Products Section 2 Product Introduction --------------------------------------------------------------------- 2.2 Conforming Fixed Rate (including DU RefiPlus) ----------------------------------- 2.3 Conforming LIBOR ARMs ---------------------------------------------- --------------- 2.8 Fannie Mae HomePath Mortgage --------------------------------------- --------------- 2.13 FHA Program Overlays------------------------------------------------------------------- 2.14 VA Program Overlays--------------------------------------------------------------------- 2.15 USDA Program Overlays----------------------------------------------------------------- 2.16 Capital Markets Jumbo Fixed & ARMs------------------------------------------------ 2.17 Flagship Jumbo NC/SC LIBOR ARMs------------------------------------------------- 2.31-2.1 - July 1, 2014
Product Introduction Loan programs offered to the Wholesale & Correspondent Lending Divisions may vary from time to time at South State Bank s sole discretion. The following is a list of traditional loan products and guidelines. Daily Pricing includes Service Release Premiums (SRP). Loan Level Price Adjustments (LLPA) and Fees are listed on the current day s rate sheets and are subject to change. Changes in LLPA or Fees will be sent via e-mail, fax, and/or written MEMO delivered by USPS first class mail. Changes will be sent prior to the change(s) taking effect. Note: It is the Broker or Correspondent s responsibility to ensure the appropriate e-mail address, fax number, and mailing address on file is current. -2.2- July 1, 2014
Conforming Fixed Rate Mortgage (10 30 Year Fixed Terms) Topic Program Type & Loan Term Minimum/Maximum Loan Primary / Second Home / Investment Term Program Code 30 Year Fixed CFR30 20 Year Fixed CFR20 15 Year Fixed CFR15 10 Year Fixed CFR10 Min Loan Amount Max Loan Amount $75,000 $417,000 or Conforming Limit Lower loan amounts may be considered with applicable fee Maximum LTV/CLTV/HCLTV Primary Residence Purchase/No Cash Out Refinance Max LTV Property Type CLTV/HCLTV SFD/Condo/PUD 95/95/95% Min Credit Score 620* MI requirements may differ 2 Unit 85/85/85% 620* MI requirements may differ 3-4 Unit 75/75/75% 620 Property Type Cash Out Refinance Max LTV CLTV/HCLTV TV SFD/Condo/PUD 85/85/85% Min Credit Score 620* MI requirements may differ Maximum LTV/CLTV/HCLTV Secondary Residence Maximum LTV/CLTV/HCLTV Non-Owner-Occupied 2-4 Unit 75/75/75% 620 Purchase/No Cash Out Refinance Max LTV Property Type CLTV/HCLTV SFD/Condo/PUD 90/90/90% Min Credit Score 620* MI requirements may differ Cash Out Refinance Max LTV Min Credit Property Type CLTV/HCLTV Score SFD/Condo/PUD 75/75/75% 620 Purchase/No Cash Out Refinance Property Type Max LTV Min Credit CLTV/HCLTV Score SFD/Condo/PUD 75/75/75% 720 2-4 Unit Ineligible Ineligible -2.3- July 1, 2014
Eligible States of Origination Escrow Waiver Assumable Buydowns GA, MD, NC, SC, TN, VA, WV (Conforming Fixed Rate) Available for all loans with LTV 80% with fee No Permanent Buy-downs Only Subordinate Financing Must meet LTV/CLTV restrictions stated above Must comply with Fannie Mae Selling Guide for Acceptable Subordinate Financing Types Documentation & Income Requirements Follow AUS findings report for items not addressed in this guide (see LP Requirements section for overlays) Additional supporting documentation may be required Qualifying Ratios Max DTI of 43% Eligible Borrowers Eligible Property Types US Citizens Permanent Resident Aliens Non-Permanent Aliens One Unit SFD, 2-4 Unit (Primary Only), PUD, & Established Condominium New Condominium Projects Not Eligible Multiple Property Ownership Follow FNMA guidelines for number of properties financed. South State will finance a maximum of 4 properties or up to $1,000,000 total exposure, whichever is less. 4506-T Wholesale A completed, signed, dated, and unexpired IRS form 4506-T for all borrowers whose income is used to qualify must be included in file submission authorizing South State to obtain income information for all borrowers. A new 4506-T must be signed at closing. Correspondent A completed, signed, dated, and unexpired IRS form 4506-T for all borrowers whose income is used to qualify must be included in file submission. 4506-T is to have been executed by the Correspondent with the transcripts also included in file submission. A new 4506-T must be signed at closing. -2.4- July 1, 2014
Conversion of Principal Residence Appraisal (Conforming Fixed Rate) Second Home Mortgage payment for current residence and new residence must be counted against borrower for qualifying. 6 months PITI for reserve requirements. Investment Property If less than 30% equity in current residence then six months PITI for existing primary and six months PITI for new property. If equity in current residence is greater than or equal to 30% then up to 75% of rental income may be used to qualify. If less, no rental income may be used. To include rental income, the following must be documented: Fully executed lease agreement Security deposit from tenant Bank statement verifying funds of security deposit Validation of home value Eligible Appraisal Forms Full Interior-Exterior 1004 / 1073 (Condo) Property Inspection Waiver (PIW) Must receive DU PIW findings Only eligible on South State Serviced DU Refi Plus mortgages Hazard declarations page must be included with the initial file submission. Coverage required in the amount equal to 100% of the insurable value of improvements as determined by the INSURER or the loan amount, as long as such is a minimum of 80% of the insurable value of improvements as determined by the INSURER. Increase underwriting fee $75 on initial GFE disclosure for PIW execution. Ineligible Appraisal Forms Freddie Mac LP offered Exterior-Only Inspection Appraisal Reports (2055 & 466-Condo) LP offered Condition and Marketability Report (2070 - no value given) LP offered Property Inspection Alternative (PIA) Similar to PIW Escrows for Completion Escrows for completion may be allowed on a case by case basis. Escrows for items that affect livability will not be considered. Title/Deed Restrictions The following are ineligible for purchase: Life Estates Irrevocable Trusts 1031 Exchanges Un-Permitted Additions -2.5- July 1, 2014
Refinance Permanent Financing for an Existing Construction Loan Private Mortgage Insurance (Conforming Fixed Rate) South State does not provide financing for initial construction loans. The refinance of a construction loan to permanent financing is allowed. Limited Cash-Out Refinance Standard Agency refinance guidelines apply. Maximum LTV based on appraised value and subject to LTV/CLTV restrictions in Refinance Matrix above. Cash-Out Refinance Borrower(s) must have held legal title to the lot for at least six months prior to the closing of the permanent mortgage. All other standard Agency cash-out refinance guidelines apply. Maximum LTV based on appraised value and subject to LTV/CLTV restrictions in Refinance Matrix above. General Coverage Requirements Fixed Rate > 20 Years Fixed Rate < 20 Years LTV Coverage LTV Coverage > 90% But 95% 30% > 90% But 95% 25% > 85% But 90% 25% > 85% But 90% 12% > 80% But 85% 12% > 80% But 85% 6% Transactions requiring mortgage insurance may be subject to MI Company overlays Fannie Mae standard coverage levels required Private Mortgage Insurance Disclosure Underwriting All transactions requiring Mortgage Insurance must include appropriate Private Mortgage Insurance Disclosure to borrower(s). Loans must be evaluated by Fannie Mae Desktop Underwriter or Freddie Mac Loan Prospector (see LP Requirements for additional overlays) Loans receiving the following message through AUS are not eligible for purchase: Out of Scope or Error DU Expanded Approval (DU Refi Plus Only) DU Refer with Caution LP A Minus LP Caution Manually underwritten loans are not eligible -2.6- July 1, 2014
