Freddie Mac Relief Refinance Open Access Program Guide Fixed Rate

Transcription

1 Freddie Mac Relief Refinance Open Access Program Guide Fixed Rate Wholesale Lending October 19, 2015 Table of Contents Freddie Mac Relief Refinance Open Access Program Guide... 1 Fixed Rate... 1 Table of Contents... 1 Program Overview... 3 Highlights... 3 Credit Philosophy... 3 Ability to Repay and Qualified Mortgage... 3 Program Parameters... 3 Eligible Programs/Options... 3 Ineligible Programs/Options... 3 Loan Limits... 4 Loan to Value (LTV) Matrices... 5 Automated Underwriting... 5 Age of Documents... 5 Assets... 6 Business Accounts... 6 Gift Funds... 6 Contributions... 7 Borrower Eligibility... 7 Adding or Deleting a Borrower... 7 Employee Loan Policy... 8 Trusts... 8 Credit and Liabilities... 8 Modified Mortgages... 8 Restructured Mortgages... 8 Collateral... 9 Property... 9 Valuations... 9 Condominium and PUD Projects Debt to Income Maximum DTI Relief Refi Program Guide Wholesale Lending Page 1 of 18 10/19/2015

2 Qualifying Rate Higher-Priced Mortgage Loans (HPML) and HPML Qualified Mortgage (QM) Income and Employment Verbal VOE Geographic Restrictions Mortgage Insurance (MI) Loans with MI Single Premium MI Borrower-Paid MI (BPMI) Paid MI (LPMI) Private Mortgage Insurance Documentation Multiple Financed Properties Number of Loans Multiple Financed Properties Secondary Financing Transaction Types Maximum Loan Amount Calculation Texas Home Equity Net Tangible Benefit (NTB) Existing Mortgages Pricing and Fees Closing Escrow Waivers Product Codes Relief Refi Program Guide Wholesale Lending Page 2 of 18 10/19/2015

3 Program Overview Freddie Mac Relief Refi Open Access Program Guide The guidelines within this document only apply to Freddie Mac Relief Refinance Open Access Mortgages which require evaluation through Loan Prospector (LP). Highlights Freddie Mac Relief Refinance (Relief Refi) is an initiative under the federal government's Home Affordable Refinance Program (HARP). This program allows borrowers who are current on their existing mortgage to refinance when home values may have declined and/or mortgage insurance may not be available. This program allows for high LTVs, unlimited CLTV, and minimal income and asset documentation. Only loans with a note date on or before May 31, 2009 are eligible to be refinanced under the Relief Refinance Open Access program. The Relief Refinance Open Access loan must have an application received date on or after December 1, 2011 and on or before December 31, The Relief Refinance Open Access loan must have a settlement date (date sold to Freddie Mac) no more than 12 months after the note date and on or before September 30, Credit Philosophy Ability to Repay and Qualified Mortgage Pacific Union is committed to complying with Ability-to-Repay and Qualified Mortgage rules (ATR/QM) by making a reasonable, good-faith determination that borrowers have a reasonable ability to repay the loan in accordance with the policies set forth within Freddie Mac guidelines. Factors considered in making this determination include the borrower s income, assets and employment status (if relied on) against the mortgage loan payment, ongoing expenses related to the mortgage loan or the subject property, payments on simultaneous loans secured by the subject property, other debt obligations, and alimony and child-support payments as required by Freddie Mac. A borrower s credit history is also considered in the evaluation and must comply with Freddie Mac policies. Pacific Union will utilize reasonably reliable third party sources of information. Program Parameters Eligible Programs/Options Fully amortizing 10, 15, 20, 25 or 30 Year Fixed Rate Ineligible Programs/Options Loan amounts >$1,000,000 Cash-out Refinance mortgages Special purpose Cash-out Refinance mortgages Interest Only Temporary Buydowns ARMs Mortgages with a potential for negative amortization and/or Option ARMs Loans with recourse, indemnification, or other negotiated credit enhancements Relief Refi Program Guide Wholesale Lending Page 3 of 18 10/19/2015

