30 Year Fixed FLORIDA FIRST MORTGAGE (NON-HHF AREAS)

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1 Tip: To find specific information for a product, Press Ctrl+F (or use Find from the Edit Menu) and then search for the information or topic you are looking for. If you don t find the topic the first time, try variations, different terms or less words. Florida Housing Finance Corporation Includes Hardest Hit Funds (HHF) Must be referred to AFS for Origination (loan cannot be originated by branch) 30 Year Fixed LTV CLTV Purpose Unit Occupancy Credit Score DTI Ratio Purchase 1-4 O/O On purchases, the CLTV is further limited to 100% (of the adjusted value) or the standard FHA LTV limit (96.50%) (depending on the type of financing) if the subordinate lien is NOT from an instrumentality of government or government agency that is providing down payment and/or closing cost assistance in the form of secondary financing. 2. Max LTV/CLTV may be exceeded when financing the Funding Fee, however max loan amount may NOT be exceeded PRODUCT NAMES Florida Housing FHA 30 Year Fixed Florida Housing FHA Military Heroes 30 Year Fixed Florida Housing Assist 2 nd DPA Florida Housing FHA HHF 30 Year Fixed* Florida Housing FHA Military Heroes HHF 30 Year Fixed* Florida Housing HHF Assist 2 nd DPA* * HHF program will end when funding is no longer available, and that is expected to be sometime in December Contact ehousingplus to determine if funds are still available. When the HHF program is no longer available, the borrowers in those areas will be eligible for the standard Florida Housing product. ALLOWABLE Retail ORIGINATION CHANNELS Loans must be referred to the AFS department for origination SERVICER U.S. Bank = Master Servicer ehousingplus = Program Administrator/Compliance FLORIDA FIRST MORTGAGE (NON-HHF AREAS) The Florida First (FL First) offers eligible borrowers a 30-year, fixed-rate mortgage. Borrowers who qualify for this mortgage program will automatically qualify for down payment assistance through the FL Assist Second Mortgage Program. Florida Housing Finance Corporation 1 of 36 12/27/2017

2 MILITARY HEROES FIRST MORTGAGE LOAN PROGRAM (NON-HHF AREAS) DOWN PAYMENT/CLOSING COST ASSISTANCE OVERVIEW (NON-HHF AREAS) Borrowers qualifying under this program must utilize the down payment assistance associated with this program. The first trust deed is not allowed to be used without using the DPA. Not eligible for borrowers in Hardest Hit Fund Areas which are the following Florida counties: Brevard, Clay, Duval, Hillsborough, Orange, Osceola, Pasco, Pinellas, Polk, St. Lucie, and Volusia Counties (see HHF section) Income and purchase limits apply, see sections below The Military Heroes offers eligible borrowers a 30-year, fixed-rate mortgage with a rate that is 25 bps less than the Florida First. To be eligible for the Military Heroes Program, borrower(s) must be a veteran whose discharge status is anything other than dishonorable, or active duty personnel from the military (Air Force, Army, Coast Guard, Marine Corps, Navy, National Guard, or the Reserves). Borrowers qualifying for this mortgage program will automatically qualify for down payment assistance through the Florida Assist Second Mortgage Program. Borrowers qualifying under this program must utilize the down payment assistance associated with this program. The first trust deed is not allowed to be used without using the DPA. Verification of eligibility may include discharge papers for non-active duty personnel, a current military photo ID for active duty personnel, or alternative documentation that supports eligibility. Not eligible for borrowers in Hardest Hit Fund Areas which are the following Florida counties: Brevard, Clay, Duval, Hillsborough, Orange, Osceola, Pasco, Pinellas, Polk, St. Lucie, and Volusia Counties (see HHF section) Income and purchase limits apply, see sections below Florida Housing offers a second mortgage program that provides eligible first-time homebuyers with a 0.00% deferred second mortgage of up to $7,500 that can be used for down payment, closing costs and prepaids, mortgage insurance premiums, or as a principal reduction to the first mortgage. Borrower(s) qualifying for the Florida First and Military Heroes First Mortgage Loan Program in all counties EXCEPT for Brevard, Clay, Duval, Hillsborough, Orange, Osceola, Pasco, Pinellas, Polk, St. Lucie, and Volusia Counties, automatically qualify. This is not a stand-alone second mortgage program. The funds may be used to fund up to 100% of the Borrower s cash requirement to close, including the down payment, closing costs, pre paid items and other related Mortgage Loan fees and expenses. Any potential cash back to borrower should be applied as a principal reduction to the first mortgage unless the cash back is from gift funds. Gift Funds may be used for down payment, closing costs, debt payment, to establish reserves for the borrower(s), or any other Agency allowed purpose. Since this is not the borrower(s)' own funds, a refund of any excess gift funds is not considered "cash back" for Program purposes and therefore, is permitted. When refunding gift funds, include a copy of the Agency required Gift Letter in the compliance file. Adhere to FHA guidelines when applying a principal reduction for cash back other than those received from gift funds. Underwriter Certification requirement: WITHIN 45 DAYS OF LOAN RESERVATION; Underwriter completes the online Underwriter Certification within the ehousingplus Lender Portal. The compliance file will be delivered to ehousingplus and the mortgage file including the credit package will be delivered to U.S. Bank. Florida Housing Finance Corporation 2 of 36 12/27/2017

