Units 8. Maximum DTI lesser of LP or 50% Link for Maximum Loan amount for geographic area Super Conforming Loans 2 P a g e

3 Property Type LP SUPER CONFORMING FIXED RATE 1,2,3,4,5,7,8,9,10,11 ONLY 1 Unit < $625,500 or ALL 2 4 unit Properties PRIMARY HOME PURCHASE & RATE / TERM 1,2,3,4,5,6,7,8,9,10,11 Max LTV w/o Sec Fin Max LTV w/ Sec Fin Max TLTV W/ Sec Fin Max HTLTV w/ Sec Fin Min Fico w/ LP Accept 1 Unit Primary Residence 90% 85% 90% 90% 620 LP 2 4 Unit Primary Residence 75% 70% 75% 75% 660 LP SECOND HOME PURCHASE & RATE/TERM REFI 1,2,3,4,5,6,7,8,10,11, Second Home 80% 75% 80% 80% 620 LP INVESTMENT PURCHASE 1,2,3,4,5,8,10,11 1 unit Investment 80% 75% 80% 80% 660 LP 2 4 Unit Investment 70% 65% 70% 70% 660 LP INVESTMENT RATE/TERM REFI 1,2,3,4,5,6,7,8,10,11 1 Unit Investment 75% 70% 75% 75% 660 LP 2 4 Unit Investment 70% 65% 70% 70% 660 LP CASH OUT REFI 1,2,3,4,5,6,7,8,10,11 1 Unit Primary 75% 70% 75% 75% 620 LP 2 4 Unit Primary 65% 60% 65% 65% 660 LP 1 Unit Second Home 65% 60% 65% 65% 660 LP 1 Unit Investment 65% 60% 65% 65% 660 LP 2 4 Unit Investment 65% 60% 65% 65% 660 LP Max DTI Minimum Loan Amount $417, Florida Condos are not eligible 3. Streamline Condo review is not allowed on all Super Conforming Ln Amt >$417, Fixed Rate Mortgages Only 5. Mortgages using Home Value Models are not eligible Full Appraisal Report 1004 or equivalent w/ 1004MC required 6. Continuity of Obligation requirements apply to all Refinances 7. Minimum 6 months seasoning on all Refinances (6 payments) 8. Terms 15 year and 30 years 9. LTV >80% subject to MI & MI guidelines 3 P a g e

4 10. Refer to FHLMC Geographical Loan Limits for Subject Property County 11. Max DTI ratio 50% TOPIC Ability to Repay and Qualified Mortgage Rule APPRAISAL REPORTS CRITERIA Effective with all loan applications dated on or after January 10, 2014 (Retail) or applications received on or after January 10, 2014 (Wholesale), all loans must meet the Ability to Repay and Qualified Mortgage provision of the Dodd Frank Act. Please refer to SPM Compliance for further details and/or questions For conforming loan amounts only, Effective immediately, LP findings permitting reduced appraisal reports including a Form 2070 Loan Prospector Condition and Marketability Report or Property Inspection Alternative PIA, o Specific transactions requiring full appraisals such as those subject to NAL, AIT, Disaster or Flipping policies are not eligible for reduced appraisal reports. Also ineligible: Tax Returns (or other file information) indicates property is a Mixed Use property o LP APPROVE/ACCEPT finding must reflect PIW, #2055, #466 or #2075 eligibility on FINAL LP report o When LP recommends an exterior only inspection (#2055 or #466), an upgrade to interior and exterior inspection is required when: The appraiser cannot adequately view the property from the street The property does not conform to the neighborhood There are apparent adverse physical deficiencies or environmental conditions Data sources do not provide sufficient information about the property to perform the appraisal Purchase transactions when the transaction is the result of the sale of an REO property The last transaction on the property being purchased was a foreclosure The condition rating is C5 or C6 based on the UAD and the data sources used to develop the appraisal or the appraiser's observations during the exterior only property inspection The quality rating is Q6 based on the UAD and the data sources used to develop the appraisal or the appraiser's observations during the exterior only inspection o When LP recommends a 2075 Property Inspection, an upgrade to interior and exterior inspection is required when: The appraiser cannot adequately view the property from the street The property does not conform to the neighborhood Apparent adverse physical deficiencies or environmental conditions are observed The appraiser needs additional information about the physical conditions of the property Purchase transactions when the transaction is the result of the sale of an REO property The last transaction on the property being purchased was a foreclosure o When LP recommends a Property Inspection Waiver, an upgrade to interior and exterior inspection is required when: The subject property does not conform to the neighborhood There are apparent adverse physical deficiencies or environmental conditions The property consists of new or proposed construction. Escrows for postponed improvements are not permitted. Home inspection report or other information in the file indicates the presence of adverse condition and/or marketability factors Purchase transactions when the transaction is the result of the sale of an REO property The last transaction on the property being purchased was a foreclosure Full Appraisal reports will continue to follow applicable SPM and FHLMC policies FULL APPRAISAL REPORTS 1004 OR EQUIVIALENT W/ 1004 MC ON SUPER CONFORMING LOANS (LN>$417,000) FIELD REVIEW REQUIRED when Value > $1,000,000 and LTV/CLTV >75% 4 P a g e