4 Loan Limits Freddie Mac Relief Refi Open Access Program Guide Construction Conversion and renovation mortgages and/or and any other mortgage that converts interim construction financing to permanent financing FHA Mortgages VA Mortgages Section 502 GRH Mortgages Section 184 Native American Mortgages Freddie Mac Relief Refinance Same Servicer mortgages Home Possible Mortgages, and any affordable Mortgage, including Mortgages originated under the Seller's proprietary affordable program Affordable Merit Rate Mortgages Mortgages submitted to any automated underwriting system excluding Loan Prospector Prepayment Penalty Mortgages Restructured Mortgages Seasoned Mortgages Mortgages using an Automated Valuation Model (AVM) other than Home Value Explorer to determine property value Maximum and Minimum Loan Amounts Maximum Conforming Balance High Balance 1 Units Contiguous States Alaska and Hawaii Contiguous States Alaska and Hawaii 1 $417,000 N/A $625,500 N/A 2 $533,850 N/A $729,750 N/A 3 $645,300 N/A $729,750 N/A 4 $729,750 N/A N/A N/A Minimum : None Maximum: Conforming loan amount plus $1 1. High Balance Loan Amounts: Refer to Maximum County Limits (select Fannie/Freddie in Limit Type field). Relief Refi Program Guide Wholesale Lending Page 4 of 18 10/19/2015

5 Loan to Value (LTV) Matrices Freddie Mac Relief Refi Open Access Program Guide Occupancy Units LTV CLTV/HCLTV Credit Score DTI Ratio Primary Residence Second Home % Unlimited Rely on LP Rely on LP Investment Property Primary Residence 1 200% 200% Rely on LP Rely on LP 1. Second Home limited to one unit dwellings Automated Underwriting The LP Feedback Certificate must indicate that the loan is eligible for Relief Refinance Open Access. Freddie Mac Relief Refinance Open Access loans are eligible if LP delivers an Accept Risk Class. Loans that receive an LP Caution Risk Class with or without an A-Minus purchase eligibility message ARE NOT eligible. Loans that receive an LP evaluation status of Invalid, Ineligible, or Incomplete are not allowed. The data submitted to LP should be reviewed and the loan resubmitted to LP. If the loan continues to receive the unacceptable evaluation, it will not be allowed under Relief Refinance Open Access. LP performs the risk review, but the lender is responsible for final credit decision as to whether or not the borrower qualifies for the loan using the underwriting recommendation. Loan must receive an Accept recommendation. The LP recommendation and our relief of representations and warranties are dependent upon the accuracy of the data entered into LP. This includes: Property address, including unit numbers, must be exact as on the title report and Income must be calculated as required by the Freddie Mac Selling Guide. Assets entered into LP must be accurately reflected in LP as per the most recent verification. Credit report must reflect all liabilities listed on the Liabilities must be included in DTI unless they may be excluded per Freddie Mac polices. In addition, all conditions of the LP Feedback Certificate must be met. verified as outlined in Income and Asset Documentation Requirements. Income and assets may be Refer to LP Tolerances in the Conventional Program Guide for additional guidance regarding rerunning LP when material data changes occur. Age of Documents Credit documents must be no more than four months (120 days) old on the Note Date. Credit documents include credit reports and employment, income, and asset documentation. If the credit documents are older than allowed, the documents must be updated. When there are consecutive documents in the loan file, the most recent document is used to determine the age. For example, when two consecutive monthly bank Relief Refi Program Guide Wholesale Lending Page 5 of 18 10/19/2015

