FHA Lending PROCESS & PRODUCT OVERVIEW. Initial Steps. Full File (Complete Package) Submission Requirements

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1 Wholesale Lending Product advantage. Broker advantage. FHA Lending PROCESS & PRODUCT OVERVIEW Initial Steps 1. Obtain Case Number through FHA Connection Print CAIVRS Authorization from FHA Connection using the following path---single Family Origination, Case Processing, then CAIVRS Authorization to retrieve information. CAIVRS checks for any unpaid federal indebtedness of borrowers. Brokers must have access to the FHA connection in order to pull a CAIVRS number. 3. Print Limited Denials of Participation (LDP) and General Services Administration (GSA) forms. The LPD and GSA check for Parties (sellers, listing agents, loan officers, attorneys) excluded from HUD procurement. Broker must have access to FHA Connection. Locate information using the following path---single Family Origination, FHA Approval Lists, Limited Denials of Participation List and GSA Lists. 4. Order FHA appraisal from HUD approved appraiser. Check with your AE or FHA Product Manager to validate the appraiser is not on CitiMortgage s Watch List. Each Broker must have a case number to order the appraisal. 5. Register loan through CitiMortgage--- Use Product: GMNA II Sub-Product: Choose stimulus act if the loan amount exceeds the standard maximum mortgage amount for that county. Full File (Complete Package) Submission Requirements The Broker must fax the complete Full Submission File, including the appropriate completed FHA Checklist and supporting documents to (877) Full File Submissions must include the following: Purchase Transactions, Cash Out, and Full Rate and Term Refinances: 1. Fully Completed Submission Checklist (should also include any special notes/clarifications pertaining to special circumstances) 2. Completed and Fully Executed Initial Final Typed Completed and Fully Executed A 5. Completed MCAW Initial (to include income calculations broker used) 6. Completed GFE 7. DU/LP Findings, and Credit Report assigned/released to CitiMortgage 8. Fully Executed Sales Contract 9. Fully Executed Real Estate Cert and Amendatory Clause 10. FHA Case Assignment (CitiMortgage as Sponsor) 11. LDP/GSA 12. All Income/Employment Documentation (as required by AUS findings and/or 4155 to support effective income) 13. All Asset/Funds to Close Documentation 14. Appropriate and Completed Gift Documentation as required 15. VOM as applicable 16. Bankruptcy, CCCS Documentation 17. Payoff Letter 18. Fully executed Mortgage Broker Fee Agreement 19. Rate Lock Commitment 20. All necessary disclosures as applicable, fully executed: Notice of Assumption, Transfer of Servicing, ECOA, ARM Disclosure, Informed Consumer Choice Disclosure, Important Notice to Homebuyer, Truth In Lending, etc. Please Note: the Appraisal may be provided once C+I Approval has been issued and/ or subject property is determined.

2 Streamline Refinances with and without Appraisals (FHA to FHA only): 1. Fully Completed Submission Checklist 2. Fully Executed Initial Final Typed Completed and Fully Executed A 5. Completed MCAW (initial) 6. Completed GFE 7. Mortgage Note 8. Payoff Letter 9. VOM or Mortgage Trade Line 10. FHA Case Assignment (CitiMortgage as Sponsor) 11. Refinance Netting Authorization 12. LDP/GSA 13. Fully executed Mortgage Broker Fee Agreement 14. Rate Lock Commitment 15. All necessary disclosures as applicable, fully executed: Notice of Assumption, Transfer of Servicing, ECOA, ARM Disclosure, Informed Consumer Choice Disclosure, Truth In Lending, Important Notice to Homebuyer, etc. Please send overnight packages to: CitiMortgage Wholesale 1000 Technology Drive Mail Stop 100-A O Fallon, Missouri Please Note: Overnight loan submissions will be delayed one day for receipt into underwriting. Underwriting Once the loan has been processed as above it will be assigned to the Underwriting Queue and Underwritten on a first in first out in order of receipt date. If the Underwriting Decision is subject to any conditions, the Broker should fax all conditions to (877) Conditions will be reviewed in order of receipt. As a rule, piecemealed conditions are not acceptable. Any documentation necessary to satisfy outstanding conditions should be sent at one time to maximize efficiency of the overall process. It is also important to note that the Underwriters typically manage a significant pipeline of active files and will not be able to review multiple conditions sets/changes for any given loan during the same business day. Appraisals may also be sent to broker.aaprocess@citi.com In the event that the Underwriter is not able to issue an Approval, the Broker will be called to discuss and determine next steps (additional conditions, counter offer, decline, etc). Once the Underwriter has issued a Final Approval and all underwriting conditions are cleared, the loan will be moved to the Closing Queue. This file will be in a clear to close (CTC) status once the closing has been scheduled and it is on the Closing Calendar. Processing Processing will reconcile the file and complete the Welcome Package and Disclosures. Should it be deemed that the file is not a Full Submission, an outbound call will be made to the Broker to alert them of any missing documentation and set expectations as to when the documents will be provided. The receipt date will be the date the submission is deemed to be complete. Processing broker.aaprocess@citi.com.

