FANNIE MAE (DU) STANDARD AND HIGH BALANCE ELIGIBILITY MATRIX FANNIE MAE FIXED RATE & ARM STANDARD AND HIGH BALANCE ELIGIBILITY REQUIREMENTS

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1 Matrices FANNIE MAE (DU) STANDARD AND HIGH BALANCE ELIGIBILITY MATRIX FANNIE MAE FIXED RATE & ARM STANDARD AND HIGH BALANCE ELIGIBILITY REQUIREMENTS Occupancy Type Prperty Type Min. Credit Scre LTV CLTV 1 Unit %* 97%* Purchase & R/T 2 Units % 85% Primary 3-4 Units % 75% Cash Out 1 Unit % 80% 2-4 Units % 75% 2nd Hme Purchas e & R/T 1 Unit % 90% Cash Out 1 Unit % 75% Purchas e 1 Unit % 85% 2-4 Units % 75% Inves tment R/T (LCOR) 1-4 Units % 75% Cash Out 1 Unit % 75% 2-4 Units % 70% *95.01% - 97% LTV is nly available fr fixed rate mrtgages fr first-time hmebuyers purchasing r refinancing a ne-unit prperty. Fr a refinance, the current mrtgage lan must be wned by FNMA and the new lan is nt eligible fr HARP. High Balance lans are nt eligible. FREDDIE MAC (LPA) STANDARD AND SUPER CONFORMING ELIGIBILITY MATRIX FREDDIE MAC (LPA) FIXED & ARM STANDARD ELIGIBILITY REQUIREMENTS Occupancy Type Prperty Type Min. Credit Scre LTV CLTV 1 Unit % (1) 97% (1) Purchase & R/T 2 Unit % 85% 3-4 Units % 80% Primary 1 Unit % (2) 85% Cash Out 1 Unit % 80% 1 Unit % 80% 2-4 Units % 75% 2nd Hme Purchase & R/T 1 Unit % 90% Cash Out 1 Unit % 75% Investment Purchase & R/T Cash Out 1 Unit % 85% 2-4 Units % 75% 1 Unit % 75% 2-4 Units % 70% (1) 95.01% - 97% LTV is nly available fr HmeOne sm Mrtgage fixed rate lans fr the purchase r refinance f a ne-unit prperty. At least ne brrwer must be a first-time hmebuyer fr a purchase. See sectin 3.3 First-Time Hmebuyer fr requirements. Fr a refinance, the current mrtgage lan must be wned by FHLMC and the new lan is nt eligible fr HARP. Super Cnfrming lans nt permitted. (2) Fixed Rate nly. Super Cnfrming nt permitted.

2 CO-OP ELIGIBILITY MATRIX FANNIE MAE & FREDDIE MAC Occupancy Primary Secnd Hme Transactin Type Purchase & R/T Cash-Out Purchase & R/T Prperty Type 1 Unit 1 Unit Term Min. Credit LTV CLTV 1 Scre Fixed % 95% Arm % 90% Fixed % 80% Arm % 75% Fixed % 2 90% 2 Arm % 80% 1. Subrdinate Financing nt permitted 2. Maximum LTV/CLTV fr LPA scred lans is 85% MANUFACTURED HOUSING ELIGIBILITY MATRIX FANNIE MAE & FREDDIE MAC Occupancy Transactin Type Prperty Type AUS Term Min. Credit Scre LTV CLTV Primary Secnd Hme Purchase & R/T Cash-Out* Purchase & R/T 1 Unit 1 Unit DU Fixed % 95% Arm % 90% LPA Fixed/ARM % 95% DU/LPA Fixed % 65% DU Fixed % 90% Arm % 80% LPA Fixed/ARM % 85% * T be eligible fr a cash-ut refinance, the brrwer must have wned bth the manufactured hme and land fr at least 12 mnths preceding the date f the lan applicatin. Maximum term fr cash-ut refinace is 20 Year term Super Cnfrming lan balances are nt eligible fr manufactured husing Page 2 f 36

3 Quick Links Matrices Quick Links Sectin 1: Prgram Summary 1.1 Prgram Summary 1.2 Underwriting 1.3 Ineligible Prgrams Sectin 2: Transactin Details 2.1 Lan Limits 2.2 Eligible Terms and Prgrams 2.3 ARM Adjustments 2.4 Eligible Transactins 2.5 Principal Curtailments/Reductins 2.6 Lans Securing HmePath Prperties 2.7 Refinances (General) 2.8 Cash-ut Refinances 2.9 Student Lan Cash Out Refinance 2.10 Payff Demands 2.11 CEMA 2.12 Texas 50(a)(6) lans 2.13 Texas 50(f)(2) Lans 2.14 Subrdinate Financing 2.15 Manufactured Hmes Sectin3: Brrwer Eligibility 3.1 Brrwer Eligibility 3.2 Occupancy 3.3 First-Time Hmebuyer 3.4 Nn-Occupant C-Brrwers 3.5 Pwer f Attrney 3.6 Living Trust (Inter Vivs Revcable Trust) 3.7 Nn-Arm s Length Transactins 3.8 Ineligible Brrwers 3.9 Maximum # f Financed Prperties Sectin 4: Cllateral 4.1 Eligible Prperties 4.2 Cnds 4.3 Cps 4.4 Hbby Farms 4.5 Ineligible Prperties 4.6 Prperties Previusly Listed fr Sale 4.7 Appraisals 4.8 Disaster Areas 4.9 Gegraphic Restrictins Sectin 5: Incme 5.1 Incme 5.2 Verificatin f Emplyment 5.3 Assets Used fr Qualifying Incme Sectin 6: Credit 6.1 Credit 6.2 Qualifying Ratis 6.3 Brrwers Retaining their Current Primary Residence 6.4 Cnversin f Primary Residence t a 2 nd Hme r Investment Prperty 6.5 Current Principal Residence Pending Sale 6.6 Student Lans Sectin 7: Assets 7.1 Assets 7.2 Cash Reserves 7.3 Gifts 7.4 Seller/Interested Party Cntributins 7.5 Dwn payment Assistance Prgrams 7.6 Ineligible Assets Sectin 8: Prcedures 8.1 Age f Dcumentatin 8.2 Electrnic Signatures 8.3 Escrws (Taxes and Insurance) 8.4 Escrw Waiver Grid 8.5 Escrw Hldbacks 8.6 Excluded Parties- LDP/GSA Searches 8.7 Interest Credit 8.8 Mrtgage Insurance 8.9 Prcess t Add r Remve Brrwers 8.10 Rent Lss Insurance 8.11 Title Insurance 8.12 Mrtgagee Clause Sectin 9: Crprate Relcatin 9.1 Incme 9.2 Guaranteed Sale (Departing Residence) Sectin 10: References 10.1 References Sectin 11: Versin Cntrl Sectin 12: Appendix Page 3 f 36

4 Sectin 1: Prgram Summary 1.1 Prgram Summary Prgram Summary 1.2 Underwriting This Prgram Guide serves as a cmprehensive summary f NewRez s Cnventinal Underwriting Overlays. Refer t applicable agency s Selling Guide (FNMA r FHLMC) fr any infrmatin nt specified in this Prduct Prfile. Autmated Underwriting: Lans underwritten by Desktp Underwriter (DU) may fllw the DU Underwriting Findings Reprt, except as utlined in this prduct prfile. Lans underwritten by Lan Prduct Advisr (LPA) may fllw LPA Feedback Certificate, except as utlined in this prduct prfile. Regardless f underwriting methd, additinal infrmatin may be requested at the discretin f the underwriter. Lan with LTVs greater than 80% require apprval thrugh an MI cmpany. Additinal guidelines and restrictins utside f this manual and its matrix may apply. Refer t MI cmpany specific guidelines. Underwriting DU Findings: An Apprve/Eligible finding is required; if DU issues a warning fr excessive DU runs, a written explanatin must be prvided by the riginatr. 1.3 Ineligible Prgrams Ineligible Prgrams Sectin 2: Transactin Details 2.1 Lan Limits Lan Limits LPA Determinatin: A Risk Classificatin f Accept is required. Cash ut greater than 80%: Lan must scre Accept/Ineligible - the nly reasn fr ineligibility is the LTV/CLTV is greater than 80%, up t 85% Manual Underwriting: Manual underwriting Is nt permitted. All lans must be apprved thrugh DU/LPA. With the exceptin f the verlays listed in this manual, agency guidelines shuld be fllwed Reverse Exchange FNMA Hmestyle FNMA MH Advantage Land trusts are nt eligible Leasehlds secured by Indian/Tribal lands Mrtgage Credit Certificates (MCC) Temprary Buydwns Page 4 f 36

5 2.2 Eligible Terms and Prgrams Eligible Terms & Prgrams 2.3 ARM Adjustments Custm Lan Terms are available under standard Cnfrming Fixed and Cnfrming LP Fixed Lan prgrams. Refer t the Jb Aide in the Frms and Jb Aides sectin f the Credit Plicy and Prduct Develpment Intranet site fr details. Custm lan terms are nt permitted fr manufactured husing Manufactured Husing is permitted fr 15, 20 & 30 Year Fixed Term Lans and 7/1 & 10/1 ARM terms. Maximum term fr cash-ut manufactured hme is 20 years ARM Adjustments 2.4 Eligible Transactins Purchase Eligible Transactins FNMA REO / HmePath Prperties are permitted. See Sectin 2.6 fr details. Page 5 f 36

