This matrix is intended as an aid to help determine whether a property/loan qualifies for certain financing.

Transcription

1 This matrix is intended as an aid to help determine whether a property/loan qualifies for certain financing. NOTE: This matrix is specific to Impac s investor requirements. A thorough reading of this matrix is recommended. Program Qualifications This jumbo mortgage loan program offers fixed and ARM products on jumbo loan balances starting at $417,001. Guidelines apply to both fixed and ARM programs unless specifically indicated. Eligibility Matrix Loan Amount & LTV Limitations Purchase and Rate/Term Refinance Cash-Out Purchase and Rate/Term Refinance Cash-Out Purchase and Rate/Term Refinance Cash-Out Primary Residence 1-Unit Credit Score LTV/CLTV/HCLTV 2 Minimum Loan Amount 3 Maximum Loan Reserves DTI Amount (Months) % $417,001 $1.0 Million 6 43% % $417,001 $1.0 Million 6 43% % $1,000,001 $1.5 Million 12 43% % $1,000,001 $1.5 Million 12 43% % $1,500,001 $2.0 Million 18 43% % $2,000,001 $2.5 Million 18 43% % $417,001 $1.0 Million 9 43% % $1,000,001 $1.5 Million 12 43% % $1,500,001 $2.0 Million 18 43% Primary Residence 2-Unit Credit Score LTV/CLTV/HCLTV 2 Minimum Loan Maximum Loan Reserves Amount 3 DTI Amount (Months) % $533,851 $1.0 Million 12 43% % $1,000,001 $1.5 Million 12 43% % $1,500,001 $2.0 Million 18 43% % $533,851 $1.0 Million 12 43% % $1,000,001 $1.5 Million 12 43% % $1,500,001 $2.0 Million 18 43% Second Home Credit Score LTV/CLTV/HCLTV 2 Minimum Loan Amount 3 Maximum Reserves DTI Loan Amount (Months) % $417,001 $1,000, % % $1,000,001 $1.5 Million 12 43% % $1,500,001 $2.0 Million 18 43% % $417,001 $1,000, % % $1,000,001 $1.5 Million 12 43% % $1,500,001 $2.0 Million 18 43% Footnotes: 1 Max LTV/CLTV/HCLTV is no longer reduced on properties in declining markets. 2 Subordinate financing is permitted. LTV/CLTV limits are the same. 3 Non-warrantable condos minimum loan amount is $100, Construction loans ineligible. 5 Texas refinance 50(a)(6) ineligible. 6 Maximum cash out is $300,000 7 Loan amounts over $1,000,000 require Impac management review (see Underwriting) 8 Borrowers with greater than two (2) financed properties are required to have at least 18 months reserves 9 NOTE: Exceptions are not allowed on the above grid items (i.e., credit score, LTV/CLTV, loan amount, reserves, or DTI) Product Description Fixed Rate 15 and 30 years 5/1, 7/1, and 10/1 LIBOR ARMs All products are fully amortizing 12/4/14 Correspondent Lending Page 1 of 19

2 Product Codes Product Code JF15PL Jumbo Platinum Fixed 15 year JF30PL Jumbo Platinum Fixed 30 year JA51PL Jumbo Platinum ARM 5/1 LIBOR JA71PL Jumbo Platinum ARM 7/1 LIBOR JA101PL Jumbo Platinum ARM 10/1 LIBOR Locking Forward locks are allowed Locking is through the Impac Lock Desk ONLY Eligibility Requirements Adjustable Rate Details Appraisal Interest Rate Adjustment Caps Margin Index Interest Rate Floor Index Establish Date Change Dates 5/1 ARM 2/2/5 Initial: 2% up/down; Subsequent: 2% up/down; Lifetime: 5% over initial rate 7/1 & 10/1 ARMs 5/2/5 Initial: 5% up/down; Subsequent; 2% up/down; Lifetime: 5% over initial rate 2.50%; Margin of 2.25% available with applicable pricing adjustment 12-month LIBOR (London InterBank Offer Rate) The interest rate floor is equal to the Margin 45 Days Prior to the Change Date 5/1 ARM The first change date is the 60 th payment due date. There is a new change date every 12 months thereafter. 7/1 ARM The first change date is the 84 th payment due date. There is a new change date every 12 months thereafter. 10/1 ARM The first change date is the 120 th payment due date. There is a new change date every 12 months thereafter None Conversion Option Assumption Not allowed, except as specified in Fannie Mae Adjustable Rate Note Form 3528 and Adjustable Rate Rider Form 3187 and utilized for Hybrid ARM products Negative None Amortization Age of Appraisal: Appraisals must be dated within 120 days of the Note. After the 120 day period a new appraisal will be required. Re-certification of value is not acceptable. Appraisal Requirement by Loan Amount: $1,500,000 One Full URAR for loan amounts up to and including $1,500,000 (e.g., Form 1004, Form 1073). All appraisals will be subject to the investor appraisal review process. > $1,500,000 Two Full URARs for loan amounts $1,500,001. It is recommended (but not required) to send appraisals to investor for appraisal review prior to closing. LTV will be based on the lower of (i) the Two Full URARs, and (ii) for purchase money loans, the purchase price, subject to investor appraisal review process. When 2 appraisals are required: Appraisals must be completed by two independent companies The LTV will be determined by the lower of the tow appraised values as long as the lower appraisal supports the value conclusion. The final inspection and/or recertification of value must be for the appraisal with the lower value. Any inconsistencies between the two reports must be addressed by the underwriter and all discrepancies must be reconciled. Appraisal Standards: All appraisers must hold at least the minimum required state license and a copy of the license must be submitted with the appraisal. 12/4/14 Correspondent Lending Page 2 of 19

