WHOLESALE LENDING - AT-A-GLANCE PROGRAM GUIDE

Transcription

1 GENERAL Fixed-rate, fully amortizing loans with terms of 20, 25, or 30 years. Guidelines included in this At-a- Glance apply to the Jumbo Saleable program. For items not addressed, refer to standard Union Bank guidelines in other At-a-Glances or contact your Account Executive. DESCRIPTION Assumption Not assumable. Documentation Standard, full documentation. Initial 1003 must be signed and dated by all borrowers. Pre-Payment Penalty None Term Fixed-Rate 20, 25 or 30 years Transactions Purchase, no cash-out refinance and cash-out refinance Exclusions Portfolio Express refinances, Green Loan documentation, Asset Utilization, AutoPay Eligible States (within Union Bank Lending Footprint): CA, OR, WA Ineligible State (within Union Bank Lending Footprint): IL Union Bank Lender Origination Charge - $1,595 APPLICANT ELIGIBILITY U.S. Citizens Permanent Resident Aliens 24 month current work history in U.S. required Non-Permanent Resident Aliens Primary residences only Max 75% LTV/TLTV Borrower(s) cannot own any other real estate Documentation Required o Unexpired passport from country of citizenship; must contain a I-94 stamp and Employment Authorized o An Employment Authorization card along with a copy of the Petition for Non-Immigrant Worker (form I-140) in file o Credit trade line requirements must be met o 24 month current work history in the U.S. is required Trusts - Inter-Vivos Revocable Trusts only The primary beneficiary of the trust must be the individual(s) establishing the trust If the trust is established jointly, there may be more than one primary beneficiary as long as the income or assets of at least one of the individuals establishing the trust will be used to qualify for the mortgage. The trustee(s) must include the individual establishing the trust (or at least one of the individuals, if there are two or more). Institutional trustees are not allowed. Documentation requirements: A completed Union Bank Trust Certification form. Non-Occupant Co-Borrowers Not allowed. First-Time Homebuyer Defined as a borrower who has not own a home in the last three (3) years. Loan amount restrictions and additional reserve requirements for first-time homebuyers only apply if all borrowers on the loan are first-time homebuyers. Multiple Financed Properties Broker-Glance Jumbo Saleable Page 1 of 19 01/12/2018

2 APPLICANT ELIGIBILITY Borrowers may own up to 4 financed 1-4 residential properties including the subject property and regardless of occupancy. Six months PITIA in reserves is required for each financed property owned by the borrower other than the subject property. Refer to Assets section above for reserves required on the subject property. Properties owned in the name of an LLC or other corporation can be excluded from the calculation of maximum financed properties when the borrower is not personally obligated on the mortgage. Power of Attorney (POA) In addition to meeting Union Bank s POA requirements, the following requirements apply to all Jumbo Saleable loans: The POA must reference the address of the subject property. Only relatives (as defined by FNMA), fiancé, fiancée, or domestic partners of the borrower may be named as attorney-in-fact. Borrower(s) must sign at least the initial or final Purchase and rate/term refinances only. Cash out transactions are ineligible. Social Security Numbers - All borrowers on the loan are required to have a valid Social Security number. APPRAISAL Appraisal Requirements LOAN AMOUNT APPRAISAL REQUIREMENTS Purchase Transactions $2,000,000 One full appraisal >$2,000,000 Two full appraisals (1) Refinance Transactions $1,500,000 One full appraisal >$1,500,000 Two full appraisals (1) (1) The lower of the two values are used for qualifying Appraisal Reviews - An appraisal review is required on all Jumbo Saleable (JS30) loans and a fee is charged for this review. A $153 appraisal review fee must be disclosed on all Jumbo Saleable loans. Escrow Holdbacks Not allowed ASSETS Down Payment Minimum 5% from borrower s own funds, except as noted in Gift Funds below. Interested Party Contributions Maximum 6% Business Assets Allowed for down payment, closing, and reserves. Borrower must be 100% owner of the business. Three months business bank statements must be reviewed to determine that business operations would not be negatively impacted by the use of business funds in the transaction. If the business statements reflect overdrafts or NSFs, use of business assets is not allowed. If any business funds are used to meet the reserve requirement, the total amount of required Broker-Glance Jumbo Saleable Page 2 of 19 01/12/2018