6 Rate & Term (Limited Cash-ut) Refinance Cash-ut Refinance Delayed financing is permitted subject t agency requirements Student Lan Cash-Out Refinance (Refer t sectin 2.9) 2.5 Principal Curtailments/Reductins Principal Permitted; fllw agency guidance Curtailments- Reductins 2.6 Lans Securing HmePath Prperties Lans Securing Effective with sales cntracts signed n r after Octber 7, 2014, fllw standard Selling Hme Path Guide eligibility plicies, except as described in B5-4-08, Lans Securing HmePath Prperties Prperties; NewRez s standard Cnfrming DU Prduct Cdes shuld be used 2.7 Refinances (General) See Agency Guidelines fr general requirements fr refinance transactins. A Net Tangible Benefit Wrksheet must be cmpleted n ALL refinance transactins Limited cash-ut refinance transactins invlve the payff f an existing mrtgage secured by the manufactured hme and land (r existing liens if the hme and land were encumbered by separate liens). The maximum LTV rati (and CLTV rati, if applicable) fr a limited cash-ut refinance transactin fr a lan secured by a manufactured hme and land will be based n the lwer f: the current appraised value f the manufactured hme and land; r if the manufactured hme was wned by the brrwer fr less than 12 mnths n the lan applicatin date and: if the hme and land are secured by separate liens, the lwest price at which the hme was previusly sld during that 12-mnth perid plus the lwer f the current appraised value f the land, r the lwest sales price at which the land was sld during that 12-mnth perid (if there was such a sale); If the hme and land are secured by a single lien, the lwest price at which the hme and land were previusly sld during that 12-mnth perid. Refinances (General) Cntinuity f Obligatin: LPA scred lans When an existing Mrtgage will be satisfied as a result f a refinance transactin, ne f the fllwing requirements must be met: At least ne Brrwer n the refinance Mrtgage was a Brrwer n the Mrtgage being refinanced; r At least ne Brrwer n the refinance Mrtgage held title t and resided in the Mrtgaged Premises as a Primary Residence fr the mst recent 12- mnth perid and the Mrtgage file cntains dcumentatin evidencing that the Brrwer, either: Has been making timely Mrtgage payments, including the payments fr any secndary financing, fr the mst recent 12-mnth perid; r Is a Related Persn t a Brrwer n the Mrtgage being refinanced; r At least ne Brrwer n the refinance Mrtgage inherited r was legally awarded the Mrtgaged Premises (fr example), in the case f divrce, separatin r disslutin f a dmestic partnership) 2.8 Cash-ut Refinances Lan is defined as cash ut if the cash ut amunt exceeds the lesser f $2,000 r 2% f the Cash-ut Refinances lan amunt r includes the payff f nn-purchase mney secnds. See Agency Guidelines fr general requirements fr cash ut refinance transactins. Page 6 f 36

7 Texas 50 (a)(6) Cash-ut refinances are eligible fr licensed and certified riginatrs nly. Refer t Texas A6 prduct prfile fr all ther Texas 50(a)(6) requirements Cntinuity f Obligatin At least ne Brrwer must have been n the title t the subject prperty fr at least six mnths prir t the Nte Date, except as specified belw. If nne f the Brrwers have been n the title t the subject prperty fr at least six mnths prir t the Nte Date f the cash-ut refinance Mrtgage, the fllwing requirement(s) must be met: At least ne Brrwer n the refinance Mrtgage inherited r was legally awarded the subject prperty (fr example, in the case f divrce, separatin r disslutin f a dmestic partnership) DU Scred nly: If the prperty was wned prir t clsing by either f the fllwing entities, the time it was held by the entity may be cunted twards meeting the brrwer s six-mnth wnership requirement A limited liability crpratin (LLC) that is majrity-wned r cntrlled by the brrwer(s). Ownership must be transferred ut f the LLC and int the name f the individual brrwer(s) prir t clsing. If the prperty was wned prir t clsing by an inter vivs revcable trust, the time held by the trust may be cunted twards meeting the brrwer s six-mnth wnership requirement if the brrwer is the primary beneficiary f the trust. OR, all f the fllwing (Delayed Financing Exceptin): The Settlement/Clsing Disclsure Statement frm the purchase transactin must reflect that n financing secured by the subject prperty was used t purchase the subject prperty. If the Mrtgage has an Applicatin Received Date prir t Octber 3,, the Settlement/Clsing Disclsure Statement must be an executed versin. A recrded trustee's deed r equivalent dcumentatin may be used when a Settlement/Clsing Disclsure Statement was nt used fr the purchase transactin. The preliminary title reprt fr the refinance transactin must reflect the Brrwer as the wner f the subject prperty and must reflect that there are n liens n the prperty The surce f funds used t purchase the subject prperty must be fully dcumented If funds were brrwed t purchase the subject prperty, thse funds must be repaid and reflected n the Settlement/Clsing Disclsure Statement fr the refinance transactin The amunt f the cash-ut refinance Mrtgage must nt exceed the sum f the riginal purchase price and related Clsing Csts, Financing Csts and Prepaids/Escrws as dcumented by the Settlement/Clsing Disclsure Statement fr the purchase transactin, less any gift funds used t purchase the subject prperty (gift funds may nt be reimbursed). A recrded trustee's deed r equivalent dcumentatin may be used when a Settlement/Clsing Disclsure Statement was nt used fr the purchase transactin. There must have been n affiliatin r relatinship between the buyer and seller f the purchase transactin Manufactured Husing Page 7 f 36

8 T be eligible fr a cash-ut refinance, the brrwer must have wned bth the manufactured hme and land fr at least 12 mnths preceding the date f the lan applicatin. 2.9 Student Lan Cash Out Refinance The student lan cash-ut refinance feature allws fr the payff f student lan debt thrugh the refinance transactin with Rate/Term pricing if all f the fllwing requirements are met: Refinance purpse type must be Student Lan Cash-Out Refinance in Destiny DU Scred nly. DU will issue a message when it appears that nly subject prperty liens and student lans are marked paid by clsing. The lender must cnfirm the lan meets all f the requirements utside f DU. At least ne student lan must be paid ff with prceeds frm the subject transactin with the fllwing criteria: prceeds must be paid directly t the student lan servicer at clsing; at least ne brrwer must be bligated n the student lan(s) being paid ff, and The student lan must be paid in full - partial payments are nt permitted. The transactin may als be used t pay ff ne f the fllwing: Student Lan Cash an existing first mrtgage lan (including an existing HELOC in first-lien psitin); r Out Refinance a single-clsing cnstructin-t-permanent lan t pay fr cnstructin csts t build the hme, which may include paying ff an existing lt lien. Only subrdinate liens used t purchase the prperty may be paid ff and included in the new mrtgage. Exceptins are allwed fr paying ff a PACE lan r ther debt (secured r unsecured) that was used slely fr energy imprvements. The brrwer may receive cash back nt t exceed the lesser f $2,000 r 2% f the lan amunt. If any debt ther than student lan(s) and acceptable liens nted in this sectin are paid ff at clsing the transactin cannt be a Student Lan Cash-Out (Ex: additinal credit card debt paid at clsing with cash-ut prceeds) Special Feature Cdes 003 and 841 are required Payff Demands Payff Demands 2.11 CEMA CEMA Payff demands are required t ensure the current lien is paid in full prir t clsing. The expiratin date f the payff demand must be reviewed. A lan may nt mve t clsing if the payff will expire prir t funding. If the payff demand cntains an expiratin date, the underwriter must verify the date is after the funding date. If the payff demand des nt cntain an expiratin date, the underwriter must verify a per diem amunt is listed. The per diem shuld be applied t the payff amunt t cver prceeds thrugh the funding date; it can be used fr an unlimited number f days; unless therwise specified in the payff letter. A payff is cnsidered expired when: The dcument instructs the assciate t vid after a specified date; r The interest accrued amunt n the statement signals the brrwer will be past-due when the new lan funds; The brrwer must make a mrtgage payment prir t clsing t avid a late payment n the credit; and The brrwer must prvide evidence the payment has been made and the updated payff demand must reflect that a payment has been made. A CEMA Apprved Attrney must be used; please see the CEMA Prcess Flw fr mre details. CEMA are nt permitted fr manufactured husing transactins Page 8 f 36