LP Requirements DU Refi Plus (Conforming Fixed Rate) Loans evaluated by Freddie Mac Loan Prospector must meet the following requirements: Max LTV/CLTV of 95% unless lower max LTV/CLTV listed in Product Matrix above 620 minimum score up to 80%, 700 minimum score over 80% Max LTV/CLTV of 90% for non-occupying co-borrower with income used for qualification No manufactured housing Max DTI 43% If tax returns required to document income, 2 years must be obtained Full interior/exterior appraisal required MI Coverage must meet Fannie Mae minimum requirements Loan Currently Serviced by South State 125% LTV/CLTV/HCLTV Maximum Current MI Certificate may be transferred Loan Level Pricing Adjustment Caps: Primary > 80% LTV & Term < 20 years 0 points Primary > 80% LTV & Term > 20 years 0.75 points Primary < 80% LTV, all Second Home & Investment Standard LLPA s Loan Currently NOT Serviced by South State 105% LTV/CLTV/HCLTV Maximum Owner Occupied Single Family Detached 660 Minimum FICO Current MI Certificate may not be transferred Transactions requiring mortgage insurance (new certificate) are not eligible for PIW Full interior/exterior appraisal required Loan Level Pricing Adjustment Caps: Primary > 80% LTV & Term < 20 years 0 points Primary > 80% LTV & Term > 20 years 0.75 points Primary < 80% LTV Standard LLPA s -2.7- July 1, 2014
Conforming Libor Adjustable Rate Mortgage Topic Program Type & Loan Term Minimum/Maximum Loan Primary / Second Home / Investment Term Program Code 3/1 ARM (30 Year Am) CARM31 5/1 ARM (30 Year Am) CARM51 7/1 ARM (30 Year Am) CARM71 10/1ARM (30 Year Am) CARM101 Min Loan Amount Max Loan Amount $75,000 $417,000 or Conforming Limit Lower loan amounts may be considered with applicable fee Maximum LTV/CLTV/HCLTV Primary Residence Maximum LTV/CLTV/HCLTV Secondary Residence Maximum LTV/CLTV/HCLTV Non-Owner-Occupied Purchase/No Cash Out Refinance Max LTV Property Type CLTV/HCTLV TV SFD/Condo/PUD 90/90/90% Min Credit Score 620* MI requirements may differ 2 Unit 75/75/75% 620 3-4 Unit 65/65/65% 620 Cash Out Refinance Property Type Max LTV Min Credit CLTV/HCTLV Score SFD/Condo/PUD 75/75/75% 620 2-4 Unit 65/65/65% 620 Purchase/No Cash Out Refinance Max LTV Min Credit Property Type CLTV/HCTLV Score SFD/Condo/PUD 80/80/80% 620 Cash Out Refinance Max LTV Min Credit Property Type CLTV/HCTLV Score SFD/Condo/PUD 65/65/65% 620 Purchase/No Cash Out Refinance Property Type Max LTV Min Credit CLTV/HCTLV Score SFD/Condo/PUD 65/65/65% 720 2-4 Unit Ineligible Ineligible -2.8- July 1, 2014
Eligible States of Origination NC/SC Conforming Flagship ARM Escrow Waiver Assumable Buydowns (Conforming ARM Including NC/SC Conforming Flagship) GA, MD, NC, SC, TN, VA, WV Program guides are applicable for the NC/SC Conforming Flagship ARM pricing. Available for all loans with LTV 80% with fee No Permanent Buydown Only Subordinate Financing Must meet LTV/CLTV Restrictions stated above Must comply with Fannie Mae Selling Guide for Acceptable Subordinate Financing Types Documentation & Income Requirements Follow AUS findings report for items not addressed in this guide (see LP Requirements section for overlays) Additional supporting documentation may be required Qualifying Ratios Max DTI of 43% Eligible Borrowers Eligible Property Types Multiple Property Ownership US Citizens Permanent Resident Aliens Non-Permanent Aliens One Unit SFD, 2-4 Unit (Primary Only), PUD, & Established Condominium New Condominium Projects Not Eligible Follow FNMA guidelines for number of properties financed. South State will finance a maximum of 4 properties or up to $1,000,000 total exposure, whichever is less. 4506-T Wholesale A completed, signed, dated, and unexpired IRS form 4506-T for all borrowers whose income is used to qualify must be included in file submission authorizing South State to obtain income information for all borrowers. A new 4506-T must be signed at closing. Correspondent A completed, signed, dated, and unexpired IRS form 4506-T for all borrowers whose income is used to qualify must be included in file submission. 4506-T is to have been executed by the Correspondent with the transcripts also included in file submission. A new 4506-T must be signed at closing. -2.9- July 1, 2014
Conversion of Principal Residence Appraisal Second Home (Conforming ARM Including NC/SC Conforming Flagship) Mortgage payment for current residence and new residence must be counted against borrower for qualifying. 6 months PITI for reserve requirements. Investment Property If less than 30% equity in current residence then six months PITI for existing primary and six months PITI for new property. If equity in current residence is greater than or equal to 30% then up to 75% of rental income may be used to qualify. If less, no rental income may be used. To include rental income, the following must be documented: Fully executed lease agreement Security deposit from tenant Bank statement verifying funds of security deposit Validation of home value Eligible Appraisal Forms Full Interior-Exterior 1004 / 1073 (Condo) Ineligible Appraisal Forms Property Inspection Waiver (PIW) DU RefiPlus only available on Conforming Fixed Rate product Freddie Mac LP offered Exterior-Only Inspection Appraisal Reports (2055 & 466-Condo) LP offered Condition and Marketability Report (2070 - no value given) LP offered Property Inspection Alternative (PIA) Similar to PIW Escrows for Completion Escrows for completion may be allowed on a case by case basis. Escrows for items that affect livability will not be considered. Refinance Permanent Financing for an Existing Construction Loan South State does not provide financing for initial construction loans. The refinance of a construction loan to permanent financing is allowed. Limited Cash-Out Refinance Standard Agency refinance guidelines apply. Maximum LTV based on appraised value and subject to LTV/CLTV restrictions in Refinance Matrix above. Cash-Out Refinance Borrower(s) must have held legal title to the lot for at least six months prior to the closing of the permanent mortgage. All other standard Agency cash-out refinance guidelines apply. Maximum LTV based on appraised value and subject to LTV/CLTV restrictions in Refinance Matrix above. -2.10- July 1, 2014
Title/Deed Restrictions Private Mortgage Insurance Private Mortgage Insurance Disclosure Caps (Conforming ARM Including NC/SC Conforming Flagship) The following are ineligible for purchase: Life Estates Irrevocable Trusts 1031 Exchanges Un-Permitted Additions General Coverage (subject to change) 3/1, 5/1, 7/1, 10/1 Conforming ARM LTV Coverage > 85% But 90% 25% > 80% But 85% 12% Transactions requiring mortgage insurance may be subject to MI Company overlays Fannie Mae standard coverage levels required All transactions requiring Mortgage Insurance must include appropriate Private Mortgage Insurance Disclosure to borrower(s). Product Max First Adjustment Max Subsequent Adjustment Max Life Adjustment 3/1 Libor 2% 2% 6% 5/1 Libor 5% 2% 5% 7/1 Libor 5% 2% 5% 10/1 Libor 5% 2% 5% Margin 2.25% Index Disclosures Convertible Qualifying Payment One Year WSJ Libor Appropriate ARM Disclosure is required. No Initial fixed rate period 3 years Greater of the note rate plus 6% or the fully indexed rate Initial fixed rate period 5 years Greater of the note rate plus 5% or the fully indexed rate Initial fixed rate period greater than 5 years Note rate or fully indexed rate -2.11- July 1, 2014