3 ASSETS reserves is double the standard requirement. This includes reserves for the subject property and any additional financed property. Gift Funds Gift funds are an acceptable source of funds for an owner occupied or second home transaction if the donor is a relative, defined as the borrower s spouse, child, or other dependent, or by an individual who is related by blood, marriage, adoption, or legal guardianship. Fiancé, fiancée, and domestic partners are also eligible donors. The donor may not be, or have any affiliation with the builder, developer, real estate agent, or any other interested party to the transaction. Documentation requirements for gift funds: Completed and signed gift letter Evidence of transfer of the gift funds from the donor to the borrower Recent bank statement from the donor to support ability to give gift funds. Gift funds may be used to cover entire down payment and closing costs, however, reserves must come from borrower s own funds. Gift funds may not be used for reserves Tax-Deferred Exchanges The following documentation is required: Closing Disclosure for both properties Exchange Agreement Sales contract for exchange property Verification of funds from the Exchange Intermediary A reverse 1031 tax deferred exchange is not an acceptable source of down payment. Ineligible Funds for Closing (Down Payment and Closing Costs) or Reserves Non-vested Restricted Stock Units Reserves OCCUPANCY LOAN AMOUNT REQUIRED RESERVES (2)(3) $1,000,000 (1) Primary Residences 6 months PITIA 1 $1,000,001 to $1,500,000 9 months PITIA 1 $1,500,001 to $2,000, months PITIA $2,001,001 to $2,500, months PITIA $1,000, months PITIA Second Homes $1,000,001 to $1,500, months PITIA $1,500,001 to $2,000, months PITIA $2,001,001 to $2,500, months PITIA Investment Property $1,000, months PITIA $1,000,000 & LTV 80% 12 months PITIA First-Time $1,000,000 & LTV > 80% 18 months PITIA Homebuyers >$1,000,000 - $1,500, months PITIA (1) First-Time Homebuyers (defined as borrowers who have not owned a property in the last 3 years) The maximum loan amount for first-time homebuyers is $1,500,000 in Broker-Glance Jumbo Saleable Page 3 of 19 01/12/2018

4 ASSETS California. The maximum loan amount for first-time homebuyers in WA or OR remains at $1,000,000. (2)Other Financed Properties In addition to the requirements above, the borrower must have 6 months PITIA reserves for each additional financed property owned. (3)Business Assets If business assets are used to meet reserve requirements, the total amount of reserves is double the standard amount. This includes reserves for the subject property and other financed properties. CREDIT Authorized User Accounts - Authorized user accounts are not eligible to be used to meet credit tradeline requirements as stated below. Credit Inquiries/Credit Update - Credit inquiries within 120 days preceding the application date must be addressed to determine if any additional credit was granted. The borrower must provide a letter of explanation to address the inquiries, and if any new credit has been granted, provide documentation showing the balance and payment amount. In addition, Union Bank will obtain a soft pull credit report at time of final loan approval. Any new or increased liabilities or new derogatory credit may impact the initial credit decision. Credit Trade Lines - Tradeline requirements apply to all borrowers unless a borrower is not contributing income for qualifying. Overall 2-year history (determined by the oldest open date); A minimum of 3 tradelines, each opened for a minimum of 6 months (trade lines for debts paid by others do not count toward the minimum trade line requirements, although debts paid by the borrower s business can be counted toward the minimum trade line requirement if the borrower is 100% owner of the business); One of the tradelines must be a 24-month mortgage or rental history. All borrowers are required to have a 24-month mortgage or rental history, unless he or she is not contributing income for qualifying. The mortgage/rental history must reflect 0x30 over the past 24 months. One currently active account (defined as the Last Active Date being the same or previous month in which the credit report was pulled). Authorized user accounts are not eligible to meet credit tradeline requirements. Non-Traditional Credit is not allowed. 24-Month Mortgage History Enhancement Borrowers who have a currently active 24-month mortgage that can be verified are not required to have 3 trade lines reporting in the last 24 months if they meet the requirements noted below. Multiple creditors reporting mortgage histories for a total of 24 months is acceptable. Requirements: Minimum 5-year credit history 5 trade lines reporting with activity within the past 5 years Minimum 720 credit score Housing payment shock does not exceed 125% (based on actual mortgage payment, not the qualifying payment) No derogatory credit within the past 24 months Broker-Glance Jumbo Saleable Page 4 of 19 01/12/2018

