Maximum loan amounts, LTV, CLTV & HCLTV per Desktop Underwriter (DU) or Loan Prospector (LP) guidelines

Transcription

1 Section 500 Loan Products Product Overview In general, Loans eligible for purchase by LAKE MICHIGAN FINCIAL must meet the standards and guidelines of Fannie Mae and Freddie Mac (Agencies), dependent on the automated underwriting system utilized. The product and underwriting information contained in this section represents exceptions to the Agencies standards. Therefore, all Loans submitted for purchase by LAKE MICHIGAN FINCIAL should be underwritten to the requirements of Fannie Mae or Freddie Mac, unless stated otherwise by the terms and conditions set forth in this section Maximum Loan Amounts, LTV, CLTV & HCLTV [Rev 9/19/09] Conforming Fixed, Balloon & ARMs Maximum loan amounts, LTV, CLTV & HCLTV per Desktop Underwriter (DU) or Loan Prospector (LP) guidelines DU Refi Plus TM loans: LTV: 125% for more information CLTV: No Maximum see the DU Refi Plus TM product matrix Relief Refinance Open Access loans: LTV: 125% Relief Refinance product matrix for more information CLTV: No Maximum see the Freddie Mac Preferred Jumbo Fixed & ARMs Maximum Loan Amount & LTV Matrix Property Maximum Loan Amount Purchase Transaction or Rate/Term Refinance Cash-Out Refinance 1 Primary Residence LTV CLTV/ HCLTV Credit Score Minimum Reserves LTV CLTV/ HCLTV Credit Score Minimum Reserves 1-2 Unit $750,000 75% 75% months 65% 65% months Second Home 1-Unit $750,000 70% 70% months 60% 60% months 1 Preferred Jumbo Maximum Cash Out LTV/CLTV Maximum Cash-out 75.00% and Less $400,000 Lake Michigan Financial Group, Inc. Correspondent Lending Guide (11/09) Section Loan Products.doc 1

2 Section 500 Loan Products Eligible Property Types / States [Rev 1/28/09] Conforming Fixed, Balloon & ARMs Refer to Fannie Mae and Freddie Mac guidelines Preferred Jumbo Fixed & ARMs Primary 1-2 units Second home 1 unit Fannie Mae or Freddie Mac acceptable condominiums PUD Eligible States, Cities & Municipalities [Rev 2/13/09] Loans in which the property is located in the following states are eligible for purchase by LAKE MICHIGAN FINCIAL: Eligible States Indiana Kentucky Maryland Michigan North Carolina Ohio Pennsylvania South Carolina Tennessee Virginia Wisconsin Automated Underwriting Systems (AUS) Acceptable AUS include Fannie Mae s Desktop Underwriter (DU) or Freddie Mac s Loan Prospector (LP) All Loans must have an acceptable DU or LP decision Conforming Fixed, Balloon & ARMs Eligible AUS response: DU Approve/Eligible, EA Level I, EA Level II, EA Level III LP Accept Plus, Accept or A-minus Levels 1-5 Ineligible AUS response: DU Refer/Eligible DU Out of Scope LP Incomplete Lake Michigan Financial Group, Inc. Correspondent Lending Guide (11/09) Section Loan Products.doc 2

3 Section 500 Loan Products Preferred Jumbo Fixed & ARMs Eligible AUS response: 2 DU Approve/Ineligible LP Accept Plus or Accept (Ineligible 2 Ineligible AUS response: EA Level I, EA Level II, EA Level III DU Refer/Eligible DU Out of Scope LP A-minus Levels 1-5 LP Incomplete 2 ) - Provided that the Ineligible finding is due only to the loan amount exceeding conforming limits Ratios & Qualifying [Rev 8/19/07] Unless stated otherwise, all Loans must meet Fannie Mae and Freddie Mac standards and guidelines. Maximum Debt to Income Ratio: [Rev 12/17/07] Conforming Fixed Per Agency and automated underwriting / DU or LP guidelines Conforming Balloon, ARMs & Preferred Jumbo Fixed & ARMs Maximum DTI: 45% Reserve Requirements: [Rev 1/28/09] Conforming Fixed, Balloon & ARMs: Per Agency and automated underwriting / DU or LP guidelines Preferred Jumbo Fixed & ARMs The minimum required PITI liquid reserves is 12 months - Cash-out Refinance funds can not be used for reserves Lake Michigan Financial Group, Inc. Correspondent Lending Guide (11/09) Section Loan Products.doc 3

4 Section 500 Loan Products Documentation Requirements [Rev 12/17/07] Conforming Fixed, Full Documentation and/or Alternative Documentation per Agency and automated underwriting / DU or LP guidelines Conforming Balloon, ARMs & Preferred Jumbo Fixed & ARMs Standard Full / Alternative Documentation is required. Documenting the loan according to the DU or LP findings is not sufficient. Refer to Section Documentation Requirements for specific documentation types and requirements Seller / Interested Party Contribution [Rev 5/27/08] Maximum seller contribution is based on LTV using the lesser of the sales price or appraised value Conforming Fixed, Balloon & ARMs LTV Primary & Second Homes Maximum Greater than 90.01% 3% 90.00% to 75.01% 6% 75.00% or less 9% LTV Investment Properties Maximum All 2% Preferred Jumbo Fixed & ARMs LTV Primary & Second Homes Maximum All 6% Mortgage Insurance Required on all loans with LTV > 80.00% Coverage amount per Agency and automated underwriting / DU or LP guidelines Reduced MI or Custom MI is not acceptable Lake Michigan Financial Group, Inc. Correspondent Lending Guide (11/09) Section Loan Products.doc 4

