Several states and local municipalities have enacted legislation that define High Cost loans based on APR and fee thresholds which may or may not relate to the HOEPA thresholds. These types of loans typically have various restrictions. It is the policy of U.S. Bank Home Mortgage not to close any loan defined as high cost under any federal or state law/regulation or local ordinances, and any subsequent amendments thereto. Description Purchase/Rate Term Refinance - All programs have a fixed rate period of 15, 20 or 30 years. - These are portfolio products and exceptions to guidelines are allowed when warranted. 1-2 unit Primary $35,000-$750,000 $750,001-$1,000,000 7 $1,500,001-$2,000,000 4 $2,000,001-$3,000,000 1-unit Second Home 3 $650,001-$1,000,000 3-4 OO/1-4 NOO / Condo LTV TLTV 90% 1 90% 80% 90% 80% 6 90% 75% 90% 60% 70% 75% 80% 70% 80% 65% 80% 75% 80% 1. 90% LTV requires 740+ FICO, otherwise 85% maximum. 2. See Subordinate Financing section for rules. 3. Second Homes: Borrower(s) may not be affiliated with the builder, developer, or seller of the subject property if it is a purchase transaction. 4. Loan amounts > $1,500,000: 1-unit primary residence only. 5. NOO: Each borrower individually and all borrowers collectively may not own or be obligated to more than three (3) 1-4 family NOO properties including the property to be financed ( 3 or 4 unit OO that receive rents are considered NOO). Rent loss insurance required. Residential investment property income cannot be more than 50% of total household income.. Subject property cannot be vacant for refinances. Exceptions not allowed. 6. 80% LTV single family dwelling only, otherwise 75% maximum.. 7. Loan amount s> $1,000,000: Single family 1 unit only (no condos). Rate/Term Refinance Definition: The pay off of the outstanding principal balance of any existing first mortgage. The payoff of any subordinate liens used to acquire subject property or home improvements (no seasoning required). Cash back to the borrower in an amount more than the lesser of 2% of the balance of the new refinance mortgage or $2,000 and the financing of closing costs (including prepaid expenses). Special purpose refinance (proceeds used to buy out the equity of a co-owner of subject property). Lending Page 1 of 5
Cashout Refinance 1-2 unit Primary $35,000 -$750,000 $750,001-$1,000,000 5 1-unit Second Home 3 $35,000 - $650,000 $650,001 -$1,000,000 Condo LTV TLTV 3 75% 1 75% 65% 75% 65% 75% 1. 75% LTV requires 740+ FICO, otherwise 70% maximum 2. See Subordinate Financing Section for rules. 3. Second Homes: Borrower(s) may not be affiliated with the builder, developer, or seller of the subject property if it is a purchase transaction.. 4. Specific to TX, if LTV is >50%, maximum cash out is $300,000. If LTV< 50%, maximum cash out is $500,000. Payoff of non-mtg debt is classified as cash out. 5. Loan amounts > $1,000,000: Single family 1-unit only (no condos). - The borrower must provide a written statement regarding the purpose of any cash out. - Maximum cash out: LTVs > 50.0% $300,000 LTVs < 50.0% $500,000 Borrower must have owned/occupied the subject property for at least 6 months prior to the note date of the new cash out refinance mortgage (Exception allowed if funds were used to purchase subject property). Cash to the borrower (cash in hand) in an amount more than the lesser of 2% of the balance of the new refinance mortgage or $2,000; and any funds used to pay off revolving and installment debt, or other funds paid to a disinterested third party shall be considered Cash Out. Subordinate Financing General Underwriting Eligible Borrowers Eligible Properties - Subordinate financing is subject to the following additional requirements: - Payments on the subordinate lien may be fixed or adjustable. - Terms of the subordinate lien must be verified at the time of underwriting. - Subordinate financing must come from the following sources: - Non-USBHM HELOC or Second mortgage. - USBHM second mortgage or HELOC. Refer to second mortgage or USBHM HELOC guidelines. All loans must be underwritten to guidelines. Co-signers are not permitted 1-2 Unit Primary Residence (including detached condos) 1 Unit Second Home 3-4 Unit Owner Occupied (Purchase/Rate Term Refinance Only) 1-4 Unit NOO (Purchase/ Rate Term Refinance Only) Condominium Lending Page 2 of 5