Underwriting (Conforming ARM Including NC/SC Conforming Flagship) Loans must be evaluated by Fannie Mae Desktop Underwriter or Freddie Mac Loan Prospector (see LP Requirements for additional overlays) Loans receiving the following message through AUS are not eligible for purchase: Out of Scope or Error DU Expanded Approval (DU Refi Plus Only) DU Refer with Caution LP A Minus LP Caution Manually underwritten loans are not eligible LP Requirements Loans evaluated by Freddie Mac Loan Prospector must meet the following requirements: Max LTV/CLTV of 90% unless lower max LTV/CLTV listed in Product Matrix above 620 minimum score up to 80%, 700 minimum score over 80% Max LTV/CLTV of 90% for non-occupying co-borrower with income used for qualification No manufactured housing Max DTI 43% If tax returns required to document income, 2 years must be obtained Full interior/exterior appraisal required MI Coverage must meet Fannie Mae minimum requirements -2.12- July 1, 2014
Fannie Mae HomePath Mortgage - 30 Year Fixed Occupancy Purpose Property Type Primary Residence Purchase 1 Unit - Attached & Detached, Condo, PUD 1 Unit - Attached & Detached, Condo, PUD Max Loan Amount Max LTV/CLTV/ HCLTV Minimum Credit Maximum DTI $417,000 95%/95%/95% 660 43% $417,000 80%/80%/80% 620 43% 2 Units $533,850 85%/85%/85% 660 43% 2 Units $533,850 80%/80%/80% 620 43% Reserve Requirement As Required per Fannie Mae DU As Required per Fannie Mae DU As Required per Fannie Mae DU As Required per Fannie Mae DU 3-4 Units $645,300 3 Unit $801,950 4 Unit 75%/75%/75% 620 43% As Required per Fannie Mae DU Second Home Purchase 1 Unit - Attached & Detached, Condo, PUD 1 Unit - Attached & Detached, Condo, PUD $417,000 90%/90%/90% 660 43% $417,000 80%/80%/80% 620 43% As Required per Fannie Mae DU As Required per Fannie Mae DU Investment Purchase 1 Unit - Attached & Detached, Condo, PUD 1 Unit - Attached & Detached, Condo, PUD 1 Unit - Borrower with 5-10 Financed Properties $417,000 85%/85%/85% 720 43% $417,000 80%/80%/80% 720 43% $417,000 75%/75%/75% 720 43% As Required per Fannie Mae DU As Required per Fannie Mae DU As Required per Fannie Mae DU NOTES/OVERLAYS: HomePath product is for the purchase of Fannie Mae-owned properties designated by Fannie Mae as eligible 30 year fixed rate conforming product Copy of the "Listing Details" page from www.homepath.com showing HomePath Mortgage logo is Required Properties where the "Listing Details" page reflects only the HomePath Renovation Mortgage logo are not eligible Mortgage Insurance is not required for transactions over 80% LTV Property appraisals are not permitted - The sales price listed on the sales contract is used as the property value A market rent schedule obtained from an appraiser is acceptable for determining rent for qualifying purposes Condo Eligibility - Review of the entire project's Master Insurance policy(s) is the only project eligibility requirement Primary residence, Interested Party Contributions of 6% on LTV's greater than 90% are eligible DU approval is required - Recommendation must reflect "Approve/Eligible" DU messages relating to items outside standard Fannie Mae eligibility addressed above may be ignored -2.13- July 1, 2014
FHA 15 & 30 Year Fixed Occupancy Purpose Property Type Max Loan Amount Max LTV/CLTV Minimum Credit Maximum DTI Purchase 1-4 Unit Max MSA FHA Loan Limit 96.5%/100% 640 43% Primary Residence Refinance Cash Out Refinance 1-4 Unit 1-2 Unit Max MSA FHA Loan Limit Max MSA FHA Loan Limit 97.75%/97.75% 640 43% 85%/85% 640 43% Streamline Refinance Ineligible Second Home Ineligible Investment Ineligible NOTES/OVERLAYS: DU approval is required - Manual underwrites are not eligible Streamline Refinance is not eligible Condominiums and Manufactured Housing are not eligible Maximum 4 borrowers per transaction Maximum of 1 x 30 on mortgage lates in the most recent 12 months for Purchase transactions 0 x 30 or greater on mortgage lates in the most recent 12 months for Refinance transactions Maximum of 4 financed properties (cumulative) Power of Attorney is ineligible on Cashout Refinance transactions Minimum 12 month chain of title required Cash Out refinance requires a 6 months payment history on subject property Cash Out refinance - Properties listed for sale must be canceled 6 months prior to initial loan application Minimum term is 180 Properties sold within 90 days of seller's acquisition with a sales price > 20% over acquisition are Ineligible Non Occupant Co-borrower is allowed for 1 unit only - No Cash Out New subordinate financing is not allowed on Refinance transactions Max 6% seller contributions -2.14- July 1, 2014
VA 15 & 30 Year Fixed Occupancy Purpose Property Type Max Loan Amount Max LTV/CLTV Minimum Credit Maximum DTI Purchase 1-4 Unit $417,000 100%/100% 620 43% Primary Residence Refinance "Other" (Loans that refi construction or installment land contract) Cash Out Refinance (called "cash-out" by VA even if borrower receives no cash) VA IRRRL 1-4 Unit $144,000 90%/90% 620 43% 1-4 Unit $417,000 90%/90% 620 43% Ineligible Second Home Ineligible Investment Ineligible NOTES/OVERLAYS: DU approval is required - Manual underwrites are not eligible Max LTV/CLTV can be exceeded by the inclusion of the VA Funding Fee Minimum term is 180 Maximum of 4 financed properties (cumulative) IRRRL transactions are not eligible Bonus entitlement may not be used on Refinance "Other" Condominiums and Manufactured Housing are not eligible Flip transactions are not eligible - Title reveals changes in ownership in the course of a few months Non Occupant Co-borrower is not allowed Maximum of 1 x 30 on mortgage lates in the most recent 12 months for Purchase transactions 0 x 30 or greater on mortgage lates in the most recent 12 months for Refinance transactions Minimum 12 month chain of title required Cash Out refinance requires a 6 months payment history on subject property True Cash Out refinance - Properties listed for sale must be canceled 6 months prior to initial loan application Power of Attorney is ineligible on Cashout Refinance transactions New subordinate financing is not allowed on Refinance transactions Max 4% seller contributions -2.15- July 1, 2014
USDA 30 Year Fixed Occupancy Purpose Property Type Max Loan Amount Max LTV/CLTV Minimum Credit Maximum DTI Purchase 1-4 Unit $417,000 100%/100% 640 29%/41% Primary Residence Refinance Cash Out Refinance Streamline Refinance Ineligible Ineligible Ineligible Second Home Ineligible Investment Ineligible NOTES/OVERLAYS: GUS approval is required - Manual underwrite is not eligible LTV/CLTV is based on Appraised Value Max LTV/CLTV can be exceeded by the inclusion of the financed Guarantee Fee All Refinance transactions are ineligible Single Family Residence and PUDs only 2-4 Unit, Condominiums and Manufactured Housing are not eligible Maximum 4 borrowers per transaction Each borrower must have a minimum of 2 scores reporting Credit waivers are not allowed Maximum of 1 x 30 cumulative on any secured or unsecured debt in the past 12 months Foreclosure/Short Sale within 36 months of application - Bankruptcy discharged within 2 years of application Outstanding collection accounts, regardless of age, with no arrangements for payments are ineligible Ownership of 1 additional dwelling - Outside commuting area, not structurally sound, or not functionally adequate Minimum 12 month chain of title required Properties sold within 90 days of seller's acquisition with a sales price > 20% over acquisition are Ineligible Non Occupant Co-borrower is not eligible Max 6% seller contributions -2.16- July 1, 2014