5 Section 500 Loan Products Appraisal Requirements [Rev 11/25/09] LAKE MICHIGAN FINCIAL will purchase loans only from Correspondents that adopt the Home Valuation Code of Conduct ( Code ). The Correspondent must represent and warrant that the appraisal report is obtained in a manner consistent with the Code. For those Correspondents that purchase loans from a third-party originator, the Correspondent must represent and warrant that appraisals were obtained in accordance to the Code. Correspondent clients are required to provide certain representation and warranties related to the appraisal, including representations and warranties on the value, condition and marketability of the subject property. See Section 300 Collateral Requirements of the Correspondent Lending Guide for details. All appraisal reports should be provided in a clear, legible and preferably electronic (PDF file type) format. In addition, photographs of the subject and comparable properties must be clear and in color format. Conforming Fixed, Balloon & ARMs Per Agency and automated underwriting / DU or LP guidelines. Property Inspection Waiver (PIW) / Property Inspection Alternative (PIA) are allowed. There will be a PIW / PIA cost of $75.00 assessed at loan funding. Preferred Jumbo Fixed & ARMs One full appraisal properly completed on the Uniform Residential Appraisal Report form 70, 72, or 465. Property Inspection Waiver (PIW) / Property Inspection Alternative (PIA) are not allowed. AVMs & Market Value Due-Diligence [Rev 3/28/08] To review property values for loans submitted for purchase, LAKE MICHIGAN FINCIAL typically obtains an automated valuation model (AVM) from third-party vendors, such as FraudGuard, Dissco and CoreLogic. In cases where there is a material difference in value as compared to the property appraisal, a subsequent field review appraisal will be required prior to loan purchase. Correspondents are responsible for the field review cost, which typically range between $250 - $350. This cost will be applied at loan funding, or sent via invoice for non-purchased loans. Important: LAKE MICHIGAN FINCIAL strongly encourages Correspondents to utilize one of these third-party vendors to assist in the analysis of the value prior to submitting loans for purchase. This will avoid unnecessary delays during the funding process. Lake Michigan Financial Group, Inc. Correspondent Lending Guide (11/09) Section Loan Products.doc 5

6 Section 500 Loan Products Declining Market Policy [Rev 1/28/09] Correspondents are ultimately responsible for determining whether a property is in a Declining Market according to LAKE MICHIGAN FINCIAL s requirements. Consistent with a lender s market value due-diligence, Correspondent s should use industry available property valuation data or other tools to properly analyze the subject s market value. Please reference FHFA s Annual Home Price Index and the Semi-annual Home Price Index. The FHFA Home Price Index Calculator and information may be obtained at: Conforming Fixed, Balloon & ARMs Loans submitted for purchase must comply with the declining value requirements of Fannie Mae or Freddie Mac, dependent on the automated underwriting system (DU or LP) utilized. Preferred Jumbo Fixed & ARMs For properties in a Declining Market, the LTV and CLTV must be reduced by 5% for loans with maximum financing. The appraiser must review the neighborhood to determine if the property is located in an area of declining values and indicate appropriately on the appraisal. The property will be considered in a Declining Market if the appraisal report denotes: 1. Over-supply of properties, e.g. marketing time that exceeds six (6) months 2. Subject neighborhood value is marked as Declining per a qualified appraiser 3. Any other comments that would indicate that the property is located in an area of declining values 4. Automated underwriting DU or LP findings indicate declining value Temporary Buydowns Conforming Fixed, Balloon & ARMs Per Agency and automated underwriting / DU or LP guidelines Preferred Jumbo Fixed & ARMs Not-permitted Assumability [Rev 8/19/07] Conforming Fixed, Balloon & ARMs Per Agency and automated underwriting / DU or LP guidelines, see the ARM Details & Documentation Matrix Section for limitations Preferred Jumbo Fixed & ARMs Allowed, see the ARM Details & Documentation Matrix Section for limitations Lake Michigan Financial Group, Inc. Correspondent Lending Guide (11/09) Section Loan Products.doc 6

7 Section 500 Loan Products Prepayment Penalty None ARM Parameters Conforming Only Conversion Option: Non-convertible Payment Change Date: First of the month following the interest adjustment rate change Index: 1 YR CMT The weekly average yield of US Treasury Securities adjusted to a constant maturity of one year Margin (Floor): 2.750% ARM Disclosure Documents: A compliant ARM Disclosure document with the proper terms is required. Initial Interest Rate Cap 1 YR & 3/1 ARM: 2.000% First adjustment may change the initial interest rate up or down by no more than 2.000%. 5/1, 7/1 & 10/1 ARM: 5.000% First adjustment may change the initial interest rate up or down by no more than 5.000%. Annual Interest Rate Cap 1 YR, 3/1, 5/1, 7/1 & 10/1 ARM: 2.000% Subsequent or annual adjustments may change the current interest rate up or down by no more than 2.000% - The annual interest adjustment date is 12 months following the first or subsequent adjustment date Lifetime Interest Rate Cap 1 YR & 3/1 ARM: 6.000% Any interest rate adjustment may not change the initial interest rate up or down by more than 6.000%. 5/1, 7/1 & 10/1 ARM: 5.000% Any interest rate adjustment may not change the initial interest rate up or down by more than 5.000%. Interest-Only Period Conforming 3/1, 5/1, 7/1 & 10/1 ARM: The initial interest-only period matches the fixed period, e.g. 3/1 ARM is interest-only during the first 36 months. Lake Michigan Financial Group, Inc. Correspondent Lending Guide (11/09) Section Loan Products.doc 7