5 TOPIC ARM PRODUCTS Not Available at this time CRITERIA AUTOMATED UNDERWRITING BORROWER FUNDS Borrower Residency Documentation ALL LOANS MUST RECEIVE LP ACCEPT/ELIGIBLE Loan Prospector A minus findings are not eligible Manual Underwriting is not allowed Maximum number of borrowers per LP transaction is 5 Borrower Funds must be from Borrower Personal Funds or Other Borrower Funds as outlined in Section 26 When Business assets are used for the transaction, the file must contain a cash flow analysis of the impact of the withdrawal on the business, & support that the withdrawal will have no negative or detrimental effect on the business. Link for Comparative Income Analysis: Copy of FNMA Liquidity/ Solvency Test to be included w/fnma 1088 Permanent Resident Aliens A copy of the Green Card is required for all permanent resident aliens whose income and/or assets are being used to qualify for a loan. A copy of the front & back of the card is required. Non Permanent Resident Aliens All non permanent resident alien must provide evidence of a valid, acceptable visa. A copy of the unexpired visa must be included in the loan file evidencing one of the following visa classes: A Series (A 1, A 2, A 3): these visas are given to officials of foreign governments, immediate family members and support staff. Only those without diplomatic immunity, as verified on the visa, are allowed. E 1 Treaty Trader and E 2 Treaty Investor: this visa is essentially the same as an H 1 or L 1; the title refers to the foreign country's status with the United States. G series (G 1, G 2, G 3, G 4, and G 5): these visas are given to employees of international organizations that are located in the United States. Some examples include the United Nations, Red Cross, World Bank, UNICEF and the International Monetary Fund. Verification that the applicant does not have diplomatic immunity must be obtained from the applicant's employer and/or by the viewing the applicant's passport H 1 (includes H 1B and H 1C), Temporary Worker: this is the most common visa given to foreign citizens who are temporarily working in the United States. L 1, Intra Company Transferee: an L 1 visa is given to professional employees whose company's main office is in a foreign country. O 1A: individuals with an extraordinary ability in the sciences, education, business, or athletics (not including the arts, motion pictures or television industry). O 1B: individuals with an extraordinary ability in the arts or extraordinary achievement in motion picture or television industry. O 2: individuals who will accompany an O 1, artist or athlete, to assist in a specific event or performance. TN, NAFTA visa: used by Canadian or Mexican citizens for professional or business purposes. TC, NAFTA visa: used by Canadian citizens for professional or business purposes 5 P a g e