6 Assets Freddie Mac Relief Refi Open Access Program Guide statements are provided, the most recent bank statement must be dated within 120 days of the Note Date. Assets must be verified to the extent required by the LP Feedback Certificate. When asset verification is required: Most recent asset statement (monthly, quarterly, or annual) should be used. Large deposits do not need to be investigated or explained. Proof of liquidation of assets is not required even if assets are required for payment of closing costs. Discounting of certain assets in accordance with standard Freddie Mac policies still applies. Business Accounts When business assets are to be used for funds to close, the assets must be verified per LP documentation requirements and must be related to a documented borrower owned business. The borrower must be listed as an owner of the business account. Because the withdrawal of assets from a sole proprietorship, partnership or corporation may have a negative impact on the ability of the business to continue operating, the impact of the withdrawal must be considered in the analysis of the borrower s self-employed income. A cash flow analysis must be documented using individual and/or business tax returns, as applicable. The cash flow analysis may be in any format that allows a determination that the withdrawal of the funds will not have a detrimental effect on the business. The cash flow analysis must be included in the loan file. Gift Funds Allowed on Primary Residence and Second Home. Gift funds may be provided only by an immediate family member, spouse, fiancé, fiancée, or domestic partner of the borrower. A letter signed by the donor, evidence of the donor s ability to provide the gift, and documentation of the gift funds per the table below is required. Brokers are encouraged but not required to use the Pacific Union Financial Gift Letter. DONOR(S) MUST PROVIDE EVIDENCE OF THEIR ABILITY TO DONATE GIFT FUNDS AND EVIDENCE OF RECEIPT OF THOSE GIFT FUNDS FROM THE DONOR S ACCOUNT MUST BE PROVIDED PER THE FOLLOWING: If the gift funds... Then the required documentation is... Are in the borrower s Document according to LP findings account and the loan is LP approved Are to be provided at Bank statement showing the withdrawal from the donor s closing AND account disclosed in the gift letter, AND In the form of a certified Copy of the certified check made payable to escrow check from donor s company account Are to be provided at closing AND Have the donor provide a withdrawal document or cancelled check for the amount of the gift, evidencing that the funds Relief Refi Program Guide Wholesale Lending Page 6 of 18 10/19/2015

7 Freddie Mac Relief Refi Open Access Program Guide Are in the form of a cashier s check, money order, official check, or other type of bank check Are to be provided at closing AND Are in the form of an electronic wire transfer to /or cashier s check deposited with the closing agent Are being borrowed by the donor, AND Documentation from the bank or other savings account is not available came from the donor s personal account disclosed in the gift letter, AND A copy of the check, AND Borrower s deposit slip or bank statement that shows the deposit and new balance OR the check may be given directly to the Title Company or Realtor who must provide written acknowledgment identifying the specific check received & being held in escrow by the Title Company Have the donor provide documentation of the wire transfer from donor s account disclosed in gift letter, AND Written acknowledgement that the specific check or wire transfer was received and is being held in escrow by the Title Company Written evidence provided by the donor to evidence that the funds were borrowed from an acceptable source. Funds may not be provided by an interested party to the transaction, including the lender. Borrower s deposit slip or bank statement showing the deposit and new balance OR Written acknowledgment that the specific check was received and is being held in escrow by the Title Company Contributions The lender may provide the Borrower with a cash or cash-like (e.g. a gift card) contribution that is not reflected on the Closing Disclosure. The contribution is not considered cash out to the borrower and does not have to be included in the calculation of the proceeds of the Relief Refinance Open Access. The following additional requirements must be met: The amount of the contribution does not exceed $500.00, and No repayment is required. The lender may provide a contribution towards the payoff of the mortgage being refinanced. The contribution is not considered cash out to the borrower provided it does not result in cash disbursed to the borrower exceeding $ The following additional requirements must be met: The amount of the contribution does not exceed $2,000.00, No repayment is required, and The contribution is reflected on the Closing Disclosure. Borrower Eligibility All borrower types are eligible. Restrictions only apply when adding or deleting a borrower or when vesting will be in the name of a trust. Each person who has an ownership interest in the property, even if the individual s income is not used as qualifying income, must sign the security instrument. Adding or Deleting a Borrower Borrowers on existing loan may be removed from the new loan provided at least one original borrower remains on title. A non-occupying co-borrower may not be added on a Primary Residence loan. Relief Refi Program Guide Wholesale Lending Page 7 of 18 10/19/2015