8 Section 500 Loan Products ARM Parameters Preferred Jumbo [Rev 1/28/09] Conversion Option: Non-convertible Payment Change Date: First of the month following the interest adjustment rate change Index: 1 YR CMT The weekly average yield of US Treasury Securities adjusted to a constant maturity of one year Margin (Floor): 2.500% ARM Disclosure Documents: A compliant ARM Disclosure document with the proper terms is required. Initial Interest Rate Cap 1 YR, 3/1, 5/1, 7/1 & 10/1 ARM: 2.000% First adjustment may change the initial interest rate up or down by no more than 2.000%. Annual Interest Rate Cap 1 YR, 3/1, 5/1, 7/1 & 10/1 ARM: 2.000% Subsequent or annual adjustments may change the current interest rate up or down by no more than 2.000% - The annual interest adjustment date is 12 months following the first or subsequent adjustment date Lifetime Interest Rate Cap 1 YR, 3/1, 5/1, 7/1 & 10/1 ARM: 6.000% Any interest rate adjustment may not change the initial interest rate up or down by more than 6.000%. Lake Michigan Financial Group, Inc. Correspondent Lending Guide (11/09) Section Loan Products.doc 8

9 Documentation & ARM Details Matrix [Rev 1/28/09] Section 500 Loan Products Note: For Conforming loan programs, all legal documentation must meet the applicable Fannie Mae or Freddie Mac guidelines in association with the automated underwriting system utilized. Product Index Note Form Rider Form Assumability FNMA Plan No Initial Interest Period Conforming 10-, 15-, 20-, 30-year Fixed FNMA FNMA None Conforming 10/20 Fixed IO (Initial Interest) FHLMC FHLMC None 120 months Conforming 15/15 Fixed IO (Initial Interest) FHLMC FHLMC None 180 months Conforming 5/25, 7/23 Balloon/Reset FHLMC FHLMC None Conforming 1 YR ARM CAPS 2/2/6 1YR CMT FNMA FNMA 3111 Yes life of loan 720 Conforming 3/1 ARM CAPS 2/2/6 1Year CMT FNMA FNMA Yes life of loan 651 Conforming 5/1 ARM Yes - after Initial 1Year CMT FNMA FNMA CAPS 5/2/5 660 Conforming 7/1 ARM Yes - after Initial 1Year CMT FNMA FNMA CAPS 5/2/5 750 Conforming 10/1 ARM Yes - after Initial 1Year CMT FNMA FNMA CAPS 5/2/ Conforming 3/1 ARM IO 1Year CMT FNMA FNMA Yes life of loan (Initial Interest) CAPS 2/2/6 1Year CMT FHLMC 5506 FHLMC 5106 Yes life of loan months Conforming 5/1 ARM IO Yes - after Initial 1Year CMT FNMA FNMA (Initial Interest) months CAPS 5/2/5 1Year CMT FHLMC FHLMC Yes life of loan Conforming 7/1 ARM IO (Initial Interest) CAPS 5/2/5 Conforming 10/1 ARM IO (Initial Interest) CAPS 5/2/5 Jumbo-Conforming 10-, 15-, 20-, 30-year Fixed (Discontinue Jan 30, 2009) Jumbo-Conforming 5/1 ARM (Discontinue Jan 30, 2009) Jumbo-Conforming 7/1 ARM (Discontinue Jan 30, 2009) Jumbo 10-, 15-, 20-, 30-year Fixed Jumbo 1 YR ARM CAPS 2/2/6 Jumbo 3/1 ARM CAPS 2/2/6 Jumbo 5/1 ARM CAPS 2/2/6 Jumbo 7/1 ARM CAPS 2/2/6 Jumbo 10/1 ARM CAPS 2/2/6 Jumbo 5/1 ARM IO (Initial Interest) (Discontinue Feb 28, 2009) Jumbo 7/1 ARM IO (Initial Interest) (Discontinue Feb 28, 2009) Jumbo 10/1 ARM IO (Initial Interest) (Discontinue Feb 28, 2009) 1Year CMT FNMA FNMA Yes - after Initial months 1Year CMT FHLMC FHLMC Yes life of loan 1Year CMT FNMA FNMA Yes - after Initial months 1Year CMT FHLMC FHLMC Yes life of loan FNMA FNMA None 1 Year LIBOR FNMA FNMA Yes - after Initial Year LIBOR FNMA FNMA Yes - after Initial 2727 FNMA FNMA None 1Year CMT FNMA 3502 FNMA 3111 Yes life of loan 1Year CMT FNMA 3502 FNMA 3111 Yes life of loan 1Year CMT FNMA 3522 FNMA Year CMT FNMA 3522 FNMA Year CMT FNMA 3522 FNMA Year LIBOR FNMA 3535 FNMA Year LIBOR FNMA 3535 FNMA Year LIBOR FNMA 3530 FNMA 3187 Yes after Initial Yes after Initial Yes after Initial Yes after Initial Yes after Initial Yes after Initial 120 months 120 months 120 months Lake Michigan Financial Group, Inc. Correspondent Lending Guide (11/09) Section Loan Products.doc 9