5 CREDIT Note: Loans with non-occupant co-borrowers are not eligible for this enhancement Derogatory Credit Housing Payment History When applicable, mortgages are rated for the last 24 months and a rent rating must be obtained for the last 12 months. For mortgage and rental verifications, if the lienholder/landlord is a relative or interested party to the transaction, cancelled checks or bank statements are required to support the payment history. The payment history must meet the following: 0 x 30 days late in the last 24 months on any mortgage, if applicable 0 x 30 days late in the last 12 months on any rental payment history, if applicable The following derogatory credit events require seasoning, as noted below: Bankruptcy, Chapter 7, 11, 13 - Seven (7) years since discharge / dismissal date Foreclosure - Seven (7) years since completion date Notice of Default - Seven (7) years Short Sale/Deed-in-Lieu - Seven (7) years since completion / sale date Mortgage accounts that were settled for less, negotiated or short payoffs - Seven (7) years since settlement date Loan Modification Lender initiated modification will not be considered a derogatory credit event if the modification did not include debt forgiveness Credit events will be considered on a case-by-case basis between four (4) and seven (7) years with extenuating circumstances subject to the following: Extenuating circumstances are defined as non-recurring events that were beyond the borrower s control resulting in a sudden, significant and prolonged reduction in income or catastrophic increase in financial obligations. Examples would include death or major illness of a spouse or child but would not include divorce or job loss. Documentation must be provided to support the claim of extenuating circumstances and confirm the nature of the event that led to the credit event and illustrate the borrower had no reasonable option other than to default on their obligations. If the defaulted debt was assigned to an ex-spouse and the default occurred after the borrower was relieved of the obligation, the event may be considered on an exception basis. Multiple derogatory events are not allowed. Disputed Accounts When disputed tradelines are present, a letter of explanation from the borrower is required. If the disputed account does not belong to the borrower and this is supported by documentation provided by the borrower or Union Bank s credit report provider, no further action is necessary. If the borrower is disputing the accuracy of the credit history, the dispute must be resolved or removed and a new credit report must be obtained reflecting that the tradelines are no longer in dispute. Broker-Glance Jumbo Saleable Page 5 of 19 01/12/2018

6 CREDIT Medical Collections May remain outstanding as long as the aggregate balance is less than $10,000. Paying down medical collections to less than $10,000 is allowed. It is also acceptable for the borrower/creditor to negotiate a lower amount as long as it is considered paid in full by the creditor. Minimum Credit Score Refer to the Rate Sheet for minimum credit score requirements. Refer to the Wholesale Lending At-a-Glance for additional requirements for credit scores. Borrower Party to a Lawsuit - If the loan application (Declarations Section), preliminary title report, credit report or other information contained in the loan file indicates the borrower is a party to a lawsuit, additional documentation must be obtained so that the underwriter can determine potential negative impact. The documentation provided by the borrower or borrower s attorney must provide details of the lawsuit and the terms must not indicate a potential ongoing liability or severe negative impact to the borrower s ability to repay. DEBT RATIOS Maximum 43% DISPOSITION OF CURRENT RESIDENCE On a purchase of a primary residence, the following guidelines must be met according to the disposition of the borrower's current residence: Appraisal Requirements A noted in the guidelines below, an appraisal may be required to document the equity in the borrower s current residence. These appraisals must be ordered through FNC Collateral Management System (refer to Broker-Glance Appraisal Requirements) and the following appraisal requirements apply: Drive-by appraisals are allowed for single-family residences, excluding manufactured homes. Full appraisals are required for manufactured homes and 2-4 unit properties. Principal Residence Pending Sale In order to exclude the payment for a borrower s primary residence that is pending sale but will close after the subject transaction the following requirements must be met: A copy of an executed sales contract for the property pending sale and confirmation all contingencies have been cleared/satisfied. The closing date for the departure residence must be within 30 days of the subject transaction note date. 6 months liquid reserves must be verified for the PITIA of the departure residence. Transaction must be an arms-length. Departure Residence Subject to Guaranteed Buy-out with Corporation Relocation - In order to exclude the payment for a borrower s primary residence that is part of a Corporate Relocation the following requirements must be met: Copy of the executed buy-out agreement verifying the borrower has no additional financial responsibility toward the departing residence once the property has been transferred to the 3rd party. Guaranteed buy-out by the 3rd party must occur within 4 months of the fully executed guaranteed buy-out agreement. Broker-Glance Jumbo Saleable Page 6 of 19 01/12/2018