3 FLORIDA ASSIST 2 ND MORTGAGE DPA (NON- HHF AREAS) DISCLOSURE REQUIREMENTS FOR THE FLORIDA ASSIST 2 ND MORTGAGE DPA (NON- HHF AREAS) FLORIDA FIRST MORTGAGE HARDEST HIT FUNDS (HHF AREA) DPA Funds must be provided upfront by lender to be reimbursed by U.S. Bank at purchase Additional loan must be created in FT360 to accommodate second lien This down payment assistance (DPA) program is available to borrowers at 120% of AMI or below (adjusted for household size) and can be used to cover down payment as well as reasonable and customary closing costs. Offers up to $7,500 This is a second lien that will subordinate to the FHA first mortgage and must be considered secured borrowed funds On the loan application, Question H Is any part of the down payment borrowed should show as Yes. The Florida Assist 2 nd Mortgage is not forgivable. Repayment is deferred, except in the event of the sale, transfer, satisfaction of the first mortgage, refinancing of the property or until such a time the mortgagor ceases to occupy the property at which time, the Florida Assist will become payable in full. Any down payment exceeding minimum requirement to be applied to first mortgage principal. Please Note: The Florida Assist down payment assistance CANNOT be used to cover the cost difference between the sales price and appraised value and CANNOT be used to pay off borrower debt. The difference between appraised value and sales price or debt repayment must be paid with the borrowers own funds. Borrower(s) must not have had an Ownership Interest in their primary residence within the past 3 years unless purchasing in a Federally Designated Targeted Area or if they qualify under the Veteran s Exemption. Note: The new TRID disclosures are not acceptable for second mortgages originated in the Florida Housing First Time Homebuyer Program. The source of funding requires that Florida Housing adhere to disclosure requirements under RESPA. The standard GFE and HUD-1 will continue to be required on all second mortgages originated in the Florida Housing Program. Do NOT disclose any Florida Housing second mortgage on the TRID documents. The Loan Estimate and Closing Disclosure are not applicable to Florida Housing second mortgages. Second mortgage loans submitted to US Bank with the TRID disclosures will not be eligible for purchase. The Florida Assist Second Mortgage and the Florida Assist Second Mortgage Note are available on the ehousing Plus website. Additional loan must be created in FT360 to accommodate second lien A separate initial and final GFE and HUD-1 is required. TRID disclosures are NOT acceptable for second mortgages originated in the Florida Housing Program. Please Note: Disclosing improperly or failure to disclose will deem the FL Assist second mortgage loan ineligible for purchase by US Bank. Non-purchase of the second mortgage loan will also result in non-purchase of the first mortgage loan. HHF program will end when funding is no longer available, and that is expected to be sometime in December Contact ehousingplus to determine if funds are still available. When the HHF program is no longer available, the borrowers in those areas will be eligible for the standard Florida Housing product. The Florida First (FL First) HHF offers eligible borrowers a 30-year, fixed-rate mortgage. Borrowers who qualify for this mortgage program will automatically qualify for down payment assistance through the FL Assist Second Mortgage Program. Borrowers qualifying under this program must utilize the down payment assistance Florida Housing Finance Corporation 3 of 36 12/27/2017

4 MILITARY HEROES FIRST MORTGAGE HARDEST HIT FUNDS (HFF AREAS) DOWN PAYMENT/CLOSING COST ASSISTANCE OVERVIEW (HHF AREAS) associated with this program. The first trust deed is not allowed to be used without using the DPA. Only eligible for borrowers in Hardest Hit Fund Areas which are the following Florida counties: Brevard, Clay, Duval, Hillsborough, Orange, Osceola, Pasco, Pinellas, Polk, St. Lucie, and Volusia Counties (see HHF section) Income and purchase limits apply, see sections below HHF program will end when funding is no longer available, and that is expected to be sometime in December Contact ehousingplus to determine if funds are still available. When the HHF program is no longer available, the borrowers in those areas will be eligible for the standard Florida Housing product. The Military Heroes offers eligible borrowers a 30-year, fixed-rate mortgage with a rate that is 25 bps less than the Florida First HHF. To be eligible for the Military Heroes Program, borrower(s) must be a veteran whose discharge status is anything other than dishonorable, or active duty personnel from the military (Air Force, Army, Coast Guard, Marine Corps, Navy, National Guard, or the Reserves). Borrowers qualifying for this mortgage program will automatically qualify for down payment assistance through the Florida Assist Second Mortgage Program. Borrowers qualifying under this program must utilize the down payment assistance associated with this program. The first trust deed is not allowed to be used without using the DPA. Verification of eligibility may include discharge papers for non-active duty personnel, a current military photo ID for active duty personnel, or alternative documentation that supports eligibility. Not eligible for borrowers in Hardest Hit Fund Areas which are the following Florida counties: Brevard, Clay, Duval, Hillsborough, Orange, Osceola, Pasco, Pinellas, Polk, St. Lucie, and Volusia Counties (see HHF section) Income and purchase limits apply, see sections below HHF program will end when funding is no longer available, and that is expected to be sometime in December Contact ehousingplus to determine if funds are still available. When the HHF program is no longer available, the borrowers in those areas will be eligible for the standard Florida Housing product. Florida Housing offers a second mortgage program that provides eligible first-time homebuyers with a 0.00% deferred second mortgage of up to $15,000 that can be used for down payment, closing costs and prepaids, mortgage insurance premiums, or as a principal reduction to the first mortgage. Borrower(s) qualifying for the Florida First and Military Heroes First HHF Mortgage Loan Program in the following counties Brevard, Clay, Duval, Hillsborough, Orange, Osceola, Pasco, Pinellas, Polk, St. Lucie, and Volusia Counties, automatically qualify. This is not a stand-alone second mortgage program. The funds may be used to fund up to 100% of the Borrower s cash requirement to close, including the down payment, closing costs, pre paid items and other related Mortgage Loan fees and expenses. Any potential cash back to borrower should be applied as a principal reduction to the first mortgage unless the cash back is from gift funds. Gift Funds may be used for down payment, closing costs, debt payment, to establish reserves for the borrower(s), or any other Agency allowed purpose. Since this is not the borrower(s)' own funds, a refund of any excess gift funds is not considered "cash back" for Program purposes and therefore, is permitted. When refunding gift funds, include a copy of the Agency required Gift Letter in the compliance file. Florida Housing Finance Corporation 4 of 36 12/27/2017