3 Scheduling a Loan Closing FHA loans can be scheduled once a loan number exists. FHA Refinances can be scheduled once it has a Clear-to-Close (CTC) status. The following options are available for closing: 1. Broker Web 2. Calling Customer Service at (888)-987-CITI (2484) 3. ing the Closing Box (broker.aaclose@citi.com) 4. Faxing to (866) Please Note: CitiMortgage reserves the right to reschedule or postpone the closing of the loan if all documentation necessary to close the loan is not submitted at least 48 hours prior to closing, or if other matters arise that affect the underwriting condition of the loan. Pre-Closing Documentation Requirements: 1. Broker Fee Demand Submit at: 2. Preliminary HUD Directly from the Title Agent 3. Corrected Loan Application/1003 (if applicable) 4. Tax Information 5. Title Commitment 6. Closing Protection letter 7. Closing Wire Instructions 8. Hazard Insurance Binder (Home Owner Insurance) 9. Flood Insurance (if applicable) 10. Subordination Agreement (if applicable) Important Notes: Currently, CitiMortgage requires that the borrower(s) pay all interim interest on all CitiMortgage loans at closing. No third-party, including seller, is permitted to cover any part of the Interim Interest. Payoffs on all FHA/VA loans must reflect loan is in a current status for the month in which it is closing (example: 9/28 closing must show 9/1 payment made on payoff, or, new payoff will be required). FHA Streamline Refinances (with or without appraisal) and VA IRRRL s MUST be submitted NLT 10th of each month for same month closing. Customer Service Brokers may call FHA/VA Customer Service at (888) 987-CITI (2484) for all loan level and/or process related questions and assistance. Please Note: Underwriters are available to discuss specific loan conditions on a limited basis, please coordinate this request with Sales. Credit Policy* FHA Available in All States: Texas 50(a) (6) loans are not permitted on FHA loans. Minimum FICO: 1. AUS (DU or LP) = Manual Underwrite = Cash Out or DTI >43% = All Streamline Refinances and Loans using Non-Traditional Credit = NO minimum FICO Debt Ratios: 1. Standard = 31%/43% 2. Energy Efficient = 33%/45% Automated Underwriting Options: It is highly recommended that all FHA/VA full doc loans be submitted through one of the following AUS: 1. Desktop Underwriting (DU) 2. Desktop Originator (DO) 3. Loan Prospector (LP) Note: Loan can be submitted to either DU or LP, but not both. Manual Underwrites are available on new submissions. Broker must indicate in the file that a manual underwrite is being requested. For all DU Refer/Eligible or LP Refer decisions (point of sale decision) CitiMortgage will consider a manual underwrite with offsetting compensating factors and a copy of the AUS findings being submitted at time of submission. *Subject to change without notice. Eligible FHA Programs at CitiMortgage: 1. Full Doc Refinance 2. Full Doc Purchase 3. FHA Streamline Refinance with appraisal 4. FHA Streamline Refinance without appraisal Note: CitiMortgage only originates loans under the 203B & 234B sections of the act.

4 Eligible Products: 1. FHA Fixed Rate 2. FHA 1-Year Adjustable Rate (1% annual/5% maximum) 3. FHA Hybrid Arm (3/1 Arm-fixed rate for 1st three years) Occupancy: 1. Primary Residence Only (FHA) Loan Purpose: 1. FHA: Purchase Rate and Term Refinance Cash Out Refinance (FHA will insure up to 95% of the appraiser s estimate of value provided certain conditions are met; minimum FICO is 580 regardless of AUS finding. If mortgage exceeds $417,000 can only do 85% cash out.) Eligible Properties (Manufactured Homes NOT eligible): 1. FHA: 1 Unit (Condo & PUD), 2-4 Unit Reserve Requirements: 1. FHA: 1-2 Unit, None Required 2-4 Unit, 3 Months PITI Additional Information Hazard and Flood Mortgagee Clause Address: CitiMortgage, Inc. Its Successors and/or Assigns Account Number P.O. Box 7706 Springfield, OH Servicing Customer Questions: CitiMortgage, Inc. Customer Services P.O. Box St. Louis, MO (800) Customers may also visit to obtain up-to-date account information. FHA Pricing: See CitiMortgage rate sheet. Please Note: All loans must be submitted through the Mortgage Calculator (see CitiMortgage External Guide) to determine eligibility for new loan limits and for possible pricing adjusters. Subordinate Financing: 1. FHA: Not permitted except for limited instances, see program and agency guidelines.