6 CASH RESERVES REQUIREMENTS CREDIT Foreign Nationals Foreign Nationals who have no lawful residency status in the US are not considered to be non permanent resident aliens and are not eligible for financing Diplomatic Immunity Due to the inability to compel payment or seek judgment, transactions with individual who are not subject to United States jurisdiction are not eligible. This includes embassy personnel with diplomatic immunity. Verification the borrower does not have diplomatic immunity can be determined by reviewing the visa, passport, or the U.S. Department of State s Diplomatic List at LTV 95% follow LP/MI company guidelines Refer to Second Homes or Investment Homes for their specific transaction requirements Standard SPM credit policies apply including: o All Borrowers must meet credit score criteria stated in matrix. o Mortgage lates: Follow LP findings. Please refer to FHLMC Product Guide for specific criteria regarding Major derogs and individual M.I. company s guideline criteria for loans > 80% LTV. DEBT RATIOS Conforming Loans lesser of LP Accept or 50% Super Conforming loan lesser of LP Accept of 50% DELAGATED UNDERWRITING DESKTOP UNDERWRITER Loan amounts > $650,000 require a second signature from the Branch Operations Manager FNMA DU findings are not acceptable File must be ran through Loan Prospector LP, and all findings met When switching from DU to LP MAKE SURE ALL FHLMC REQUIREMENTS ARE MET INCLUDING BUT NOT LIMITED TO FHLMC LANDLORD 2 YEAR HISTORY 6 P a g e

7 TOPIC CREDIT SCORE All borrower(s) must have at least 2 valid scores. A valid score consists of minimally 3 tradeline. CRITERIA CONTINUITY OF OBILGATION At least one Borrower on the refinance Mortgage was a Borrower on the Mortgage being refinanced; or At least one Borrower on the refinance Mortgage held title to and resided in the Mortgaged Premises as a Primary Residence for the most recent 12 month period and the Mortgage file contains documentation evidencing that the Borrower, either Has been making timely Mortgage payments, including the payments for any secondary financing, for the most recent 12 month period; or Is a Related Person to a Borrower on the Mortgage being refinanced; or At least one Borrower on the refinance Mortgage inherited or was legally awarded the Mortgaged Premises by a court in the case of divorce, separation or dissolution of a domestic partnership FHLMC will purchase Mortgage secured by properties subject to resale restriction including, but not limited to, income based restrictions (also referred to as inclusionary zoning) and age based restrictions, if the requirements of this section are met and the restrictions are in compliance with all federal, State and local laws, rules and regulations. (Sec 22.23) DEED RESTRICTIONS/ INCLUSIONARY ZONING First Right of Refusal For properties subject to resale restrictions, and right of first refusal must run to the enabling authority or jurisdiction that imposed the resale restrictions, with a time period not exceeding 90 days from the date of written notice to the authority or jurisdiction that the restricted property is being offered for sale. Resale controls Properties subject to resale restrictions, except for age restrictions, must have resale controls for a fixed period of time. The controls must be administered by a duly authority of State, local or municipal government or an agent of the authority that has established mechanism to provide applicants screening and processing on an ongoing basis. The controls may not be administered by the developer. Notice of Default or foreclosure The mortgagee is not required to send notice of default or foreclosure to any 3 rd party. Public Land records Agreements or requirements, i.e., enacted ordinances, statutes, published policies or imposed restriction, must appear in public land records for the project in a manner discoverable by routine title search. Effect of foreclosure of deed in lieu foreclosure Any resale restrictions, except for age restrictions, must not survive foreclosure or deed in lieu of foreclosure. Payment of financial obligations Any requirement in the deed restrictions requiring the owner of the property to make payments under certain circumstances or requiring repayment of financial subsidies must state that the payment obligation is subordinate to the lien of the 1st Lien Mortgage. Appraisal requirements for restricted properties The appraisal must include at least 3 comparables sales with similar resale restrictions. 7 P a g e

