Contents. Underwriting Guidelines Closed End Second Mortgage

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1 Contents Product Description... 2 Product Codes... 2 Available Mortgage Channels... 2 Loan Amounts... 2 Maximum Combined Loan Amount... 2 Occupancy... 2 Eligible Property Types... 2 Ineligible Property Type... 2 Eligible Loan Purposes for... 3 Eligible First Mortgage Transactions... 3 Eligible Borrowers... 3 Ineligible Borrowers... 4 Fees... 4 Underwriting Method... 4 Maximum DTI Ratio... 4 Qualifying Rate... 4 Payment due date... 4 Lock Period... 4 State Restrictions... 5 Program Restrictions... 5 Product Description of CLTV/FICO/Reserves... 6 Application and Disclosure Requirements... 7 Age of Credit Documents... 7 Credit Report and Credit Score Requirement... 7 Derogatory Credit:... 7 Documentation Requirements... 8 Assets and Reserve Requirements... 8 Seller Contributions... 8 Appraisal Requirements... 8 Title Policy and Hazard Insurance Policy Requirements... 9 Flood Determination Certificate... 9 Other Requirements... 9 Underwriting Guidelines FLCB Page 1 of 9 10/18/2018

2 Product Description FCBM s is designed to be combined FCBM s First Mortgage Purchase or Refinance transaction with 15 or 20 years term through a simultaneous closing. The guidelines noted here are for the product. FCBM will generate closing documents for the and for the first mortgage at the same time. Loan closing will occur simultaneously. Product Codes 2ND15-15 years fixed rate mortgage 2ND20-20 years fixed rate mortgage Available Mortgage Channels Retail and Wholesale Brokers Type A Only Loan Amounts Minimum loan amount for the is $10,001. Maximum loan amount for the is $250,000 Maximum Combined Loan Amount Maximum combined first and second loan amount is $1,000,000 Occupancy Primary Residence. Second Home. Eligible Property Types 1-Unit: Single Family Residence, Detached or Attached PUD and units located in a Warrantable Condominium Project. 1-Unit Second Home: Single Family Residence, Detached or Attached PUD. Ineligible Property Type 2-4 Unit properties Modular Homes Manufactured Homes Condominium on Second Homes CondoTels Cooperatives Log Homes Non Warrantable Condominiums Properties considered unique Properties zoned other than residential Properties with more than 5 acres Income producing properties i.e. hobby or working farms Underwriting Guidelines FLCB Page 2 of 9 10/18/2018

3 Eligible Loan Purposes for Purchase Money, Rate and Term Refinance, Cash Out Refinance (the first mortgage cannot be a cash out refinance when combined with the closed end second mortgage cash out). Eligible First Mortgage Transactions The first mortgage must have an AUS Approval through DU or LPA and be either: Fannie Mae, Freddie Mac, FHA, VA or USDA fixed rate and ARMs with an initial fixed rate 5 years Conforming and High Balance mortgage transaction; or Non-Conforming/Jumbo with a fixed rate and ARMs with an initial fixed rate 5 years. Eligible Borrowers The Borrowers must also hold the below characteristics: US Citizens, Permanent Resident Aliens Non-Permanent Resident Aliens* A Non-Permanent Resident Alien (NPRA) is an individual who is granted the right to live and work in the U.S. for a fixed period of time, and for a specific purpose and may be eligible for financing provided they meet all of the following guidelines: o Must have a valid Passport and appropriate VISA (see below a list of acceptable visa type). Evidence of eligible visas: o H-1.* This is the most common VISA given to a foreign citizen who is temporarily working in United States. o L-1.* Intra-Company Transferee. An L-1 VISA is given to professional employees, whose company s main office is in a foreign country. o E-1.* Treaty Trader. This VISA is essentially the same as an H-1 or L-1; the title refers to the foreign country s status in the United States. o E-2.* Treaty Investor. This visa is held by an Individual who develops or directs the operation of an enterprise in which he/she has a substantial investment. Must be based on a treaty between visa holder s country and the U.S. A copy of an USCIS I-94 document with an H1, E1, E2, or L1 visa classification is acceptable provided that the borrower meets the rule along with the following: Copy of Original Visa (can be expired or unexpired) Borrower must be currently employed with the company that initially sponsored the H1B VISA in the United States Full Written Verification of Employment document showing the likelihood of continuance from the current employer Borrower must currently reside in the United States legally. The source of the borrower s income must be verified and must be expected to continue for at least 3 years Underwriting Guidelines FLCB Page 3 of 9 10/18/2018