9 2.12 Texas 50(a)(6) lans A new lien n a TX brrwer s hmestead becmes an (a)(6) lan if the current lien is an (a)(6) and/r the new lan amunt pays ff an existing lien and: Prvides any prceeds t the brrwer (even $1) Texas 50(a)(6) lans Payff/dwn an existing TX(a)(6) lien (with r withut cash back t the brrwer) that des nt meet the requirements fr (f)(2) eligibility Refer t the Texas 50(a)(6) prduct prfile fr all ther requirements Texas 50(f)(2) Lans Texas 50(f)(2) lans allw the refinance f a hme equity lan int a nn-hme equity lan per the Texas Cnstitutin. These lans are limited t an 80% LTV/CLTV and n additinal funds may be rlled int the lan (except clsing csts and pre-paids). Texas 50(f)(2) Lans (f)(2) Determinatin: New Lan Amunt pays ff existing lien and. If existing lien is a nn- 50(a)(6); then the new lien is. If existing lien is a 50(a)(6); then the new lien is. Prvides even $1 cash t the brrwer Texas (a)(6) Texas (a)(6) Pays ff/dwn an existing TX (a)(6) lien with n cash t brrwer Texas (a)(6) Texas (f)(2) if seasning requirements are met* Pays ff/dwn an existing TX (a)(6) lien with Texas (a)(6) Texas (a)(6) cash t brrwer The new lien is < existing UPB (n new funds) Nn-Texas (a)(6) Texas (f)(2) if seasning requirements are met* Funds, prepaids and/r clsing csts Nn-Texas (a)(6) Texas (f)(2) if seasning requirements are met* Pays ff/dwn a purchase mney 2nd Nn-Texas (a)(6) Texas (f)(2) if seasning requirements are met* Pays ff/dwn an existing Secured Hme Imprvement Lan (mechanic s lien) Nn-Texas (a)(6) Texas (f)(2) if seasning requirements are met* Prvides funds t satisfy a curt rdered Divrce Equity Buyut Nn-Texas (a)(6) Texas (a)(6) *Brrwer may elect t have lan remain a Texas (a)(6). Refer t Texas A6 prfile. Special Cnsideratins: Lan may nt clse until: Twelve days after the brrwer submits the lan applicatin r all brrwers sign the 12-day ntice, whichever is later. One day after the brrwers receive a cpy f the Settlement Statement and Clsing Disclsure. After the ne-year anniversary f the clsing f an existing Texas (a)(6) lan. New subrdinate financing is nt permitted n a first lien Texas 50(f)(2). Attrney Review: All Texas 50 (f)(2) lans must be reviewed and certified by an NewRez apprved TX Attrney prir t lan clsing. NewRez s apprved firms include: Black, Mann and Graham Peirsn Pattersn 2.14 Subrdinate Financing Subrdinate Financing New, Mdified, and existing subrdinate liens are permitted within the max CLTV tlerances nted in the Cnventinal matrix. A cpy f the subrdinating Nte, Mrtgage/Deed and Subrdinatin Agreement is als required. If there is an utstanding balance at the time f clsing, the payment n the subrdinate financing must be included in the calculatin f the brrwer s debt t incme rati. The qualifying payment is the payment evidenced n the credit reprt r fr new draws the Page 9 f 36

10 peridic payment required under the terms f the plan and the amunt f credit t be drawn at r befre cnsummatin f the cvered transactin. Fannie Mae DU: Eligible Subrdinate Financing is allwed per the LTV/CLTV tables Freddie Mac LPA: Lans with eligible secndary financing require a 5% LTV reductin frm the maximum LTVs listed in the matrix. Subrdinate Financing nt permitted n C-ps 2.15 Manufactured Hmes A Manufactured Hme is a dwelling unit built n a permanent chassis and attached t a permanent fundatin system. Refer t applicable agency s Selling Guide (FNMA r FHLMC) fr any infrmatin nt specified in this Prduct Prfile. The manufactured hme must be built in cmpliance with: The Federal Manufactured Hme Cnstructin and Safety Standards that were established June 15, 1976, as amended and in frce at the time the hme is manufactured; and Additinal requirements that appear in HUD regulatins at 24 C.F.R. Part Cmpliance with these standards will be evidenced by the presence f bth a HUD Data Plate and the HUD Certificatin Label. If the riginal r alternative dcumentatin cannt be btained fr bth the Data Plate/Cmpliance Certificate and the HUD Certificatin Label, the lan is nt eligible fr delivery t Fannie Mae. Manufactured Hmes The HUD Data Plate/Cmpliance Certificate is a paper dcument lcated n the interir f the subject prperty that cntains, amng ther things, the manufacturer s name and trade/mdel number. In additin t the data required by Fannie Mae, the Data Plate includes pertinent infrmatin abut the unit, including a list f factry-installed equipment. The HUD Certificatin Label, smetimes referred t as a HUD seal r tag, is a metal plate lcated n the exterir f each sectin f the hme. The Manufactured Hme Appraisal Reprt (Frm 1004C) must shw evidence f bth the HUD Data Plate/Cmpliance Certificate and the HUD Certificatin Label. As an alternative t the riginal HUD Certificatin Label, the lender may be able t btain a verificatin letter with the same infrmatin cntained n the HUD Certificatin Label frm the Institute fr Building Technlgy and Safety (IBTS). A duplicate HUD Data Plate/Cmpliance Certificate may be available frm IBTS r by cntacting the In-Plant Primary Inspectin Agency (IPIA) r the manufacturer. (A list f IPIA ffices is psted n HUD s website.) The unit must nt have been previusly installed r ccupied at any ther site r lcatin, except frm the manufacturer r the dealer s lt as a new unit. The manufactured hme must be a ne-unit dwelling unit that is legally classified as real prperty and taxed and titled as such. New cnstructin and any hmes that have nt yet been taxed and titled as real prperty are nt permitted. The twing hitch, wheels, and axles must be remved. The dwelling must assume the characteristics f site-built husing. The brrwer must wn the land n which the manufactured hme is situated in fee simple Unit must be duble wide, at least 12 feet wide and have a minimum f 600 square feet f grss living area. Page 10 f 36

11 The manufactured hme must be attached t a permanent fundatin system in accrdance with the manufacturer s requirements fr anchring, supprt, stability, and maintenance. The fundatin system must be apprpriate fr the sil cnditins fr the site and meet lcal and state cdes The manufactured hme must be permanently cnnected t a septic tank r sewage system, and t ther utilities in accrdance with lcal and state requirements If the prperty is nt situated n a publicly dedicated and maintained street, then it must be situated n a street that is cmmunity wned and maintained, r privately wned and maintained. There must be adequate vehicular access and there must be an adequate and legally enfrceable agreement fr vehicular access and maintenance. Manufactured hmes that have been structurally mdified r have an additin are ineligible Sectin3: Brrwer Eligibility 3.1 Brrwer Eligibility There can be n mre than 4 brrwers per lan. Eligible Applicants: Brrwer Eligibility All brrwers must have valid and verifiable Scial Security Numbers, as well as a valid driver s license, state-issued ID r passprt. Other frms f taxpayer identificatin are nt allwed. 3.2 Occupancy Eligible ccupancy types include: Primary residences fr 1-4 unit prperties Secnd hme residences fr 1-unit prperties Occupancy Nn-Owner Occupied/Investment fr 1-4 unit prperties See Cnversin f Residence and Rental Incme fr additinal details and requirements 3.3 First-Time Hmebuyer First-Time Hmebuyer LPA scred lans with % LTV/CLTV: Require at least ne brrwer t be a first-time hmebuyer fr purchase transactins. When all brrwers are first-time hmebuyers n a purchase transactin, hmebuyer educatin is required. See FHLMC Guide Sectin fr hmewnership educatin requirements. 3.4 Nn-Occupant C-Brrwers Nn- Occupant C-Brrwer lans may be run thrugh either DU r LPA. Nn-Occupant NewRez applies the fllwing verlays t Nn-Occupant C-Brrwer lans: C-Brrwers The nn-ccupant c-brrwer may nt be an interested party t the sales transactin, such as the prperty seller, builder, r real estate brker. Nn-ccupant c-brrwers are nt required t be n title. 3.5 Pwer f Attrney Permitted n Purchase r Rate & Term Refinance transactins nly; the use f a Pwer f Attrney must be apprved by NewRez s Underwriting and Legal teams. Generally, a Pwer f Attrney may be used fr clsing in the fllwing scenaris: Pwer f Attrney Incapacitated Brrwer - the brrwer is incapacitated and therefre unable t sign dcuments due t disability, legal incapability, r he/she lacks the physical ability; Incapacitated brrwers must ccupy the prperty as their primary residence; the underwriter must validate ccupancy and review fr red flags within the lan file; Page 11 f 36

12 Example: verify the signer f the POA is nt acting as a straw buyer r purchasing an investment prperty utilizing the incapacitated brrwer s credit. Military Persnnel - the brrwer is currently deplyed r statined verseas and is unable t sign dcuments r attend clsing; Hardship Circumstance - the brrwer is unable t attend clsing because he/she is ut f the state r cuntry fr an extended perid f time, bedridden, in the hspital with a serius illness, r the brrwer is incarcerated. POA will nt be permitted fr brrwers that are n vacatin Gvernment Cntractr the brrwer is emplyed by the gvernment and currently wrking verseas A letter frm the brrwer s emplyer is required t verify verseas travel Business Reasns permitted n Purchase and Rate/Term Refinance transactins when the spuse has Pwer f Attrney fr the unavailable brrwer There are tw (2) acceptable types f pwer f attrney. The fllwing persns may sign security instruments n a brrwer s behalf: Specific - this type f POA is specific t the mrtgage transactin; therefre, the POA must specify the legal descriptin, prperty address, and transactin type within the bdy f the dcument. It must be recrded at clsing; General Military - this type f POA is generally used in situatins where a brrwer r his/her spuse may be deplyed r is n active duty. All lan files wishing t utilize a pwer f attrney require the fllwing: A Letter f Explanatin frm the brrwer advising why the lan is clsing with a POA Cmpleted and Signed POA Frm 3.6 Living Trust (Inter Vivs Revcable Trust) A living trust (Inter Vivs Revcable Trust) is an eligible mrtgage brrwer if it meets the fllwing requirements as well as State requirements. All trusts must be apprved by NewRez legal prir t Lan Apprval. Living Trust (Inter Vivs Revcable Trust) T determine whether r nt the Trust meets all the criteria required by State and investr standards, ne f the fllwing will be required: A cpy f the trust dcument must be included in the file Exceptin: Califrnia, where a current (less than 1 year ld) trust certificatin cmpleted by the brrwer may be prvided in lieu f the full trust dcument. If this certificatin is incmplete r cntrary t title results, the full trust dcumentatin may still be required. 3.7 Nn-Arm s Length Transactins Nn-Arm s Length Fllw agency guidelines with the fllwing exceptins: Transactins (At- Regardless f lan prgram, shrt sale transactins and flips are nt permitted Interest Transactins where the lan riginatr is acting in anther real-estate related rle are Transactins) prhibited. 3.8 Ineligible Brrwers Brrwers with Diplmatic Immunity Brrwers with Deferred Actin fr Childhd (DACA) apprval (EAD Categry C33) Brrwers withut a valid SSN (ITINs are nt accepted) Emplyees/Principals/Owners NewRez Third Party Originatrs; related parties (family Ineligible Brrwers members) are eligible s lng as they are nt emplyed, in any capacity, by the submitting brker/crrespndent Individuals n the LPD/GSA exclusinary lists Life Estates Page 12 f 36