5 FHA Frequently Asked Questions 1. Does the $ Admin Fee include ALL fees? Yes. 2. Must borrower(s) submit a letter of explanation for all derogatory items? Yes. 3. On purchase transactions can seller or 3rd party contribute or pay all Interim Interest? No. Borrower(s) must pay all Interim Interest. 4. What is the maximum DTI allowed? Guideline is 31/43%. 5. Will CitiMortgage consider DTI exceptions >43%? Yes, with strong compensating factors. 6. Can the mortgage be delinquent at time of underwriting? No. The mortgage can be due for current month in which loan is closing. If the loan does not close within the month the payment is due then a payment must be made and verification of such provided by CMI. 7. Is there a cut-off or last day received for refinances to close? CitiMortgage will ask that the file be submitted NLT the 20th of the current month in which the loan is scheduled to close. Closing docs must be received a minimum 48 hours prior to closing. 8. Are there exceptions to the minimum FICO scores? No. 9. Can I draw docs for FHA loans on-line? Not at this time. 10. Does CMI declining markets apply to FHA loans? LTVs not subject to declining markets. 11. What are the Appraisal Requirements for Declining Markets? A second appraisal is required where the LTV is 95% or greater and the appraiser or lender determines the property is a declining market. This policy is effective for case assignments dates on April 1st or later and when the loan amount exceeds $417,000 (not including UFMIP). 12. Does CMI sponsor new FHA brokers? Not at this time. 13. Does CRA Incentive apply to FHA loans? Yes. 14. What is the maximum allowable YSP? 4.00 on fixed and 1.50 on ARMs. Total income cannot exceed Does CMI close and fund FHA loans using Interest Credit the first seven days of the month if the loan did not close by prior month-end? Yes. 16. Are Down Payment Assist Loans (DPA) permitted? Yes. 17. What is the difference between an FHA full eagle and mini eagle? CMI is a full eagle FHA lender with HUD and therefore originates, underwrites, funds and services FHA loans. A mini eagle (broker) can only originate. 18. Does CMI originate FHA from other full eagle lenders? HUD actually allows two full eagles to do FHA loans together with a principal/agent relationship. However, CMI Wholesale does not participate in this process. 19. Must appraisal be submitted at time of loan submission? No. But, it is recommended for improved service levels. 20. Does CMI originate FHA Rehab loans? No. 21. What is CitiMortgage s Sponsor ID Number? Note: Underwriting turn times are subject to the Broker partner s compliance with the requirements of the program, including the timely submission of all information needed. Failure to submit information when required will delay your turn times. All loans are subject to underwriting and approval by CitiMortgage, Inc., and are subject to all applicable product guidelines and parameters then in effect. CitiMortgage, Inc. may require additional information other than that set forth in the FHA Streamline Checklist as a result of underwriting the loan file. Please consult the Wholesale Lending Guide for additional information on product guidelines and parameters.