3 For loan amounts $1,000,000, the appraisal must be completed by a state certified appraiser Appraisals must be completed in compliance with FIRREA/USPAP and all applicable regulatory requirements. Appraisals must have interior photos to include: kitchen, bathrooms, bedroom and living room/family room. 1004MC is required On Purchase transactions, the appraiser must review the sales contract. Appraisal 1 st generation PDF is required Appraisals should not include comparables greater than six (6) months old at the time of underwriting review Appraisals must be completed in accordance with Uniform Appraisal Dataset (UAD) requirements Investor will purchase loans secured by properties with unpermitted structural additions under the following circumstances: o The subject addition complies with all investor guidelines o The quality of the work is described in the appraisal and deemed acceptable ( workmanlike quality ) by the appraiser o The addition does not result in a change in the number of units comprising the subject property (e.g., 1-unit property, converted into a 2-unit property) o 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 addition and state the following in the appraisal: Non-permitted additions are typical for the market area and a typical buyer would consider the unpermitted addition square footage to be part of the overall square footage of the property The appraiser has no reason to believe the addition would not pass inspection for a permit Third Party Appraisal Verification Third party appraisal verification, independent of the appraisal, is required to support the appraised value. This requirement may be met by providing a value report from an Automated Valuation Model (AVM), second appraisal, desk review or field review from any vendor. The AVM or appraisal review s estimated value or estimated market value must support the appraised value. There is a 10% variance on appraisal review. Note: The ECOA Valuations Rule requires copies of appraisals and other written valuations be delivered to borrower promptly upon completion, or three (3) business days before consummation, whichever is earlier. Assets Unless specifically stated otherwise, assets must be documented in accordance with Fannie Mae guidelines. Asset types which are not specifically mentioned herein are not permitted. All asset documentation must be within 90 days of the note date. Minimum 5% required from borrower(s) own funds. All funds for reserves must come from the borrower s own demonstrated savings All borrower funds must be documented with two most recent months asset statements or VOD covering a minimum of 60 consecutive days. o A written VOD may only be used as supporting documentation and cannot be used in lieu of asset statements. All unusual large deposits must be explained and source must be documented. Verify the borrower s actual receipt of the funds realized from sale or liquidation when non-liquid assets are used for any part of the down payment or required cash to close. Business Funds Business funds may be used for down payment and/or closing costs, not for purposes of calculating reserves. Cash flow analysis is required using 3 months business bank statements to determine no negative impact to business based on withdrawal of funds. o Borrower must have access to funds o The borrower must be the sole proprietor or 100% owner of the business (or all borrowers combined own 100%) o CPA letter must be included in the file confirming that the withdrawal will not harm the financial strength of the business Employer assistance Funds from an established employer relocation program may be used for down payment and closing costs on primary residence purchase transactions. The funds must be a gift or grant and cannot be in the form of a 12/4/14 Correspondent Lending Page 3 of 19

4 second lien or unsecured loan. The following documentation must be obtained: Verification that the program is an established company program, not just an accommodation developed for an individual employee; Verification of the dollar amount and proof that there are no repayment terms or liens associated with the gift or grant; Terms of any other employee assistance being offered to the borrower; The requirements listed under gift funds must be met, with the exception that the funds are not required to come from a family member or domestic partner. Sale of Assets 100% of the net proceeds from the sale of a residence or other personal assets. Cash Value of Life Insurance 100% of the cash value If using gift funds: The borrower is required to meet a 5% minimum down payment from his or her own personal funds for all purchase transactions. Gift funds are permitted subject to the following criteria: Primary residence purchase money transactions only Minimum down payment is 20% (max 80% LTV): First 5% of down payment must come from borrower s own personal funds Once the first 5% of the buyer s own funds are verified, a gift can be used for the remaining down payment and closing costs Notes: Gift funds are not allowed to meet reserve requirements Gift funds can be applied towards closing costs and pre-paids above minimum required investment Gift letter, signed by the donor that includes the amount of the gift, date the funds were transferred, a statement that no repayment is expected, the donor s name/address/phone number and relationship to the borrower, and source of funds The donor must be a relative or domestic partner (domestic partner donors must live with borrower) or in the form of Employer Assistance as outlined above. Refer to Fannie Mae Selling guide B for acceptable donors. Verifying Donor Availability of Funds and Transfer of Gift Funds: Sufficient funds must be verified to cover the gift either in the donor s account or transferred to the borrower s account. Acceptable documentation includes the following: A copy of the donor s check and the borrower s deposit slip, A copy of the donor s withdrawal slip and the borrower s deposit slip, A copy of the donor s check to the closing agent, or A settlement statement showing receipt of the donor s check When the funds are not transferred prior to settlement, the lender must document that the donor gave the closing agent the gift funds in the form of a certified check, a cashier s check, other official check or wire transfer. Use of recently borrowed funds Borrowed funds may not be used for closing costs or reserves until they have been seasoned 60 days. Example: A recent HELOC on primary residence used to purchase another home is not allowed until funds have been seasoned. Interested Party Contributions (IPC s) The property seller or any interested party (e.g., builder, developer, lender, real estate agent or mortgage lender or any of their affiliates) can pay closing costs, prepaid items and escrows. Interested party contributions may not exceed six percent (6%) of the loan amount. Financing and Sales Concessions Financing and sales concessions are defined as IPC s beyond the above limits or any amounts not being used for closing costs or prepaid items. If financing or sales concessions are present, both the appraised value and sales price must be reduced by the concession amount for purposes of calculating the LTV/CLTV/HCLTV. Reserves required for the subject property are based on the loan amount and LTV See Eligibility Matrix Loan Amount and LTV Limitations for required reserves Reserve funds must be verified with two (2) consecutive months bank statements or VOD 12/4/14 Correspondent Lending Page 4 of 19

5 All reserves are calculated on the qualifying rate, in each case using the full Principal, Interest, Taxes, Insurance, Assessments ( PITIA ) payment Mandatory Data Requirement: The required number of months of PITIA reserves on the subject property must be manually calculated and input into the front end system on every loan prior to final loan approval In addition to the minimum reserves required for the subject property, 6 months PITIA reserves is required for each additional financed property owned by all borrowers See Income / Departure Residence section for additional reserves when departure residence is pending sale at time of subject loan closing Unless the borrower is of retirement age, no more than 50% of the total reserve requirement may come from retirement accounts, including 401K, IRA, SEP, and Keogh accounts. For borrowers aged 59½, 100% of the reserve requirements may come from retirement accounts. In order to be considered effective reserves, the account must be vested and allow withdrawals by the borrower without restrictions other than early withdrawal penalties and applicable taxes. Funds that cannot be withdrawn under circumstances other than the account owner s retirement, employment termination or death cannot be counted s reserves. Borrowers must disclose and Lenders must verify all assets. Acceptable PITIA Documentation: The minimum documentation to correctly verify the full PITIA payment should be from one of the following sources: Current monthly mortgage statement; Copy of Homeowners insurance policy; Copy of recent tax bill or web search to taxing authority; Copy of mortgage note, etc. Defined Acceptable Reserve Accounts: The types of assets that can be used for down payment, cash to close and reserves and the value of those funds are as follows: Account/Asset Type Eligibility Checking/Savings/Money Market 100% Publicly traded stocks, bonds and mutual funds 65% (4) IRAs, SEP or KEOUGH accounts 65% / 100% (1) Annuities 65% / 100% (1) Vested amount of 401(k) Plans 65% (2) Trust Assets Up to 100% (3) (1) 100% of the account value may be used for borrowers aged 59 ½ (2) 65% of the vested amount, after reduction of any outstanding loans. The terms and conditions under which funds may be withdrawn or borrowed must be verified (3) Borrower/Co-Borrower must have full access to consider; Copy of complete trust or trustee letter is required (4) Non-vested or restricted stock accounts are not eligible for use as down payment or reserves Assumptions ATR/QM Requirements (Ability to Repay / Qualified Mortgage) Not allowed, except as specified in Fannie Mae Adjustable Rate Note Form 3528 and Adjustable Rate Rider Form 3187 and utilized for Hybrid ARM products. Effective for applications dated on or after January 10, 2014, only loans that meet the Ability to Repay and Qualified Mortgage requirements ( ATR/QM ) as set forth in the Ability to repay/qualified Mortgage Standards under the Truth-in-Lending Act (Regulation Z) ( ATR/QM Final Rule ) issued by the Consumer Financial Protection Bureau (the CFPB ). Loan file must provide evidence of compliance with ATR/QM. Impac will not accept cures on QM violations. Category Eligibility General Requirements Safe Harbor QM (non HPML) Eligible Term of 30 years Adherence to applicable points and fees thresholds; APR < APOR + 1.5% (1 st liens) 43% DTI 12/4/14 Correspondent Lending Page 5 of 19

