Description Maximum Loan Amount. LP Eligibility. NetOxygen Product Names

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1 NetOxygen Product Names Description Maximum Loan Amount LP Eligibility Purchase / Rate Term Refinance 7 Primary: 1- Unit 6 Primary: 2-4 Unit 6 2 nd 4, 5, 6 Home: 1 Unit Investment:1-Unit (Purchase ) 4, 5, 6 Investment:1-Unit 4, 5 (Rate/Term Refinance) FHLMC-30 Yr FIX-Conf FHLMC-15 Yr FIX-Conf FHLMC-20 Yr FIX-Conf FHLMC-10 Yr FIX-Conf FHLMC-30 Yr FIX-A Minus FHLMC-15 Yr FIX-A Minus Fixed rate, fully amortizing with level payments for life of loan. This program is for conventional conforming loan amounts. Conforming Limits LP Accept allowed LP A-Minus allowed provided: The Mortgage must be a Conventional Mortgage (30, 15 or 10 -year fixed). The Mortgage must be an LP Mortgage with a Risk Class of Caution and evaluation results of eligible for A-minus. A-Minus offering is not available for NOO borrowers who own more than one (1) financed investment property. See Secondary Marketing Exhibits FHLMC Delivery Fees LTV w/out LTV w/ 1 TLTV w/ 2, 3 HTLTV w/ 2, 3 Sec. Financing Sec. Financing Sec. Financing Sec. Financing 95% 90% 95% 95% 80% 75% 80% 80% 85% 80% 85% 85% 85% 80% 85% 85% 4, 5, 6 Investment:2-4 Unit Streamline refinances: Refer to most recent Underwriting memo regarding Streamline Refinance. - Rate/Term refinance transactions limited to the following: - The pay off of the outstanding principal balance of an existing first mortgage, - The pay off of the outstanding principal balance of any existing subordinate mortgage that was used in whole to acquire the subject property, - The financing of closing costs (including prepaid expenses), and - Cash back to the borrower in and amount no more than the lesser of 2% of the balance of the new refinance mortgage or $2, LTV with secondary financing is the maximum allowable LTV of the first mortgage when secondary financing is used with the transaction. 2 TLTV (Total Loan to Value) ratio is calculated by adding the first lien mortgage amount to disbursed amount of the HELOC plus any other secondary financing, and dividing that sum by the lesser of the value of the mortgaged premises or purchase price. Both TLTV and HTLTV ratio requirements must be met when secondary financing is in the form of a HELOC. 3 HTLTV (HELOC Total Loan to Value) ratio is calculated by adding the HELOC credit line limit to the mortgage amount plus any secondary financing, and dividing that sum by the lesser of the value of the mortgaged premises or the purchase price. Both TLTV and HTLTV ratio requirement must be met when secondary financing is in the form of a HELOC. 4 Each Borrower and all Borrowers collectively may not own and/or or be obligated on more than four (4) 1-4 unit financed properties (including primary residence) if loan is secured by second home or investment property, unless Borrower(s) meet requirements in footnote #5. Retail Lending Page 1 of 7

2 Purchase / Rate Term Refinance 7 (continued) Cashout Refinance 5 Primary: 1- Unit 8 Primary: 2-4 Unit 8 2 nd 6, 7, 8 Home: 1 Unit 4, 6, 7, 9 Investment: 1- Unit 5 Each Borrower and all Borrowers collectively may own and/or be obligated on more than four (4) but not to exceed six (6) 1-4 unit financed properties (including primary residence) if loan is secured by second home or investment property provided loan complies with all of the following additional restrictions: - Maximum 70% LTV/TLTV on new mortgage; AND - Minimum 740 FICO Score; AND - Borrower(s) must have a minimum of six (6) months mortgage payments (principal, interest, taxes, insurance and association dues, if applicable) in reserves for EACH financed property; AND - Must receive an LP Accept 6 For newly constructed homes that are purchase transactions, borrower(s) may NOT have an affiliation or relationship with the builder, developer or seller of the subject property. 7 If the mortgage being refinanced was a purchase money mortgage, the Note Date of the mortgage being refinanced must be at least 120 days prior to the Note Date of the Rate/Term refinance. Refer to Contributions By Interested Parties section further in this guideline for additional information and restrictions. - See Secondary Marketing Exhibits FHLMC Delivery Fees. LTV w/out LTV w/ 1 TLTV w/ 2, 3 HTLTV w/ 2, 3 Sec. Financing Sec. Financing Sec. Financing Sec. Financing 80% 75% 80% 80% 4, 6, 7, 9 Investment:2-4 Unit 70% 65% 70% 70% - See Secondary Marketing Exhibits FHLMC Delivery Fees. - Refer to Contributions By Interested Parties section further in this guideline for additional information and restrictions. 1 LTV with secondary financing is the maximum allowable LTV of the first mortgage when secondary financing is used with the transaction. 2 TLTV (Total Loan to Value) ratio is calculated by adding the first lien mortgage amount to disbursed amount of the HELOC plus any other secondary financing, and dividing that sum by the lesser of the value of the mortgaged premises or purchase price. Both TLTV and HTLTV ratio requirements must be met when secondary financing is in the form of a HELOC. 3 HTLTV (HELOC Total Loan to Value) ratio is calculated by adding the HELOC credit line limit to the mortgage amount plus any secondary financing, and dividing that sum by the lesser of the value of the mortgaged premises or purchase price. Both TLTV and HTLTV ratio requirements must be met when secondary financing is in the form of a HELOC. 4 A-Minus offering from Loan Prospector is not available for NOO borrowers who own more than one (1) financed investment property. 5 See Credit / FICO section for cashout refinance FICO restrictions. Retail Lending Page 2 of 7