10 Section 500 Loan Products Product Menu [Rev 11/25/09] Conforming Fixed, Balloon & ARM CONF 40YR FRM Conforming 40 YR Fixed CONF 30YR FRM Conforming 30 YR Fixed CONF 20YR FRM Conforming 20 YR Fixed CONF 15YR FRM Conforming 15 YR Fixed CONF 30YR FRM 97 TM Conforming 30 YR Fixed Alt 97% CONF 40YR FRM HP TM Conforming 40 YR Fixed Home Possible CONF 30YR FRM HP TM Conforming 30 YR Fixed Home Possible CONF 30YR FRM FLEX 97 Conforming 30 YR Fixed Fannie Mae Flex 97 CONF 30YR FRM MCM Conforming 30 YR Fixed MyCommunityMortgage CONF 10/20YR FRM IO Conforming 10/20 YR Fixed Initial Interest CONF 15/15YR FRM IO Conforming 15/15 YR Fixed Initial Interest CONF 30YR FRM HB Conforming 30 YR Fixed High-Balance CONF 15YR FRM HB Conforming 15 YR Fixed High-Balance CONF 30 YR FRM AFF REFI Conforming 30 YR Fixed Affordable Refinance (Discontinue Nov 25, 2009) CONF 20 YR FRM AFF REFI Conforming 20 YR Fixed Affordable Refinance (Discontinue Nov 25, 2009) CONF 15 YR FRM AFF REFI Conforming 15 YR Fixed Affordable Refinance (Discontinue Nov 25, 2009) CONF 30 YR FRM HB AFF REFI Conforming 30 YR Fixed High-Balance Affordable Refinance (Discontinue Nov 25, 2009) CONF 15 YR FRM HB AFF REFI Conforming 30 YR Fixed High-Balance Affordable Refinance (Discontinue Nov 25, 2009) CONF 30 YR FRM DU REFI PLUS Conforming 30 YR Fixed DU Refi Plus TM CONF 15 YR FRM DU REFI PLUS TM Conforming 30 YR Fixed DU Refi Plus CONF 30 YR FRM RELIEF REFI Conforming 30 YR Fixed Relief Refi - Open Access CONF 15 YR FRM RELIEF REFI Conforming 30 YR Fixed Relief Refi - Open Access CONF 5/25 BALLOON Conventional 5/25 Balloon/Reset CONF 7/23 BALLOON Conventional 7/23 Balloon/Reset CONF 1YR ARM Conforming 1YR ARM Non-convertible CONF 3/1 ARM Conforming 3/1 ARM Non-convertible CONF 5/1 ARM Conforming 5/1 ARM Non-convertible CONF 7/1 ARM Conforming 7/1 ARM Non-convertible CONF 10/1 ARM Conforming 10/1 ARM Non-convertible CONF 3/1 ARM IO Conforming 3/1 ARM Initial Interest Non-convertible CONF 5/1 ARM IO Conforming 5/1 ARM Initial Interest Non-convertible CONF 7/1 ARM IO Conforming 7/1 ARM Initial Interest Non-convertible CONF 10/1 ARM IO Conforming 10/1 ARM Initial Interest Non-convertible CONF 5/1 ARM HP Conforming 5/1 ARM Home Possible TM Non-convertible JUMBO-CONF 30YR FRM Jumbo-Conforming 30 YR Fixed (Discontinue Jan 30, 2009) JUMBO-CONF 15YR FRM Jumbo-Conforming 15 YR Fixed (Discontinue Jan 30, 2009) JUMBO-CONF 5/1 ARM Jumbo-Conforming 5/1 ARM (Discontinue Jan 30, 2009) JUMBO-CONF 7/1 ARM Jumbo-Conforming 7/1 ARM (Discontinue Jan 30, 2009) Lake Michigan Financial Group, Inc. Correspondent Lending Guide (11/09) Section Loan Products.doc 10

11 Section 500 Loan Products Product Menu (Cont) Preferred Jumbo Fixed & ARM JUMBO 30YR FRM Jumbo 30 Year Fixed JUMBO 15YR FRM Jumbo 15 Year Fixed JUMBO 1YR ARM Jumbo 1 Year ARM Non-convertible JUMBO 3/1 ARM Jumbo 3/1 ARM Non-convertible JUMBO 5/1 ARM Jumbo 5/1 ARM Non-convertible JUMBO 7/1 ARM Jumbo 7/1 ARM Non-convertible JUMBO 10/1 ARM Jumbo 10/1 ARM Non-convertible JUMBO 5/1 ARM IO Jumbo 5/1 ARM Initial Interest (Discontinue Feb 28, 2009) JUMBO 7/1 ARM IO Jumbo 7/1 ARM Initial Interest (Discontinue Feb 28, 2009) JUMBO 10/1 ARM IO Jumbo 10/1 ARM Initial Interest (Discontinue Feb 28, 2009) Lake Michigan Financial Group, Inc. Correspondent Lending Guide (11/09) Section Loan Products.doc 11