6 Meets ATR requirements per Appendix Q No loan features (IO, Negative Amortization, Balloon, et al) considered to be non-qm compliant Rebuttable Presumption QM Not Eligible N/A (HPML) Non-QM Not Eligible N/A Income Analysis Worksheet required (see Income) Points and Fees Worksheet To evidence compliance with QM points and fees, the loan file must include a clear itemization of fees and application of all credits that indicate paid by/to. No specific form is required. Borrower Eligibility Eligible Ineligible U.S. Citizens All Borrowers must have a valid social security number (Borrowers with only an ITIN are not eligible) Permanent Resident Aliens: o With proof of lawful permanent residence in the U.S., and o 24 months employment history in the United States Inter-Vivos Revocable Trusts (revocable at any time by the trustor) and if closed in accordance with applicable Fannie Mae requirements Illinois Land Trusts First Time Homebuyers defined as anyone who has not owned a home for three (3) years. For loans with more than one borrower where at least one borrower has owned a home in the past three (3) years, first-time homebuyer requirements do not apply. Non-Permanent Resident Aliens (including Foreign nationals) Irrevocable Trust, Limited / General Partnership, Corporations, and LLC s are not permitted Inter Vivos Revocable Trust (revocable at any time by the Trustor) Land trusts, except for Illinois Land Trusts Non-arm s length transaction defined as a pre-existing relationship between the buyer and seller which includes: o Relationship or business affiliation between the buyer, seller, loan agent, or originator o Applicants related by blood or marriage to the seller of the property o Owners, employees or family members of originating broker o Builder/developer of the property o Purchasing a property from a builder/developer who, in turn, is purchasing the borrower s existing property o Renters buying from landlord o Persons trading properties with the prior owner (seller) of the property Co-borrowers Credit The following non-arm s length transactions may be considered with appropriate documentation o Family sales or transfers o Borrower is an employee of the originating lender and the lender has an established employee loan program o Renter buying from landlord, with at least 24 months cancelled checks evidencing satisfactory pay history o Sellers or Buyers representing themselves as agent in the real estate transaction Non-occupant co-borrowers are ineligible Credit Package (Credit Report, Income, Assets, Title Commitment) Maximum Age Purchase or Refinance: 90 days to the Note date Credit Report Requirements A full residential mortgage credit report (RMCR) or Tri-Merged in-file conforming to FNMA/FHLMC requirements should be used Credit Score Requirements The RMCR or tri-merged in-file should reflect credit history from all 3 repositories and meet the minimum program standards as follows: Minimum FICO for all qualifying borrowers see product Eligibility Matrix The loan file must have the most current month mortgage rating on the credit report, if applicable. This may require a credit supplement even though the credit report date is within 90 days of the note date. 12/4/14 Correspondent Lending Page 6 of 19

7 Housing Payment History A satisfactory 24 month housing payment history is required of each borrower. This history can be a combination of mortgage and rental history. If not contained within the credit report, the following documentation must be provided by a third party: Mortgage Verification can come directly from the lender/servicer, canceled checks and/or bank statements. Rent Rental history may be verified by a direct written verification (VOR), 12 months canceled checks and/or bank statements. Exception: Borrowers who own their current home free and clear are exempt from this requirement. Documentation must be provided verifying the home has been owned for the prior 24 months without a lien. Minimum Credit Standards A minimum of 3 trade lines open for at least 24 months is required. o At least 2 of the trade lines must show activity within the past 12 months; o At least 1 trade line must be a mortgage for non-first time homebuyers, and for first time homebuyers, 1 trade line must be an installment line; o First time homebuyers must have satisfactory housing payment history for at least 24 months; o Credit history must be established for at least 5 years, and be consistent with the borrower(s) occupation and financial activity. Fewer than 3 trade lines open for at least 24 months may be considered if o Credit history is established for at least 10 years, and no fewer than 10 trade lines are reported, one of which is a mortgage; o At least 1 trade line is open and shows activity within the past 12 months. Borrowers contributing less than 25% of the qualifying income are not subject to the minimum credit standards. Authorized user accounts and non-traditional credit are not considered as acceptable trade lines. Adverse Credit Policy: In addition to the minimum credit standards and score requirements, the following adverse credit standards apply: Generally no public records are permitted within the last 24 months o Public records of de minimis amounts which occurred as isolated events may be permitted. Documentation must be provided describing the cause of the event and the extenuating circumstances that illustrate the borrower s inability to resolve the problems. Patterns of continuous or repetitive derogatory events are not acceptable. All public records with outstanding debt obligations must be paid off prior to or at closing as noted below: Open judgments, garnishments and all outstanding liens must be paid. In general, outstanding collections and charge-offs must be paid off. Collections and charge-offs with minor outstanding balances may remain open. No bankruptcies or foreclosures, short sales or deed in lieu within the last seven (7) years Modifications due to adverse circumstances are not permitted within the last 7 years. Modifications that are not the result of adverse circumstances are permitted, including: o Modification due to a principal pay down with recast may be considered on a case by case basis, o Modification as part of a previous single-close construction-to-permanent financing transaction. No significant derogatory ratings on any trade line activity within the last 36 months (including installment or revolving accounts) Pay Down or Pay Off Debt to Qualify is not allowed. Borrowers must qualify with ALL DEBT. Paying down or paying off debt to qualify is not allowed. Documentation Notes and Riders (All products are fully amortizing) Fixed Rate: Multistate Fixed Rate Note 3200 (or state specific as required) Hybrid ARM (5/1, 7/1, & 10/1 ARM): Note 3528 & Rider 3187 Maximum interest credit is seven (7) calendar days posted on the HUD-1 Settlement Statement. Interest Calculations Per diem interest is based on a 360-day calculation. Interest to be credited or debited at the time of loan purchase ( days interest calculation ) is based on the actual number of days, that is, a 365-day year for non-leap years and a 366-day year for leap years. 12/4/14 Correspondent Lending Page 7 of 19