4 Ineligible Borrowers o Non-Occupying Co-Borrowers o Foreign Nationals o Borrowers with diplomatic status o Leasehold Estates o Life Estates o Non-Revocable Trusts o Guardianships o LLCs, Corporations or Partnerships o Land Trusts, except for Illinois Land Trust Underwriting Guidelines Fees FLCB s administrative fee is $495. Underwriting Method The First Mortgage must have a DU Approve/Eligible or LPA Accept/Eligible, or an Accept/Approve Ineligible due to the loan amount of the first mortgage being non-conforming. The must follow the documentation type and requirements noted on the first mortgage AUS unless otherwise noted in these guidelines. Maximum DTI Ratio 43% for CLTV up to 90% 41% for CLTV > 90% up to 95% Qualifying Rate o The qualifying payment is based on the note rate. Payment due date Payment is due on the first day (1 st day) of each month. Lock Period The lock period is good for 30 days Underwriting Guidelines FLCB Page 4 of 9 10/18/2018

5 State Restrictions Properties located in the following states are limited to a CLTV of 90% if the transaction is for cash out refinance: California Nevada Also, properties located in the following states are ineligible for financing: Alaska Hawaii Ohio Texas Refinances New York Program Restrictions The may not be defined as High Cost Transactions or HPML The Borrower may only have one outstanding closed end second mortgage financed by FCBM. No reconsideration of values permitted. Note: all appraisal quality issues must be addressed and corrected by the appraiser. Properties with condition rating of C5/C6. Properties with construction rating of Q6. Underwriting Guidelines FLCB Page 5 of 9 10/18/2018

6 Product Description of CLTV/FICO/Reserves Primary Residence Purchase, Rate and Term and Cash Out Refinances 15 and 20 years Term Underwriting Guidelines Maximum Closed End Second Mortgage Loan Amount FICO Maximum CLTV* Combined First and Second Mortgage loan amount Reserves Max DTI $250, Up to 90% 43% Follow the reserves $1,000,000 required on the first mortgage % to 95%* 41% Second Home Residence Purchase, Rate and Term and Cash Out Refinances 15 and 20 years Term Maximum Closed End Second Mortgage Loan Amount FICO Maximum CLTV Combined First and Second Mortgage loan amount Reserves Max DTI $250, Up to 90% $1,000,000 Follow the reserves required on the first mortgage 43% * The maximum CLTV for cash out refinances is 90% in California and Nevada. The following requirements apply: Co-Signers or Non-Occupying Co-Borrowers are ineligible Cash out refinance first mortgages are ineligible when being originated simultaneously with closed end second mortgage The closed end second mortgage must close simultaneous with the first mortgage transaction Underwriting Guidelines FLCB Page 6 of 9 10/18/2018