13 3.9 Maximum # f Financed Prperties DU scred lans If the mrtgage being delivered t Fannie Mae is secured by the brrwer s principal residence, there are n limitatins n the number f prperties that the brrwer can currently have financed. If the mrtgage is secured by a secnd hme r an investment prperty, the brrwer may wn r be bligated n up t ten (10) financed prperties (including his r her principal residence). Tw (2) mnths PITIA reserves are required when the subject is a secnd hme and six (6) mnths when the subject is an investment prperty The ther financed prperties reserve amunts must be determined by applying a specific percentage t the aggregate f the utstanding unpaid principal balance (UPB) fr mrtgages and HELOCs n these ther financed prperties. The percentages are based n the number f financed prperties (brrwer s primary residence is excluded): 2% f the aggregate UPB if the brrwer has ne t fur financed prperties, 4% f the aggregate UPB if the brrwer has five t six financed prperties, r 6% f the aggregate UPB if the brrwer has seven t ten financed prperties (DU nly). The aggregate UPB calculatin des nt include the mrtgages and HELOCs that are n the subject prperty, the brrwer s principal residence, Maximum # f Financed Prperties prperties that are sld r pending sale, and Accunts that will be paid by clsing (r mitted in DU n the nline lan applicatin). Sectin 4: Cllateral LPA scred lans If the mrtgage being delivered t Freddie Mac is secured by the brrwer s principal residence, there are n limitatins n the number f prperties that the brrwer can currently be financing. If the mrtgage is secured by a secnd hme r an investment prperty, each Brrwer individually and all Brrwers cllectively must nt wn and/r be bligated n (e.g., Ntes, land cntracts and/r any ther debt r bligatin) mre than 10 (ten) 1- t 4-unit financed prperties, including the subject prperty and the Brrwer's Primary Residence One (1) t six (6) financed prperties require reserves f tw (2) mnths f PITIA n each prperty Seven (7) t ten (10) financed prperties require: LPA scred with a Risk Classificatin f Accept Minimum 720 FICO Reserves f eight (8) mnths f PITIA n each prperty These limitatins apply t the brrwer s wnership in ne-t fur-unit prperties r mrtgage bligatins n such prperties and are cumulative fr all brrwers. This limitatin includes prperties financed abrad. These limits may be exceeded, as permitted by the agencies, with a secnd sign frm Underwriting. Page 13 f 36

14 4.1 Eligible Prperties Attached/Detached SFRs Attached/Detached PUDs Lw/Mid/High-Rise Cnds and site Cnds 2-4 Unit Prperties C-ps (eligible fr Whlesale nly) Limited t the 5 brughs f New Yrk, Nassau, Rckland, Sufflk and Westchester cunties in New Yrk Bergen, Essex and Hudsn Cunty New Jersey 1-unit nly C-p lans must be underwritten by NewRez s Prject Review Department Mdular Hmes (these are nt cnsidered t be manufactured and are eligible under the guidelines fr 1-unit prperties) Hbby Farms as defined belw Mixed Use Prperties: Fr mixed use prperties, riginatrs may fllw agency guidelines with the exceptin that the square ftage f cmmercial part f the prperty cannt exceed 25% f the ttal square ftage Deed Restricted Prperties: All deed restricted prperties must be reviewed and apprved prir t lan apprval; all agency requirements must be met. Eligible Prperties Seasnal Secnd Hmes Nt Suitable fr Year Rund Use: LPA scred nly Purchase r LCOR 1-unit Full appraisal with interir/exterir prperty inspectin (prperty inspectin waivers are nt permitted) The appraisal must prvide a minimum f 2 cmparable sales that are als nt suitable fr year-rund ccupancy which supprt the market value pinin f the subject prperty. Manufactured Hmes: (Refer t Sectin 2.15 fr additinal requirements) 1-unit single family detached r PUD detached Dublewide nly Minimum 600 square feet f living space Manufactured after June 15, 1976 The fllwing manufactured hme types are nt permitted Cnd Cp Mixed used Leasehld f any kind Deed restricted Prperties nt taxed and titled as real prperty Prperties nt permanently affixed t the fundatin r have the twing hitch, wheels and axles Prperties less than 12 feet wide Prperties withut HUD Data Please r HUD Certificatin label Page 14 f 36

15 4.2 Cnds Cnds Newly cnstructed manufactured hmes nt yet attached t the land, nt yet cnstructed r nt yet titled and taxed as real prperty Hbby farms (where subject is manufactured hme Manufactured hmes lcated in a mbile hme park Cndminiums must meet the fllwing requirements.. 1) Fannie Mae r Freddie Mac prject eligibility standards 2) Prject review is nt required fr the fllwing. Prject Review Department will review master insurance and waive the applicable prject review cnditins. N HOA certificatin is required. Fannie Mae PERS apprved prjects Fannie Mae t Fannie Mae r Freddie Mac t Freddie Mac rate and term refinances less than r equal t 80% LTV/CLTV/HCLTV. Prject Type Cde V is required fr cnds apprved as Fannie Mae. Detached cnds. Prject Review Department t verify subject unit is detached. Special Feature Cde 588 is required fr cnds apprved as Fannie Mae. Tw- t fur-unit cnd prjects Prject Review Department t verify subject unit is a tw- t fur-unit. 3) Prjects requiring review: Findings must prvide fr the fllwing review types: DU/DO scred Limited Review CPM/Full Lender Review Apprval is valid fr 90 days; after 90 days an updated Questinnaire and any ther expired dcumentatin must be prvided Required fr new cnstructin prjects LPA scred (Nte: Full review is required fr cash-ut refinances greater than 80% LTV/CLTV.) Streamlined Review Established Cndminium Prjects New Cndminium Prjects Reciprcal Prject Reviews New r Recently Cnverted Cnds, Subdivisins r PUDs If there are n clsed r settled sales inside the subject prject, pending r under cntract sales frm the subject subdivisin r prject may be used as cmparable sales as fllws: DU scred: Subdivisins r prjects with 5 r mre units: Tw f the cmparable sales used must be pending (under cntract) sales frm the subject subdivisin and three additinal clsed/settled cmparable sales frm utside the subject subdivisin r prject must als be used by the appraiser. Subdivisins r prjects with 2-4 units: One f the cmparable sales used must be a pending (under cntract) sale frm the subject subdivisin r prject (tw if available); and three additinal clsed/settled cmparable sales frm utside the subject subdivisin r prject must als be used by the appraiser. LPA scred: One f the cmparable sales used must be a pending (under cntract) sale frm the subject subdivisin r prject; and three additinal clsed/settled Page 15 f 36

16 cmparable sales frm utside the subject subdivisin r prject must als be used by the appraiser. In the event the subject subdivisin r prject is s new that a clsed sale r a cntract sale is nt available, cmparable sales frm utside the subject subdivisin r prject may be used. Hwever, the appraiser must cmment n the marketability f the new subdivisin r prject and justify and supprt the use f the cmparable sales frm utside the new subdivisin r prject. Cnds- Flrida: New and newly cnverted cnds require PERS apprval (Sectin B ) PERS apprval r a CPM/Lender Full Review may be used n established cnd prjects up t the matrix maximum LTVs (Sectin B ) Limited review n Existing Cnds- LTV max is 75% primary/70% Secnd Hme r investment (Sectin B ) Ineligible Cnd Characteristics Nn-Incidental Business incme mre than 10%, up t 15% under expanded guidelines eligible by Fannie/Freddie Live-wrk prjects that d nt meet Fannie/Freddie Litigatin that des nt meet Fannie/Freddie eligibility exceptin guidelines Pririty lien exceeds Fannie/Freddie guidelines Single Entity greater than prjects with 2 t 4 units 1 unit prjects with 5 t 20 units 2 units prjects with 21 r mre units 25% fr LPA scred lans 20% fr DU scred lans Cmmercial space exceeds 35% Cmmercial parking facilities may be excluded frm the calculatin fr DU scred lans nly Manufactured husing cnd prjects Leasehld nt permitted Newly cnverted nn-gut rehabilitatin prjects that are nt PERS apprved New r Newly Cnverted prjects in Flrida that are nt PERS apprved Prjects with mandatry upfrnt r peridic membership fees fr use f recreatinal amenities A prject may nt be perated r managed as a htel, mtel, r similar cmmercial entity as evidenced by meeting ne r mre f the fllwing criteria: The HOA is licensed as a htel, mtel, resrt, r hspitality entity. The HOA r prjects legal dcuments restrict wners' ability t ccupy the unit during any part f the year. The HOA r prject s legal dcuments require wners t make their unit available fr rental pling (daily r therwise). The HOA r the prject s legal dcuments require unit wners t share prfits frm the rental f units with the HOA, management cmpany, r resrt, r htel rental cmpany. The fllwing characteristics are red flags and may indicate the prject is perating as a htel r mtel, which warrant further investigatin. Names that include the wrd Resrt, Club, htel r mtel Shrt-Term Rentals: Page 16 f 36