8 E-signed Documents Initial disclosures may be electronically signed by the borrower, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E- Sign Act). Clarification of Compliance Requirements Documentation Homeownership Counseling Notice and Disclosure of list of approved housing counselors Valuations: Notice of right to receive free copies of all appraisal reports or other valuations & acknowledgement of receipt of the disclosure Valuations: Evidence that the appraisals and other valuations were provided to consumer Anti-Steering Disclosure: - Loan originated as a retail loan by Impac - Loan brokered to Impac as a wholesale loan Affiliated Business Disclosure: - Loan originated by Impac as a retail loan - Loan purchased by Impac from correspondent - Loan brokered to Impac (wholesale) Settlement Cost & CHARM Booklets: Evidence that booklets were provided to consumer NMLS ID Disclosure encompassing - Loan originator s name - Loan originator organization s name - Loan originator s NMLS ID - Loan originator organization s NMLS ID Notes/Timing Provided within 3 business days of loan application Provided within 3 business days of loan application Provided promptly upon completion or at least 3 days prior to loan consummation Provided within 3 business days of loan application: - Retail Loan Officer Compensation Policy - Broker Anti-Steering Disclosure - IF Lender Paid broker compensation Provided within 3 business days of loan application: - Seller Affiliated Business Disclosure - Correspondent Affiliated Business Disclosure - Impac and Broker Affiliated Business Disclosure Provided within 3 business days of loan application All items must appear on application, note, and security instrument. Failure to provide information on required documents cannot be cured Valuations A valuation includes an appraisal report, automated valuation model ( AVM ), or GSE (DU or LP) report of value. Loan files must contain a copy of the appraisal disclosure, and an acknowledgement of receipt of the disclosure. Affiliated Business Disclosure Sellers of TPO loans must include an affiliated business certification (or disclosure where required) for the lender and/or loan originator. Anti-Steering Disclosure A copy of the anti-steering disclosure must be provided with every brokered loan and for every loan file in which compensation is paid by the lender. Employment Any gaps in employment spanning 1 month must be explained and documented by the Borrower in writing. A written Verification of Employment (VOE) will be required when income detail relied upon to determine a borrower s repayment ability is not clearly documented and/or itemized on W-2 forms or paystubs. This may be applicable for income sourced from commissions, bonus, overtime, or other income. However, a written VOE may only be used as supporting documentation and cannot be used in lieu of pay stubs, W-2s or Tax Returns. Verification of employment or self-employment confirmation which confirms the borrower s employment status is required for all borrowers whose income is used for qualifying purposes. For wage income, a verbal verification of employment (VVOE) must be completed within 10 business days before the Note date (or funding date for escrow states); For self-employed income, verification of self-employed businesses by third-party sources must be obtained within 30 calendar days from the Note or funding date. Self-Employment: Self-employed borrowers are defined as individuals who have 25% or greater ownership interest or receive a 1099 statement to document income Income from self-employment is considered stable and effective if the Borrower has been self- 12/4/14 Correspondent Lending Page 8 of 19

9 employed for two or more years and the income trend has been level or increasing. Declining income trends are generally not acceptable A borrower employed by a family owned business is required to provide evidence that borrower is not an owner of the business, which may include: Copies of signed personal tax returns, or A signed copy of the corporate tax return showing ownership percentage Escrow Holdbacks Escrow Waivers Ineligible California (CA): Escrows may be waived at the borrower s request without conditions District of Columbia (DC): Escrows may be waived at the borrower s request without conditions Other states: May be waived at the borrower s request, subject to o A review of title work for evidence of tax liens or other evidence of failure to pay tax obligations; o o File cannot reflect evidence of lapsed hazard insurance coverage; To the extent the borrower has previously obtained mortgage loans without escrow requirements, the loan documentation should support a history of timely independent payment of escrow items. Borrowers with a prior history of delinquent taxes or lapses in homeowner s coverage are not eligible to waive escrows. Loans without escrows are subject to a loan-level price adjustment. At a minimum, taxes and hazard insurance must be escrowed in order to avoid the loan-level price adjustment. Financing Types PLEASE NOTE: Non-FNMA Standard Purchases Loan to value ratios are calculated based on the lesser of the purchase price or the appraised value of the subject property. All refinance transactions require the completion of a net tangible benefit analysis and worksheet. Such worksheet must be completed, signed by the borrower and included in the loan file with supporting documentation. Unless stated otherwise in the following sections, all refinance transactions must meet Continuity of Obligation requirements as described in the Fannie Mae Single Family Selling Guide. Limited Cash-Out Refinance: Pay off of 1 st lien Pay off in whole, the outstanding principal balance of the existing subordinate mortgage that was used to acquire the subject property (purchase money 2 nd lien only) OR The payoff of any seasoned non-first lien mortgages: A seasoned non-first lien mortgage is a purchase money mortgage or a mortgage that has been in place for a minimum of 12 months. A seasoned equity line is defined as not having any draws greater than $2,000 in the past 12 months. Withdrawal activity must be documented with a transaction history for the Line of Credit Pay related closing costs and prepaid items The inclusion of any delinquent property taxes, HOA dues, tax liens, garnishments, or judgments is not eligible and should not be included in the new loan amount. Disbursed cash-out to borrower not to exceed 1% of the principal amount of the new loan or $2,000, whichever is less. If a prior Cash-Out transaction (as determined by the HUD-1) is now being refinanced as a Limited Cash-Out refinance within 6 months of the prior transaction (as determined by the Note date), it will be considered a Cash-Out Refinance. Borrower must have 12 months minimum ownership to base LTV on appraised value, otherwise the lesser of purchase price or current appraised value will be used. The ownership date is measured from the date of acquisition (HUD-1 closing date) to date of application. Property may not be listed for sale on the date of the loan application Refinances subject to Texas Regulation 50(a)(6) are NOT eligible Refinances not subject to Texas Regulation 50(a)(6) are eligible Title must be in borrower s name(s) at the time of application for refinance transactions. Inherited properties are eligible may not be refinanced prior to 12 months ownership Cash-Out Refinance: Pay off of liens secured by the subject property only, to include unseasoned (i.e. open less than 12 months) junior liens exceeding the 2% or $2,000 draw limit. 12/4/14 Correspondent Lending Page 9 of 19