8 The following requirements must be met: Copy of Restricted covenant must be include in loan file ALTA 9 title endorsement is required Affidavit for Properties subject to Age Restriction must be completed and retained in loan file OPS will print the Age Restriction Affidavit when the Deed Restriction field is correctly populated with the Y regardless of occupancy type. If the property is subject to Age Restriction, the form will be required. Reminders and Clarifications: Charitable endowments instituted by a Builder will NOT be allowed. Also refer to private transfer fee covenants. Certain states have enacted legislation that makes private transfer fee covenants void and unenforceable. Properties with transfer fees that are identified as exceptions on the title commitment are not acceptable DEROGATORY CREDIT DOWN PAYMENT ASSISTANCE EXCLUSIONARY LIST ELIGIBLE BORROWERS ELIGIBLE PROPERTY TYPES FLIPPING Foreclosure 7 years Deed in lieu 7 years Short Sale NOT ALLOWED (Requires a manual underwriter which is not allowed) Bankruptcy (other than Chapter 13) 4 years Chapter 13 Bankruptcy 4 years after discharge date or dismissal date* Multiple Bankruptcy filings in the past 7 years 60 months seasoning from last BK discharge NOT ALLOWED All Parties to the transaction must be checked against FHLMC Exclusionary List If any party is on the Exclusionary List, the loan is not eligible for sale to FHLMC US Citizens Permanent and Nonpermanent Resident Aliens (who is lawfully residing in US) Section Revocable Living Trust (Section 22.10) Refer to PnP for full details and requirements Borrowers who receive Government/Public Assistance Income (commonly known as Section 8)are not eligible Eligible property type: Attached and Detached SFRs and PUDs; Low /High Rise Warrantable Condos*; 2 4 Units Ineligible property type: Non warrantable condo s, Manufactured Housing and Co ops. Purchase transactions for properties that are owned by the Seller and resold < 90 days can be Approved by the UW. The Sellers acquisition date is evidenced by the Preliminary Title report s recordation of Grant Deed to date borrower s purchase contract was executed all contract terms accepted by the seller. All of the following requirements must be met: OPS Flip field In UW screen must be correctly populated. (Note: instructions were previously communicated and requires field to be completed for all flips resold 0180 days) 8 P a g e

9 SFR Detached/Attached, Condo, PUD, 1 4 Units Primary Residence, Second Home, and Investment Property Maximum LTV/CLTV of 95% Secondary Financing is permitted if obtained from institutional lender. Max CLTV will be 95% The maximum number of ownership transfers within the most recent 90 days is limited to ONE. (E.G. multiple title/ownership transfers within a 90 day period is not permitted) If the Seller is an entity (LLC, trust, etc.), documentation showing legal registration of the entity such as articles of operation with the seal, or a business license. The borrower(s) can have no affiliation with the entity of any kind Standard SPM policy regarding acceptable purchase contract documentation applies, including but not limited to: o Complete executed purchase contract is in file with all addendums attached and reviewed by UW o Seller is currently on title and must remain on title throughout closing A full appraisal report will be required. Limited appraisal reports or PIW is not permitted. The Underwriter will be responsible to evaluate appraisal report to ensure: The subject property s sales history makes sense for the market as addressed on appraisal report Appraiser must confirm property improvements made for properties that were purchased through a distressed sale and where substantial renovations to the property were made and is now selling for a profit The renovations must be documented and verified Increase in value must be supported by Appraiser s comments and photo s reflecting Seller s improvements/rehab/capital improvements were made to the property beyond normal clean up, repairs and refurbish GIFTS OR GIFT OF EQUITY INTERESTED PARTY CONTRIBUTIONS/ FINANCING CONCESSIONS A gift or gift of equity from a Related Person that does not have to be repaid is an eligible source of Borrower Funds, provided it meets the requirements of Section 26.2 (b). For LTV of 80% or below, all funds may come from an acceptable gift. For LTV >80%, Borrower must contribute 5% own funds to transaction Gifts of Equity for LTV > 80%, Borrower must contribute 5% own funds into transaction Gifts or gifts of equity are not eligible sources of Borrower Funds for Second Homes or Investment Property Mortgages Primary Residence and Second Homes 9% of value < 75% LTV/TLTV 6% of value >75% to < 90% LTV/TLTV 3% of value >90% LTV/TLTV Investment Properties 2% regardless of LTV/TLTV Interested Parties MAY NOT pay any future HOA Dues Value is lesser of sales price or appraised value Short sale fees paid by borrower and reimbursed by an interest party are considered a sales concession & require dollar for dollar reduction to sales price. Refer to Product Guide for full requirements 9 P a g e