12 Fannie Mae DU Refi Plus TM Overview In conjunction with the U.S. Department of the Treasury s Home Affordable Refinance Program, LAKE MICHIGAN FINCIAL will purchase Fannie Mae DU Refi Plus TM loans and Freddie Mac Relief Refinance Open Access loans. The Home Affordable Refinance Program is intended to stabilize the nation s housing market and help up to 7 to 9 million Americans reduce their monthly mortgage payments to more affordable levels. More information may be found at: Fannie Mae DU Refi Plus TM : Eligible loans include refinance transactions in which the original mortgage is owned or securitized by Fannie Mae prior to March 1, The loan must receive the DU Refi Plus TM recommendation through Desktop Underwriter (DU SM ). Standard conforming and high-balance conforming loans are eligible. Homeowners may determine if their original loan is owned or securitized by Fannie Mae by accessing the Fannie Mae Loan Lookup tool at: Correspondent lenders should refer to Fannie Mae s guidelines in Announcement and subsequent Announcements for complete details of the DU Refi Plus TM program. In addition to Fannie Mae s guidelines, lenders must meet all requirements of the LAKE MICHIGAN FINCIAL Correspondent Lending Guide and the product terms within. Loan Term Fixed-Rate: 10-, 15-, 20-, and 30-year terms (ARMs, Balloons, & Interest Only / Interest First payment loans are not eligible) Lake Michigan Product Codes CONF 30 YR FRM AFF REFI ( Months) CONF 20 YR FRM AFF REFI ( Months) CONF 15 YR FRM AFF REFI ( Months) CONF 30 YR FRM HB AFF REFI ( Months) / 2009 High-Balance Loans CONF 15 YR FRM HB AFF REFI ( Months) / 2009 High-Balance Loans Maximum LTV/CLTV LTV: Maximum allowed per Desktop Underwriter Approve/Eligible recommendation, not to exceed the following loan-to-value ratio for all occupancy and property types 125% -- Effective on or after September 19, 2009 DU version % -- Effective prior to September 19, 2009 CLTV: No maximum All existing subordinate financing must be re-subordinated to maintain a first-lien position No new subordinate financing may be obtained as part of the new mortgage transaction 2009 Lake Michigan Financial Group, Inc. All rights reserved. (Rev09/09b) Page 1 of 4

13 Fannie Mae DU Refi Plus TM Mortgage Insurance All LTVs - Original loan without MI: Mortgage insurance is not required if the original loan being refinanced does not have mortgage insurance, and the original loan s LTV is < 80%. LTV > 80 % - Original loan with MI: If mortgage insurance exists for the original loan, the new requires either new mortgage insurance or a transfer of the existing mortgage insurance from the original loan. Refer to the specific mortgage insurance company s guidelines for eligibility. In all cases, correspondent lenders must represent and warrant that a borrower benefit exists. See the Borrower Benefit section below for details. Eligible Borrowers Borrower Benefit Borrower(s) of the original loan must be identical to the borrower(s) on the new loan; Borrower(s) may be added to the new loan, provided the existing borrower(s) is retained The new refinance mortgage must result in one of the following: reduction in interest rate of the first-lien mortgage providing a lower principal and interest payment replacement of an ARM, interest only mortgage & balloon/reset mortgage with a fixed-rate, fully amortizing mortgage reduction in the amortization term of the first-lien mortgage Property Type Single Family Primary Residence 2-4 Units Second Home (1 Unit) Fannie Mae acceptable condominiums (attached & detached) PUD Investment properties (Manufactured homes and condotels are not eligible) Occupancy Primary / Owner-occupied Second home / Owner-occupied Investment / Non-owner-occupied Ineligible Original Mortgage Loans Mortgage loans that are subject to any credit enhancement (e.g., full or partial recourse) other than borrower-paid mortgage insurance Mortgage loans that are currently subject to any outstanding repurchase request from Fannie Mae Reverse mortgages Second mortgages Government loans Automated Underwriting Systems (AUS) Desktop Underwriter : Approve/Eligible, including the DU Refi Plus TM recommendation Ineligible In addition to the above AUS messages, all loans must be manually underwritten and meet all requirements according to the product terms within Lake Michigan Financial Group, Inc. All rights reserved. (Rev09/09b) Page 2 of 4

14 Fannie Mae DU Refi Plus TM Credit Minimum credit score is 620 for all occupancy types Payment history: Original loan must be current, e.g. no more than one-time 30 days late within the previous 12 months The borrower must meet the requirements for DU SM underwritten loans, including the mortgage delinquency, bankruptcy and foreclosure policies Documentation Standard Full / Alternative Documentation per the Correspondent Lending Guide A complete application (Form 1003) and a new tri-merged credit report -- all income and asset information input into DU SM must be fully documented 4506-T: A properly completed and signed 4506-T is required for all loans Reduced documentation is not allowed, regardless of any lesser requirement given by the AUS findings. Refer to Section Documentation Requirements for specific documentation types and requirements Appraisal Requirements Property requirements as specified by the Desktop Underwriter recommendation Condominium: Two comparables must be from projects outside of the subject project Correspondent clients are required to provide certain representation and warranties related to the appraisal, including representations and warranties on the value, condition and marketability of the subject property. See Section 300 Collateral Requirements of the Correspondent Lending Guide for details. Financed Properties Escrow Waiver No limit with multiple mortgages to the same borrower Permitted for LTVs 80% and below. See the price sheet for pricing adjustors Pricing: Conforming base pricing applies Add all relevant DU Refi Plus TM price adjustors per the daily price sheet Note: Loans with the MGIC mortgage insurance transfer option requires a price adjustor 2009 Lake Michigan Financial Group, Inc. All rights reserved. (Rev09/09b) Page 3 of 4