10 Cash proceeds (outside of payment of liens secured by the subject property) are permitted and may not exceed $300,000. Proceeds may be disbursed directly to the borrower(s) or any other payee. Pay related closing costs, financing costs, and prepaid items; Refinances subject to Texas Regulation 50(a)(6) are NOT eligible Refinances not subject to Texas Regulation 50(a)(6) are eligible Properties that have been listed for sale within six (6) twelve (12) months of the loan application are not eligible Inherited properties may not be refinanced prior to 12 months ownership Property must have been owned by the Borrower(s) for at least six (6) months prior to the application date Borrower must have 12 months minimum ownership to base LTV on appraised value, otherwise the lesser of purchase price or current appraised value will be used. The ownership date is measured from the date of acquisition (HUD-1 closing date) to date of application. Title must be in borrower s name(s) at the time of application for refinance transactions. Seasoning for Cash Out Refinance: Borrower must have 12 month minimum ownership to base LTV on appraised value; otherwise the lesser of purchase price or current appraised value will be used. The ownership date is measured from the date of acquisition (HUD-1 closing date) to date of application Delayed Purchase Refinance: Defined as the refinance of a property purchased by the borrower for cash within 6 months of loan application; Underwritten as a rate & term refinance; Available for primary residence only; The HUD-1 from the original purchase must be included in the loan file. Documentation must show the down payment and closing costs were from the borrower s own funds (borrowed, gift or shared funds are not allowed). Loan to value ratios are calculated based on the lesser of the purchase price or the appraised value of the subject property Construction to Permanent Financing: Borrower(s) must have legal title to the land prior to the application and must be named as the borrower on the construction financing. LTV/CLTV/HCLTV ratios o For lots owned 12 months from subject transaction s application date, ratios are based on current appraised value; o For lots owned < 12 months, ratios are based on the lesser of the current appraised value of the property or the total acquisition costs (sum of construction costs and the purchase price of the lot) o Single Close construction to Permanent financing is not eligible o Transactions will be underwritten as a refinance New York Consolidation, Extension & Modification Agreement (NY CEMA) For all Impac refinance products, property located in the state of New York may be structured as a Consolidation, Extension, and Modification Agreement (CEMA) transaction. The most current version of Fannie Mae/Freddie Mac Uniform Instrument (Form 3172) must be used. The following documentation must be provided: NY Consolidation, Extension and Modification Agreement (Form 3172) Original Note(s) Original documents signed by the borrower Gap Note and Gap Mortgage, if applicable Consolidated Note Original documents signed by the borrower Exhibit A Listing of all Notes & Mortgages being consolidated, extended and modified Exhibit B Legal description of the subject property Exhibit C Copy of the consolidated Note Exhibit D Copy of the consolidated Mortgage Lost Note Affidavits are not an acceptable substitute for any of the required documents. If original documentation cannot be provided per above, then a CEMA is not allowed. Geographic Locations/Restrictions, as applicable Eligible states are as follows: Correspondent: All states except Maine and Missouri 12/4/14 Correspondent Lending Page 10 of 19

11 See New York Consolidation, Extension & Modification Agreement (NY CEMA) in Financing Types section above. Additional restrictions as follows: Texas Cash-out 50(a)(6) is ineligible State specific regulatory requirements supersede all underwriting guidelines set forth by Impac. High-Cost Mortgage Loans Higher-Priced Mortgage Loans Income Impac does not originate or purchase high-cost mortgage loans (12 CFR ) Higher-priced mortgage loans (12 CFR ) are prohibited on this program. (APR < APOR + 1.5%) All income documentation must be dated within 90 days of the closing date. Income Analysis Worksheet The income for each borrower who will be obligated on the mortgage, and whose income is relied upon in determining the ability to repay, must be analyzed to determine whether the income level reasonably may be expected to continue. The loan file must include a worksheet demonstrating income calculation methodology and debt considered to qualify each loan in accordance with the ATR/QM Final Rule and the standards in appendix Q. No specific form is required, however, the worksheet must clearly and fully document the underwriter s determination of qualifying income along with applicable payment and debt obligations that result in the debt to income ratio of less than or equal to 43% T Required for all loans. Most recently filed: Salaried: 2 years of IRS tax return transcripts Self-Employed: 2 years of IRS tax return transcripts Tax transcripts must match documentation in the file In the case where taxes have been filed and the tax transcripts are not available from the IRS, the IRS response to the request must reflect No Record Found Unfiled Tax Returns for the prior year s tax return Between January 1 and the tax filing date (typically April 15), borrowers must provide, as applicable: o IRS Form 1099 and W-2 forms for the prior year o Current year profit and loss (signed by borrower) o Year-end profit and loss for prior year (signed by borrower) o Balance sheet for prior calendar year if business is a sole proprietorship o For loans closing in January and prior to the receipt of W-2s, may use the prior year s year-end pay stub. For borrowers using 1099s, evidence of receipt of 1099 income must be provided. Between the tax filing date and the extension expiration date (typically October 15), borrowers ust provide, as applicable: o Copy of filed extension o IRS Form 1099 and W-2 forms for the prior year o Current year profit and loss (signed by borrower) o Year-end profit and loss for prior year (signed by borrower) o Balance sheet for prior calendar year if business is a sole proprietorship o After the extension expiration date, loan is not eligible without prior year tax returns. Salaried Income Requirements Full Documentation Program Required Standards 4506-T signed at application and closing, is required for all transactions W-2 forms or personal tax returns, including all schedules, for prior two years Most recent YTD paystub up through and including the most recent pay period (at time of application). Pay stub must cover at least 30 days. Two (2) years personal tax returns when the borrower has twenty-five percent or more ( 25%) ownership interest in a business. If income from ownership interest constitutes more than 25% of income used for qualifying purposes, the borrower is considered self-employed and must provide income documentation per self-employed income requirements. All income documentation must be dated within 90 days of the date the Note is signed Most recent two (2) years tax transcripts are required for each borrower whose income is utilized as a source of repayment Generally, when the documentation used to verify income is from the same calendar period as the tax transcripts, the information must match exactly See Employment for VOE requirements 12/4/14 Correspondent Lending Page 11 of 19