17 A Shrt-Term Rental (generally a rental perid less than 30 days) desn t disqualify a prject frm apprval as lng as the hme wner s assciatin has abslutely n invlvement in the facilitatin f renting f units n a shrt-term basis. Typically, units that are being advertised fr nightly r weekly rentals thrugh any f the fllwing surces are acceptable: Rental Agency Vacatin Club Third Party Management Cmpany VRBO Individual Unit Owners 4.3 C-ps C-ps Established prjects where the budget shws less than 5% f the verall incme frm nnincidental business peratins may be eligible fr a lan level exceptin frm FNMA. The cnd review team will submit the prject thrugh CVAS fr an exceptin review. The cst fr each review is $200 regardless f the utcme and the prcess takes apprx hurs t cmplete. C-ps within the New Yrk City/NJ Metr area (eligible fr Whlesale nly) New Yrk: 5 Brughs (Brnx, Brklyn, Manhattan, Queens and Staten Island), Nassau, Sufflk, Westchester and Rckland cunties New Jersey: Bergen, Essex and Hudsn Cunty Lan must clse with ne f the tw apprves C-p clsing attrneys Abrams Garfinkel Marglis Bergsn LLP r Ferr, Kuba, Mangan, Skylar PC. 1-unit nly Primary purchase, rate-term and cash-ut eligible Secnd hme purchase and rate-term refinance nly Full prject review required (limited reviews nt permitted) Refer t eligibility matrix fr maximum LTV and FICO requirements Nte: Individual C-p bards may impse mre restrictive LTVs which will be determined in the review f the C-p prject On apprved C-ps, NewRez will allw up t 25% lender expsure A C-p apprval is valid fr 90 days; after 90 days a Questinnaire and any ther expired dcumentatin must be prvided. Subrdinate Financing nt permitted Ineligible C-p Characteristics Investment prperty c-p transactins New Prjects where the seller is ffering sale r financing structures in excess f Fannie Mae/Freddie Mac eligibility plicies fr individual mrtgage lans Prjects with upfrnt r peridic membership fees fr use f recreatinal amenities Prjects perating as a htel/mtel. Live-wrk prjects that d nt meet Fannie/Freddie Litigatin that des nt meet Fannie/Freddie eligibility exceptin guidelines Single Entity greater than prjects with 2 t 4 units 1 unit prjects with 5 t 20 units 2 units prjects with 21 r mre units 10% fr LPA scred lans 20% fr DU scred lans Page 17 f 36

18 4.4 Hbby Farms Multi-dwelling unit prjects that permit an wner t hld title r stck wnership t mre than ne dwelling unit n a single deed Cmmercial space exceeds 25% fr LPA scred lans 35% fr DU scred lans Cmmercial parking facilities may be excluded frm the calculatin fr DU scred lans nly Manufactured husing prjects Newly cnverted nn-gut rehabilitatin prjects that are nt PERS apprved Limited Equity C-ps Develper retained wnership interest ther than unsld units Leasehld nt permitted Detached (Land C-ps) Subrdinate Financing nt permitted NewRez will accept prperties that may have an additinal use as a hbby farm. Examples f this wuld be a semi-rural r rural prperty, residential in nature, where sme f the acreage is used t grw grapes, have a small rchard, r a small barn and riding rings, etc. The requirements fr the prperty t be cnsidered are: Prperty must be residential in nature, and an wner ccupied SFR nly Appraiser must state prperty s highest and best use is as Residential and supply phts f the nn-residential use Prperty must be appraised as residential real estate, with cmmercial/agricultural value nt included in the appraiser s market value; appraiser must cmment n any affect the cmmercial/agricultural use has n marketability and cmpatibility with the subject s neighbrhd; the market value f the prperty is primarily a functin f its residential characteristics rather than f the business use Hbby Farms Agricultural use shuld generally nt exceed 20% f the ttal acreage Minimal utbuildings, such as small barns r stables, that are f relatively insignificant value in relatin t the ttal appraised value, prvided the utbuildings are typical f ther residential prperties in the subject area, and the appraiser can demnstrate (via cmparable sales) that there is an active, viable market Significant utbuildings, such as sils, large barns, strage areas, r facilities fr farmtype animals may indicate that prperty is agricultural in nature, and regardless f whether the appraiser assigns a value, wuld be ineligible fr financing Incme generated (grss, nt net) shuld be minimal. (this is mre telling than a lss, because any lss is prbably a write-ff f mre than just the hbby itself). Any lss must be cnsidered in the DTI Cmmercial use shuld nt result in any significant alteratins The cmmercial/agricultural use must be allwed by zning and the subject must cnfrm t zning. 4.5 Ineligible Prperties Cndtels Manufactured Hmes that are cnd, leasehld r cp Gedesic Dmes, Berms, Earth hmes Prperties / land held in a life estate Ineligible Prperties Prperties encumbered with private transfer fee cvenants (title, sales cntract r final CD shuld be evaluated t cnfirm) Prperties which are subject t a right f redemptin Prperties appraised with a prperty cnditin f C5 r wrse Page 18 f 36

19 4.6 Prperties Previusly Listed fr Sale Refinances listing must have been cancelled r expired prir t the applicatin date, and the brrwer must cnfirm their intent t ccupy the subject fr Owner Occupied. Prperties Previusly Listed fr Sale 4.7 Appraisals Appraisals In all instances, careful cnsideratin shuld be given t the listing price and appraised value t be sure the value is supprted. Nte: The definitin f prperties listed fr sale includes nn-wner-ccupied prperties where the current tenants have a lease-t-wn prvisin in their lease; these transactins are ineligible. All appraisals must be rdered and prcessed in cmpliance with Appraiser Independence Requirements (AIR). All lan files require a full appraisal r Appraisal Waiver/ACE (as permitted by the AUS) Appraisal must be cmpleted by a Certified appraiser frm an NewRez apprved AMC r be apprved as an appraisal transfer frm anther lender Cpy f the appraiser s licensee must be included in all funded lan files Re-use f an appraisal is permitted with the fllwing requirements Eligible fr Rate & Term refinances nly May nt payff secndary financing NewRez must ensure the prperty has nt undergne any significant remdeling, renvatin r deteriratin t the extent that the imprvement r deteriratin f the prperty wuld materially affect the market value f the subject prperty NFP must have been the riginal lender n the appraisal reprt and lan being refinanced The effective date f the appraisal reprt cannt be mre than 12 mnths prir t the nte date f the current transactin If the effective date f the appraisal reprt is greater than 4 mnths frm the nte date f the current transactin an appraisal update is required The same appraiser wh cmpleted the riginal reprt must inspect the exterir f the prperty and review current market data t determine whether the prperty has declined in value since the date f the riginal appraisal and be reprted n Frm 1004D If the appraiser indicates the value has declined then a new full, interir/exterir appraisal reprt If the appraiser indicates that the prperty value has nt declined n further actin is required The appraisal update frm must be within 4 mnths f the current transactin nte date New r Recently Cnverted Cnds, Subdivisins r PUDs If there are n clsed r settled sales inside the subject prject, pending r under cntract sales frm the subject subdivisin r prject may be used as cmparable sales as fllws: DU scred: Subdivisins r prjects with 5 r mre units: Tw f the cmparable sales used must be pending (under cntract) sales frm the subject subdivisin and three additinal clsed/settled cmparable sales frm utside the subject subdivisin r prject must als be used by the appraiser. Subdivisins r prjects with 2-4 units: One f the cmparable sales used must be a pending (under cntract) sale frm the subject subdivisin r prject (tw if available); and three Page 19 f 36