8 Employee Loan Policy Freddie Mac Relief Refi Open Access Program Guide Loans to the originating Broker and/or their employees are allowed subject to Second Level Review and approval by a Credit Risk Underwriter. Trusts Not permitted Credit and Liabilities Unless otherwise stated within this program guide, the borrower s credit reputation is acceptable if the mortgage receives an LP Accept/Eligible. Modified Mortgages A modified mortgage is one in which a permanent change has been made to the original loan terms without any forgiveness of principal or accrued interest. This may include, but is not limited to: A change in amortization term, A reduction in interest rate, or A reduction in the scheduled monthly payment amount. Modified mortgages may not be accurately reflected on the borrower s credit report. If it is known or suspected that the borrower had a previous modification, the credit report must be updated and the loan re-scored and resubmitted to LP. A copy of the modified note must be in the loan file. See Restructured Mortgages, if applicable. Eligibility Transaction Refinance of a Modified Mortgage OR Other Modified Mortgage(s) Non-Subject Eligibility Eligible with LP Open Access approval. The terms of the modified loan must be used in determining if the new loan meets required benefit to borrower. If the borrower was previously in a trial period plan, but was denied a permanent modification, the current terms of the loan must be used for this purpose. Restructured Mortgages A restructured mortgage is one that: Provides forgiveness of a portion of principal and/or interest on either the first or second mortgage. Application of a principal curtailment by or on behalf of the investor to simulate principal forgiveness. Converts any portion of the original mortgage debt to a soft subordinate mortgage. Converts any portion of the original mortgage debt from secured to unsecured. A mortgage that meets the definition of a Restructured Mortgage continues to be a Restructured Mortgage, regardless of seasoning. Relief Refi Program Guide Wholesale Lending Page 8 of 18 10/19/2015

9 Freddie Mac Relief Refi Open Access Program Guide A mortgage that is the result of a subsequent refinance of a Restructured Mortgage is also considered a Restructured Mortgage. Restructured mortgages may not be accurately reflected on the borrower s credit report. If it is known or suspected that the borrower had a previous restructure, the credit report must be updated and the loan re-scored and resubmitted to LP. A mortgage that is modified through a Freddie Mac modification is not considered to be a Restructured Mortgage. A copy of the restructured note must be included in the loan file. See Modified Mortgages, if applicable. Eligibility Transaction Refinance of a Restructured Mortgage Other Restructured Mortgage(s) Non- Subject Eligibility Not allowed regardless of LP approval. Allowed with LP Open Access approval Collateral Property Eligible 1-4 unit dwellings that comply with Freddie Mac polices PUDs Mixed-use Modular and Panelized Homes provided the home meets Freddie Mac property requirements. Properties currently listed for sale Ineligible Manufactured Homes Cooperative properties Valuations Loan must be documented in accordance with LP Feedback Certificate. All data entered into LP must be accurate and complete. Freddie Mac offers two options for determining the property value on a Relief Refinance-Open Access loan. Home Value Explorer (HVE) HVE is a Freddie Mac tool that provides a point value estimate for a property within a Confidence Score and Forecast Standard Deviation, indicating the accuracy of the estimated value. Forecast Standard Deviation scores of 0.20 and lower indicate that the degree of confidence in the valuation estimate is a high or medium level. Forecast Standard Deviation scores above 0.20 indicate that the degree of confidence in the valuation estimate is low. Relief Refi Program Guide Wholesale Lending Page 9 of 18 10/19/2015

10 Freddie Mac Relief Refi Open Access Program Guide Use of the HVE is allowed only under the following conditions: 1-2 unit properties only Property must be an attached or detached dwelling, or a unit in a Condo project or PUD Property may not be a manufactured home, dwelling on a leasehold estate, or a cooperative unit. The HVE point value estimate must have a Forecast Standard Deviation that is no greater than 0.20 (corresponding to a Confidence Score of H (high) or M (medium) as reported by the HVE report A written copy of the HVE point value estimate must be kept in the file The HVE point value estimate may not be dated more than 120 days prior to the Note Date Subject is not a Texas Home Equity 50(a)(6) Using the HVE Messages Returned with Loan Prospector (LP) Results Refer to: Using HVE via LoanProspector.com for Relief Refinance Mortgages Understanding the HVE Messages Returned with LP Results Review the HVE messages returned in the LP results: Y0 will provide the HVE point value estimate of the subject property. Y1 provides the HVE Forecast Standard Deviation of the HVE point value estimate. Y2 provides the Confidence level of the HVE point value estimate. Y4-6 provide additional comments regarding the HVE point value estimate. Y7 describes the property types that are eligible for HVE. If the HVE is used to determine value: Review the HVE point value estimate to insure that it meets all requirements. Document the file with evidence that the subject property is eligible for HVE Title report will indicate if a property is a Leasehold Estate. Documentation of the number of units includes, but is not limited to: MLS Listing Screen print from Zillow or other on-line source. Resubmit to Loan Prospector using the point value estimate received from LP. The initial HVE values may change with subsequent resubmissions. Freddie Mac allows the use of any HVE value provided it is dated within 120 days of the Note Date. It is not necessary to resubmit when a different value is obtained from LP, provided the loan was resubmitted with the initial point value estimate. The Loan Prospector feedback certificate reflecting the submitted point value estimate must be included in the loan file. The lender is relieved of reps and warranties regarding the value, internal and external condition and marketability of the property unless, as of the settlement date of the loan, the lender is aware of any circumstances or conditions that would adversely affect the value, condition or marketability of the property. The lender reps and warrants that all information provided for the purpose of obtaining the HVE point value estimate, including the address of the property, is true, complete, and accurate. Relief Refi Program Guide Wholesale Lending Page 10 of 18 10/19/2015

