Conventional and Government Program Overlays. OVERLAYS All Programs

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1 4506-T/1040s Requirements Financed Properties OVERLAYS All Programs If TRV (Tax Return Verification) reveals C or E losses and/or unreimbursed expenses, 2 years of tax transcripts and 2 years 1040s will be required regardless of DU findings. Limited to maximum 2 loans to one borrower, one must be primary residence Minimum Loan Amount $60,000 Power of Attorney Rent Back Texas OO, C/O Refis - Section 50(a)(6) Allowed for active duty military personnel, military contractors, extenuating circumstances, and documented medical conditions. The maximum number of days a property seller m ay rent back the subject property from the buyer (borrower) after loan closing is 30 days. Not allowed 1

2 CONVENTIONAL PROGRAM OVERLAYS Fannie Mae Conforming and High Balance Escrow Holdbacks Flip Transactions Ineligible Transactions Inter Vivos Trusts Escrow holdback must have been funded and work completed prior to purchase Properties re-sold 90 days from acquisition require Planet Home Lending prior approval. Manual underwrite Non-traditional credit Eligible subject to Fannie Mae guidelines on owner-occupied and second home transactions only. Ineligible on Investment transactions. S/E Borrower Borrower filed extension, a P&L for prior year must be provided. YTD P&L only for loan apps dated >120 days after the end of the business tax year. *This is not a Planet Home Lending overlay; it is a requirement of Fannie Mae under LQI. This information is provided on this overlay document as a courtesy reminder for Sellers. 2

3 CONVENTIONAL PROGRAM OVERLAYS DU REFI PLUS AUS Decision Credit Score Minimum Escrow/Impound Account Inter Vivos Trusts Maximum LTV MI Transfer Mortgage History S/E Borrower. Approve/Eligible Only Minim um 620 regardless of DU Findings Required regardless of LTV unless prohibited by state law. Eligible subject to Fannie Mae guidelines on owner-occupied and second home transactions only. Ineligible on Investment transactions. 150% LTV for primary residence and second home 125% LTV for investment property Eligible with: Arch Essent Genworth PMI MGIC Radian RMIC Triad United Guaranty National MI **Lender Paid Mortgage Insurance: Single premium only** 0 x 30 past 12 months Borrower filed extension, a P&L for prior year must be provided. YTD P&L only for loan apps dated >120 days after the end of the business tax year. 3

4 Product Manual Underwrites 2/2/6 caps not allowed Not Allowed CONVENTIONAL PROGRAM OVERLAYS HomeReady 4

5 Back to Work Extenuating Circumstances Conversion of Current Residence (Borrower Vacating 2-4 unit O/O Prop) Credit Score Minimum Credit Score Minimum 640 credit score required FHA Standard Rental income from the units rented, excluding owner-occupied units the borrower is vacating, may be used for qualifying. 1-unit conforming and high balance minimum 580 credit score with 90% LTV/CLTV 1-4 units conforming loan amount and 1- unit high balance minimum 620 credit score with maximum LTV/CLTV allowed per matrix Minimum 660 credit score for 2-4 unit high balance transactions Loans where not all borrowers have a credit score are eligible subject to the following: If a primary borrower exists, the loan may proceed without any additional documentation. A primary borrower is defined as: The individual has more than 50% of the qualifying income, and Meets the minimum tradeline requirements (3 tradelines with 12-month history; 1 of the 3 tradelines must have been active within the past 24 months), and The individual must occupy the property. If a primary borrower cannot be established because no borrower meets all of the above requirements, then the loan must follow HUD s non-traditional credit requirements. Maximum LTV/CLTV Credit score : Purchase transactions: 90% LTV/CLTV. No gift or DPA funds allowed for down payment; all funds for down payment must be from borrower own funds. Twelve-month verified housing history with 0x30 in previous 12 months is required. (Document with credit report or checks/money orders or evidence of consistent bank withdrawals). VOR, including VOR from professional management company or landlord letter is not acceptable. Rate/term refinance transactions: Rate/term: m ax 90% LTV/CLTV. Minim um 2 year payment history on the current loan with 0x30 in previous 24 months is required; or Credit score : Purchase transactions: 96.50% LTV/CLTV. No gift or DPA funds allowed for down payment; all funds for down payment must be from borrower own funds. Twelve-month verified housing history with 0x30 in previous 12 months is required. (Document with credit report or checks/money orders or evidence of consistent bank withdrawals). VOR, including VOR from professional management company or landlord letter is not acceptable. Rate/term refinance transactions: Rate/term: 97.75% LTV/CLTV. Minim um 2-year payment history on the current loan with 0x30 in previous 24 months is required; and 1-unit properties only (SFR, PUD, condos) 5