15 Fannie Mae DU Refi Plus TM MGIC Mortgage Insurance Transfer If MGIC mortgage insurance exists for the original loan, regardless of the current servicer the insurance may be transferred to the new servicer provided that Correspondent client supply the existing mortgage insurance certificate. Underwriting Options: Prior Approval Underwriting only Contract underwriting (MGIC only) Occupancy status: Same as the original loan Occupancy of the new loan can change to a primary residence but can not change from a primary residence Closings Costs: Reasonable and customary closing/financing costs and prepaids are allowed, but may not exceed 4% of the unpaid principal balance of the Original Loan or $5,000, whichever is lower. Cash-back: Maximum $ Cash back greater than $250, as identified on the HUD-1, must be applied as a principal curtailment to the Refinance Loan. Debt-to-income Ratio: 45% (income must be documented per MGIC s Manual Underwriting requirements without regard to the DU SM documentation requirements. Other documentation must follow either MGIC s Underwriting Guide or Fannie Mae s automated underwriting requirements. Coverage Percentage & Premium Rate: No change to the coverage from the original loan Delivery Requirements & Other Notes Loan must be delivered in fundable form to LAKE MICHIGAN FINCIAL no more than 90 days after the note date If mortgage insurance is being transferred from the mortgage being refinanced, Correspondent client must provide the existing mortgage insurance certificate or, if applicable, the replacement certificate number and existing percentage of coverage for the mortgage being refinanced as the DU Refi Plus TM. Correspondent client must deliver the original Fannie Mae loan number of the existing mortgage with the new refinance mortgage. Compliance: Correspondent clients are reminded of their obligations to ensure that all mortgage loans they deliver comply with applicable consumer protection laws, including state abuse lending laws, and comply with our standard that guard against the purchase of home mortgages with predatory features. Underwriting Methods: Delegated Authority - Permitted in conjunction with the approval limits granted for Correspondent client Prior Approval by LAKE MICHIGAN FINCIAL Contract Underwriting by approved third-parties allowed Extended Rate Lock & Float Down Programs are not allowed 2009 Lake Michigan Financial Group, Inc. All rights reserved. (Rev09/09b) Page 4 of 4

16 Freddie Mac Relief Refinance Overview In conjunction with the U.S. Department of the Treasury s Home Affordable Refinance Program, LAKE MICHIGAN FINCIAL will purchase Fannie Mae DU Refi Plus TM loans and Freddie Mac Relief Refinance Open Access loans. The Home Affordable Refinance Program is intended to stabilize the nation s housing market and help up to 7 to 9 million Americans reduce their monthly mortgage payments to more affordable levels. More information may be found at: Freddie Mac Relief Refinance Open Access: Eligible loans include refinance transactions in which the original mortgage is owned or securitized by Freddie Mac prior to May 31, The loan must be seasoned at least three months. The loan must be fully underwritten by Loan Prospector (LP) and receive an Accept recommendation. LP with a risk class of Caution with or without A-minus are not eligible for sale to LAKE MICHIGAN FINCIAL. Standard conforming and high-balance (super conforming) loans are eligible. Homeowners may determine if their original loan is owned or securitized by Freddie Mac by accessing the Freddie Mac Loan Lookup tool at: Correspondent lenders should refer to Freddie Mac s guidelines in Bulletin and subsequent announcements for complete details of the Relief Refinance - Open Access program. In addition to Freddie Mac s guidelines, lenders must meet all requirements of the LAKE MICHIGAN FINCIAL Correspondent Lending Guide and the product terms within. Loan Term Fixed-Rate: 10-, 15-, 20-, and 30-year terms (ARMs, Balloons, & Interest Only / Interest First payment loans are not eligible) Lake Michigan Product Codes CONF 30 YR FRM AFF REFI ( Months) CONF 20 YR FRM AFF REFI ( Months) CONF 15 YR FRM AFF REFI ( Months) CONF 30 YR FRM HB AFF REFI ( Months) / 2009 High-Balance Loans CONF 15 YR FRM HB AFF REFI ( Months) / 2009 High-Balance Loans Maximum LTV/CLTV LTV: Maximum allowed per Loan Prospector Accept Plus/Accept findings, not to exceed the following loan-to-value ratio for all occupancy and property types 125% -- Effective on or after October 1, 2009 CLTV: No maximum All existing subordinate financing must be re-subordinated to maintain a first-lien position No new subordinate financing may be obtained as part of the new mortgage transaction 2009 Lake Michigan Financial Group, Inc. All rights reserved. (09/09) Page 1 of 4

17 Freddie Mac Relief Refinance Mortgage Insurance All LTVs - Original loan without MI: Mortgage insurance is not required if the original loan being refinanced does not have mortgage insurance, and the original loan s LTV is < 80%. LTV > 80 % - Original loan with MI: If the mortgage being refinanced has mortgage insurance coverage, then the same mortgage insurance coverage percentage must be maintained for the Relief Refinance Mortgage Open Access. Refer to the specific mortgage insurance company s guidelines for eligibility. In all cases, correspondent lenders must represent and warrant that a borrower benefit exists. See the Borrower Benefit section below for details. Eligible Borrowers Borrower Benefit Borrower(s) of the original loan must be identical to the borrower(s) on the new loan; Borrower(s) may be added to the new loan, provided the existing borrower(s) is retained The new refinance mortgage must result in one of the following: reduction in interest rate of the first-lien mortgage providing a lower principal and interest payment replacement of an ARM, interest only mortgage & balloon/reset mortgage with a fixed-rate, fully amortizing mortgage reduction in the amortization term of the first-lien mortgage Property Type Single Family Primary Residence 2-4 Units Second Home (1 Unit) Freddie Mac acceptable condominiums (attached & detached) PUD Investment properties (1-4 Unit) (Manufactured homes and condotels are not eligible) Occupancy Primary / Owner-occupied Second home / Owner-occupied Investment / Non-owner-occupied Ineligible Original Mortgage Loans Mortgage loans that are subject to any credit enhancement (e.g., full or partial recourse) other than borrower-paid mortgage insurance Mortgage loans that are currently subject to any outstanding repurchase request from Freddie Mac Reverse mortgages Second mortgages Government loans 2009 Lake Michigan Financial Group, Inc. All rights reserved. (09/09) Page 2 of 4