11 Appraisal Freddie Mac Relief Refi Open Access Program Guide If the requirements for use of an HVE are not met, an appraisal with an interior and exterior inspection must be obtained. The lender is not responsible for the reps and warranties regarding the value, condition, and marketability of the property. Freddie Mac will accept appraisal reports with a Uniform Appraisal Dataset (UAD) condition rating of C5 or C6 and/or a UAD quality rating of Q6 completed on an as is basis. The appraisal does not have to be completed subject to needed repairs being completed. The lender is not responsible for the completeness and accuracy of the appraiser s description of the Mortgaged Premises, and the accuracy of and support for, the appraiser s opinion of market value of the property. A new appraisal or appraisal update is not required if the Settlement Date is more than 120 days after the Note Date. Properties Affected by a Disaster The lender is not required to obtain a property inspection of new appraisal when a property valuation (either HVE or appraisal) was relied on prior to a disaster, provided that Freddie Mac s property insurance requirements are met. The lender can use an HVE point value estimate with a high or medium confidence score after a disaster without obtaining a property inspection or appraisal to determine property condition provided that Freddie Mac s property insurance requirements are met. Condominium and PUD Projects No project review is required, however: The adequate insurance coverage must be in place and verified in accordance with Freddie Mac standard policies. The 1008 must reflect: Condo Class V PUD Class E Unit number for subject must be exactly as shown in the Freddie Mac Look Up Table. Underwriter must validate that the project is not a condotel, condo motel, co-op hotel or motel, houseboat project, timeshare or segment ownership project. Cooperative Mortgages are not eligible. Debt to Income Maximum DTI Rely on LP If HPML, see HMPL topic below Qualifying Rate The qualifying rate is the note rate. Relief Refi Program Guide Wholesale Lending Page 11 of 18 10/19/2015

12 Freddie Mac Relief Refi Open Access Program Guide Higher-Priced Mortgage Loans (HPML) and HPML Qualified Mortgage (QM) HPMLs and HPML Qualified Mortgages (QM) are loans secured by the borrower s primary residence, second home or investment property that are priced at an Annual Percentage Rate (APR) that exceeds the Average Prime Offer Rate (APOR). Based on the date the interest rate is set (locked or re-locked), the APR must be compared with the APOR index. The loan will be considered an HPML if the APR exceeds the index by 1.5% or more. HPMLs or HPML QMs may be eligible subject to the following: Borrower s ability to repay is established and income and assets have been fully documented; The qualifying rate for an ARM loan with initial adjustment period within the first seven years of the mortgage are qualified at the higher of the fully indexed rate or the note rate; and An escrow account for taxes and insurance is established. For projects such as condominiums and PUDs where the property insurance is collected as part of the borrower s HOA fee and remitted by the HOA to the insurance provider, the escrow account must be established for taxes and if applicable any mortgage insurance and any individual homeowner s insurance policy. Loan Prospector is not able to determine if a loan is an HPML OR HPML QM, and will not be updated to reflect these guidelines, therefore these loans must be manually reviewed to insure compliance with these requirements. Minimum 620 credit score Maximum 45% DTI Verification of income source and amount is required. Income and Employment Freddie Mac does not require establishment of a minimum history of receiving income or a determination that the income is expected to continue for at least three years in order to use the income for qualifying. A Verbal Verification of Employment dated no more than 10 business days prior to the Note Date is required for all employed borrowers. Refer to Income and Asset Documentation Requirements for Relief Refinance -Open Access documentation requirements. Seasonal and non-seasonal unemployment compensation may be used in qualifying. Freddie Mac does not require establishment of a minimum history of receiving income or evidence that the income can be expected to continue for at least three years. If the subject property is a 1-4 unit Investment Property and rental income is being used to qualify, rent loss insurance covering a minimum of six months of gross monthly rent is required. Loans using assets as a basis for mortgage qualification must meet the requirements of Chapter (e) of the Freddie Mac Selling Guide T must be signed by all borrowers at application and again at closing. Verbal VOE Verbal VOE must be completed by a Pacific Union Financial closer within five business days prior to closing. Verbal VOE for Self-Employed Income: Relief Refi Program Guide Wholesale Lending Page 12 of 18 10/19/2015