3 Cashout Refinance (continued) Subordinate Financing General Underwriting Eligible Borrowers 6 Each Borrower and all Borrowers collectively may not own and/or be obligated on more than four (4) 1-4 unit financed properties (including primary residence) if loan is secured by second home or investment property, unless Borrower(s) meet requirements in footnote #7. 7 Each Borrower and all Borrowers collectively may own and/or be obligated on more than four (4) but not to exceed six (6) 1-4 unit financed properties (including primary residence) if loan is secured by second home or investment property, provided loan complies with all of the following additional restrictions: - Maximum 70% LTV/TLTV on new mortgage (or lower as required by guidelines); AND - Minimum 740 FICO Score; AND - Borrower(s) must have a minimum of six (6) months mortgage payments (principal, interest, taxes, insurance and association dues, if applicable) in reserves for EACH financed property; AND - Must receive an LP Accept 8 Primary Residence and Second Homes: At least one Borrower must have been on the title to the subject property for at least six months prior to the Note date of the new cash out refinance mortgage. Exceptions are allowed as specified in Chapter 24.6 of the Freddie Mac Guide. 9 Investment Properties: At least one Borrower must have been on the title to the subject property for at least six months prior to the Note date of the new cash out refinance mortgage. Exceptions are not allowed. - Secondary financing must comply with FHLMC guidelines. Additional delivery fees may apply. - If originating a U.S. Bank second mortgage, refer to second mortgage program guidelines for additional requirements. Underwritten to FHLMC guidelines except as outlined in this product guideline. LP Accept required. - Non-occupant co-borrowers with LTV > 90%, must have LP Accept - See Conventional Underwriting Guidelines Eligible Borrowers 1-4 Unit Primary Residence 1 Unit Second Home 1-4 Unit Investment Eligible Properties Standard FHLMC eligible properties as stated in the Conventional Underwriting Guidelines Eligible Properties. Condominium requirements listed in the Conventional Underwriting Guidelines Condominiums & PUDS section. Non-Warrantable Condos are not allowed. Manufactured Homes: See specific separate Manufactured Homes guidelines (FHLMC 30 Yr conf Manufactured Home 3666; FHLMC 20 Yr conf Manufactured Home 3667 and FHLMC 15 Yr conf Manufactured Home 3668) in Allregs for eligibility requirements. Eligible States See State Table Retail Lending Page 3 of 7

4 Employment / Income For those Borrowers in a medical residency program and /or medical clinical fellowship program, any student loan payments that are in a period of deferment or forbearance may be excluded from the calculation of monthly debt payment-to-income ratio provided that the mortgage complies with the following requirements: 1-Unit primary residence only Purchase or no cash out refinance only Loan must receive an LP Accept from LP Maximum 45% DTI Manufactured homes are not allowed Minimum 700 FICO score Loan must include documentation indicating the length of deferment or forbearance period will extend until after Borrower is placed in the field and receives full compensation. Must apply reasonableness test that borrower s future income will be sufficient to expect timely repayment. An SCC of H18 must be entered by the underwriter into Net O Credit / FICO Qualifying Ratios Qualifying Rate - A minimum FICO Score of 620 is required on cash out refinance transactions. - DTI determined by LP. - Temporary Buydown 2-1 Buydown: Note Rate Note Rate Buydown: Note Rate See Temporary Buydown Section of guidelines for additional restrictions. Investment Property Underwriting Trailing Co-Borrower Standard FHLMC Requirements - Not Allowed Retail Lending Page 4 of 7