6 Credit Score (cont.) DTI LTV/CLTV Manual Downgrade Property Flips Additional State Restrictions. FHA Standard (cont.) No gifts/dpa allowed meeting down payment requirement. Gift funds eligible after applicable down payment from borrower own funds requirement is met. Two (2) months bank statements dated prior to loan application date and signed letter attesting all funds are borrower funds required. VA residual income requirements apply. Refer to the FHA Program guidelines in the Seller Guide for residual income requirements. Max payment shock 100% %-100% require double residual income No property flips (property re-sold 90 days from acquisition) Credit score: is 31%/43%, no exceptions Credit score: maximum 45% (based on occupant borrower only) Credit score DTI is 50%. Exceptions to exceed 50% are considered on a case-by-case basis. Purchase transactions, the combined loan amount of the first and second lien cannot exceed the lesser of 105% CLTV or 100% of the cost to acquire % LTV/CLTV may only be exceeded when using government entity for subordinate financing. Credit score maximum 90% LTV/CLTV on purchase and rate/term transactions Credit score maximum 85% LTV/CLTV on cash-out transactions Compensating factors are required on all loans downgraded to a manual underwrite. Reminder: HUD requires specific compensating factors when DTI exceeds 31%/43% (case numbers assigned on or after 4/21/14) 1-4 unit properties are eligible (Illinois 1-unit only; New Jersey/New York 1-2 units only) subject to the following: Properties re-sold 90 days from acquisition ineligible Regardless of the increase in value Planet Home Lending requires two appraisals, documentation/receipts of improvements and a property inspection. The lower of the value of the two appraisals must be used. Refer to the Planet Home Lending Seller Guide Chapter 6 Loan Eligibility, Property Re-sold 0-90 Days from Acquisition topic for detailed requirements. Property flips re-sold 90 days from acquisition are ineligible 2-4 units regardless of geographic region: Properties subject to a Short Sale Agreement are required to be listed on an MLS for a minimum of 30 days prior to the execution of the sales contract. Properties listed as an Exclusive Listing are ineligible for a flip transaction. Illinois 2-4 units and New Jersey / New York 3-4 units subject to the following: One full calendar year since acquisition date (closing date) to application date must have elapsed for the property to be eligible and there can be no relationship between the seller and borrower. (Does not apply when the seller is bank, government agency, etc.), - The subject property must not be in foreclosure, and - Signed affidavit required stating no relationship between buyer and seller, and - Max DTI 45%, and - If > 90% LTV, no gifts are grants allowed. 6

7 FHA Streamline Credit Score Credit Qualifying w/ Appraisal Maximum CLTV Occupancy Minimum 620 credit score for non-credit qualifying Minimum 580 credit score for credit qualifying ( restrictions apply). Refer to the Credit score topic below. Borrower must be receiving benefit of reduced annual MIP or CLTV for credit qualifying with appraisal Streamline; if not, loan should be processed as a rate/term refinance and have valid DU/Total Scorecard Approve/ Eligible Finding credit score max. 90% LTV/CLTV and max DTI 31%/43%. Minimum 24 mortgage seasoning on loan being refinanced with 0x30 in 24 months 125% CLTV Credit score max 90% CLTV Investment property eligible with single family residence only 7

8 VA Standard Cash-Out > 90% LTV Conforming loan amount only; no high balance Minimum 600 credit score 30 year fixed rate Minimal residual income requirements apply: AUS Credit Score Credit Score DTI Eligible Borrowers Loans must be run through DU. Planet Home Lending accepts: An Approve/Eligible Finding requires a downgrade to manual underwriting for any of the following: Mortgage history indicates 1x30 in 12 months Disputed tradelines Subject loan was previously restructured/modified mortgage. A minimum of 12 months of 0x30 payments have been made on the modified loan If the mortgage was in default at the time of modification it is not eligible. Minimum 580 credit score Minimum 600 with cash-out and > 90% LTV Maximum 90% LTV/CLTV purchase transactions. Minimum 12 months housing history with 0x30 in 12months Document with in-file credit report trade line rating or checks/money orders with evidence of bank withdrawals (no VOR or landlord letter). VOR or Landlord letter not accepted. Maximum 90% LTV/CLTV refinance transactions. Minimum 2 years pa y history on loan being refinanced with 0x30 in 24 months 1-unit properties only (SFR, PUD, condos) 10% down from borrower own funds required. No gifts/dpa until after 10% borrower own funds requirement met. 2 months bank statements dated prior to loan application date and signed letter attesting all funds are borrower funds required. Max payment shock 100% %-100% require double residual income No property flips (property re-sold 90 days from acquisition) Max DTI 31%/43% with a credit score Max DTI 45% with a credit score; > 45% requires Planet Home Lending prior approval Per DU Findings with a 640 credit score and Approve/Eligible. Only the veteran and the veteran s spouse are eligible. Loans defined as joint loans by VA are not eligible. 8