13 Freddie Mac Relief Refi Open Access Program Guide The existence of the borrower s business must be verified within 30 calendar days prior to the Note Date as follows: From a third party, such as a CPA, regulatory agency, or the applicable licensing bureau, or By verifying a phone number and address for the business using a telephone book, the Internet, or directory assistance. The source of the information and the name and title of the person obtaining the verification must be documented. Active military: A YTD Leave and Earnings Statement (LES) dated no more than 30 days prior to note date may be provided in lieu of a verbal VOE. Geographic Restrictions Refer to the Geographic Matrix for additional restrictions Mortgage Insurance (MI) If the LTV is >80% and LP Feedback Certificate indicates that the existing loan has mortgage insurance in place, the new loan must have MI. LP will determine if MI is required as follows: If original LTV <=80%, then MI is not required. If original LTV >80% AND existing loan has active MI, then obtain either amount of coverage on existing loan or standard coverage if obtaining the standard coverage provides a lower cost option for the borrower. If original LTV >80% AND existing loan does NOT have active MI, then MI is not required. If MI has been cancelled, the file must include written evidence provided by the MI provider or current servicer to reflect cancellation of MI due to a decrease in LTV below the maximum acceptable limit. Loans with MI When the LP Feedback Certificate indicates that MI is required, the existing MI must be transferred to the new loan, or the file must contain documentation to evidence the original MI was canceled. For loans where MI is required: Eligible only if insured by one of the following providers: Radian Genworth RMIC United Guaranty (UG may require a full underwrite of the original loan. This process requires UG request the original file from the original lender and the entire process may take 30 to 45 days). Triad PMI MGIC Coverage amount of insurance remains as on the existing MI policy. However, the term of the insurance must cover the life of the new loan, or until cancellation or termination of coverage as required by law or Freddie Mac guidelines. Relief Refi Program Guide Wholesale Lending Page 13 of 18 10/19/2015

14 Freddie Mac Relief Refi Open Access Program Guide On transferred MI policies, the initial premium was paid when the existing loan closed and is not collected on the new loan. A reasonable cost may be charged for the modification of the mortgage insurance policy. Escrow waivers are not permitted on monthly MI plans. Single Premium MI If the premium on the original loan was paid as a single premium, the coverage may not be converted to any other plan. Borrower-Paid MI (BPMI) On annual plans, the full annual premium is paid at closing. Any applicable refunds are processed by the MI provider. Financed/ Split MI: If the existing loan has financed upfront MI, the coverage transfers to the new loan. The existing coverage is continued on the new loan regardless of whether the initial premium was paid as a single financed premium or split upfront premium. If the initial coverage was a Split MI plan, the monthly payment as reflected on the modification certificate must be entered in DataTrac. If the transfer of the MI policy results in a refund to the borrower, as may be the case with a refundable annual premium, the MI provider will process the refund after the loan closes. The refund is not netted from the payoff. Paid MI (LPMI) Single Pay LPMI plans may be transferred to the new loan. Monthly LPMI plans must be converted to a Borrower Paid plan. Existing Borrower Paid MI may not be converted to LPMI. Private Mortgage Insurance Documentation The following documentation is required on loans with Private Mortgage Insurance: The LP Feedback Certificate must indicate MI is required, identify the existing MI provider name, coverage details and certificate number. The File must contain evidence the MI provider will modify the policy to the new loan. This must be obtained prior to closing the loan and should be included in the submission package for all loans. The forms of evidence will vary from MI provider to MI provider. The Closing Disclosure must indicate the amount of the MI as follows: If monthly premium, appropriate escrow cushions have been collected. Typically two months escrows are required unless prohibited by state regulations or the MI certificate indicates a zero monthly MI plan is in place. On a HARP loan with MI, the monthly MI transfers from the old loan to the new loan. This may create a slight gap in payment of the MI premium to the MI provider during the transition period from original lender to the new lender. To ensure sufficient funds are available to make any back payments due the MI provider, an amount sufficient to cover the monthly MI due from the date of last mortgage payment made per the payoff statement and the date of closing, will be Relief Refi Program Guide Wholesale Lending Page 14 of 18 10/19/2015