12 Self-Employed Income Requirements The following documentation must be provided for each borrower whose income is used to qualify: Sole Proprietorship o Personal tax returns, including all schedules for the most recent two tax years; o IRS Tax Transcripts for the corresponding returns provided o Year-to-date P&L statement and balance sheet signed and dated by the borrower. Corporations, S Corporations, Partnerships (General, Limited), Limited Liability Companies o Personal tax returns, including all schedules, for the most recent two tax years; o K-1s from most recent two tax years, showing ownership percentage. K-1s are not required if the source is reporting positive income and the income is not used for qualification. If K-1s show a loss, they are required, regardless if they are used for qualifying purposes. o Business tax returns, including all schedules, for the most recent two tax years are required if the borrower has an ownership percentage 25%; they are not required if reporting positive income via a K-1, and the income is not used for qualification purposes. o Year-to-date P&L statement and balance sheet o IRS Tax Transcripts for the corresponding returns provided. Bonus, Overtime, or Commission Income If more than 25 percent of income used to qualify is from bonus, overtime or commission income, the following requirements apply: In addition to items required for salaried borrowers, the following additional documents must be provided to further support the calculation of income: o A written Verification of Employment (Fannie Mae form 1005 or similar) which clearly shows the amount of bonus, overtime and/or commission earned o The two most recent years of personal income tax returns are required for commission income. An average of bonus, commission or overtime income for the past two years must be developed. A longer period may be required if income varies significantly from year to year. Borrowers whose commission income was received for more than one year, but less than two years may be considered favorably if the underwriter can: o Document the likelihood that the income will continue, and o Soundly rationalize accepting the income Unreimbursed business expenses must be subtracted from gross income An earnings trend for overtime and bonus income must be established and documented. If either type of income shows a continual decline, written sound rationalization for including the income to qualify the borrower must be provided, or the income should not be used. Commission income earned for less than one year is not considered effective income. Exceptions may be made for situations in which the borrower s compensation was changed from salary to commission within a similar position with the same employer. A borrower s income may also qualify when the portion of earnings not attributed to commissions would be sufficient to qualify the borrower for the mortgage. Passive Income: A minimum two (2) year history of receiving passive income from the same source is required Verification of existence of current portfolio generating passive income to support continuance for three or more ( 3) years Most recent two (2) years IRS Form 1040 with all schedules Most recent two (2) years IRS Tax Return Transcript Rental Income: Rental income is an acceptable source of stable income if it can be established that it is likely to continue and is documented per these guidelines. In all cases, rental income must be documented with both a current lease and the most recent two year s tax returns. Property Eligibility Primary Residence rental income can only be used if the primary residence is a 2-unit home Second Home rental income cannot be used Investment Property For investment properties owned by the borrower, rental income must be documented with the borrower s most recent two years tax returns including Schedule E and current lease. Exception boarder income may be considered on primary residences and second homes if the requirements under Fannie Mae Selling Guide Part B are met 12/4/14 Correspondent Lending Page 12 of 19

13 Subject Property only applicable on 2-unit primary residences If the borrower has history receiving rental income on the subject property, rental income must be supported and documented by an appraisal (Form 1025) and one of the following: o Most recent two years tax returns, including Schedule E o Current lease agreement If the borrower does NOT have history receiving rental income on the subject property, rental income must be supported and documented by an appraisal (Form 1025) and a lease Departure Residence Current Residence Pending Sale If the borrower s current primary residence is pending sale, but the new primary residence transaction will not close with title transfer to the new owner prior to the closing of the subject transaction for a new primary residence, both the current PITIA and the proposed PITIA must be used in qualifying the borrower for the subject transaction unless: o In addition to standard reserve requirements, six months reserves are documented for the current residence, and o A copy of the fully executed sales contract on the current residence is obtained with a scheduled closing date no later than 60 days after the subject transaction closes, and o Confirmation that any financing contingencies have been removed. Second Home if the borrower is converting a primary residence to a second home, rental income cannot be considered in qualifying. Both the current and proposed PITIA must be used to qualify for the new transaction. Investment Property if the borrower is converting a primary residence to an investment property, rental income on the property can only be used if the borrower has at least 25% equity in the property. The borrower s equity position must be documented with an appraisal, minus outstanding liens. The appraisal must be at least an exterior appraisal (i.e., FNMA 2055) and must have an effective date within six (6) months of the closing date for the new primary residence. If the resulting equity is: o Less than 25% equity, rental income cannot be used. o 25% or greater equity, rental income can be used as follows: Obtain the fully executed lease agreement, security deposit from the tenant, and bank statement showing the deposited security funds Net rental income is 75% of the gross rent Partial or No Rental Income on Tax Returns Property acquired during or subsequent to the most recent tax filing year, obtain the HUD-1 to confirm the purchase date and the following: o Schedule E showing the partial year rental income and expenses, and o Lease agreement (the lease must be for a term of at least one year). Rental property was out of service for an extended period, Schedule E must support the unit being out of service for all or a part of the year. The costs associated with a significant renovation should be reflected as Repairs and support the amount of time the unit was out of service. Fair Rental Days on Schedule E is the number of days the unit was in service, which should reflect a reduction in accordance with the time spent off the market during renovation. A copy of the current lease is required (the lease must be for a term of at least one year). Calculating Rental Income When Schedule E of the tax returns is used to calculate rental income, depreciation, interest, taxes and Insurance should be added back to the cash flow. If the property was in service: For the entire tax year, the rental income must be averaged for 12 months. For less than the full year, the rental income must be averaged over the number of months the property was used as a rental unit. When current lease agreements are used, calculate the rental income by multiplying the gross rent by 75% Treatment of Rental Income (or Loss) 2-unit Primary Residence monthly qualifying rental income on the rented unit is added to the borrower s total monthly income and the full PITIA must be included in the total monthly obligations Investment Properties o If monthly qualifying rental income minus the full PITIA is positive, it must be added to the borrower s total monthly income o If monthly qualifying rental income minus the full PITIA is negative, it must be added to the borrower s total monthly obligations o The full PITIA for the rental property is factored into the amount of rental income (or loss); therefore it should not be counted as a monthly obligation. Refer to Assets/Reserves section for additional reserve requirements. 12/4/14 Correspondent Lending Page 13 of 19