10 INVESTMENT PROPERTY LANDLORD EXPERIENCE LOAN AMOUNTS LOAN TERMS MAXIMUM #FINANCED PROPERTIES For newly constructed homes that are purchase transactions, the Borrower may not be affiliated with or related to the builder, developer or property seller. Regardless of whether rental income from the Mortgaged Premises is used in qualifying, the Borrower must have: Reserves equal to 6 months of PITI for the Mortgaged Premises, and Reserves equal to 2 months of PITI for each other financed second home & investment property(s) The aggregate negative rental income from all rental properties must be treated as an obligation and considered in calculating the Borrower's monthly debt payment to income ratio. Borrower Funds must not include gifts from a Related Person or gifts or grants from an Agency Rent Loss insurance of at least 6 months of monthly Gross Rents required when using rental income in qualifying rent. If rental income is not used for qualifying, the Mortgaged Premises PITI must be used in calculating the monthly debt payment to income ratio Borrower must demonstrate a 2 year history of Landlord experience as evidenced by most recent 2 years 1040 s reflecting rental income to enable allowing rental income. Conversion from Primary to Rental requires Landlord experience to allow rental income Conforming 1 unit $417,000; 2 unit $533,850; 3 unit $645,300; 4 unit $801,950 Super Conforming 1 unit $625,500; 2 unit $800,775, 3 unit $967,950; 4 unit $1,000,000 Maximum Loan Amount $1,000, Loan Amounts > $625,500 limited to 1 Unit for Geographic Areas of Alaska, Hawaii, Guam, & US Virgin Islands Refer to FHLMC Section L33.3 General Eligibility requirements for Maximum LTV/TLTV/HTLTV limits for Super Conforming 1 unit Mortgage with original loan amounts greater than $625,500 Fixed Rate: 15, 20, 25, or 30 years. Fixed Period ARMs: Not Available at this time Four including subject property, in total, at closing. Effective with Loan Applications dated January 10, 2014 (Retail Business Channel) or files accepted January 10, 2014 (Wholesale Business Channel), the following will be the only options for Mortgage Insurance: M.I. REQUIREMENTS Borrower Paid Monthly Insurance ( BPMI ) Lender Paid Single Premium ( LPMI ) Mortgage Insurance is Refundable Renewals are constant, not declining Reduced MI coverage is ineligible In addition to SPM policy, please refer to the Individual Mortgage Insurer guidelines for their specific requirements, as due to the variances between the companies, the Mortgage Insurer guidelines cannot be captured in the matrices Standard Mortgage Insurance coverage requirements as per below chart Only Non delegated M.I. is allowed. M.I. contract UW must underwrite and issue certificate 10 P a g e

11 Standard M.I. Coverage LTV Range Mortgage Term/Type % 85.01% 90.00% % Fixed Rate Term < 20 years Fixed Rate Term >20 years; 6% 12% 25% 12% 25% 30% ARMS For Loan applications dated prior to January 10, 2014 (Retail) or Applications Received prior to January 10, 2014 (Wholesale) the following applies: MIN. DOWN PAYMENT REQUIREMENT NON OCCUPPANT CO BORROWER NEWLY EMPLOYED/ RE ENTERING THE WORKFORCE RECENTLY LISTED PROPERTY o Reduced MI is not allowed o Spilt MI (HPMI) premium is now allowed o Borrower paid monthly o Renewal must be constant o Borrower paid single premium is acceptable o Lender Paid Single Premium is acceptable o Financed Premium is not allowed Loan transactions with LTV/CLTV >80% up to 95% require minimum 5% minimum contribution of own funds. M.I. companies may have additional requirements/restrictions. LTV 80% may use all gift funds. Identity of Interest Transactions require Borrower has verified/saved a minimum of 5% own funds, however the funds do not have to be utilized for down payment. (i.e. Gift of Equity) Not available at this time For a Borrower who has less than a two year employment and income history, the Borrower's income may be qualifying income if the Mortgage file contains documentation to support that the Borrower was either attending school or in a training program immediately prior to their current employment history. (Copy transcripts of other documentation verify dates covering 2 full years) For a Borrower who is re entering the workforce and has less than a two year employment and income history,(defined as >30 day gap in the preceding 24 months) the Borrower's income may be qualifying income if the Borrower has been at the current employer for a minimum of six months and there is evidence of a previous employment history. No Cash Out Transaction the subject property must not be currently listed for sale. It must be taken off the market off a minimum of 31 days prior to the application date; Borrowers must confirm their intent to occupy the subject property (for primary residence.) Cash Out Transaction Properties listed for sale in the six months preceding the application date for new financing are limited to 70% LTV/CLTV. Properties that were listed for sale must be taken off the market a minimum of 31 days 11 P a g e