20 additinal clsed/settled cmparable sales frm utside the subject subdivisin r prject must als be used by the appraiser. LPA scred: One f the cmparable sales used must be a pending (under cntract) sale frm the subject subdivisin r prject; and three additinal clsed/settled cmparable sales frm utside the subject subdivisin r prject must als be used by the appraiser. In the event the subject subdivisin r prject is s new that a clsed sale r a cntract sale is nt available, cmparable sales frm utside the subject subdivisin r prject may be used. Hwever, the appraiser must cmment n the marketability f the new subdivisin r prject and justify and supprt the use f the cmparable sales frm utside the new subdivisin r prject. Appraisal Waivers/ACE: The fllwing prperties may receive a FNMA Appraisal Waiver ffer. Purchase and refinance lans receiving Apprve/Eligible with Appraisal Waiver One-unit prperties, including cndminiums Primary residence and secnd hme maximum: 90% LTV/CLTV limited cash ut refinance 80% LTV/CLTV purchase 70% LTV/CLTV cash-ut (Primary residence) 60% LTV/CLTV cash-ut (Secnd hme) Investment prperties maximum: 75% LTV/CLTV limited cash ut refinance 60% LTV/CLTV cash-ut A prperty inspectin fee waiver is nt required Appraisal Waivers are ineligible fr the fllwing transactins: Prperties lcated in a disaster-impacted area Cnstructin and cnstructin-t-permanent lans Tw- t fur-unit prperties Lan casefiles in which the value f the subject prperty prvided t DU is $1,000,000 r greater Texas 50(a)(6) lans Leasehld prperties, cmmunity land trust hmes, r ther prperties with resale restrictins Cperative units and manufactured hmes DU lan casefiles that receive an ineligible recmmendatin Lans fr which the mrtgage insurance prvider requires an appraisal Lans fr which rental incme frm the subject prperty is used t qualify If the Appraisal Waiver is ffered an appraisal shuld nt be rdered unless there is reasn t believe the prperty s current market value shuld be cnfirmed. Fr example, a prperty lcated in an area impacted by a recent disaster. If an appraisal is btained the appraised value must be used regardless f receiving an Appraisal Waiver eligible message. Purchase and refinance lans receiving Accept with ACE Waiver One-unit prperties, including cndminiums Primary residence r secnd hme maximum Maximum 80% LTV/CLTV Purchase and limited cash ut refinance nly Page 20 f 36

21 The fllwing are ineligible: Lan Prduct Advisr Cautin risk class Cash-ut Refinances Investment prperties Mrtgages secured by a cndminium, manufactured hme, leasehld estate r Cps 2-4 unit prperties Mrtgages secured by prperties with re-sale restrictins Cnstructin cnversin mrtgages Texas 50(a)(6) lans Nn-arm s length transactins Purchases f REO prperties Mrtgages with an estimated value r purchase price > $1,000,000 If the ACE is ffered an appraisal shuld nt be rdered unless there is reasn t believe the prperty s current market value shuld be cnfirmed. Fr example, a prperty lcated in an area impacted by a recent disaster. The age f the appraisal waiver is gd fr 120 days. If the ffer is mre than 120 days ld as f the nte date, a resubmissin t LPA is required t determine the nging appraisal waiver eligibility C-ps If an appraisal is btained the appraised value must be used regardless f receiving an ACE eligible message. The reprt must be cmpleted n Frm 2090 Appraisers must cnsider and reprt, amng ther things, the fllwing infrmatin: the number f shares attributable t the unit; the number f shares issued and utstanding fr the c-p crpratin; the name f the lienhlder, the lien psitin, and the amunt and repayment terms f all prject blanket financing; the pr rata share f the blanket mrtgage payments that are attributable t the unit, as determined by dividing the number f shares attributable t the unit by the ttal number f prject shares; the pr rata share f each lien that is attributable t the unit; any tax abatements r exemptins that are attributable t the unit; the remaining term fr any tax abatements r exemptins and prvisins fr escalatin f real estate taxes, which is the dllar amunt by which the taxes will increase and the year in which the increase will ccur; and any mnthly maintenance fees, including: utility charges, if they are part f these fees; mnthly special assessments; grund rent; ther fees fr the use f the facilities that are attributable t the unit; and the fee type, amunt, and term (if applicable) f thse ther fees. Cmparable Selectin Requirements fr C-p Share Lans in Existing Prjects tw clsed r settled sales frm within the subject prject, if available; and ne clsed r settled sale frm a cmpeting prject. Nte: Use f cmparable sales lcated utside f the established subject neighbrhd must be explained in the appraisal analysis. Cmparable Selectin Requirements fr C-p Share Lans in New (r Recently Cnverted) Prjects Page 21 f 36

22 ne clsed r settled sale frm the subject prject, if ne is available; and tw clsed r settled sales frm utside f the prject. If clsed r settled sales are nt available in the subject prject, appraisers must use sales frm cmpeting prjects. 4.8 Disaster Areas Disaster Areas Manufactured Hmes All lan files require a full appraisal n frm 1004C and include: manufacturer's name, trade r mdel number, year f manufacture, serial number, Certificatin Label number(s) frm either the HUD Data Plate r Certificatin Label(s), type f fundatin and utility cnnectins, detailed and supprted cst apprach, Opinin f the market value f the site, and prperty's cnfrmity t the neighbrhd. Appraisal must be cmpleted by a Certified appraiser frm an NewRez apprved AMC Transferred appraisals are nt permitted Cpy f the appraiser s licensee must be included in all funded lan files Appraisal must cntain a detailed and supprted cst apprach The appraiser must indicate a value cnclusin based slely n the real prperty as cmpleted cnsisting f the manufactured hme, site imprvements, and Land n which the hme is situated. The appraisal reprt must indicate whether r nt the site is cmpatible with the neighbrhd, and must cmment n the cnfrmity f the manufactured hme t ther manufactured hmes in the neighbrhd. The value cnclusin cannt include any nn-realty items including, but nt limited t, insurance, warranties, and furniture. Refer t the list f affected cunties published by FEMA at the fllwing link: NewRez will require recertificatin frm the appraiser n all lans lcated in the affected Cunties prir t clsing. If the cunty is indicated as being in a declared disaster area, the plicy must be adhered t The Disasters are referenced with bth an incident start date and an incident ending date. The prperty is cnsidered ptentially impacted fr 120 days frm the incident END date; If a full appraisal was btained n the prperty prir t the declared disaster, the inspectin must verify the prperty is sund and habitable and in the same cnditin as when it was appraised. Any f the fllwing ptins are acceptable t satisfy this requirement: A 1004D Final Inspectin r Appraisal Update signed by the riginal appraiser FNMA 2075 Desktp Underwriter Prperty Inspectin Reprt DAIR Disaster Area Inspectin Reprt Full appraisals btained after the declaratin need t indicate the prperty has nt been impacted by the disaster; The NewRez branches will request the apprpriate appraisal r inspectin thrugh the nrmal channels Page 22 f 36

23 4.9 Gegraphic Restrictins The fllwing restrictins apply t transactins secured by prperties in Alaska and Hawaii Brkered transactins nt permitted in Alaska r Hawaii Crrespndent transactins permitted in Alaska nly (Hawaii nt permitted) Gegraphic Restrictins Sectin 5: Incme 5.1 Incme C-p lans are eligible fr Whlesale nly and are restricted t the fllwing gegraphic lcatins: New Yrk: 5 Brughs (Brnx, Brklyn, Manhattan, Queens and Staten Island), Nassau, Sufflk, Westchester and Rckland cunties New Jersey: Bergen, Essex and Hudsn Cunty Incme Dcumentatin: Incme dcumentatin requirements are utlined belw. Refer t Fannie Mae r Freddie Mac Selling Guides fr any areas nt addressed Wage Earners: Mst recent paystub including all year-t-date earnings dated n earlier than 30 days prir t the initial lan applicatin date and mst recent ne r tw year s W-2 as required by DU/LPA (W-2 transcripts are permissible in lieu f W-2s); r incme validatin btained thrugh DU Validatin Service; r Written Verificatin f Emplyment btained thrugh a 3 rd party vendr such as, but nt limited t TALX (The Wrk Number) except when: The brrwer wrks fr an interested party t the transactin (Paystub and W-2s required) Nte: Fr 3 rd party verificatins, infrmatin must be current as f 35 days frm the date f the verificatin Incme Self-Emplyed: Fllw AUS tax return requirements. In instances where DU/LPA allws fr nly 1-year tax returns n a self-emplyed brrwer(s), the tax returns must be fr the mst recent tax year. A current year extensin and the previus year s tax returns will nt be accepted. Dcumentatin r evaluatin is nt required when a brrwer r c-brrwer is qualified using nly incme that is nt derived frm self-emplyment and selfemplyment is a secndary and separate surce f incme (r lss). Amended Tax Returns- When tax returns are utilized fr dcumenting incme: (All Emplyment/Incme Types): Tax returns amended within 90 days prir t the applicatin date r at any time during the lan prcess with NewRez are nt permitted. Tax returns amended greater than 90 days prir t the applicatin date are permitted hwever, bth the riginal and amended return must be examined fr cnsistency with the previus filings t determine whether the use f the amended return is warranted. The fllwing dcumentatin will be required: A letter f explanatin frm the brrwer detailing the reasn fr re-filing; Evidence f re-filing via tax transcript f amended return; Payment f and evidence f the ability t pay any applicable tax Brrwers starting New Emplyment After Nte Date: Brrwers wh are changing r starting new jbs are permitted t clse prir t the start f emplyment accrding t Agency requirements. Page 23 f 36