14 Asset Based Income (Asset Amortization) Requirements Asset amortization is a calculation used to generate a monthly income stream from a borrower s personal assets. It can be combined with other income such as Social Security, Pension or other investment income. Eligibility Requirements (Asset Amortization) Maximum 70% LTV for Primary Residence and Second Homes Only Must meet 43% DTI standard Borrower and Co-Borrower must be individual or co-owners of all asset accounts with no other account holders listed on the documentation 100% of eligible assets must be verified following ATR/QM Final Rule and appendix Q standards Income must support projected earnings and must be expected to continue for a minimum of 3 years All assets must be in a U.S. financial institution No Foreign Assets Borrower and Co-Borrower must have full unrestricted access to the funds and joint accounts to be used must have all account holders on the loan. The sum of eligible assets as defined are net of any discounts and minus any funds used for closing and/or minimum reserves required for the program. Other reported earnings from Capital Gains or Interest/Dividend already considered and averaged as qualifying income cannot be included or double counted. Eligible Asset Types (Asset Amortization) Considered assets must be comprised of the following readily marketable assets which must be available to the borrower with no penalty and are limited as follows: Bank Deposits Checking, Saving, Money Market accounts = 100% Publicly traded stocks and bonds = 65% (stock options not allowed) Mutual Funds = 65% Retirement Accounts o 401(K) plans or IRA, SEP or KEOUGH accounts = 65% (These can only be used if distribution is no already set up) Asset Amortization (Annuitization, Asset Depletion) Calculation Policy: Eligible asset amount to be amortized over a 360 month period (30 years) Rate of return is the 1 Year LIBOR index as published within the Wall Street Journal Social Security and Pension Income Benefits (for children or surviving spouse) with a defined expiration date must have a remaining term of at least three years. Must be verified by a Social Security Administration award letter, copies of the borrower s previous 12 months bank statements to confirm regular payment deposits, or signed personal tax returns from the prior two years. Pending or current re-evaluation of medical eligibility for benefit payments is not considered an indication that the benefit payments are not likely to continue. Non-taxable social security income may be grossed up using the tax rate from the borrower s most recent tax returns. If the borrower is not required to file tax returns, the tax rate used is 25%. Unacceptable Income Income from trailing co-borrowers, stock options and restricted stock grants, any unverified source, income that is temporary or a one-time occurrence, rental income received from the borrower s single family primary residence or second home, retained earnings, education benefits. IRA income distribution IRA distribution must have been received continually for several years and show a 3 year continuance. A borrower who just starts receiving IRA distributions is viewed as high risk and needs to show they can maintain that level of income for 30 years (e.g., 360 monthly payments) Limitations on Other Real Estate Owned Borrower(s) may own a total of four (4) financed 1-4 unit residential properties, including the subject property All financed residential properties (1-4 units), other than the subject property, require an additional six (6) months PITI reserves for each property. Residential property owned free and clear and commercial properties are not subject to this requirement. Investors who demonstrate a rapid acquisition (acquired within the most recent 24 month period) of investment properties will be reviewed cautiously. Underwriter reserves the right to request documentation to evidence the borrower had the funds required to purchase any property acquired within the last 24 months. Loan Amount Minimum: $417,001 1 Unit $533,851 2 Unit 12/4/14 Correspondent Lending Page 14 of 19

15 Maximum: See Eligibility Matrix Mortgage Insurance Non-Warrantable Condos Not required Note: Impac s non-warrantable condominium program does not include condotels. Minimum Loan Amount = $100,000 Subject property must have living area 750 square feet Non-warrantable condominiums must meet the Expanded Criteria and all Standard Fannie Mae Criteria referenced below: Expanded Criteria Commercial Space Single Entity Ownership Investor Concentration Subject Property: Owner Occupied & 2 nd Homes Established Projects New Projects (Presale) Minimum # units sold or under contract (New Projects) Standard Fannie Mae Criteria New & Established Projects Delinquent on HOA dues Insurance Litigation Budget Review Legal Review New Projects Only (as defined by Fannie Mae) Ineligible Projects Non-warrantable Condominium Projects 40% of project total space 20% of total units in project N/A 65% of total units sold or under bona fide contract can be Nonowner Occupied At least 25% of units in the project must be under bona fide contract. There is no minimum on the number of units closed & funded in the project. Non-warrantable Condominium Projects Follow Fannie Mae s definition of New Projects and Established Projects 15% of total units are 60 days delinquent Follow Fannie Mae condo insurance requirements for: Hazard HOA s blanket/master policy HO-6 if interior of unit is not covered by HOA s master/blanket policy Liability HOA s commercial general liability policy Fidelity if applicable Flood if applicable No pending litigation (If litigation does not affect safety, soundness or structural integrity of the property, will consider cases by case) The HOA s projected budget must be adequate, provide for the funding of replacement reserves for capital expenditures and deferred maintenance (at least 10% of the budget). A reserve study may be used in accordance with Fannie Mae guidelines. In addition to representing and warranting that the condo project has been created and exists in full compliance with the state law requirements of the jurisdiction where the condo project is located and all other applicable laws and regulations, Lenders must also represent and warrant as follows with respect to the project s legal documents: Limitations on Ability to Sell/Right of First Refusal Rights of Condo Mortgagees and Guarantors First Mortgagee s Rights Confirmed Amendments to Documents With the exception of the items listed under the Expanded Criteria, all nonwarrantable condominium projects must not be considered ineligible under Fannie Mae B Ineligible Projects. Non-warrantable condominium projects require a Lender Full Review; Limited Reviews are not permitted. A Condominium Project (HOA) Questionnaire is required. All loans secured by non-warrantable condominiums must include the Non-warrantable Certification of Project Eligibility. This Certification must be completed by Impac certifying under which review type and agency guidelines the project was reviewed and qualified. At a minimum, the following documentation must be provided: Project Minimum Documentation Requirements Non-warrantable Form 1073 or Form 1004 (detached condos only), and 12/4/14 Correspondent Lending Page 15 of 19

16 Condominium Non-warrantable Certification of Project Eligibility, and HOA Questionnaire, and Project s Budget (if applicable), and Project s Legal Documents (if applicable), and Documentation verifying insurance coverage in accordance with Fannie Mae guidelines for the: o Subject unit, and o Project Restrictions: Investor maximum exposure is limited to 20% of the units in a project. For projects with 4 units, investor exposure is limited to no more than one (1) of those units. Refer to the Fannie Mae Single Family Selling Guide for complete requirements on condominiums. Occupancy Prepayment Penalty Property Types Primary Residence 1-unit and 2-unit only Second Homes 1 unit only None Eligible 1 2 Unit owner occupied properties 1 Unit second homes Low/Mid/High-Rise condos, Fannie Mae Warrantable o Warrantable Types S, T or U PERS: Projects with an unexpired Final Project Approval through Fannie Mae s Project Eligibility Review Service (PERS) are eligible CPM: Projects with an unexpired approval using Fannie Mae s Condo Project Manager are acceptable in accordance with Fannie Mae guidelines. All supporting documentation must be included in the file. o Limited Review Types P and Q are not eligible for attached condos Detached (site) condos, Fannie Mae Warrantable o Limited Review Types P and Q are eligible for detached condos Non-Warrantable Condominiums (see Non-Warrantable Condos for details) Planned Unit Developments (PUDs), Fannie Mae warrantable Modular Homes Properties with 20 acres Properties with > 10 and 20 o Must be typical for area as evidenced by recent comparables o Maximum 35% land to value o No income producing attributes Leaseholds: In areas where leasehold estates are commonly accepted, loans secured by leasehold estates are eligible for purchase. The mortgage must be secured by the property improvements and the borrower s leasehold interest in the land. The leasehold estate and the improvements must constitute real property, must be subject to the mortgage lien, and must be insured by the lender s title policy. Accessory Units must follow Fannie Mae requirements regarding Accessory Units and Additions without Permits Condominium and PUD Projects Properties secured by Condominium or Planned Unit Development (PUD) projects must meet Fannie Mae s warrantability requirements described in its Single Family Seller guide. A Lender Full Review is required for all attached Condominium projects. A Limited Review is only permitted on detached Condominium projects. At a minimum, the following documentation must be provided verifying full compliance with Fannie Mae warrantability requirements, including insurance, for the particular project type: Project Minimum Documentation Requirements Detached Form 1004, and PUDs Certification of Project Eligibility*, and Documentation verifying insurance coverage in accordance with FNMA guidelines Attached PUDs Form 1004, and Certification of Project Eligibility*, and 12/4/14 Correspondent Lending Page 16 of 19