5 FLORIDA ASSIST HARDEST HIT FUNDS DPA (HHF AREAS) DISCLOSURE REQUIREMENTS FOR THE FLORIDA ASSIST 2 ND MORTGAGE DPA (HHF AREAS) Adhere to FHA guidelines when applying a principal reduction for cash back other than those received from gift funds. Underwriter Certification requirement: WITHIN 45 DAYS OF LOAN RESERVATION; Underwriter completes the online Underwriter Certification within the ehousingplus Lender Portal. The compliance file will be delivered to ehousingplus and the mortgage file including the credit package will be delivered to U.S. Bank. DPA Funds must be provided upfront by lender to be reimbursed by U.S. Bank at purchase Additional loan must be created in FT360 to accommodate second lien HHF program will end when funding is no longer available, and that is expected to be sometime in December Contact ehousingplus to determine if funds are still available. When the HHF program is no longer available, the borrowers in those areas will be eligible for the standard Florida Housing product. This Down Payment Assistance (DPA) Program will provide an incentive to qualified First Time Homebuyers to purchase a primary residence in eleven targeted counties within Florida. The HHF second mortgage program provides eligible borrower(s) with funds that can be used for down payment, closing costs and prepaids, mortgage insurance premiums, or as a principal reduction to the first mortgage. This second mortgage program offers the following benefits to qualified borrower(s): DPA is a five-year, deferred loan that is forgiven at the rate of 20% per year, over the term of the second mortgage loan provided the borrower is not in default. 0% interest rate. Up to $15,000 in assistance. The HHF DPA Second Mortgage, HHF DPA Second Mortgage Note, and Dodd- Frank and HHF DPA Certification form are all available in the ehousing Plus Lender Portal. This is a second lien that will subordinate to the FHA first mortgage and must be considered secured borrowed funds On the loan application, Question H Is any part of the down payment borrowed should show as Yes. Additional loan must be created in FT360 to accommodate second lien A separate initial and final GFE and HUD-1 is required. TRID disclosures are NOT acceptable for second mortgages originated in the Florida Housing Program. Please Note: Disclosing improperly or failure to disclose will deem the FL Assist second mortgage loan ineligible for purchase by US Bank. Non-purchase of the second mortgage loan will also result in non-purchase of the first mortgage loan. VETERANS EXCEPTION Veterans Exception refers to the Congressional Act that permanently exempts qualified veterans from the Internal Revenue Code 143 requirement of being a First Time Homebuyer when utilizing loan programs that rely on mortgage revenue bond financing as its funding source. Veterans need not be First Time Homebuyers if he or she served in the active military, naval, or air service, and who was discharged or released therefrom under conditions other than dishonorable. Borrower(s) qualifying under the Veterans Exception must certify that they meet the requirements on the Mortgagor Affidavit. TARGETED AREAS Borrowers purchasing in a Federally Designated Targeted Area are exempt from the First-Time Homebuyer Requirement. Refer to the Program Guidelines on the ehousing Plus website for eligible census tracts: Florida Housing Finance Corporation 5 of 36 12/27/2017

6 AUS DATA ENTRY REQUIREMENTS OF DPA LIEN finance-government/ Note: For the Targeted Areas in HHF counties, please refer to those specific program guidelines on the ehousing Plus website. See Housing Authority Products with Second Liens in FT360 in the Resource Center, which can be located at the following link: AuthorityProductswithDPALiensinFT360.pdf In the Secondary Financing of the HUD-92900LT FHA Loan Transmittal screen Enter the Secondary Financing Source/EIN Select the Correct Check box (Gov t A Government Entity is the source of the secondary financing, NP A Non-Profit Agency is the source of the secondary financing, Family A Family member is the source of the secondary financing, Other There is another source of the secondary financing (completed checkbox which will enable if selected) Enter the Amount of the Secondary Financing TRAINING For program and system training ehousingplus offers training: Anyone who will reserve funds, complete an underwriter certification, print forms or clear exceptions is highly encouraged to attend a 30-minute training. Register to attend: For underwriting, delivery and funding information see U.S. Bank website ges/mrbp_division.cfm AGENCY LINKS For additional reference, Florida Housing guidelines posted on ehousingplus website: In addition to any Product Profile requirements, you must always meet the published HUD guidelines and master servicer, U.S. Bank, lending criteria. If published HUD guidelines or U.S. Bank are more restrictive then what is allowed in the Product Profile, you must always defer to HUD Guidelines. For underwriting, delivery and funding information see U.S. Bank website ges/mrbp_division.cfm then click on U.S. Bank Lending Manuals All PRMG staff can access all end Agency guidelines though AllRegs Online at Instructions on how PRMG staff can access the AllRegs service is available in the Resource Center. Use the following link to access the HUD Housing Handbooks site, and from there, obtain access to the Handbook: s/handbooks/hsgh Access the All Regs version of the Handbook at: MINIMUM LOAN No Minimum Loan Amount AMOUNT MAX. LOAN AMOUNT The maximum loan limit is county specific set by HUD and can be further lmited by purchase limits set by Florida Housing. Max HUD Limits for all counties can be found here: The property must not exceed Florida Housing county specific Sales Price Limits. These limits are subject to change can be found in their program guidelines which Florida Housing Finance Corporation 6 of 36 12/27/2017