18 Freddie Mac Relief Refinance Automated Underwriting Systems (AUS) Loan Prospector (LP): Accept recommendation LP loans with a risk class of Caution with or without A-minus are not eligible for delivery to LAKE MICHIGAN FINCIAL. In addition to the above AUS messages, all loans must be manually underwritten and meet all requirements according to the product terms within. Credit Minimum credit score is 620 for all occupancy types Payment history: Original loan must be current and may not have any 30 day late payments within the previous 12 months Noncredit payment references are prohibited and may not be used to establish an acceptable credit reputation. Documentation Standard Full / Alternative Documentation per the Correspondent Lending Guide A complete application (Form 1003) and a new tri-merged credit report -- all income and asset information input into LP must be fully documented 4506-T: A properly completed and signed 4506-T is required for all loans Reduced documentation is not allowed, regardless of any lesser requirement given by the AUS findings. Refer to Section Documentation Requirements for specific documentation types and requirements Refinance Proceeds The proceeds of the Relief Refinance Mortgage Open Access must be used only to: Pay off the first mortgage (amount includes the unpaid principal balance and accrued interest through the payoff date). The payoff amount can be rounded up to the nearest thousand. Pay the lesser of 4 percent of the current unpaid principal balance of the mortgage being refinanced or $5,000 in related closing costs, financing costs and prepaids/escrows. Funds available as a result of the rounding must be: Applied as a principal curtailment to the refinance mortgage and/or Disbursed as cash to the borrower not to exceed $250. The proceeds may not be used to pay off or pay down any secondary financing Appraisal Requirements A full interior/exterior appraisal that meets Freddie Mac guide requirements required, including the special appraisal and collateral documentation requirements for high-balance (super conforming) loans Use of the Home Value Explorer is not permitted Correspondent clients are required to provide certain representation and warranties related to the appraisal, including representations and warranties on the value, condition and marketability of the subject property. See Section 300 Collateral Requirements of the Correspondent Lending Guide for details Lake Michigan Financial Group, Inc. All rights reserved. (09/09) Page 3 of 4

19 Freddie Mac Relief Refinance Financed Properties Escrow Waiver Pricing: No limit with multiple mortgages to the same borrower Permitted for LTVs 80% and below. See the price sheet for pricing adjustors Conforming base pricing applies Add all relevant Relief Refinance Open Access price adjustors per the daily price sheet Note: Loans with the MGIC mortgage insurance transfer option requires a price adjustor Mortgage Insurance Transfer If mortgage insurance exists for the original loan, regardless of the current servicer the insurance may be transferred to the new servicer provided that Correspondent client supply the existing mortgage insurance certificate. If mortgage insurance is being transferred from the mortgage being refinanced, Correspondent client must provide the existing mortgage insurance certificate and, if applicable, the replacement certificate number and existing percentage of coverage for the mortgage being refinanced for the Relief Refinance Mortgage Open Access. Delivery Requirements & Other Notes Loan must be delivered in fundable form to LAKE MICHIGAN FINCIAL no more than 90 days after the note date Mortgage insurance transfer: Correspondent must deliver the original mortgage insurance certificate and, if applicable, the replacement certificate number and existing percentage of coverage for the mortgage being refinanced for the Relief Refinance Mortgage Open Access. Correspondent must deliver the Freddie Mac loan number of the existing mortgage with the new refinance mortgage. Compliance: Correspondents are reminded of their obligations to ensure that all mortgage loans they deliver comply with applicable consumer protection laws, including state abuse lending laws, and comply with our standard that guard against the purchase of home mortgages with predatory features. Underwriting Methods: Delegated Authority - Permitted in conjunction with the approval limits granted for Correspondent client Prior Approval by LAKE MICHIGAN FINCIAL Contract Underwriting by approved third-parties allowed Extended Rate Lock & Float Down Programs are not allowed 2009 Lake Michigan Financial Group, Inc. All rights reserved. (09/09) Page 4 of 4