Capital Markets Jumbo Product Topic Program Type & Loan Term Minimum/Maximum Loan Maximum LTV/CLTV & Loan Amount Primary Residence Primary Residence & Second Home Term Program Code 15 Year Fixed JFCMI15 30 Year Fixed JFCMI30 5/1 ARM (30 Year Only) JACMI51 7/1 ARM (30 Year Only) JACMI71 10/1 ARM (30 Year Only) JACMI101 Min Loan Amount Max Loan Amount $417,001 $1,500,000 Purchase/No Cash-Out Refinance 1 Unit, PUD Max Max Min Credit Loan Amount LTV/CLTV/HCLTV Score $1,500,000 80/80% 760 $1,500,000 75/75% 720 $1,500,000 70/70% 700 Cash-Out Refinance 1 Unit, PUD Max Loan Amount Max LTV/CLTV/HCLTV Min Credit Score $1,500,000 70/70% 720 Max Cash Out LTV/CLTV/HCLTV < 50% = $500,000 LTV/CLTV/HCLTV > 50% = $300,000 Note: Max cash out includes pay off of subordinate liens Maximum LTV/CLTV Secondary Residence Purchase/No-Cash Out Refinance 1 Unit, PUD Max Max Min Credit Loan Amount LTV/CLTV/HCLTV Score $1,000,000 75/75% 720 $1,000,000 70/70% 700 $1,500,000 70/70% 720 Second Home not eligible for cash-out refinance Maximum LTV/CLTV Non-Owner Occupied Ineligible Declining Market Policy Maximum LTV/CLTV/HCLTV financing is subject to a reduction of 5% for properties located in a declining or distressed market. Declining/distressed market is defined as the neighborhood section of the appraisal indicates that Property Values are declining Reduction is waived when the following criteria is met: o Minimum FICO score of 740 o 6 months reserves in addition to standard requirement o LTV/CLTV/HCLTV < 65% - 17 - July 1, 2014
Eligible States of Origination (TPO) Underwriting GA, MD, NC, SC, TN, VA, WV (Capital Markets Jumbo Fixed & ARM) Manual Underwrite Required There are No Exceptions to this guide Contact South State Underwriting for questions on any items not addressed in guide Appraisal Full Interior-Exterior 1004 Market Conditions Addendum 1004MC required 1004D required for conversion of interim construction financing to permanent transactions (2 close only) The date of appraisal(s) must be within 120 days of closing If greater than 120 days, a new appraisal will be required, recertification is not eligible Transactions Requiring 2 Appraisals All transactions with loan amount > $1,000,000 First Time Homebuyer (see also First Time Homebuyer section) Appraisal Valuation Assumable Buy-downs Continuity of Obligation Comparables The appraisal should contain at least 3 recently closed comparables Generally the appraisal should not contain comps greater than 6 months from the report date Comparables between 6-12 months are typically permitted with acceptable appraiser explanation Comparables greater than 12 months from the report date are not permitted Typically comps used should be within 1 mile of the subject, as well as similar in age, size, features, amenities Net Adjustments should not exceed 15% of the comparable s sales price, gross adjustments should not exceed 25%, and individual line items should not exceed 10% Not eligible Not available For a refinance of an existing lien (no cash-out or cash-out) continuity of obligation must be present. Acceptable continuity of obligation exists when any of the following conditions are met: At least 1 borrower obligated on the new loan was also a borrower obligated on the existing loan being refinanced The borrower has been on title and residing in the property for 6 months and has either paid the mortgage for the last 6 months or can demonstrate a relationship with the current obligor The borrower recently inherited or was legally awarded the property (divorce, separation, etc) The title on the existing loan has been held in the name of a natural person or an LLC and the borrower was a member of the LLC prior to the transfer Transfer must occur prior to application Note: Transfer of ownership from a corporation to an individual does not meet the acceptable continuity definition. If continuity of obligation does not exist, the loan will be underwritten as a purchase transaction. - 18 - July 1, 2014
(Capital Markets Jumbo Fixed & ARM) Convertible Conversion of Principal Residence Not eligible Current Home Pending Sale Mortgage payment for current residence and new residence must be counted in qualifying ratios Converting to Second Home Mortgage payment for current residence and new residence must be counted in qualifying ratios Converting to Investment Property Equity in current residence must be greater than or equal to 30% to use 75% of rental income to qualify If less than 30% equity, no rental income may be used and the mortgage payment for current resident plus the new residence must be counted in qualifying ratios To include rental income, all of the following are required: o Fully executed lease agreement o Copy of canceled check for security deposit o Bank statement verifying deposit in borrower s account o Validation of home value through appraisal no older than 6 months from date of application Credit History Minimum of 3 trade lines from a traditional source that reported for 24 months or more, and 1 open mortgage trade line in the last 36 months o 0 x 30 previous 12 months; 1 x 30 previous 24 months o See First Time Homebuyer section for applicable credit history requirements o Borrowers currently owning home free and clear requirement is waived for free and clear period A copy of the title is required Borrower(s) must have a minimum of two credit scores A letter of explanation is required for any new account opened within 60 days of credit report date where the total credit extended is greater than $10,000-19- July 1, 2014
Derogatory Credit Documentation (Capital Markets Jumbo Fixed & ARM) Borrowers with previous severe derogatory credit history must have reestablished acceptable credit since the event with at least 3 satisfactorily paid accounts. Delinquent credit impacting title must be paid off prior to or at close. Chargeoffs or collection accounts that do not impact title are not required to be paid off if the cumulative balance does not exceed $5,000. If the total exceeds $5,000, all collection balances must be paid in full and past due brought current. Bankruptcy None in the past 7 years based on the discharge or dismissal date Foreclosure/Deed-in-Lieu/Notice of Default None in the past 7 years Foreclosure filed/consummated/redeemed, delinquent property taxes, delinquency of 120 days or more, and workout agreements are treated the same as Foreclosure (as per title work, tax certificate, and/or credit report) Pre-Foreclosure Sale/Short Sale/Short Refinance/Modification None in the past 4 years Consumer Credit Counseling Service (CCCS) None in the past 7 years based on the completion date Full Documentation Required Credit report/credit verifications, income and asset documentation may not be more than 90 days at time of close o Stock asset values used for dividend/interest income may be no more than 30 days old at close 2 years income documentation required See Income section for detailed information Assets must be sourced & seasoned for 60 days - 2 months asset statements required o Statements must provide Borrower as account holder, account #, time period covered, current balance, & statement date o See Eligible Funds section for additional asset information Previous 24 month primary housing payment history is required o Should include mortgage payment, rental payments or combination o 0 x 30 previous 12 months; 1 x 30 previous 24 months Fully processed 4506-T with Tax Transcripts required for all borrowers, personal returns only Certificate of Occupancy required on all new construction properties Eligible Borrowers US Citizens Permanent Resident Aliens Proof of lawful residency required Not Eligible Non-Permanent Resident Aliens Limited Partnerships, General Partnerships, Corporations - 20 - July 1, 2014