24 Refer t FNMA s Emplyment Offers r Cntracts, Optin 1 and Optin 2, with the fllwing requirements: Fr Optin 1, the emplyment start date as shwn n the emplyment ffer r cntract must be within 90 days f the Nte date. Fr Optin 2, Special Feature Cde 707 is required. Refer t FHLMC s Incme cmmencing after the Nte Date, Optin 1 and Optin 2, with the fllwing requirement: Fr Optin 2, start date f the new emplyment r future salary increase must be n later than 90 days after the Nte date. Crprate Relcatin- See sectin 9.1 fr additinal dcumentatin allwances r requirements 4506T & Tax Transcript Requirements A fully cmplete 4506T frm must be signed and dated by each brrwer fr all lans and must include the number f years f incme required The 4506T frm must be prcessed and transcripts btained in the fllwing circumstances. Wage Earners: Handwritten paystubs are used as verificatin f incme (W-2 transcripts acceptable unless ther surces f incme utilized) There is a relatinship between the parties (W-2 transcripts acceptable unless ther surces f incme utilized): Brrwer and Seller are related Brrwer/Seller/Lan Originatr are related Brrwer is emplyed by the Third-Party Originatr Cmpany Any f the fllwing are present (1040 transcripts required): Additinal incme fr qualifying is derived frm surces such as rental prperties, dividend/interest r ther incme where tax returns is required; r Tax returns are used t dcument incme; r At the underwriter s discretin Self-Emplyed: Fr self-emplyed brrwers persnal tax transcripts are required. Business tax transcripts must be btained if incme frm the business des nt flw thrugh t the brrwer s persnal tax returns r business incme appearing n persnal transcripts is nt cnsistent with the incme n the business tax returns Brrwer Prvided Transcripts In certain cases, such as identificatin theft, transcripts will nt be available directly frm the IRS, and the brrwer will need t btain. Additinal dcumentatin will be required alng with the transcripts: Fllw the guidelines belw when the IRS rejects an IRS Frm 4506-T request as unable t prcess: Evidence the IRS rejected the IRS Frm 4506-T request, A brrwer-btained Recrd f Accunt Transcript, in pdf frmat, fr all applicable years missing frm the website, and A signed IRS Frm 4506-T fr the year(s) impacted by the IRS rejectin. Fllw the guidelines belw when the IRS rejects an IRS Frm 4506-T request fr identity theft: Page 24 f 36

25 Prf identificatin theft was reprted t and received by the IRS (IRS Frm 14039) r A cpy f the ntificatin frm the IRS alerting the taxpayer t pssible identificatin theft, and Brrwer btained transcript, in pdf frmat, fr all applicable years missing In additin t the abve, brrwer prvided transcripts may als be permitted with apprval frm an underwriting team lead r higher. Cmments must be nted in Destiny fr the reasn brrwer prvided transcripts required. 5.2 Verificatin f Emplyment Verificatin f Emplyment 5.3 Assets Used fr Qualifying Incme Assets Used fr Qualifying Incme Wage Earner: A verbal verificatin f emplyment dated within 10 business days f the nte date is required fr all nn-self-emplyed brrwers. The verificatin f emplyment must include the phne number cntacted t cmplete the verbal, which must be dcumented as assciated with the business. In additin, the verificatin shuld be cmpleted thrugh the Human Resurce Department f the emplyer, the wner f the cmpany r direct supervisr fr small businesses. Self-Emplyed Brrwer: Fr Self Emplyed brrwers, the existence f the brrwer s business must be validated within 120 calendar days f the nte. This can be accmplished thrugh a third party, such as a CPA, regulatry agency, r the applicable licensing bureau, AND by verifying a phne listing and address fr the brrwer s business using a telephne bk, the internet, r directry assistance. Lan must be DU scred with a recmmendatin f Apprve/Eligible Eligible Occupancy/Number Units: 1-2 unit primary residence 1 unit secnd hme Ineligible prperty types Manufactured hmes Assets must be liquid and wned individually by the brrwer. Stcks, bnds and mutual funds must be reduced by 30%. Funds fr clsing, dwn payment and reserves must be netted frm the assets resulting in a net dcumented asset amunt. The initial minimum accunt value f the assets used t determine the incme stream is $500,000. Acceptable assets: checking r savings accunts; investments in stcks, bnds, mutual funds, certificates f depsit, mney market funds, and trust accunts; the amunt vested in a retirement savings accunt (must be f retirement age) the cash value f a vested life insurance plicy Mnthly Incme Stream calculatin: T determine the mnthly incme stream, cnvert the brrwer s net dcumented assets by the amrtizatin terms f the mrtgage (in mnths). This amunt is entered as ther incme in Destiny. Example: Page 25 f 36

26 Mutual Funds $ 500, Funds Fr Clsing (dwn payment, clsing csts & reserves) $ 100, Remaining Funds $ 400, % Required Reductin $ 120, Net Dcumented Assets $ 280, Incme Stream: $280,000/360 = Eligible Mnthly Incme $ Brrwer(s) must have a histry f wnership f the assets being utilized fr the calculatin. The fllwing requirements must be met: Purchase/Rate-Term: Owned and seasned fr 12 mnths with FICO 720+ Owned and seasned fr 24 mnths with FICO belw 720 Cash-ut: Owned and seasned fr 24 mnths regardless f FICO LTV Limits: Purchase/Rate-Term: 80% LTV/CLTV Cash-ut: 60% LTV/CLTV FICO minimum: 680 when LTV/CLTV < 70% 720 when LTV/CLTV > 70% The assets used fr the incme stream calculatin may be utilized fr reserves. The reserves must be subtracted frm the assets used t determine the Net Dcumented Assets fr the incme stream calculatin. Special feature cde 579 is required Nte: Interest, dividends, and capital gains frm the same r ther financial assets (reprted n the brrwer s tax return) cannt be used as additinal incme Sectin 6: Credit 6.1 Credit Credit A Tri-merge Credit Reprt is required fr every Brrwer wh executes the Nte. The Credit Reprt shuld generally include verificatin f all credit references prvided n the lan applicatin and must certify the results f public recrd searches fr each city where the Brrwer has resided in the past tw years. Each Brrwer must have a valid and usable scre frm at least tw f the fllwing three agencies: Experian (FICO), Trans Unin (Empirica), and Equifax (Beacn). Only scres frm these three agencies are acceptable. Revlving debt may be paid ff t qualify. The debt must be paid ff at r prir t clsing and the accunt des nt have t be clsed. Debts paid at clsing must be reflected n the Clsing Disclsure. All credit inquiries within 90 days f the credit reprt are required t be addressed by the custmer see Credit Attestatin Plicy Dergatry Credit Fllw AUS findings as t any debt that shuld be paid, and fr husing payment histry All judgments and liens must be paid at r befre clsing Fr frgiveness f debt, mdificatins, bankruptcies, freclsures, and shrt sales, fllw agency guidelines, alng with the fllwing: Extenuating circumstances are nt permitted fr LPA scred lans Page 26 f 36

27 Extenuating circumstances are permitted fr DU scred lans. Cnfirmed CR BK EC must be entered in DU s DU will disregard the bankruptcy infrmatin n the credit reprt Disputed Accunts When DU issues an Apprve recmmendatin using the disputed trade-lines, n further dcumentatin f the disputed trade-line(s) will be required and the fllwing message will be issued: The fllwing trade-line(s) were identified by DU as disputed by the brrwer. Because DU issued an Apprve recmmendatin when including the disputed infrmatin in the credit risk assessment, n further actin is necessary. 6.2 Qualifying Ratis Fr all LPA scred lans and DU scred lans that d nt receive an Apprve recmmendatin (with the abve DU message) using the disputed trade-line in the risk assessment, the risk will then be assessed with the disputed trade-line excluded. The brrwer must cntact the creditr t have the status updated accrdingly. An updated credit reprt is required and must reflect that the accunt is n lnger being disputed. A new AUS submissin is required and the findings must be reviewed accrdingly. Manual underwriting is nt permitted. Fr DU scred lans trade-lines reprted as medical debt will cntinue t be excluded frm the disputed trade-line identificatin. Investigatin f disputed medical trade-lines is nt required. Qualifying Ratis (Qualifying Interest Rate) Transactins resulting in significant payment shck shuld always be cnsidered by the underwriter. The brrwer s incme must clearly supprt the brrwer s ability t make the higher mnthly payment. It is always at the underwriter s discretin t require additinal verificatin f assets r a larger dwn payment as a cmpensating factr fr a lan with high payment shck. If a revlving accunt balance is t be paid ff at r prir t clsing, a mnthly payment n the current utstanding balance des nt need t be included in the brrwer s lngterm debt, i.e., nt included in the debt-t-incme (DTI) rati. Such accunts d nt need t be clsed as a cnditin f excluding the payment frm the DTI rati. Husing Payment Rati: The mnthly husing expense is the sum f the fllwing charges as they apply t any prperties wned and financed by the brrwer: Mnthly principal and interest payment as per the qualifying rate 1/12th f the annual hazard insurance premium and any ther insurance required by lan prgram. 1/12th f the annual real estate taxes. 1/12th f the annual fld insurance premium, when applicable. Mnthly leasehld payments, when applicable. Mnthly hmewner assciatin dues, cndminium maintenance fees and mnthly assessments (when applicable). Mnthly payment fr ther secured financing (when applicable). Ttal Debt Rati Mnthly husing expense as per qualifying rate. Outstanding mnthly bligatins such as: Page 27 f 36