20 Preferred Jumbo Fixed & ARM Overview A standard fixed-rate loan or an adjustable rate loan with a specified fixed-rate period and fully amortizing payment. Preferred Jumbo mortgages allow for loan limits higher than the conforming limit. In general, Loans eligible for purchase must meet the standards and guidelines of Fannie Mae and Freddie Mac, dependent on the automated underwriting system utilized. In addition, the underwriting criteria must meet all the terms and parameters set forth in this program description. Loan Term Fixed-Rate: 10-, 15-, 20-, and 30-year terms ARM: 30-year term (Balloon & Interest Only / Interest First payment loans are not eligible) Lake Michigan Product Codes JUMBO 30 YR FRM ( Months) JUMBO 15 YR FRM ( Months) JUMBO 1 YR ARM (360 Months) JUMBO 3/1 ARM (360 Months) JUMBO 5/1 ARM (360 Months) JUMBO 7/1 ARM (360 Months) JUMBO 10/1 ARM (360 Months) Property Type Single Family Primary Residence (1-2 Units) Second Home (1 Unit) Fannie Mae or Freddie Mac acceptable condominiums (attached & detached) PUD (Investment properties, manufactured homes and cooperatives are not eligible) Maximum Loan Amount & LTV Matrix Property Maximum Loan Amount Purchase Transaction or Rate/Term Refinance Cash-Out Refinance1 Primary Residence LTV CLTV/ HCLTV Credit Score Minimum Reserves LTV CLTV/ HCLTV Credit Score Minimum Reserves 1-2 Unit $750,000 75% 75% months 65% 65% months Second Home 1-Unit $750,000 70% 70% months 60% 60% months Maximum Cash Out Automated Underwriting Systems (AUS) LTV/CLTV Maximum Cash-out 75.00% and Less $400,000 Desktop Underwriter : Approve/Ineligible 1 Loan Prospector : Accept 1 In addition to the above AUS messages, all loans must be manually underwritten and meet all requirements according to the product terms within. 1 Provided that the ineligible finding is due only to the loan amount exceeding conforming limits 2008 Lake Michigan Financial Group, Inc. All rights reserved. (Rev09/09) Page 1 of 4

21 Preferred Jumbo Fixed & ARM Credit Credit score required for all borrowers Payment history: No 30-day late payments on all housing debts for the past 12 months (includes all mortgages and rental payments) Bankruptcies and foreclosures must be seasoned 7 years All revolving debt, regardless if it is being paid, off must be included in the qualifying ratios Reserves Twelve (12) months of PITI payments Qualifying Ratios Documentation Appraisal Requirements Financed Properties Escrow Waiver Interested Party Contributions Assumability Prepayment Penalty Temporary Buydown Pricing: Debt-to-Income: Maximum 45%, regardless of AUS findings Standard Full / Alternative Documentation per the Correspondent Lending Guide. Reduced documentation is not allowed, regardless of any lesser requirement given by the AUS findings. Refer to Section Documentation Requirements for specific documentation types and requirements Full URAR Interior / Exterior inspection appraisal required (Form 1004/70 or 1073/465, as applicable) For properties with a value of $1,000,000 or greater, a second Full URAR Interior / Exterior inspection appraisal is required Condominium: Two comparables must be from projects outside of the subject project LAKE MICHIGAN FINCIAL s Declining Markets Policy applies in the event the property is located in a declining market, the maximum financing LTV is reduced by 5%. For more information, see Section Appraisal Reports, Declining Values. For reference, the FHFA Home Price Index Calculator and information may be obtained at: Correspondents must use appraisers who are experienced with the types of properties that are eligible for Non-conforming/Jumbo financing Borrower may finance a maximum of four properties, including borrower's primary residence. Permitted. See the price sheet for pricing adjustors 3% Not permitted Not permitted Not permitted All Preferred Jumbo Price Adjusters apply. See the daily price sheet for more Information Lake Michigan Financial Group, Inc. All rights reserved. (Rev09/09) Page 2 of 4

22 Preferred Jumbo Fixed & ARM ARM Details & Documentation Matrix Conversion Option Index Non-convertible 1 YR CMT The weekly average yield of US Treasury Securities adjusted to a constant maturity of one year Margin 2.500% (The Interest Rate Floor is 2.500%) Initial Interest Rate Cap 2.000% First adjustment may change the initial interest rate up or down by no more than 2.000%. Annual Rate Cap 2.000% Subsequent or annual adjustments may change the current interest rate up or down by no more than 2.000% - The annual interest adjustment date is 12 months following the first or subsequent adjustment date Lifetime Interest Rate Cap Delivery Requirements & Other Notes 6.000% Any interest rate adjustment may not change the initial interest rate up or down by more than 6.000%. Compliance: Correspondents are reminded of their obligations to ensure that all mortgage loans they deliver comply with applicable consumer protection laws, including state abuse lending laws, and comply with our standard that guard against the purchase of home mortgages with predatory features. Underwriting Methods: Delegated Authority - Permitted in conjunction with the approval limits granted for those Correspondents that have Non-Conforming/Jumbo Delegated Authority with Lake Michigan Financial Prior Approval by Lake Michigan Financial & Contract Underwriting by approved thirdparties allowed Extended Rate Lock and Float Down Programs are allowed with new lock commitments as of August 28, Lake Michigan Financial Group, Inc. All rights reserved. (Rev09/09) Page 3 of 4

23 Preferred Jumbo Fixed & ARM Documentation Matrix (Correction 1/22/09) FNMA Plan Product Index Note Form Rider Form Assumability No Jumbo 10-, 15-, 20-, 30-year Fixed FNMA FNMA None Jumbo 1 YR ARM CAPS 2/2/6 1 Year CMT FNMA 3502 FNMA 3111 Yes life of loan Jumbo 3/1 ARM CAPS 2/2/6 1 Year CMT FNMA 3502 FNMA 3111 Yes life of loan Jumbo 5/1 ARM CAPS 2/2/6 1 Year CMT FNMA 3522 FNMA 3182 Jumbo 7/1 ARM CAPS 2/2/6 1 Year CMT FNMA 3522 FNMA 3182 Jumbo 10/1 ARM CAPS 2/2/6 1 Year CMT FNMA 3522 FNMA 3182 Yes after Initial Yes after Initial Yes after Initial 2008 Lake Michigan Financial Group, Inc. All rights reserved. (Rev09/09) Page 4 of 4