Eligible Funds Reserves (Capital Markets Jumbo Fixed & ARM) Asset documentation must be sourced and seasoned for 60 days. Large or irregular deposits (in excess of 5% of the transaction) must be explained and may require additional documentation. Acceptable for Down Payment/Closing Costs & Reserves Funds from borrower s checking or savings account(s) Proceeds from sale of borrower s personal assets o Value and evidence of sale must be verified Proceeds from a loan secured by borrower s assets (example: loan secured by other real estate) Proceeds from sale of other real estate Stock, retirement accounts, COD, pension &/or other savings plan Business funds when borrower is the sole owner and the company s CPA provides a statement that withdrawal of the funds will not negatively affect the business Specific to Down Payment/Closing Costs Gift funds are eligible on Primary & Second Home o 5% minimum borrower contribution before gift may be used o Gift letter required stating donor s relationship, address, phone #, amount of gift, & no repayment required o Donor must be related to borrower Domestic partner acceptable with proof of shared residency history o Evidence of donor s ability to provide the funds 60 days sourced & seasoned Proceeds from a loan secured by financial assets (401K, stock, life insurance, etc) Ownership & proof of liquidation is required when stock, retirement accounts, COD, etc are used for down payment/closing costs Specific to Reserves 60% of the net vested amount of assets located in retirement funds may be used for liquid reserves 70% of the value of stocks, bonds, and mutual funds in non-retirement accounts may be used for liquid reserves Loan Amount (Primary, 1 Unit) Months of PITI $1MM 6 Months Liquid > $1MM 12 Months Liquid Second Home requires 12 months liquid reserves An additional six (6) months reserves is required for each financed property owned by the borrower(s) First Time Homebuyer requires 12 months liquid reserves See Eligible Funds section for information on allowable funds for reserves Employment History 2 year employment history required Gaps In Employment All gaps exceeding 1 month must be explained in writing Borrowers re-entering the workforce with less than 2 year employment history must be employed with current employer a minimum of 6 months and previous employment must be fully documented - 21 - July 1, 2014
Escrows for Completion Escrow Waiver First Time Homebuyer Income (Capital Markets Jumbo Fixed & ARM) Escrows for completion are not allowed Available with fee Note: Partial waiver of insurance only is acceptable with fee First time homebuyers, defined as no ownership interest in a residential property during preceding 3 years, are allowed with additional restrictions: Primary residence only $1,000,000 max loan amount 720 minimum credit score 24 month housing history, 0 x 30 required o Payments documented via an institutional VOR or canceled checks/bank records o Borrowers living rent free are not eligible 12 months liquid reserves required Payment shock cannot exceed 200% This section outlines guides specific to different borrower income sources. If income has been declining or inconsistent, the lowest annual compensation over the prior 2 year period should be used. Annuity & Pension Income Verified by one of the following: Copy of retirement award letter(s) 12 months most recent bank statements showing receipt, OR Most recent years W-2, 1099, or signed tax return along with copies of 2 most recent bank statements showing deposit of income Asset Dissipation Must be an employment related asset & borrower must be of retirement age Borrower must have unrestricted access to the account and can only use if distribution is not already set up 70% of the value is to be used if the employment related asset is in the form of stocks, bonds, and mutual funds Funds used for closing or required reserves must be subtracted out of value Maximum LTV/CLTV/HCLTV 70% Purchase & rate term refinance only Divide Net Documented Assets (value after funds for transaction are subtracted and any discounts applied) by 360 for monthly income figure Automobile Allowance Verified allowance minus all unreimbursed expenses Add figure to income (if negative reduce income by) Automobile payment(s) is included in ratios Bonus/Incentive Income Must be consistent and documented for a minimum of previous 2 years Written verification from the employer defining the dollar amount paid during past 24 months, OR The most recent 30 days paystub & 2 years W-2 s or signed tax returns If being used for down payment and is the only source of funds, it may not be counted as income - 22 - July 1, 2014
Income (continued) (Capital Markets Jumbo Fixed & ARM) Capital Gains/Losses Sale of assets including mutual funds, but excluding the sale of real estate 2 year history & sufficient assets to continue generating similar earnings required evidenced by 2 years signed tax returns If assets generating capital gains are being sold as part of the mortgage transaction, income must be reduced by the % of assets that are being sold Commission Income 2 years receipt required, same employer/same line of work 2 years signed tax returns & year to date earnings Child Support/Alimony Divorce decree/separation agreement, AND Copies of court records, bank statements or canceled checks reflecting 12 months receipt Disability Income Verify benefits with a copy of the awards letter or a statements from the benefit s payer Dividend/Interest Income Received for previous 24 months with current YTD in line with previous earnings Verification of stock assets no older than 30 days at closing with sufficient assets remaining to generate income Document with 2 years tax returns (4 years for non-public company stock) The cash/stocks/bonds producing dividend/interest income may not be used as a source for down payment or pledged as security Employed by a Relative Document income with 2 years tax returns and a current 30 day paystub reflecting YTD earnings Non-Taxable Income Non-taxable portion (verified on 1040) may be grossed up 25% Notes Receivable Income May be used to qualify if received at least 12 months and will continue for at least 3 years Evidenced by a copy of the 12 month seasoned note, individual tax returns, AND copies of bank statements Overtime & Part-Time/Second Job Must have been received for previous 24 months Document with 1 current 30 day pay stub with YTD earnings & W-2 s or tax returns for previous 2 years Rental Income Tax returns for the prior 2 years, including Schedule E, AND a current lease are required A 2 year history from time of application of managing residential investment properties is required o Must be free of unexplained gaps greater than 3 months o This can be waived for borrowers converting current primary to investment who meet the conversion guides and no other rental income is being used (See Conversion of Primary Residence) - 23 - July 1, 2014