7 GEOGRAPHIC RESTRICTIONS can be access here: Purchase price limits vary between the Florida Assist 2 nd lien and the HHF DPA options. Make sure you are referring to the correct limits. Purchase price limits for the HHF counties can be found within those specific guidelines, also on the ehousing Plus website. See State Specific Requirements in Resource Center for state specific information Non-HHF program available in 56 Counties throughout Florida with the exception of the following counties: Brevard, Clay, Duval, Hillsborough, Orange, Osceola, Pasco, Pinellas, Polk, St. Lucie, and Volusia Hardest Hit Fund (HHF) program can only be used within the following counties and is not available in other counties: Brevard, Clay, Duval, Hillsborough, Orange, Osceola, Pasco, Pinellas, Polk, St. Lucie, and Volusia Refer to the Hardest Hit Fund section of the product profile for more information on using the First-Time Homebuyer program in these counties. PURCHASE PRICE LIMITS Purchase price limits are county-specific and change annually. Refer to the program guidelines on the ehousing Plus website for current limits: Documentation required to verify purchase price eligibility: Closing Disclosure (CD) Final URLA or 1003 MORTGAGE TYPES 203(b) Home Mortgage Insurance 234(c) Mortgage Insurance for Condominiums FEES First Mortgage 1.00% Origination Fee charged Standard PRMG Underwriting and Processing Fee to be charged Compliance/Admin Fee $250 payable to ehousing Standard fees normally charged to the borrower (i.e. Appraisal Fee, Credit Report Fee, Flood Certification, Freight, Document Preparation) are allowed Effective for all loans reserved on or after 8/1/2017: Realtor Transaction Fees, if charged, cannot exceed $400. These costs cannot be deducted from down payment assistance funds In all cases the lender must meet federal and Florida lending laws regarding fees and charges. No additional fees are allowed for the Florida Assist Second FIRST LOAN INTEREST RATES ehousingplus posts the First Mortgage interest rates daily on their website All loans must be delivered and purchased by U.S. Bank within 115 days of rate lock. This information is posted on the daily rate sheet. Rates can be subject to intra day pricing changes. Note: there are no extensions for the Florida Housing FHA program. Loans purchased after the maximum delivery date will be charged 25 bps late fee and this fee will be netted from the Participating Lender s SRP at loan purchase. DOCUMENTATION Full/Alt Doc Regardless of DU findings, all loans must have evidence that the most current year s 1040 tax returns have been validated for all borrowers with any type of qualifying income. If the results cannot be obtained due to an extension, a No Record Found message is acceptable, and a validated 4506-T on the previous year is required. For a borrower who is qualified using either (1) base pay, (2) bonus, (3) overtime, or (4) commission income less than 25% of the borrower s annual employment income, Florida Housing Finance Corporation 7 of 36 12/27/2017

8 then unreimbursed employee business expenses are not required to be analyzed or deducted from the borrower s qualifying income, or added to monthly liabilities. This applies regardless of whether unreimbursed employee business expenses are identified on tax returns (IRS Form 2106) or tax transcripts received from the IRS. Union dues and other voluntary deductions identified on the borrower s paystub do not need to be deducted from the borrower s income or treated as a liability. Full 1040 tax transcripts are required to support income used to qualify. When transcripts indicate Due to limitations, the IRS is unable to process this request" one of the following must be documented in the file: 1. For salaried borrowers, when available, utilize The Work Number s Instant Access Database. This will show employment and income records provided by the employer s payroll system, OR, Lender may order W-2 or 1099 transcripts when the only income used to qualify is salaried/w-2 or 1099 reported income. 2. Request the most recent 1040s from the borrower(s), and proof of filing (cancelled check for tax payment, or bank statement showing deposit of refund). 3. Request that the borrower obtain the transcripts from the IRS. Tax transcripts must be provided for the number of years of income documentation required to be in the loan file, in accordance with the AUS findings and/or Agency requirements Tax transcripts must come to lender directly from the IRS or through a third party vendor ordered/obtained by lender When business tax returns are required by AUS, business income is used to qualify or business income is used to offset a loss on personal tax returns or is included in the loan file, a separate IRS Form 4506-T must be executed (but not processed and must allow enough time to be executed post-closing after delivery to investor) for each business for the required number of years of income documented, for each selfemployed borrower on the loan transaction. Allowable signatures (per IRS): 1120/1120S: Borrower must sign name with title and only the following titles are acceptable: President, Vice President, CEO, CFO, Owner, 1065: Borrower must sign name with title and only the following titles are acceptable: General Partner, Limited Partner, Partner, Managing Member, Member Letter of explanation is required for borrowers who are self-employed or have non- W2 income/loss if there is a variance of 10% or more between the total income on the tax transcripts and the tax returns. Two years IRS 1040 Transcripts are required on all loans when the borrower is employed by a relative or closely held family business. For non-self-employed borrowers: Verbal VOE is required to be completed no more than 10 days prior to the note date for wet funding states and escrow states. If the Verbal VOE is completed more than 10 days prior to the funding date, another Verbal VOE should be completed 10 days prior to funding date for escrow states. For self-employed borrowers: No more than 30 calendar days prior to note date, verify the existence of the borrower s business from a third party that may include a CPA letter (cannot be vague, must state length of time doing taxes and be signed by CPA), regulatory agency, or appropriate licensing bureau; OR verify a phone listing and address for the borrower s business through resources such as the telephone book, directory assistance, internet, or contact the appropriate licensing bureau. Verification may not be made verbally, and a certification by PRMG indicating the information was verified is not allowed. Documentation from the source used to verify the information must be obtained and in the file. Internet sites such as 411.com, Chamber of Commerce sites and Manta.com where they allow the business owner to add their own information are not acceptable. Also single source verifications, such as from superpages.com, yellowpages.com and searchbug.com Florida Housing Finance Corporation 8 of 36 12/27/2017