9 Property Listed for Sale Maximum Loan Amount Short Sale State Restrictions VA Standard (cont.) If the property was listed for sale within the prior 12 months but is not currently listed for sale: Cash-out only eligible if the listing is expired/canceled or withdrawn 180 days prior to the application date The appraised value should be at least 10% below the lowest listing price. If the appraised value is not at least 10% less than the lowest list price, the underwriter must address the variance satisfactorily. The borrower must provide written confirmation of their intent to occupy as their primary residence. $1,000,000 in all states except Hawaii; max $1,500,000 in the state of Hawaii 2-4 unit properties subject to a Short Sale Agreement must have been listed on the MLS for a minimum of 30 days prior to the execution of the sales contract. Properties designated as an Exclusive Listing are ineligible. Illinois 2-4 units, New Jersey, and New York 3-4 units are subject to the following: At least one full calendar year must have elapsed between the seller s acquisition of title and the execution of the sales contract (does not apply if the seller is a government agency, bank or bank subsidiary), and The subject property must not currently be in foreclosure, and The borrower and seller will be required to sign an Identity of Interest Certification stating that there is no relationship between them other than the transaction, and Max DTI 45%, and If LTV is > 90% no gifts or grants permitted. 9

10 >$417,000 Loan Amount (Alaska/Hawaii $625,500 or $750,000 Honolulu County, Hawaii) VA IRRRL Credit score requires full credit qualification Credit score 640 non-credit qualifying eligible. Maxim um LTV is 100% Full credit report required for both credit and non-credit qualifying to verify mortgage history Mortgage history 0x30 in12 months for credit qualifying 0x30 in 24 months for non-credit qualifying Appraisal An AVM or 2055 is required for both conforming and high balance transactions as follows: CoreLogic GeoAVM with a standard deviation 18. If standard deviation > 18, a 2055 will be required; or ProTeck AVM with a confidence score of 80% or more for conforming loan amounts. If confidence score is < 80% a 2055 will be required; high balance loan amount requires confidence score of 90% or more; or 2055 Credit Score Credit qualifying requires minim um 580 credit score Non-credit qualifying requires minimum 640 credit score Occupancy Credit scores of are subject to specific requirements. Refer to the Credit Score topic for details. 1-4 unit owner-occupied primary residence (2-4 unit ineligible on high balance) 1 unit second home (ineligible on high balance) 1-4 unit investment (ineligible on high balance) Credit Score Credit qualification required. Maximum 90% LTV/CLTV purchase transactions. Minim um 12 months housing history with 0x30 in 12 months document with in-file credit report tradeline rating or checks/money orders with evidence of bank withdrawals (no VOR or landlord letter) Maximum 90% LTV/CLTV refinance transactions. Minimum 2 years pay history on loan being refinanced with 0x30 in 24 months 1-unit properties only (SFR, PUD, condos) 10% down from borrower own funds required. No gifts/dpa until after 10% borrower own funds requirement met. 2 months bank statements dated prior to loan application date and signed letter attesting all funds are borrower funds required. VA standard residual income requirements apply Max payment shock 100% %-100% require double residual income No property flips (property re-sold 90 days from acquisition) 10

11 VA IRRRL (cont.) LTV/CLTV Maximum 125% LTV/Unlimited CLTV with AVM $417,000 loan amount Maximum 100% LTV/Unlimited CLTV on loan amounts > $417,000 ($625,500 Alaska/Hawaii or $721,050 in Honolulu count y, HI) Refer to Credit Score topic above for LTV/CLTV restrictions Maximum Loan Amount $1,000,000 in all states except Hawaii; max. $1,500,000 in the state of Hawaii. 11

12 USDA AUS Findings A GUS Accept/Eligible or Refer Finding required on purchase and non-streamlined refinance transactions. USDA requires manually underwritten. As a reminder, USDA requires full file documentation and documented mitigating circumstances/compensating factors are approved loans receiving a Refer from GUS. DTI Purchase and non-streamlined transactions maximum 45%. 12