12 prior to the application date. RENTAL INCOME RESERVES SECOND HOME SECONDARY FINANCING SPECIAL PURPOSE CASH OUT REFINANCE TEMPORARY BUY DOWNS TEXAS(a)(6) Borrower tax returns must reflect a 2 year history of rental income, managing 1 4 unit investment properties Form 998 required Reserve requirements of 6 mths PITI PLUS 2 mths PITI for each other property owned Rent Loss insurance for minimum 6 months See FHLMC Product Guide for full details Primary Residence pending sale or convert to investment Equity > 30%, 2 mths PITI for both current primary residence & subject property Equity < 30% 6 mths PITI for both current primary residence & subject property 2 nd Homes 2 mths PITI on subject & 2 mths PITI on all other REO owned and/or financed Primary Residence 2 4 units 6 mths PITI Gift Funds MAY NOT be used for Reserves For new construction purchase transactions, the Borrower may not be affiliated with or related to the builder, developer or the property seller. Each Borrower individually and all Borrowers collectively must not own and/or be obligated on more than four 1 to 4 unit financed properties, including the subject property. Ownership of commercial or multifamily (five or more units) real estate is not included in this limitation. The Borrower must have: Reserves equal to 2 months of PITI for the Mortgaged Premises, and Reserves equal to 2 months of PITI for each other financed second home and 1 to 4 unit Investment Property in which the Borrower has an ownership interest or on which the Borrower is obligated Maximum LTV,TLTV, & HTLTV as per matrix Maturity Date > 5 years after Note Date of first lien Mortgage Regular monthly payments to minimally cover interest due No negative or accrued interest Institutional Lender financing No Community Second or Affordable Second A Special Refinance is the buy out of a co owner s equity such as in the case of Divorce or Domestic Partnership dissolution. THESE TYPES OF TRANSACTIONS ARE NOT ELIGIBLE Not available. Texas Equity Section 50(a)(6) Mortgages must have the following characteristics: 15, 20 or 30 year terms First Lien Fixed interest rate, fully amortizing, with a level payment Conventional whole Mortgages Texas Equity Section 50(a) (6) Mortgages may not be ARMs. A Texas Equity Section 50(a)(6) Mortgage must be one of the following, depending on the applicable facts: A cash out refinance Mortgage, as described in Section 24.6, or 12 P a g e

13 A "no cash out" refinance Mortgage as described in Section 24.5 A Texas Equity Section 50(a) (6) Mortgage may not be a special purpose cash out refinance Mortgage. Each Mortgage must be secured by a Mortgaged Premises that is: A 1 unit Primary Residence, and the Borrower s homestead, Located in the State of Texas, NO POA allowed 3% cap includes Discount Points (only true interest can be excluded), and A residential property, not a farm, ranch or used for any agricultural purposes Full Appraisal Report required The Seller and the owner of the homestead must execute a written acknowledgment of the "fair market value" of the homestead property as of the date the extension of credit is made. The appraisal report must be attached to the acknowledgment If a POA is utilized, it must follow Texas Law restrictions The maximum LTV and TLTV ratios for Texas Equity Section 50(a)(6) Mortgages must not exceed 80% and must be lower if necessary to comply with the provisions of Sections 23.4 and 24.5 for "no cash out" and cash out refinances, as applicable REFER TO SECTION 24.8 OF THE FHLMC SELLER/SERVICER GUIDE VOLUME I FOR FULL DETAILS 13 P a g e