9 are not allowed. If all other methods of obtaining third party verification have been exhausted, the borrower can provide letters from three clients indicating the type of service performed, length of time of business relationship, frequency of service, payment arrangements, etc. and support the income with current bank statements, deposits, etc. The underwriter must thoroughly investigate that the business, income and proof of business is legitimate. VOR/VOM required as indicated by the AU approval. Documentation must comply with AUS and TOTAL Scorecard section of the handbook. Amended tax returns cannot be used to qualify if they are amended after the application, initial credit report date or purchase contract date unless the changes made are non-material to the amount of income claimed, and qualification for the mortgage loan. Due diligence must be exercised with close examination of the original, and amended returns, to determine if the use of the amended return is warranted and the following documentation should be reviewed when income from the amended return is required: A letter of explanation regarding the reason for the re-filing; evidence of filing (must be validated with a record of account (4506T results); copy of the original 1040; any extensions filed, and evidence of payment of the taxes due (or evidence borrower is on a payment plan in lieu of full payment as long as the borrower qualifies with the payment in the ratios), and the ability to pay, if the check has not yet cancelled. Profit and loss statement and balance sheet required if more than a calendar quarter has elapsed since date of most recent calendar or fiscal-year end tax return was filed by the borrower. (A balance sheet is not required for self-employed borrowers filing Schedule C income.) Additionally, if income used to qualify the borrower exceeds the two-year average of tax returns, an audited profit and loss statement or signed quarterly tax returns obtained from IRS are required. Income documentation per AUS findings Preliminary Title policy must be no more than 90 days when the note is signed Provide a written analysis of the income used to qualify the borrower on the Transmittal Summary or like document(s) in the file. An Income Analysis must be completed for self-employed borrowers. For self-employed borrowers who have not yet filed the previous year s tax returns, a P&L for that tax year will be required When paying off any non-transaction related item (i.e., debts, third party payouts, etc.) that has a balance of $5,000 or more, paid for by either buyer or seller, to ensure that the total payoffs are accurate, copies of the actual invoices (statements) or a signed amendment authorizing disbursement for these account(s) are required. You cannot use the amount listed on the credit report to document the payoff amount. All documentation used in qualifying the borrower must be legible and if not in English, will require a full written translation of the entire documentation into English. Must authenticate documents obtained from an Internet website and examine portions of printouts downloaded from the Internet including the Uniform Resource Locator (URL) address, as well as the date and time the documents were printed. The lender must visit the URL or the main website listed in the URL if the page is password protected to verify the website exists and print out evidence documenting the lender s visit to the URL and website. DOCUMENT EXPIRATIONS Preliminary Title policy must be no more than 90 days when the note is signed Credit documentation must not be more than 120 days old from the disbursement Florida Housing Finance Corporation 9 of 36 12/27/2017

10 AUTOMATED UNDERWRITING DESKTOP UNDERWRITER (DU) date Appraisals are valid for 120 days and must be dated within 120 days of the disbursement date The last AUS finding, which must match the terms of the loan, must be in the loan file. For all loans, the first submission to the AUS must occur prior to the note date (it cannot be the same as the note date.) All loans must be run through FHA s TOTAL SCORECARD decisioning engine via DU. A copy of the findings must be included in the file Must receive an Approve/Eligible All conditions outlined in the Findings Report must be satisfied. If TOTAL Scorecard issues an Approve/Eligible and ANY the following applies or the DU findings indicate you need to downgrade, then the loan must be downgraded to a Refer (and is not eligible): the mortgage file contains information or documentation that cannot be entered into or evaluated by TOTAL Mortgage Scorecard; additional information, not considered in the AUS recommendation affects the overall insurability of the Mortgage; the Borrower has $1,000 or more collectively in Disputed Derogatory Credit Accounts (defined as disputed charge off accounts, disputed collection accounts, and disputed accounts with late payments in the last 24 months; exclusions from cumulative balance include: disputed medical accounts; and disputed derogatory credit resulting from identity theft, credit card theft or unauthorized use. To exclude these balances, the Mortgagee must include a copy of the police report or other documentation from the creditor to support the status of the accounts.) the date of the Borrower s bankruptcy discharge as reflected on bankruptcy documents is within two years from the date of case number assignment (see credit section for seasoning requirements); the case number assignment date is within three years of the date of the transfer of title through a Pre-Foreclosure Sale (Short Sale) (see credit section for seasoning requirements); the case number assignment date is within three years of the date of the transfer of title through a foreclosure sale (see credit section for seasoning requirements); the case number assignment date is within three years of the date of the transfer of title through a Deed-in-Lieu (DIL) of foreclosure (see credit section for seasoning requirements); for purchase and non-cash out refinances transactions, if any mortgage trade line reported on the credit report used to score the application, including mortgage line-of-credit payments, during the most recent 12 months reflects: 3 or more late payments of greater than 30 days; OR 1 or more late payments of 60 days plus one or more 30-day late payments; OR 1 payment greater than 90 days late For a cash out transaction if a mortgage trade line reported on the credit report used to score the application reflects a current delinquency or any delinquency within 12 months of case assignment date or a current delinquency the Borrower has undisclosed mortgage debt that reflects: (1) a current delinquency; (2) any delinquency within 12 months of the case number assignment date; or (3) more than two 30 Day late payments within 24 months of the case number business income shows a greater than 20 percent decline over the analysis period. Florida Housing Finance Corporation 10 of 36 12/27/2017