7 Application and Disclosure Requirements Loan Originator must submit the first and closed end second mortgage simultaneously to FLCB and utilize the Combo First and Second Loan Submission checklist The following forms/disclosures are required: o A fully completed closed end second mortgage loan application signed by the loan applicant and the loan originator. Note: All information-collection related to Government Monitoring Questions apply. o FLCB will prepare the initial disclosure package and TRID related disclosures which will include State and Federal disclosures for the. Age of Credit Documents Credit documents which include: credit reports, explanation letters, employment, income and assets must be dated within 30 days of loan application. The expiration date of credit documents is 120 days and is measured from the date of the document to the date the note is signed. Credit Report and Credit Score Requirement A Tri-Merged credit report is required for all transactions. The representative score used to qualify will be based off the lower of 2 or middle of 3 on the credit scores of each borrower and is used to determine loan eligibility and for pricing purposes. Non-Traditional Credit is not permitted. 680 credit score is required for CLTV s 90%. 700 credit score is required for CLTV s > 90% up to 95%. Note: It is permissible for the Loan Originator to upload into our LOS s imaging system the credit report from the first mortgage. Derogatory Credit: There must be no derogatory mortgage payment history in the most recent 24 months on all mortgage accounts (open or closed). The credit report must not reflect any judgements, repossessions or charge offs in the past 5 years. Borrowers with the following items on their credit history are ineligible for the closed end second mortgage regardless of the AUS feedback until 7 years has passed since the occurrence and credit has been re-established: o Bankruptcies, Foreclosure/Notice of Default/Short Sale/Deed-in-Lieu. o Mortgage accounts that were settled for less, negotiated or short payoffs. o Loan Modification - Allowed if seasoned 24 months with no mortgage lates in the last 24 months. Note: Borrowers with extenuating, isolated, one-time circumstances may be considered on a case-bycase basis, as determined by the underwriter. Underwriting Guidelines FLCB Page 7 of 9 10/18/2018

8 Documentation Requirements Income Documentation will be based on the required documents per the first mortgage AUS findings unless noted otherwise in these guides. It is required to upload the same income/credit/asset documents from the first mortgage into the s Imageview. W-2 Transcripts are not required for salaried/wage earning borrowers using salary wages only to qualify and a written VOE is obtained from a third party independent company. Tax Transcripts are required for the number of years of income used to qualify the borrower(s) for each borrower whose self-employment or other income sources is being utilized for the repayment of the mortgage, in addition to the IRS form 4506-T required for personal tax returns used to underwrite the loan, a fully complete and signed IRS Form 4506-T for each business tax return used to underwrite the Loan is required. Assets/funds to close/ reserves must be verified per the requirements for the first mortgage. A verbal verification of employment must be completed for all employed/self-employed applicants whose income is being used for loan qualification. The verbal verification of employment (VOE) must be dated within 10 business days prior to loan closing for wage/salary income, and within 120 days prior to loan closing for self-employed income. A full ALTA, Junior Alta or ALTA lite Title Commitment for the must be obtained. Lender s title insurance in the amount of the is required. The appraisal from the first mortgage can be used to document the market value of the collateral of the transaction. Reconsiderations of value are not allowed. The Second Mortgage will not be decisioned until the appraisal and its accompanying SSR s are submitted to FLCB. If subject transaction is paying off a HELOC that is not included in the CLTV/HCLTV calculation, the loan file must contain evidence the HELOC has been closed. For additional requirement not found within these guidelines, please refer to Florida Capital Bank Mortgage s conventional underwriting guidelines for the AUS utilized on the first mortgage. Assets and Reserve Requirements Follow requirements on first mortgage Seller Contributions See first mortgage requirements Appraisal Requirements FLCB will not issue a credit decision on the until the appraisal has been received. The appraisal from the first mortgage can be used to document the market value of the collateral of the Second Mortgage transaction. This product requires a full FNMA 1004 or FHLMC 70 appraisal, or the AUS collateral requirements noted in the findings/feedback. Underwriting Guidelines FLCB Page 8 of 9 10/18/2018

9 Title Policy and Hazard Insurance Policy Requirements The Title Commitment in the amount of the limit is required. A full ALTA, Junior ALTA or ALTA Lite are acceptable forms. Note that a separate title commitment for the second mortgage is not necessary so long the title commitment reflects two separate policies listing the first and second lien amounts. Refer to the Hazard and Flood Requirements posted in our Resource Center for additional information including for FLCB s mortgagee clause Flood Determination Certificate A flood determination certificate is required for this program. Note: The flood determination from the first mortgage obtained by Florida Capital Bank, N.A. may be used for the ; a copy of the flood determination must be placed in the loan file. Other Requirements This product does not adhere to FLCB standard turn times and a credit decision on the Closed End Second mortgage cannot be made until the appraisal is received. The appraisal from the first mortgage can be used to document the market value of the collateral of the Second Mortgage transaction. FLCB must handle all closing document preparation functions. Underwriting Guidelines FLCB Page 9 of 9 10/18/2018