Eligible States All state except Louisiana, Mississippi and Hawaii - A borrower with a history of moderate-to-slow payment of obligations must have a strong offsetting characteristic to be considered favorably. - The borrower must provide a written explanation for all material adverse credit information. - Minimum required FICO score: LTV/TLTV FICO >85% - 90% 740 >80% - 85% 720 >75% - 80% 680 < 75% 660 All Loan Amounts > $900,000 require 720 and > $2,000,000 require 740 Credit / FICO - Severe Derogatory Credit Policy: The following are considered severe derogatory credit regardless of FICO score: Bankruptcy Foreclosure Deed in Lieu of Foreclosure Short Sale or Short Payoff at least 1 X 30 day delinquency in 12 months preceding loan being paid in full. For borrowers with these credit profiles, USBHM requires a period of 7 years to have passed since occurrence and the re-establishment of good credit before financing a new transaction. Exceptions to the Severe Derogatory Credit Policy: Short Sale or Short Payoff: If the loan that was paid off was current and there had been no delinquencies on that loan during the past 12 months before being paid off, 5 years (instead of 7 years) must have passed with the re-establishment of acceptable credit. Lending Page 3 of 5
Credit / FICO (continued from previous page) Qualifying Ratios Bankruptcies, Foreclosure or Deed in Lieu: If extenuating circumstances existed (see definition below) that resulted in borrower s bankruptcy, foreclosure, or deed in Lieu, then the following apply: Chapter 7 Bankruptcy: 7 years must have passed with re-establishment of acceptable credit. Chapter 13 Bankruptcy: 7 years must have passed with re-establishment of acceptable credit. Foreclosure or Deed in Lieu of Foreclosure: 7 years must have passed with reestablishment of acceptable credit. *Extenuating circumstances are defined as a nonrecurring or isolated circumstance, or set of circumstances, that was beyond the Borrower s control and that significantly reduced income and/or increased expenses and rendered the Borrower unable to repay obligations as agree, resulting in significant adverse derogatory credit information. Qualified Mortgage: Maximum 43.00% debt to income ratio Qualifying Rate Trailing Co-Borrower Funds to Close/Reserves - Initial rate - Not Allowed Loan amount Minimum required reserves: < $1,000,000 6 months PITI > $1,000,000 12 months PITI > $2,000,000 24 months PITI - Fully completed URAR required. No short forms allowed. Appraisal Requirements Mortgage Insurance Escrow Requirements Contributions by Interested Parties - California properties ONLY: If the aggregate loan amount is less than $1.5MM, only one appraisal will be required. If the aggregate loan amount is equal to or greater than $1.5MM, two appraisals will be required. - All other states: If the aggregate loan amount is less than $1.0MM, only one appraisal will be required. If the aggregate loan amount is equal to or greater than $1.0MM, two appraisals will be required. - Not required - Escrow for taxes and insurance is required on all loans at any LTV. Waiver is available for both collectively with an add to pricing (see Pricing Sheets for CA). - LTV/TLTV: - 6% of the lesser of the sales price or the appraised value. Please note: Maximum financing concessions must be based on CLTV if secondary financing is present. Lending Page 4 of 5
Construction-to- Permanent Loans Convertible Assumability Amortization Prepayment Penalty Late Charges Loan Disclosures - Construction-to-permanent loans include (i) self-built with sworn construction statement, (ii) transactions for which there are separate purchase agreements/contracts for land and building, and (iii) loans to pay off existing financing used or being used for construction of the home. - Documentation of all construction costs are required. (A sworn construction statement is not considered documentation of cost.) Costs for material and labor can be documented by (i) a construction contract or, (ii) in the case of a self-built home, by invoices, lien waivers, or contracts (signed bids or bills) for services or materials provided by sub-contractors. Any costs paid from the borrower s funds must be documented with canceled checks or paid receipts. - Value is the lesser of appraised value or documented costs. Value of the lot will be as indicated on the appraisal if it was purchased more than 12-months prior to the loan application date. If less than 12-months, value will be the lesser of cost or appraised value. - Sweat equity is not allowed. - When documentation of costs is unavailable, the appraised value may be used if (i) the LTV ratio does not exceed 75%, (ii) the transaction is arms-length, and (iii) there is no cash out. Not convertible No 15, 20 or 30 year amortization. No 5% or the highest amount allowed by state law. N/A (No early disclosures specific to Fixed rate products) FIXED 15, 20, and 30 YR : Note: - Multi State Fixed Rate Note (VMP-5N) Closing Documents Riders: - Multi State Fixed Rate Note Prepayment Rider (USBPPNEW) - For Condominiums, Multi State Condominium Rider (VMP-8R) - For PUD units, Multi State PUD Rider (VMP 7R) - For Two, Three, or Four-Unit Properties, Multi State One to-four Family Rider (VMP-57R). - For Second Homes, Multi State Second Home Rider (VMP-365R) Security Instrument: - In all states, use the state specific Fannie Mae/Freddie Mac Uniform Instrument Lending Page 5 of 5