11 LOAN PRODUCT ADVISOR (LPA) MANUAL UNDERWRITING CAIVRS/DELINQUENT FEDERAL DEBT Not allowed Formerly known as Loan Prospector (LP) Not allowed Credit Alert Interactive Voice Response System (CAIVRS) needs to be run Borrower may not be denied solely on the basis of CAIVRS information that has not been verified. Lender must contact the creditor agency using the contact phone number and debt reference number reflected in the Borrower s CAIVRS report If a Borrower is currently delinquent on an FHA-insured Mortgage, they are ineligible for a new FHA-insured Mortgage unless the delinquency is resolved. Borrowers with delinquent Federal Tax Debt are ineligible. See Qualifying Section for borrowers who have past due federal tax debt and are in a payment plan. Tax liens may remain unpaid if the Borrower has entered into a valid repayment agreement with the federal agency owed to make regular payments on the debt and the Borrower has made timely payments for at least three months of scheduled payments. The Borrower cannot prepay scheduled payments in order to meet the required minimum of three months of payments. (Payment must be included in DTI.) Mortgagees must check public records and credit information to verify that the Borrower is not presently delinquent on any Federal Debt and does not have a tax lien placed against their Property for a debt owed to the federal government To verify a delinquent student loan, or loan paid by a government claim, is not a defaulted federal loan (when not appearing in CAIVRS or clearly listed on the credit report as federal debt or even when reporting as a charge-off on credit report), contact or DCS_Help@ed.gov For delinquent federal non-tax debt, including deficiency judgments and other debt associated with past FHA-insured mortgages, must include documentation from the creditor agency to support the verification and resolution of the debt (the Borrower must resolve their federal non-tax debt in accordance with the Debt Collection Improvement Act). For debt reported through CAIVRS, the Mortgagee may obtain evidence of resolution by obtaining a clear CAIVRS report. For a borrower that had an FHA mortgage foreclosed, that borrower is not eligible to apply/order a case number for another FHA mortgage until three years after the date that HUD paid the insurance claim to the lender. LDP/GSA REQUIREMENT All parties involved with and who handle the loan file (see instructions in the Resource Center for additional information) must be checked against HUD s Limited Denial of Participation (LDP) list at and the General Services Administration s (GSA) Excluded Party List at Any entity noted on either of the LDP and GSA lists must be removed from the transaction or will cause the loan to be ineligible. The parties to verify include, but are not limited to, Buyers (including AKAs on the credit report), Sellers, Loan Officer, Buyers Agent, Sellers Agent, Escrow Officer, Title Officer, Appraiser, Processor, and Underwriter. MORTGAGE CREDIT REJECT/SANCTION PROPERTY TYPES ELIGIBLE Any mortgage credit reject or mortgage credit sanction will require a second signature from an Operations Manager. The underwriter must justify on their LT why they want to overturn another lender s decline and document the file accordingly. Loan with a Mortgage Credit Reject/Sanction will not allow paying off revolving debt to qualify Single Family Residence 1-4 Units Florida Housing Finance Corporation 11 of 36 12/27/2017

12 2-4 Units must be at least 5 years old, and borrower(s) must occupy one of the units as their primary residence HUD Approved Condos PUDs Attached and Detached Must be residential units INELIGIBLE Co-ops Manufactured Homes Condos without HUD Approvals Mobile homes, campers and similar vehicles Home used as investment property Recreational, vacation or second homes Non-permanent homes Condotels Mixed-Use Leased Land/leaseholds Land Trusts Log Homes Properties that do not meet FHA requirements Properties that have a Property Assessed Clean Energy (PACE) loan are not eligible (such as the Home Energy Renovation Opportunity (HERO) Program) CONDOS Must be HUD Approved: Underwriter must certify that there have been no changes to the project since HUD approval that would cause the project to no longer be HUD approved Detached condos, meeting HUD s definition of a site condo, do not have to have project approval. MAXIMUM ACREAGE N/A. PROPERTIES WITH UN- Allowed. PERMITTED ADDITIONS Must meet HUD Guidelines. PROPERTIES WITH Not allowed ACCESSORY UNIT NEW CONSTRUCTION If it is a construction loan that is being paid off, where it is a property the borrower already owns, the LTVs are based on the occupancy requirements set by HUD in the Maximum Loan to Value Ratio section of the The sale of an occupied property that has been completed less than one year from the issuance of the CO or equivalent is considered as an existing property Allowed, with the following requirements: The permanent loan had interim construction financing that was not provided by FHA or the loan proceeds were used to pay off a builder The loan must meet all FHA policies and documentation requirements for new construction loans Borrowers must be qualified using the estimated real estate taxes based upon the completed property improvements, not the unimproved lot taxes FHA Construction Permanent Mortgage Program is not available (where the FHA loan funds are taken as draws and used to finance the construction of the property) If any part of the property (the dwelling and related structures/equipment essential to the property value and subject to flood damage) is located within a Special Flood Hazard Area (SFHA), the property is not eligible unless one of the following is obtained: FEMA Final Letter of Map Amendment (LOMA) or Final Letter of Map Revision (LOMR) that removed the property from the SFHA; or Florida Housing Finance Corporation 12 of 36 12/27/2017