15 Freddie Mac Relief Refi Open Access Program Guide collected at closing. For example, if the loan was paid off in May and the first loan payment due PUF is July 1, then: If the May MI payment was not paid by the borrower to the original lender, collect three months of premium to cover May, June and July s MI premium. If May payment was paid by the borrower to the original lender, collect two months of premium to cover the June and July monthly payments. If annual premium, the full annual premium has been collected. If any portion of the annual premium paid by the previous servicer is refundable, the refund will be processed by the MI provider. If the subject is the borrower s primary residence: File must contain an amortization schedule illustrating when the MI will drop. State required MI disclosures, where applicable, must also be included in the loan file. Borrower must be provided with a PMI Disclosure which explains how the borrower may request MI cancellation, the borrower s right to request cancellation, when MI will be automatically dropped and any exemptions to the general cancellation or termination policy. Multiple Financed Properties Number of Loans There is no limit to the number of loans that may be financed by Pacific Union Financial to any one or group of borrowers. Multiple Financed Properties There is no limit to the number of financed 1-4 unit properties a borrower may own. Secondary Financing Payoff of a subordinate lien, regardless of age, may not be included in the new loan amount. An increase in the current unpaid principal balance of the existing lien to curtail the Relief Refinance Open Access mortgage or to pay related closing costs, financing costs, or prepaids/escrows for the Relief Refinance Open Access transaction is not allowed. New subordinate financing is not allowed. Existing subordinate financing may remain in place provided the loan is clearly subordinated to the first lien and meets Freddie Mac requirements for subordinate financing. Loans with Property Assessed Clean Energy (PACE) subordinate liens are not eligible. Existing subordinate financing may be an Affordable Second meeting the requirements of the Freddie Mac Seller Guide. Refer to Section B24.4 for special delivery requirements for Relief Refinance Open Access mortgages with an Affordable Second. Existing subordinate financing may be refinanced simultaneously with the Relief Refinance Open Access mortgage provided that: The subordinate lien is being refinanced for one of the following purposes: A reduction in interest rate of the subordinate lien Relief Refi Program Guide Wholesale Lending Page 15 of 18 10/19/2015