28 Installment debt Revlving debt payments Alimny, child supprt r maintenance payments Lsses assciated with ther real-estate wned Other bligatins where a mnthly payment is legally required 6.3 Brrwers Retaining their Current Primary Residence Brrwers Retaining their Current Primary Residence When a brrwer is purchasing a new hme and retaining his/her current residence, it is ften a surce f cncern fr ccupancy fraud and ptential risk t the cmpany. The underwriter must review the applicatin and supprting dcumentatin t determine if any red flags are present and that the reserve/equity requirements are met. The brrwer(s) must sign the Occupancy Affidavit Frm prir t clsing 6.4 Cnversin f Primary Residence t a 2 nd Hme r Investment Prperty Cnversin f See agency guidelines fr specific requirements n qualifying ratis, use f rental incme Primary Residence frm cnverted prperty and reserve requirements. t a 2 nd Hme r Investment Prperty 6.5 Current Principal Residence Pending Sale Current Principal Residence Pending Sale 6.6 Student Lans Student Lans In instances where the brrwer s current primary residence is pending sale, but the sale will nt be finalized prir t the new lan s clsing, the PITIA f the current principal residence must be included in the brrwer s debt ratis, except in instances where agency reserve guidelines are met. BPO (Brker Price Opinin) is nt permitted 2055E r 1004 required t establish equity psitin; an AVM may be used n lan files apprved thrugh DU Fr all student lans, whether deferred, in frbearance, r in repayment (nt deferred), the lender must use the fllwing t determine the mnthly payment t be used as the brrwer s recurring mnthly debt bligatin (see Medical Dctrs and Dentists belw fr exceptin): LPA Scred: Fr student lans in repayment, deferment r frbearance: If the mnthly payment amunt is greater than zer, use the mnthly payment amunt reprted n the credit reprt r ther file dcumentatin, r If the mnthly payment amunt reprted n the credit reprt is zer, use 0.5% f the utstanding lan balance, as reprted n the credit reprt Payment may be excluded if: Brrwer currently meets student lan frgiveness, cancellatin r discharge requirements, and there is n indicatin circumstances wuld make the brrwer ineligible in the future, and Student lan has 10 r less mnthly payments remaining OR Full balance f the student lan will be frgiven, canceled r discharged at the end f the deferment r frbearance perid Brrwer currently meets emplyment-cntingent repayment requirements, and there is n indicatin circumstances wuld make the brrwer ineligible in the future, and Student lan has 10 r less mnthly payments remaining OR Full balance f the student lan will be paid at the end f the deferment r frbearance perid DU Scred: Page 28 f 36

29 If a mnthly payment is prvided n the credit reprt, the amunt appearing n the credit reprt may be used If the credit reprt des nt prvide a mnthly payment fr the student lan, r if the credit reprt shws $0 as the mnthly payment (which may be the case fr deferred lans r lans in frbearance), ne f the fllwing must be used: 1% f the utstanding balance even if this amunt is lwer than the actual fully amrtizing payment r A fully amrtizing payment using the dcumented lan repayment terms $0 payment fr student lans when dcumentatin is btained t evidence the actual mnthly payment is $0 prvided the payment is assciated with an incmedriven repayment plan. Medical Dctrs and Dentists: LPA Scred: Student lan payments that are in a perid f deferment r frbearance may be excluded frm the DTI fr a brrwer in, r wh has recently cmpleted, a medical residency prgram and/r a medical clinical fellwship prgram, prvided the fllwing requirements are met: One-unit purchase r rate & term refinance (nt a manufactured hme) LPA scred with a Risk Classificatin f Accept Minimum 720 FICO Evidence the lan is in deferment r frbearance and will remain in that status fr a minimum f 12 mnths frm the Nte Date Investr Feature Identifier f H18 is required Sectin 7: Assets 7.1 Assets Assets 7.2 Cash Reserves Assets must be verified as nted by the AUS. Written Verificatins f Depsit (VOD) are nt acceptable. Only system generated Verificatins f Depsit frm the financial institutin are acceptable. Transactins shuld fllw the agency guidelines in terms f cash reserves. Cash Reserves Nte: The agencies have specific cash reserve requirements fr 2-4 unit prperties, 2 nd Hmes and Investment prperties; including a requirement f specific reserves fr each prperty where the brrwer has multiple financed prperties. 7.3 Gifts Fllw Agency guidance Gifts Nted exceptin: brrwers must cntribute a minimum f 5% f their wn funds when the lan is secured by a manufactured hme 7.4 Seller/Interested Party Cntributins Seller/Interested Party Cntributins 7.5 Dwn payment Assistance Prgrams Dwn payment Dwn Payment Assistance prgrams are cnsidered an Interested Party Cntributin (IPC) Assistance Prgrams and are permitted; DAPs must be apprved by the NewRez Special UW Team prir t CTC. 7.6 Ineligible Assets Cryptcurrency, i.e. Bitcin, cannt be used fr dwn payment, clsing csts r reserves Ineligible Assets UTMA/Custdial Accunts fr minrs (cannt be used by accunt custdian) Sectin 8: Prcedures Page 29 f 36

30 8.1 Age f Dcumentatin Age f Fllw Agency Guides Dcumentatin 8.2 Electrnic Signatures NewRez will accept electrnic signatures n third party dcuments in accrdance with Electrnic Signatures in Glbal and Natinal Cmmerce Act (ESIGN) and the Unifrm Electrnic Transactins Act (UETA), as applicable. Electrnic Signatures Escrws The electrnic signature and date must be clearly visible when viewed electrnically and in a paper cpy f the electrnically signed dcument. Electrnic signatures are nt permitted fr any final dcuments including but nt limited t the nte, mrtgage, final 1003, etc. 8.3 Escrws (Taxes and Insurance) Escrws may be waived when the brrwer s LTV is less than 80% and the brrwer is nt a first-time hmebuyer FTHBs will be cnsidered n a case-by-case basis with a demnstrated ability t save (reserves) and strng residual incme. the brrwer des nt exhibit recent signs f delinquency Fr Rate & Term Refinance Transactins the fllwing restrictins als apply: the brrwer may nt finance the payment f real estate taxes fr the subject prperty in the lan amunt and waive escrws the brrwer may nt finance the payment f real estate taxes that are mre than 60 days delinquent fr the subject prperty in the lan amunt, regardless f whether r nt they waive escrws Fr Cash-ut Refinance Transactins the fllwing restrictins als apply: The new lan amunt may nt include the financing f real estate taxes that are mre than 60 days delinquent, unless requiring an escrw accunt is nt permitted by applicable law r regulatin. Fr example, if a particular state law des nt allw a lender t require an escrw accunt under certain circumstances, the lan wuld be eligible fr sale t Fannie Mae withut an escrw accunt. In all states, except CA, n exceptins are permitted if the LTV is > 80% (see waiver eligibility grid belw). 8.4 Escrw Waiver Grid Escrw Waiver Grid Primary Residence All states excluding CA and NM: < 80% LTV Califrnia: < 90% LTV New Mexic: < 80% LTV Escrw Waiver Eligibility Secnd Hme All states excluding CA: < 80% LTV Califrnia: < 90% LTV Investment All states excluding CA: < 80% LTV Califrnia: < 90% LTV 8.5 Escrw Hldbacks Fllw Agency guidance Escrw Hldbacks Review the Escrw Hldback Plicies and Prcedures n the NewRez Intranet fr details. 8.6 Excluded Parties- LDP/GSA Searches Excluded Parties- LDP/GSA Searches Agency, FHA and VA lans require cnfirmatin that cmpanies r individuals invlved in the riginatin r underwriting f a mrtgage transactin are nt n the Freddie Mac Exclusinary List, General Services Administratin (GSA) excluded party list r the HUD Limited Denial Participatin (LDP). Regardless f the reasn fr the party being excluded, any party t the transactin included n either list will result in the lan being ineligible fr delivery. All name variatins fund thrughut the lan file must be run when perfrming the searches. The search must be run n the fllwing parties in the transactin: Page 30 f 36

31 8.7 Interest Credit Brrwers Seller Builder Listing Agent & Listing Cmpany Selling Agent & Selling Cmpany Title Agent Title Cmpany Clsing Attrney Appraiser and Appraisal Cmpany Permitted n Cnventinal lans, bth purchases and refinances; must fund by the 5 Interest Credit th calendar day 8.8 Mrtgage Insurance Mrtgage Insurance cmpanies may have additinal verlays ther than thse established by the agencies and NewRez. A valid MI certificatin must be btained prir t CTC. Mrtgage Insurance Apprved MI Cmpanies: Essent, Genwrth, MGIC, NMI, Radian, and United Guaranty Plicies may be refundable r nn-refundable and require zer initial premium (ZIP/ZOMP) Split-Premium, Annual (lender r brrwer paid) and lender-paid mnthly plicies are nt permitted. NewRez accepts nly standard cverage amunts. Reduced, lwer cst, and minimum MI as apprved by DU/LPA are nt eligible. Financed premiums are nt permitted with the fllwing: Cash ut greater than 80% LTV/CLTV DU scred 2-t 4-units and investment prperties LPA scred with grss LTVs greater than 95%, except fr HmeOne sm mrtgages 8.9 Prcess t Add r Remve Brrwers Adding Brrwers Adding a brrwer t a lan at any time during the lan prcess, unless the lan has received an adverse credit decisin, is acceptable. When this ccurs a new RESPA package will be sent ut and cl ff perid will be 7 days. File shuld be submitted back t UW fr review f additinal brrwer s infrmatin. Prcess t Add r Remve Brrwers Remving Brrwers Remving a brrwer frm a lan is allwed nly in the fllwing scenaris N credit decisin has been made n the lan and brrwer expresses desire t withdraw their name frm the applicatin Lan has been apprved with bth brrwers as submitted and ne brrwer expresses desire t withdraw their name frm the applicatin. In bth f the abve scenaris - Request in writing frm brrwer shuld be placed in the lan file supprting their desire t withdraw their name frm the applicatin. Detailed ntes shuld als be placed in the lan file t eliminate any pssible cnfusin with the file. Remving a brrwer frm a lan is NOT allwed in the fllwing scenaris Lan is declined by underwriting Page 31 f 36