Income (continued) Verification of Employment Requirements (Capital Markets Jumbo Fixed & ARM) Salaried Income/Wage Earner Document via current 30 day pay stub with YTD earnings, 2 years W-2, and a verbal verification of employment executed within 10 calendar days of closing Self-Employed 25% or more ownership interest in a business Self-employment income not used to qualify must still follow selfemployment documentation guidelines 2 years signed personal and business returns (if applicable), including all schedules, K-1s, and statements required o A year-to-date profit and loss statement may be required when the application date is more than 120 days after the end of the business tax year Self-Employed Verification of Existence of Business is required within 10 calendar days prior to close Social Security and Retirement Including retirement distributions, document via: Copy of social security award letter 2 years tax returns 2 years 1099, OR 3 months bank statements Proof of continuance required for retirement distributions Social Security Disability Document via: Copy of social security award letter, AND 12 months bank statements showing direct deposit Trust Income Trust must be irrevocable to use income A copy of the trust agreement or trustee s statement confirming the amount, frequency, & duration of payments is required Salaried Verbal Verification Must be executed within 10 calendar days of closing Confirm the borrower is employed at time of verification Include the name & phone number of the person processing the verification Include the name, position, & phone number of the person providing the employment verification The telephone number of the borrower s employment must be verified independently Self-Employed Verification of Existence of Business Must be executed within 10 calendar days of closing The existence of business must be verified through a disinterested 3 rd party which can include: o CPA o Regulatory agency o Professional association Documentation secured from source is required - 24 - July 1, 2014
Ineligible Transactions Interested Party Contributions/Sales Concessions Lawsuit/Pending Litigation (Capital Markets Jumbo Fixed & ARM) Investment Transactions Interest Only Properties listed for sale within 6 months of refinance application date Properties titled to a separate legal entity (LLC, corporation, limited partnership, etc) Non-QM transactions High Cost/Section 32 Transactions (HOEPA) Higher Priced/Section 35 Mortgage Loans (HPML) Lease-Purchase Option Leasehold Properties Escrows for Work Completion Properties purchased through auction Note: This list is not inclusive of all ineligible parameters. Please review guidelines in their entirety to ensure loan eligibility, including Property Eligibility section. Maximum 3 rd Party Concessions are 6%. Ineligible Concessions and concessions above 6% must be deducted from the purchase price prior to determining LTV. Allowable Concessions Permanent reduction of the interest rate on the mortgage Payment of mortgage financing charges (discount points, loan fees, origination fees, property taxes, insurance escrows, etc) Pay the cost of other items typically paid by borrower (appraisal fee, application fee, attorney fees, title insurance, transfer taxes, etc) Ineligible Concessions Payment of HOA dues Concessions not addressed above Borrower presently involved in a lawsuit or pending litigation: Primary Purchase or Rate Term Refinance only A statement from borrower s attorney explaining circumstances, potential liability, & insurance coverage may be necessary The title company must be informed of the lawsuit/litigation & provide affirmative coverage - 25 - July 1, 2014
Liabilities Topic (Capital Markets Jumbo Fixed & ARM) Installment Debt Payments may be excluded from the DTI calculation if there are less than 10 payments remaining to pay in full o Excluded payment may not exceed 5% of borrower s qualifying income o Installment debt cannot be paid down to 10 payments in order to exclude Revolving Debt The minimum required payment as stated on the credit report should be used in DTI calculations, unless, Revolving accounts where there are less than 10 payments remaining based on the remaining balance divided by the payment, may be paid off and closed to exclude from DTI calculation o If there are more than 10 payments remaining the debt must be included in the DTI and cannot be paid off & closed to exclude o Revolving debt cannot be paid down to 10 payments in order to exclude o Excluded payment may not exceed 5% of borrower s qualifying income Revolving accounts with no payment listed on the credit report and no supplemental documentation to support a payment less than 5% of the balance, require 5% of the outstanding balance to be used as payment (Ex: American Express revolving accounts) Home Equity Lines of Credit The qualifying payment used for all HELOCs, including non-subject property, is the greater of the payment listed on the credit report or 1% of the entire line amount, regardless of balance Alimony/Child Support Payments may be excluded from the DTI calculation if there are less than 10 payments remaining to pay in full o Excluded payment may not exceed 5% of borrower s qualifying income Business/Co-signed Debt For co-signed debt, if the credit report does not reflect borrower is co-signer, a copy of the note/security instrument is required to verify borrower is not the primary obligor Proof of payment by the business/primary obligor is required to exclude debt from borrower s DTI calculations o 12 months, consecutive canceled checks are required for proof o If 12 months cannot be obtained, the debt must be included in DTI New accounts with less than 12 months proof of payment, must always be counted in borrower s DTI calculations Multiple Property Ownership Maximum of four mortgaged residential properties, regardless of occupancy An additional six (6) months reserves is required for each financed property owned by the borrower(s) - 26 - July 1, 2014
Non-Arms Length Transactions Non-Occupying Co-Borrower Occupancy Payment Shock POA Requirements Private Roads (Capital Markets Jumbo Fixed & ARM) Primary residence only Ineligible if additional risk factors are present (distressed sale, selling assets for down payment, etc) Appraiser must be informed of the non-arms length transaction and address whether or not the market value has been affected Principals or employees of lender or service provider cannot provide services on their own transactions Additional Family Transaction Requirements Gift of Equity letter required Foreclosure bailouts ineligible o Payoff statement & VOM required on current mortgage as verification HUD-1 must reflect all liens on title paid, not all proceeds going to family member Current appraised value used for LTV purposes when borrower purchasing subject property from a family member Primary, 1-unit, SFR only Occupying borrower DTI may not exceed 40% Non-occupying co-borrower must sign the Note as well as be on title prior to closing on a refinance or must take title at closing on a purchase Non-occupying co-borrower must have a family or long standing relationship with the borrower and may not be an interested party to the transaction Primary Residence & Second Home Payment Shock is defined as the percentage of change from the Borrower(s) current housing payment to the Borrower(s) new housing payment. It reflects total rental payment or the PITIA on the Borrower s Primary Residence. A Limited Power of Attorney may be used for execute the closing documents provided the POA meets the following requirements: POA is specific to the transaction Contains an Expiration Date POA is used only to execute final loan documents Borrower(s) signed the initial 1003 No interested party to the transaction may be POA POA is recorded with the Mortgage/Deed of Trust Acceptable subject to the following: Title company must insure access to the subject property from a public street An adequate, legally enforceable agreement or covenant for maintenance is required o Should include provisions for payment of repairs, default remedies, & term of the agreement If the state has statutory provisions defining the responsibilities of property owners for maintenance & repairs, no separate agreement or covenant is required Maintenance costs must be included in borrower s ratios - 27 - July 1, 2014