13 Flood Elevation Certificate (form FEMA 81-31) from a licensed engineer or surveyor documenting that the lowest floor (including the basement) of the residential building and related improvements is built at or above the 100 year flood elevation in compliance with NFIP criteria. CONSTRUCTION TO Not allowed PERMANENT FINANCING OCCUPANCY Primary Residence (O/O) ELIGIBLE BORROWERS U.S. Citizen, permanent resident alien or qualified alien First-time homebuyers only (exceptions apply. Refer to First Time Homebuyer Requirement Section below) All borrowers must occupy the property as their primary residence within 60 days of closing ITIN (Individual Tax Payer Identification Numbers) are not allowed; all borrower must have valid and verifiable social security numbers Borrowers with diplomatic immunity are not allowed Borrower must take title in individual names, no trusts, etc. allowed Borrower s income may not exceed the income limits that can be found on the Florida Housing ehousing Plus website: FIRST TIME HOMEBUYER REQUIREMENT First-Time Homebuyers are generally defined as borrowers who have not had an ownership interest in their primary residence within the past 3 years A non-purchasing spouse appearing on deed must also be a first-time homebuyer All borrowers must be first-time homebuyers except for borrowers purchasing in Federally Designated Targeted Areas and for certain Veterans eligible for the Veteran s Exception Last 3 years tax returns OR tax transcripts for all borrowers AND spouse are required to verify first-time homebuyer requirement. This includes non-purchasing spouse. Tax returns/transcripts should NOT reflect any mortgage interest or any credits claimed for homeownership. If they do, further investigation is required by the Participating Lender to determine first-time homebuyer eligibility. Note: Tax returns/transcripts are not required for borrower(s) qualifying under the Veteran s Exception or purchasing in a Federally Designated Targeted Area. U.S. CITIZENS Allowed RESIDENT ALIENS Allowed Permanent resident aliens are eligible and must provide evidence of a valid Social Security number. Non-permanent resident alien may be eligible provided: the Property will be the Borrower s Principal Residence; the Borrower has a valid SSN, except for those employed by the World Bank, a foreign embassy, or equivalent employer identified by HUD; the Borrower is eligible to work in the United States, as evidenced by the Employment Authorization Document issued by the USCIS; and the Borrower satisfies the same requirements, terms and conditions as those for U.S. citizens. The Employment Authorization Document is required to substantiate work status. If the Employment Authorization Document will expire within one year and a prior history of residency status renewals exists, the Mortgagee may assume that continuation will be granted. If there are no prior renewals, the Mortgagee must determine the likelihood of renewal based on information from the USCIS. A Borrower residing in the U.S. by virtue of refugee or asylee status granted by Florida Housing Finance Corporation 13 of 36 12/27/2017

14 the USCIS is automatically eligible to work in this country. The Employment Authorization Document is not required, but documentation substantiating the refugee or asylee status must be obtained. NON-OCCUPYING CO- Not allowed BORROWERS NON-OCCUPYING CO- Not allowed SIGNERS CO-SIGNER Not allowed CURRENT Borrower(s) must be first-time homebuyers, which means, except for borrowers HOMEOWNERSHIP purchasing in Federally Designated Targeted Areas and for certain veterans eligible REQUIREMENTS for the Veteran's Exception, the borrower and spouse of a borrower, if applicable, must have had no present Ownership Interest in a principal residence at any time during the three-year period prior to the date on which the Mortgage Loan is executed. HOMEBUYER EDUCATION All borrowers/parties appearing on the loan application/note are required to attend Homebuyer Education regardless of who appears on the deed. First-Time Homebuyers, unless qualifying under a Veteran's Exception or those who are exempt by purchasing a home in a Federally Designated Targeted Area as specified this product profile, must complete a Program-approved pre-purchase homebuyer education course. Face-to-face homebuyer education is acceptable if provided by a HUD approved counseling agency, a unit of local government that provides pre-purchase homebuyer education in Florida, or a counseling agency designated by a unit of local government to provide homebuyer education on their behalf. Refer to for a list of approved education providers by county. Online Homebuyer Education is permitted if provided by a HUD approved agency, a unit of local government that provides pre-purchase homebuyer education in FL, a mortgage insurance provider, or an FNMA sponsored course. Certificates of Completion are acceptable for 2 years from date of completion. OPTIONAL HOME WARRANTY INSURANCE COVERAGE It is strongly recommended that homebuyers secure a home warranty prior to close of escrow. Home Warranty to be paid through the close of escrow Home Warranty must be disclosed on Final Settlement Statement or copy of insurance declaration page required POWER OF ATTORNEY Power of Attorney must be reviewed and approved by fulfillment center Operation Manager or PRMG's Compliance Group Allowed with the following requirements: Power of Attorney (POA) must be limited or specific to the transaction All transaction types allowed Power of Attorney may not be used to sign loan documents if no other borrower executed such documents unless, the Attorney in Fact is a relative or Attorney at Law. POA can be used only for closing documents The attorney-in-fact may not be the seller, appraiser, broker, etc. or have any other direct or indirect financial interest in the transaction A statement that the POA is in full force and effect on the closing date, survives subsequent disability (durable), and has to be revoked in writing, or gives a specific expiration date which survives the closing date A statement of the borrower s name exactly as it will appear on all closing documents Notarized signature of borrower (if executed outside the U.S., it must be Florida Housing Finance Corporation 14 of 36 12/27/2017