17 HOA/Project questionnaire, and Documentation verifying insurance coverage in accordance with Fannie Mae guidelines for the: o Subject unit, and o Project (if applicable) Condominium Form 1073 or Form 1004 (detached condos only), and Certification of Project Eligibility*, and HOA Questionnaire, and Project s Budget (if applicable), and Project s Legal documents (if applicable), and Documentation verifying insurance coverage in accordance with Fannie Mae guidelines for the: o Subject unit, and o Project * Impac to certify Restrictions: Investor maximum exposure is limited to 20% of the units in a project. For projects with 4 units, investor limits its exposure to no more than one (1) of those units. Refer to the FNMA Selling Guide for complete requirements on condominiums and PUDs. Ineligible 3-4 unit properties Investment properties Mixed use properties Manufactured Homes or Mobile Homes PUDs that do not meet Fannie Mae eligibility criteria Cooperatives Condo-hotel units (Condotels) Unimproved Land and property currently in litigation Unique properties (including log homes, geodesic domes) Timeshares Properties subject to oil and/or gas leases Working farm and ranches Properties with < 750 square feet of living area Properties with > 20 acres Properties with values significantly in excess of the predominant value of the subject s market area may be ineligible Properties held in a business name Commercial Enterprise (e.g., Hotel, Bed and Breakfast, Boarding House) Zoning violations including residential properties zoned commercial Properties located in Hawaii Lava Zones 1 & 2 Qualifying Rate and Ratios Refer to Eligibility Matrix for DTI requirements Qualifying Rate 15, 30-year fixed Note Rate 5/1 ARM greater of fully indexed rate ( use Note Rate + Margin) or Note Rate plus 2% 1 7/1, 10/1 ARM Note Rate 1 At all times, the qualifying rate must equal the maximum interest rate that may apply during the first five years (subject to any rate adjustment caps) after the date on which the first regular periodic payment will be due. Maximum back-end debt-to-income (DTI) ratio limit is 43% Debt-to-Income (DTI) The debt-to-income ratios must be determined in accordance with the ATR/QM Final Rule and its Appendix Q. Per those requirements, debt includes: the monthly payment on the subject loan 12/4/14 Correspondent Lending Page 17 of 19

18 the monthly payment for Mortgage-Related obligations the monthly payment for any simultaneous loan that the lender knows or has reason to know will be made the current debt obligations including alimony and child support any existing monthly liabilities any future liabilities based on credit inquiries or otherwise disclosed by the borrower Income includes verified gross monthly income, meaning the sum of the Borrower s current or reasonably expected income, including any income from verified assets. Secondary Financing Institutional financing only, not to exceed program LTV/CLTV/HCLTV guidelines Seller subordinate financing is not allowed Negative amortization is not allowed Qualification for Home Equity Lines of Credit (HELOC): If the subordinate financing is a HELOC secured by the subject property, monthly payments equal to the greater of: o The minimum payment required under the HELOC terms considering all draws made on or before closing of the subject transaction; or o 1% of the recorded total line amount regardless of whether the HELOC has a zero balance or a balance greater than zero. For existing HELOCs secured by property other than the subject, use the payment amount shown on the credit report, except: o If the balance is zero, no monthly payment is required to be counted in the recurring liabilities. o If there is a balance but no payment is showing on the credit report or the HELOC is not reflected on the credit report, monthly payments equal to 1% of the total line amount must be used for qualifying purposes. Temporary Buydown Underwriting Not allowed Loan amounts > $1,000,000 require second signature Impac Underwriting Manager review and signature is required for loan amounts greater than $1,000,000 up to and including $2,500,000. Full documentation only This product is manually underwritten (DU/LP not required) All loans must be underwritten in compliance with Ability-to-Repay standards set forth in Appendix Q. Refer to investor Residential Credit Policy Guidelines for current underwriting guidelines If a topic is not specifically addressed within this product description, within Appendix Q, or the investor Residential Credit Policy Guidelines, the FNMA Selling Guide policies will apply All loans must satisfy stable monthly income, ratios, assets, reserves and acceptable credit reputation guidelines Investor will not purchase High Cost Loans (Section 32/HOEPA) Higher Priced Loans (HPML) Higher Priced Covered Transactions or QM with Rebuttable Presumption Mortgages classified as threshold, predatory high risk home loan, or covered loan (or similarly classified loans using different terminology) under any applicable federal, state or local law. Power of Attorney must meet Fannie Mae requirements. Maximum Age 120 days prior to date of Note. Additional Loan File Documentation Evidence of compliance with both ATR and QM rules (no specific form is required) Income Analysis Worksheet The loan file must include a worksheet demonstrating the income calculation methodology and debt considered to qualify each loan in accordance with the ATR/QM Final Rule and the standards in appendix Q. No specific form is required, however, the worksheet must clearly and fully document the underwriter s determination of qualifying income along with applicable payment and debt obligations that result in the debt to income ratio of less than or equal to 43%. Points and Fees Worksheet (aka Fee Details Worksheet) To evidence compliance with QM points and fees, the loan file must include a clear itemization of fees and application of all credits that indicate paid by/to which is then supported by a HUD-1 settlement statement. No specific form is required. Underwriter may request a copy of any inspection where repairs or remediation (monetary or other) are specified 12/4/14 Correspondent Lending Page 18 of 19

19 in a purchase contract, regardless of whether repairs have been completed. Fraud Electronic fraud detection/qc report is required for each loan package purchased by investor. Report must cover standard areas of quality control including borrower validation, Social Security verification, property information and MERS. # # # 12/4/14 Correspondent Lending Page 19 of 19