Property Eligibility (Capital Markets Jumbo Fixed & ARM) Eligible Property Types 1 Unit Single Family Attached & Detached PUD (Type E & F) o Project Budget & PUD Questionnaire required on New PUD (Type F) Rural Properties Primary Only Historical Homes 2 comps listed with the historical society required Accessory Units/In-Law Units/Non-Conforming Addition acceptable if: o 1 unit property o Typical, common and acceptable in subject market o 3 comps provided on appraisal with similar accessory unit o Rental income may not be used o Accessory unit must not jeopardize future hazard insurance claims o Accessory unit must be substantially smaller Ineligible Property Types Condominiums Co-ops 2-4 Unit Properties Lease-Purchase Option Leasehold Properties Properties Greater Than 10 Acres Properties Less Than 600 Square Feet Mixed-Use Properties Manufactured, Modular, & Log Home Properties Note: Special consideration must be given for properties where land value exceeds 35% of total value to ensure typical & common in market area. Purchase Transactions Verification of a satisfactory chain of title is required for a minimum of 24 months The seller must be on title for a minimum of 90 days, (from the date seller takes title to date sales contract executed) Qualifying Ratios Maximum DTI = 40% Max DTI of 43% is allowed when the following are met: o LTV/CLTV/HCLTV ratio is five percent (5%) below the indicated maximum, and o Reserves (on the subject property) are six (6) months more than the required minimum, and o Payment Shock is less than 50% Qualifying payment used for Equity Lines of Credit Greater of the payment listed on the credit report or 1% of the entire line amount, regardless of balance Initial fixed rate period 5 years Greater of the Note rate plus 2% or the fully indexed rate Initial fixed rate period great than 5 years Greater of the Note rate or the fully indexed rate Note: See Liabilities section for additional information specific to inclusion/exclusion of borrower debt - 28 - July 1, 2014
Refinance (Cash-Out) Refinance (Rate Term) (Capital Markets Jumbo Fixed & ARM) Primary Residence only Maximum cash-out limits: o LTV/CLTV/HCLTV < 50% = $500,000 o LTV/CLTV/HCLTV > 50% = $300,000 Max cash out includes pay off of subordinate liens 6 month seasoning required since the most recent first mortgage transaction (purchase or refinance) from Note date to Note required for cash out Properties listed for sale within 6 months prior to application date are ineligible Copy of the Note for any subordinate lien is required Subordinate liens not provided by a financial institution are not eligible Proceeds used to pay off current first mortgage, including closing costs and prepaids Proceeds may be used to pay off junior liens used to purchase the property or those with 12 months seasoning o Home equity line of credit draws cannot exceed a total of $2,000 in previous 12 months A maximum of $5,000 incidental cash may be received back by the borrower If owned less than 6 months, LTV is based on lesser of the current appraised value or the original purchase price plus the cost of any documented improvements Properties listed for sale within 6 months prior to application date are ineligible Permanent Financing for Newly Constructed Home The conversion of construction-to-permanent financing, replacing interim construction financing on a new home with a long term mortgage, may be treated as a purchase, refinance or cash-out refinance. South State does not offer interim construction financing. Permanent financing is eligible. Purchase Borrower used proceeds from the interim construction financing to purchase the lot The LTV is calculated by dividing the unpaid principal balance by the lesser of the appraised value or the total acquisition costs (costs of improvements + purchase price of the lot) Limited Cash-Out Refinance Borrower held legal title to the lot prior to construction financing application and is named as the borrower for the construction loan For borrowers who acquired the lot 12 months or more before applying for the construction financing, LTV is based on the current appraised value For borrowers who acquired the lot within the 12 months preceding the application dated for the construction financing, LTV is based on the lesser of the appraised value or the total acquisition costs (costs of improvements + purchase price of the lot) Cash-Out Refinance Must meet all requirements for a Limited Cash-Out Refinance Borrower(s) must have held legal title to the lot for at least six months prior to the closing of the permanent mortgage Note: For qualification purposes taxes are calculated at 1.5% of the property value used to calculate LTV. - 29 - July 1, 2014
(Capital Markets Jumbo Fixed & ARM) Secondary Financing Term Secondary financing must meet LTV/CLTV/HCLTV restrictions stated in the Product Matrix. There also may be no terms that restrict prepayment of the secondary transaction. Simultaneous Closing Copy of loan approval & copy of the executed Note at closing Subordinate Existing Financing The terms of the second lien (copy from lender if not able to determine from credit), unsigned copy of subordination agreement prior to close, & executed subordination agreement at close are required Greater of the payment listed on the credit report or 1% of the entire line amount, regardless of balance is used as payment for Equity Line of Credit Fixed Rate Term 10 to 30 year amortization Terms < 180 months will be priced as 15 years; > 180 months will be priced as 30 years ARM Term 5/1 & 7/1initial fixed rate period options 30 year amortization only 4506-T Wholesale A completed, signed, dated, and unexpired IRS form 4506-T for all borrowers whose income is used to qualify must be included in file submission authorizing South State to obtain income information for all borrowers. A new 4506-T must be signed at closing. Correspondent A completed, signed, dated, and unexpired IRS form 4506-T for all borrowers whose income is used to qualify must be included in file submission. 4506-T is to have been executed by the Correspondent with the transcripts also included in file submission. A new 4506-T must be signed at closing. ARM Specific Caps Product Max First Adjustment Max Subsequent Adjustment Max Life Adjustment 5/1 Libor Jumbo 2% 2% 5% 7/1 Libor Jumbo 5% 2% 5% Disclosures Index Lookback Appropriate ARM Disclosure is required. One Year WSJ Libor Most recently available 1 Year LIBOR 45 days prior to the interest rate change date Margin 2.25% ARM Term 30 year amortization only - 30 - July 1, 2014
NC/SC Flagship Jumbo Libor ARMs Topic Program Type & Loan Term Minimum/Maximum Loan Maximum LTV/CLTV & Loan Amount Primary Residence Primary Residence & Second Home Term Program Code 3/1 ARM (30 Year Am) FSTPO31 5/1 ARM (30 Year Am) FSTPO51 7/1 ARM (30 Year Am) FSTPO71 10/1ARM (30 Year Am) FSTPO101 Min Loan Amount Max Loan Amount $417,001 $1,500,000 Max Loan Amount Purchase/No Cash-Out Refinance 1-2 Unit, PUD, Condo Max LTV/CLTV Min Credit Score $1,000,000 80/80% 720 $1,500,000 70/70% 720 $1,000,000 65/65% 700 $2,000,000 65/65% 720 3-4 Unit Max Loan Amount Max LTV/CLTV Min Credit Score $1,000,000 65/65% 740 $1,500,000 60/60% 740 Cash-Out Refinance 1-2 Unit, PUD, Condo $1,000,000 70/70% 740 $1,500,000 65/65% 740 Max Cash Back in hand $250,000 3-4 Unit not eligible for cash-out refinance Maximum LTV/CLTV Secondary Residence Maximum LTV/CLTV Non-Owner Occupied Max Loan Amount Purchase/No-Cash Out Refinance 1 Unit, PUD, Condo Max LTV/CLTV Min Credit Score $1,000,000 80/80% 740 Second Home not eligible for cash-out refinance Ineligible -31- July 1, 2014