15 LEXIS-NEXIS SEARCH REQUIREMENT notarized at a U.S. Embassy or a military installation) Recorder s stamp, if previously recorded The attorney-in-fact must execute all closing documents at settlement Title policy must not contain any exceptions based on use of POA POA must be recorded along with or immediately prior to the closing documents If a lender determines a Power of Attorney is required by applicable law (so cannot be restricted by investor requirements), lender must include a written statement explaining use of the Power of Attorney and may also be required to provide supporting documentation. A written statement that explains the circumstances of the use of the POA must be included in the loan file. Must met all Agency requirements For any of the following transaction types an request (which includes a screenshot or snip of the loan in the FastTrac pipeline) must be sent to QC to have a LexisNexis search run on involved parties to the transactions to ensure there is no relationship between the buyer and seller. (Not all items listed may be applicable to this product, review product profiles for what is allowed): Short Sale Purchase Property Flips <= 180 days Contractors on a 203K loan For Sale by Owner (FSBO) required for all except: If the borrower and seller are related or are landlord and tenant, and the relationship is disclosed and is acceptable per PRMG guidelines An investor, such as HUD, FNMA, FHLMC, etc. REO lender who acquired the subject property by Trustee Sale as the Beneficiary QC AUDIT REQUIRED A QC audit is required if the loan has any of the following high risk characteristics (not all items listed may be applicable to this product, review product profiles for what is allowed): 5-10 financed properties for second home and investment transactions. 3-4 Units 2-4 Unit properties in New Jersey 203K loans (Lexis Nexis is required on all contractors as well) VOE only used (when allowed by AUS) and not supported by paystub/w2 for Wholesale and Correspondent channels only (not required for retail channel) If the borrower is employed by a party to the transaction When the borrower is also a Real Estate Agent for the loan transaction Retail loans referred to the AFS department (CC 204 & 204-A) any time the referring Loan Officer or the AFS Loan Officer are in New or Watch status When the Real Estate Agent is also the Loan Officer on the transaction (not allowed on retail). NOTE: The above list applies to credit qualifying loans only. QC REVALIDATION REQUIRED A QC validation is required if the loan has any of the following characteristics (not all items listed may be applicable to this product, review product profiles for what is allowed): A revalidation of the VOE (in addition to the audit) is required by the QC Department if the following is used: VOE only used (when allowed by AUS) and not supported by paystub/w2 and Wholesale and Correspondent channels only (not required for retail channel) A revalidation of the VOD is required by the QC Department for the if the following is used: Florida Housing Finance Corporation 15 of 36 12/27/2017

16 INCOME REQUIREMENTS/LIMITS MAXIMUM PROGRAM COMPLIANCE INCOME LIMITS VOD only used (when allowed by AUS) and not supported by bank statements and Wholesale and Correspondent channels only (not required for retail channel) Note: A Borrower Authorization in name of PRMG may be required to obtain VOD or VOE revalidation if requested by the verifying institution. Household Income is defined as the combined Current Gross Annual Income of the borrower(s) and all occupants, over the age of 18, that will be residing in the property. If married, the income of a spouse must be included regardless of if he/she will occupy the property or not. Underwriter has the discretion when evaluating the loan file to utilize a more conservative approach to income/expenses for qualification purposes based on the circumstances of the loan. All income sources used to qualify borrowers must be legal at the local, state, and federal level. Any income derived from an activity or source that violates Federal, state, or local laws cannot be considered for loan qualification for both selfemployed borrowers and wage earners working for a company. Income calculations must be included in the file If a borrower is currently on temporary disability (including maternal/parental leave), the borrower must provide a letter of intent to return to work and the employer must provide a letter or other communication of the borrower's right to return to work and a description of the employment terms (same as prior to leave). The temporary disability benefits must be used for loan qualification and must not terminate prior to the borrower returning to work, unless the borrower(s) has liquid reserves sufficient to offset reduced income, covering the gap between the benefits expiration and the return to work dates. See for specific requirements. Follow HUD requirements for non-reimbursed business expenses. If the borrower has claimed automobile depreciation on Form 2106, this expense should be added to the borrower's income. Vehicle depreciation can be calculated one of two ways by using the standard mileage deduction or actual depreciation expense. The method used by the borrower will be disclosed on the second page of Form If the borrower used the standard mileage deduction, multiply the business miles driven by the depreciation factor for the appropriate year and add the calculated amount to Total Income. If the borrower claimed the actual depreciation expense, add this amount to Total Income. For borrowers with rental income, if a lease agreement is required then the lease agreement must be executed by the landlord and the tenant and all pages of the lease agreement must be included. Housing Assistance Payments (HAPs), which are often known as Section 8 Homeowner Vouchers, where a portion of the mortgage payment is paid directly to the borrower/lender as a subsidy for the mortgage payment on the subject property is not allowed. Borrower s income must not exceed the Florida Housing income limits that can be found within the program guidelines on the ehousing Plus website: Note: income limits for the Florida Housing FHA Program, and Hardest Hit Funds (HHF) are different. Please make sure you are referring to the correct income limits. Income limits for the HHF counties can be found in those specific guidelines, also located on the ehousing Plus website. Documentation required to verify income eligibility: Underwriter Certification Florida Housing Finance Corporation 16 of 36 12/27/2017