6 Glossary of FHA Terms BCIS Bureau of Citizenship and Immigration Services. FHA borrowers must have a valid social security number. CAIVRS Credit Alert Interactive Voice Response System. If CAIVRS indicated the borrower is delinquent on any Federal/Government obligation the borrower in not eligible for an FHA loan. CHUMS Computerized Homes Underwriting Management System (CHUMS) identification number-this allows the DE Underwriter to submit to TOTAL Scorecard and review results for loan consideration. Consumer Handbook on ARM Booklet (CHARM) The booklet must be given to every applicant for an ARM loan no later than date of application. DE Direct Endorsement, Fully delegated to underwrite FHA loans. Fees Loan origination fees may not exceed 1% of the Base loan amount of the mortgage. FHA Federal Housing Association created in FHA Amendatory Clause An Amendatory Clause must either be included in the sales contract or executed by the borrower(s) and seller(s) when the borrower has not been informed of the appraised value. FHA ARM Disclosure Must be given at time of loan application for all FHA ARM loans. Must include an example of the monthly payment of principal and interest based on the maximum amount the interest rate can increase at each adjustment and throughout the life of the loan. FHA Real Estate Certification The borrower, seller and the selling agent involved in the transaction must certify that the terms and conditions of the sales contract are true to the best of their knowledge. FHA Secure Is a refinancing option that gives credit worthy homeowners who were making timely mortgage payments before their own reset but are now in default. CMI Wholesale does not offer. For Your Protection-Get a Home Inspection The form must be given to the borrower at application for purchase loans. However, the form was changed so a signature is not required and it no longer needs to be part of the case binder. Full Eagle DE underwriting authority. GNND Good Neighbor Next Door Program available to law enforcement officers, teachers and firefighters and emergency medical technicians whereby HUD offers a substantial incentive in the form of a discount of 50% from the list price of the home in exchange the borrower commits to live in the property as primary residence for 36 months. HUD owned houses only. Sales incentives apply to HUD owned houses. GSA The government-wide General Services Administration s (GSA) List of parties Excluded from Federal Procurement or Non procurement Programs. If the name of any party to the transaction appears on either list (LDP or GSA), the application is not eligible for mortgage. May be accessed through HUD Department of Housing and Urban Development. In 1965 FHA became part of HUD. HUD/Settlement Cost Booklet This booklet is required, by RESPA, to be given to the borrower at the time of loan application for ALL types of loans, not just FHA. HUD/VA Addendum to the Application (92900-a) Initial addendum accompanies the URAL to meet the requirement that a signed application is submitted to underwriting. Important Notice to Homebuyer (92900-b) This form discloses information concerning the loan, discrimination, insurance premiums, loan fraud, prepayments, interest rates and discount points, etc. Informed Consumer Choice Disclosure Required to be given at or prior to the time of loan application for all FHA loans. Intended to assist borrowers in comparing the costs of a FHA loan vs. similar conventional loans. This disclosure must be given to prospective borrowers that may qualify for both FHA insured financed and a conventional mortgage product. LDP Limited Denial of Participation List. MCAW MCAW or HUD PUR (Mortgage Credit Analysis Worksheet) contains almost every aspect of the FHA loan. Mini Eagle Has no underwriting authority (typically our Broker Partners). MIP Monthly Mortgage Insurance Premium, not financed into the loans but included with the regular mortgage payment. Monthly MIP.50% for 30 year and.25% for 15 year. Neighborhood Watch HUD s Early Warning System website Can access via FHA Connection and review Lender performance, comparisons, etc. NPRA Non Permanent Resident Alien. An individual who has the right to live and work in US for a limited time. PRA Permanent Resident Alien. An individual who has the right to live and work in the US for an indefinite amount of time. Principal/Agent One Lender originates, another underwrites. RESPA The Real Estate Settlement Procedures Act. Section 203(b) Mortgage Insurance for One - Four Family Houses. Section 203(k) Loans for Rehabilitation. CMI Wholesale does not offer. Section 234 Mortgage Insurance for Condominium units. Section 251 Insurance for Adjustable Rate Mortgages. Sponsor/Loan Correspondent Correspondent must be Sponsored by DE lender, who closes and funds. TOTAL Technology Open to Approved Lenders (FHA AUS) Scorecard FHA s TOTAL Mortgage Scorecard evaluates the overall creditworthiness of the applicants based on a number of credit variables and, when combined with the functionalities of the AUS, indicates a recommended level of underwriting and documentation to determine a loan s eligibility for insurance by FHA. Taken together, TOTAL and the AUS either conclude that the borrowers credit and capacity for repayment of the mortgage are acceptable or will refer the loan application to a Direct Endorsement (DE) underwriter for further consideration and review. UFMIP Up Front Mortgage Insurance Premium. Usually financed into the loan.