(NC/SC Flagship Jumbo ARMs) Eligible States of Origination Escrow Waiver Assumable Convertible Buy-downs NC & SC Available with fee No No Not Available Subordinate Financing Must meet LTV/CLTV Restrictions stated above Must comply with Fannie Mae Selling Guide for Acceptable Subordinate Financing Types If the subordinate lien is an equity line of credit, use the line limit to calculate the CLTV Credit History Minimum two years established credit history is required 3 active trade lines (activity dates less than or equal to 12 months from current date) with 12 months satisfactory history on each trade. A minimum credit risk score is required. See the LTV/CLTV & Loan Amount topic for minimum score requirements. Borrower(s) must have a minimum of two credit scores. Follow any additional automated underwriting guidance Bankruptcy & Foreclosure Eligible under specific conditions. Bankruptcy 48 months from discharge or dismissal date with re-establishment of acceptable credit Foreclosure 84 months must have passed with re-establishment of acceptable credit Deed-in-Lieu of Foreclosure & Short Sale/Modification 48 months must have passed with re-establishment of acceptable credit - 32 - July 1, 2014
Refinance (Cash- Out) (NC/SC Flagship Jumbo ARMs) Primary Residence only Loan amount limited to: Current unpaid principal balance, plus Pay off of any junior liens, plus Closing costs and prepaid items, plus Maximum cash-out limit If the existing first mortgage was originated within 6 months of the application date and was a cash-out transaction, loan must be treated as cash-out Max cash back in hand to borrower is $250,000 6 month ownership of subject property required for cash-out refinance. Properties listed for sale within 6 months prior to application are ineligible Refinance (No Cash-Out) Proceeds used to pay off current first mortgage. If the existing first mortgage was originated within 6 months of the application date and was a cash-out transaction, loan must be treated as cash-out Proceeds may be used to pay off junior liens with 12 months seasoning, no draws on home equity lines of credit, unless documentation can be provided to show it was incurred as part of acquisition of home. The lesser of one percent (1%) or $5,000 incidental cash may be received back by the borrower. If owned less than 6 months, LTV is based on lesser of the current appraised value or the original purchase price plus the cost of any documented improvements. Property may not be listed for sale at time of application Documentation Full Documentation Required AUS Recommendation Not Applicable 2 months asset statements required For Self-Employed Borrowers a minimum of 2 years personal and business returns (if applicable), signed by the borrower, including all schedules, K-1s, and statements A year-to-date profit and loss statement may be required for any selfemployed borrower whose application date is more than 120 days after the end of the business tax year. Fully processed 4506-T with Tax Transcripts required for all borrowers, personal and business if applicable Eligible Funds Down Payment may be from borrower s own funds or gift Gifts permitted for Primary Residence only Required 5% minimum contribution from borrower s own funds before gift may be used Retirement accounts calculate at 70% of vested value for down payment/closing costs with proof of liquidation - 33 - July 1, 2014
(NC/SC Flagship Jumbo ARMs) Reserves Loan Amount Months of PITI $1, 000,000 6 Months Liquid > $1,000,000 12 Months Liquid Liquid assets are those that are readily available to a borrower after the mortgage closes Exclusive of 401k/SEP accounts, cash out funds, business assets Eligible Borrowers Occupancy Eligible Property Types Multiple Property Ownership US Citizens Permanent Resident Aliens Non-Permanent Aliens (max LTV of 75%) Primary Residence & Second Home 1 4 Unit SFD, PUD, & Established Condominium New condominium projects not eligible Full Review Only Maximum of four mortgaged residential properties, regardless of occupancy. 4506-T Wholesale A completed, signed, dated, and unexpired IRS form 4506-T for all borrowers whose income is used to qualify must be included in file submission authorizing South State to obtain income information for all borrowers. A new 4506-T must be signed at closing. Correspondent A completed, signed, dated, and unexpired IRS form 4506-T for all borrowers whose income is used to qualify must be included in file submission. 4506-T is to have been executed by the Correspondent with the transcripts also included in file submission. A new 4506-T must be signed at closing. - 34 - July 1, 2014
Conversion of Principal Residence Escrows for Completion Appraisal Refinance Permanent Financing for an Existing Construction Loan (NC/SC Flagship Jumbo ARMs) Second Home Mortgage payment for current residence and new residence must be counted against borrower for qualifying. 6 months PITI for reserve requirements. Investment Property If less than 30% equity in current residence then six months PITI for existing primary and six months PITI for new property. If equity in current residence is greater than or equal to 30% then up to 75% of rental income may be used to qualify. If less, no rental income may be used. To include rental income, the following must be documented: Fully executed lease agreement Security deposit from tenant Bank statement verifying funds of security deposit Validation of home value Escrows for completion are not allowed Full Interior-Exterior 1004 / 1073 (Condo) required Market Conditions Addendum 1004MC required > $1,000,000 loan amount requires 2 appraisals South State does not provide financing for initial construction loans. The refinance of a construction loan to permanent financing is allowed. Limited Cash-Out Refinance Standard Agency refinance guidelines apply. Maximum LTV based on appraised value and subject to LTV/CLTV restrictions in Refinance Matrix above. Cash-Out Refinance Borrower(s) must have held legal title to the lot for at least six months prior to the closing of the permanent mortgage. All other standard Agency cash-out refinance guidelines apply. Maximum LTV based on appraised value and subject to LTV/CLTV restrictions in Refinance Matrix above. - 35 - July 1, 2014
(NC/SC Flagship Jumbo ARMs) Caps Product Max First Adjustment Max Subsequent Adjustment Max Life Adjustment 3/1 Libor Jumbo 2% 2% 6% 5/1 Libor Jumbo 5% 2% 5% 7/1 Libor Jumbo 5% 2% 5% 10/1 Libor Jumbo 5% 2% 5% Margin 2.25% Index Disclosures One Year WSJ Libor Appropriate ARM Disclosure is required. Qualifying Ratios Follow Desktop Underwriter (DU) Findings Not to exceed 43% Initial fixed rate period 3 years Greater of the note rate plus 6% or the fully indexed rate Initial fixed rate period 5 years Greater of the note rate plus 5% or the fully indexed rate Initial fixed rate period greater than 5 years Note rate or fully indexed rate Underwriting Loans must be evaluated by Fannie Mae Desktop Underwriter (DU) South State Program Guideline supersedes DU findings Accept/Ineligible required Ineligible findings are acceptable for reasons in alliance with this guideline For items not addressed in these guides, Fannie Mae Selling and DU Findings are to be utilized Manually underwritten loans are not eligible - 36 - July 1, 2014