16 Freddie Mac Relief Refi Open Access Program Guide To replace a subordinate lien with an ARM, interest-only, balloon, or call option with a new fixed rate, fully amortized subordinate lien A reduction in amortization term of the subordinate lien A reduction in monthly payment of the subordinate lien The unpaid principal balance of the new subordinate lien may not be more than the unpaid principal balance, at the time of payoff, of the existing subordinate lien. If the subordinate lien being refinanced is a fixed rate loan, the new subordinate financing may not be an ARM loan. Grant-like unsecured financing (Hardest Hit Funds) may be used to pay down a portion of the existing first lien, and to pay closing costs, financing costs, and/or prepaids/escrows as long as the funds do not result in a lien on the property. In this situation, the following policies apply: Funds must be reflected on the 1003 and in Details of Transaction. The file must contain a copy of the promissory note. When repayment of the funds is required, the verified payment must be included in the debt to-income ratios, unless repayment of funds is due only upon sale or default. Closing Disclosure must reflect the transfer of loan proceeds. Transaction Types Transaction must be a rate/term refinance with proceeds being used to pay off an existing Freddie Mac first lien loan. The Freddie Mac Look Up Table may be used to determine if a loan is owned by Freddie Mac. Maximum Loan Amount Calculation The loan amount may not exceed the lesser of: The maximum loan limit in the Loan Amount Matrix; or The total of: Payoff of the existing first lien (details of transaction section (line d) must match the balance of the lien being paid off in the liabilities section); plus Interest accrued through the date the mortgage being refinanced is paid off Closing costs, financing costs, and prepaids/escrows not to exceed the lesser of $5,000 or the actual closing costs. When MI is being transferred, the MI provider may charge a reasonable MI transfer fee. Incidental cash back to the borrower at closing may not exceed $250. Cash back in excess of $250 must be applied as a principal reduction on the new loan. The principal reduction must be made prior to delivery of the loan to Freddie Mac. The $250 limit does not include the reimbursement of documented fees paid outside of closing. Proceeds of loan may not be used to: Pay off subordinate financing or any other lien. The file must contain a copy of the subordination agreement. Buy out the interest of another borrower. The Freddie Mac Relief Refinance Open Access Maximum Loan Amount Worksheet may be used to assist in calculating the maximum loan amount. Relief Refi Program Guide Wholesale Lending Page 16 of 18 10/19/2015

17 Freddie Mac Relief Refi Open Access Program Guide Texas Home Equity The payoff of an existing Texas Home Equity Loan is permitted provided the LP Feedback Certificate indicates that it is eligible for Relief Refinance Open Access. The loan must comply with the most conservative of Freddie Mac or Texas 50(a)(6) requirements. The maximum LTV/CLTV is limited to 80%. Refer to the Texas Home Equity Program Guide for additional requirements. Full appraisal required regardless of LP feedback. Net Tangible Benefit (NTB) Loan must provide a benefit to the borrower in accordance with any federal, state or local regulation. In addition, the loan must provide at least one of the following benefits to the borrower: Reduction in borrower s monthly principal and interest payment, Reduction in the interest rate, Reduction in amortization term, or Results in a more stable product: Interest-only to fully amortizing ARM to Fixed The term of the Relief Refinance Open Access loan may be longer than the term of the existing loan provided one of the benefits stated above is met. There is no limitation on the amount of increase to the borrower s monthly principal and interest payment. Existing Mortgages Ineligible Existing Mortgages The following mortgage types may not be paid off as part of this program: Mortgage loans that are currently subject to any outstanding repurchase request from Freddie Mac Reverse mortgages Second Mortgages Government Loans Loans with an existing credit enhancement are not eligible. Pricing and Fees Closing All other standard Pacific Union Financial fees apply. A reasonable MI transfer fee may be charged by the MI provider and included in the loan amount. Freddie Mac Relief Refinance Open Access loans are closed in accordance with standard conventional policies except as follows: Cash back to the borrower may not exceed $250. If borrower receives a principal curtailment to eliminate excess cash back: Relief Refi Program Guide Wholesale Lending Page 17 of 18 10/19/2015

18 Escrow Waivers Freddie Mac Relief Refi Open Access Program Guide Curtailment must be completed prior to delivery of the loan to Freddie Mac. Escrows for taxes and insurance are encouraged. Escrows may be waived regardless of LTV. Escrow waivers are not allowed on: Loans that include monthly Mortgage Insurance (MI) Loans that have been identified as a HPML Partial escrows are not allowed. If an escrow account is waived: Borrower must be financially able to handle the future lump-sum payments. File must contain a written disclosure advising of the implication of waiving an escrow account. At a minimum, the disclosure must: Identify any fees associated with waiving escrow accounts Advise borrower that they may establish an account at any time after closing Product Codes Advise borrower that they are responsible for payment of taxes and insurance Advise borrowers that if they do not make their taxes and insurances payment, the lender has the right to force place an impound account Borrowers should be provided with an estimate of the first year taxes and insurance payments along with due dates for each. Product Code Master List Relief Refi Program Guide Wholesale Lending Page 18 of 18 10/19/2015