7 URLA Uniform Residential Loan Application. Traditional application document and should be signed and dated by all borrowers. Case Processing Functions (FHA Connection) Case Number Assignment Case Number Assignment consists of three functions that are listed below: Establish a New Case Establish a New Case allows lenders to establish a new case in the Computerized Home Underwriting Management System (CHUMS). (Last Revised 07/30/02) Update Existing Case Update Existing Case allows the lender, its agent, or sponsor to correct case data entered during the establishing of the case prior to the endorsement of the case. (Last Revised 08/07/02) Holds Tracking Holds Tracking allows lenders to monitor the Home Ownership Center s review of a case that was held for a Duplicate Address or HOC Processing error or on streamline refinance cases that are held when the refinance authorization information cannot be accessed. (Last Revised 07/08/02) Appraisal Logging Appraisal Logging allows lenders to add, review, and update appraisal information if it is a prerequisite to FHA insurance. (Last Revised 07/09/02) Insurance Application Insurance Application allows lenders to add, review, or update insurance application data for a case prior to endorsement. (Last Revised 07/10/02) HECM Insurance Application HECM Insurance Application allows a lender to add, review, and update insurance application data on a Home Equity Conversion Mortgage (HECM) case prior to endorsement. 203k Case Close-Out 203k Case Close-Out allows lenders to close out an endorsed 203(k) case by electronically certifying that required documents have been reviewed and verified for accuracy. Appraiser Reassignment Appraiser Reassignment allows lenders to assign a case to another FHA approved appraiser prior to the logging of the appraisal. (Last Revised 08/21/02) Borrower/Address Change Borrower/Address Change allows lenders to review and update the borrower information, property address, and PUD/Condo details prior to endorsement. (Last Revised 07/10/02) CAIVRS Authorization CAIVRS Authorization lists any information regarding default, claim, judgment, or foreclosure reported on an applicant s past government loans or guarantees. Case Cancellation Case Cancellation is no longer available. Lenders must contact the Home Ownership Center that covers the case and request the cancellation of the case. (Last Revised 08/21/02) Case Query Case Query function lists general case information regarding the property address, case type, appraiser, Up front Mortgage Insurance Premium (UFMIP), and insurance status. (Last Revised 07/10/02) Case Transfer Case Transfer allows a lender who is currently assigned to the case to transfer the case to a new lender, sponsor, or both. (Last Revised 08/21/02) Conditional Commitment Conditional Commitment allows the originator or sponsor/agent to view and print the Conditional Commitment form issued by HUD for a HUD-processed case. Firm Commitment Firm Commitment allows the originator or sponsor/agent to view and print the Firm Commitment form issued by HUD for a DE test (preclosing) case or a HUD-processed case. Inspector Assignment Inspector Assignment allows lenders to assign an inspector to a case and to record the completion of compliance inspections. MIC/NOR List MIC/NOR List allows a lender to request a list of cases that were either recently: Endorsed for mortgage insurance and electronically issued a Mortgage Insurance Certificate (MIC) via the FHA Connection. Not endorsed for mortgage insurance and issued a Notice of Non-Endorsement/Return (NOR). A MIC/NOR List may be requested for cases which the lender originated or acted as a sponsor or agent. Branch offices of the same lender may request a MIC/NOR List for any related branches. Mortgage Credit Reject Mortgage Credit Reject allows lenders to add, update, delete, or view borrower mortgage credit rejection information for a non endorsed DE case. This information is reported when an FHAapproved underwriter determines that a borrower poses a credit risk and is ineligible for a mortgage. Mortgage Insurance Certificate Mortgage Insurance Certificate can be used by the originator, sponsor, agent, or servicer to view and print a Mortgage Insurance Certificate (MIC). This serves as evidence of FHA insurance on the mortgage loan. Notice of Return Notice of Return is used to view and print the NOR where HUD personnel specified a reason(s) a mortgage loan cannot be endorsed for FHA insurance. Post-endorsement Borrower SSN Correction Post-endorsement Borrower SSN Correction allows originators, sponsors, holders, or servicers to use the FHA Connection to correct borrower SSNs after endorsement. Refinance Authorization Refinance Authorization allows lenders to order a new refinance authorization when the refinance authorization the closing date changed or if the previous copy was misplaced. (Last Revised 10/29/03) Refinance Credit Query Refinance Credit Query is used before case number assignment to determine the refinance credit available for an active FHA case being refinanced CitiMortgage, Inc. CitiMortgage, Inc. does business as Citicorp Mortgage in NM. CitiMortgage, Inc. is an equal housing lender. Citi and Citi with the Arc Design are registered service marks of Citigroup Inc. Let s Get It Done is a service mark of Citigroup Inc. DU is a registered trademark of Fannie Mae. Use of Fannie Mae s name, trademarks or service marks are for illustration purposes only and do not represent an endorsement of our products and services by Fannie Mae. All loans are subject to underwriting and approval by CitiMortgage, Inc., and are subject to all applicable product guidelines and parameters then in effect. CitiMortgage, Inc. may require additional information during underwriting. Please consult the Wholesale Lending Guide for additional information on product guidelines and parameters. This information is for mortgage and real estate professionals only and is subject to change without notice. Do not distribute to consumers. BR059 03/08