5 Funds to Close / Reserves Processing Options Mortgage Insurance - Reserves are not required for owner occupied 1-unit properties, however, reserves should be considered in the underwriting process. If reserves are submitted to Loan Prospector they must be verified. - Primary residence 2-4 Units: Borrower(s) must have 6 months PITI in reserves regardless of whether rental income is used to qualify the borrower(s). - Second Home - Borrower(s) must have 2 months PITI in reserves for subject property. In addition, Borrower(s) must have additional 2 months PITI in reserves for each other financed second home and/or 1-4 unit Investment Property in which the Borrower(s) have an ownership interest OR on which the Borrower is obligated. - Investment property (subject property): Borrower(s) must have 6 months PITI in reserves regardless of whether rental income is used to qualify the borrower(s). In addition, Borrower(s) must have additional 2 months PITI in reserves for each other financed second home and 1-4 unit Investment Property in which the Borrower(s) have an ownership interest OR on which the Borrower is obligated. - Borrower s current primary residence is pending sale or being converted to a second home or investment property: Borrower(s) must have 6 months PITI in reserves for the new Primary residence and 6 months PITI in reserves for the current Primary residence pending sale / being converted. The required reserves can be reduced to 2 months PITI in reserves for each of the new primary residence and current Primary residence pending sale / being converted if all of the following requirements are met: Value of property pending sale / being converted is supported by a new appraisal with at least an exterior-only inspection that meets Freddie Mac requirements and is dated no more than 60 days prior to Note date (or effective date of permanent financing if new primary residence is a newly constructed home. LTV/TLTV/HTLTV for pending sales / being converted is less than or equal to 70%. - Loans may utilize LP designated Documentation Class of Standard or Streamlined. LTV <= 20 Yr. Term > 20 Yr. Term 90.01%-95.0% 25% 30% 85.01%-90.0% 12% 25% 80.01%-85.0% 6% 12% - Custom, Reduced, Financed and Split Premium MI are not allowed. - Single Premium is allowed. - Borrower Paid and Seller Paid (must comply with seller concession rules) MI is allowed. Retail Lending Page 5 of 7

6 Contributions By Interested Parties Temporary Buydowns IFI Codes (Formerly referred to as Special Characteristic Codes) Well and Septic Requirements Termite Inspection Work Completion Escrows Shared Roads, Well / Septic Systems Assumability Escrow Waivers Amortization Prepayment Penalty Late Charges Extended Lock Options Loan Disclosures - Primary Residences and Second Homes LTV/TLTV > 90%: 3% of the lesser of sales price or appraised value. LTV/TLTV > 75% < 90%: 6% of the lesser of sales price or appraised value. LTV/TLTV < 75%: 9% of the lesser of sales price or appraised value. - Investment Property All LTV/TLTV: 2% of the lesser of sales price or appraised value. - For newly constructed homes that are purchase transactions, borrower(s) may NOT have an affiliation or relationship with the builder, developer or seller of the subject property. - A gift, including a gift of equity, from a related person who is also the seller of the subject property is not subject to Freddie Mac s Interested Party Contribution restrictions provided that : The Related Person is not, and has no affiliation with, the builder, real estate agent or any other interested party (as defined by Freddie Mac) to the transaction; and Loan must comply with all Freddie Mac requirements pertaining to gifts. Maximum 3% - Not allowed on investment property. - Not allowed on cashout refinances. - Not allowed on no cashout refinances with a buydown plan funded from premium financing. See Conventional Underwriting Guidelines Well & Septic Requirements See Conventional Underwriting Guidelines Termite Inspection See Conventional Underwriting Guidelines Work Completion Escrows See Conventional Underwriting Guidelines Shared Roads, Well & Septic Systems - Not assumable. - Escrows may be waived on LTV of 80% or less and TLTV of 95% or less for a.25 discount point charge. The borrower must sign an Agreement for Waiver of Loan Escrows. - 10, 15, 20, 25 and 30 year amortization. No negative amortization. - None. - 5% or the highest allowed by state law. See Secondary Marketing Exhibits Firstlock Matrix None Retail Lending Page 6 of 7

7 Closing Documents Use most current version required by FHLMC/FNMA for the following documents: - Note: - Multistate or state specified, if applicable - Fixed Rate Note FNMA/FHLMC 3200 series. - Rider to Mortgage: - PUD units only - FNMA/FHLMC 3150 Multistate Planned Unit Development Rider. - CONDO units only - FNMA/FHLMC 3140 Condominium Rider. - 2nd Home Rider - FHLMC 3890 Second Home Rider. - Investment and 2-4 Unit Properties - FNMA/FHLMC 3170 Multistate one-to-four family Rider. - Security Instrument: - In all states, use the state-specific FNMA/FHLMC Mortgage/Deed of Trust. Retail Lending Page 7 of 7