7 DISPOSITION OF CURRENT RESIDENCE Evidence of receipt of equity advance if funds will be used for down payment or closing costs. Verification of an additional 6 months PITIA of the departure residence. Conversion of Principal Residence to a Second Home - Both the current and the proposed mortgage payments must be used to qualify the borrower for the new transaction; and Six (6) months of PITI reserves is required for both the borrower s current residence and the subject property. A reduction to two (2) months for both properties is allowed if there is documented equity of at least 25 percent in the existing property derived from an appraisal or by comparing the unpaid principal balance to the original sales price. If standard guidelines require more than 6 months reserves for the subject property, standard guidelines would prevail. For programs where no reserves are required, a minimum of 2 months reserves will be required for the current residence, regardless of the percent of equity. Conversion of Principal Residence to an Investment Property - Up to 75 percent of the rental income can be used to offset the mortgage payment in qualifying if there is documented equity of at least 25 percent in the existing property derived from an appraisal or by comparing the unpaid balance on the property to the original sales price of the property. The rental income must be documented with: A copy of the fully executed lease agreement; and The receipt of a security deposit from the tenant and deposit into the borrower's account, and A minimum of two (2) months reserves is required for both the borrower s current residence and the subject property. Standard guidelines requiring more than 2 months reserves for the subject property would prevail. For programs where no reserves are required, a minimum of 2 months reserves will be required for the current residence, regardless of the percent of equity. Regardless of the percent of equity. If the 25 percent equity in the property cannot be documented, rental income may not be used to offset the mortgage payment. Both current the proposed mortgage payments must be used to qualify the borrower for the new transaction; and Six (6) months of PITI reserves is required for both the borrower s current residence and the subject property. Standard guidelines requiring more than 6 months reserves would prevail for the subject property. For programs where no reserves are required, a minimum of 2 months reserves will be required for the current residence. 2 4 Unit Properties Unit Previously Occupied By the Borrower If there is documented equity of at least 25%, rental income from this unit may be used and the documentation requirements noted above must be met. If the equity is less than 25%, no rental income from this unit may be counted. Remaining Units Regardless of the amount of equity, the net rental income from the remaining units may be counted. Calculate the net rental income from the borrower s most recent two years of tax returns. Leases are permitted only if the property is not on Schedule E because it was acquired subsequent to filing the tax return. Broker-Glance Jumbo Saleable Page 7 of 19 01/12/2018

8 DISPOSITION OF CURRENT RESIDENCE Note: If there is less than 25% equity in the borrower s current residence, and the borrower owns other rental properties, the PITI payment from the borrower s current residence may be included with the net rental income. Note: If a borrower converted their principal residence to an investment property at least six months prior to the application date, the above requirements do not apply. Rental income from the property can be used subject to standard rental income guidelines. Paying Down a Mortgage to Meet the 25% Equity Requirement The borrower may use seasoned personal funds to pay down a mortgage in order to meet the 25% equity requirement. Funds coming from a gift, business asset or line of credit on another property would not be allowed. EMPLOYMENT/ INCOME 4506-T - A 4506-T must be processed and tax transcripts obtained on all loans. IRS Rejection of Tax Transcript Request The IRS may reject a request for tax transcripts due to identity theft or other concerns. If the IRS rejects a 4506-T request and the reason for the rejection is Unable to Process, Limitation, or Identity Theft, the following conditions must be met in order to validate the borrower s income: Copy of the IRS rejection with a code of Unable to Process, Limitation, or Identity Theft. Record of Account for 2 years obtained by the borrower from the IRS. Adjusted Gross Income and Taxable Income on the Record of Account should match the borrower s 1040s. OR Tax transcripts for 2 years obtained by the borrower via mail from the IRS. Asset Utilization - Not Allowed Corporate After-Tax Income - Ordinary income from the corporation can be used to qualify the borrower only if the following requirements are met: Borrower is 100% owner of the business Business income is stable and consistent Sales and earnings trends are positive, and Business must have adequate liquidity to support the Borrower s withdrawal of cash without severe negative effect. Stable and consistent earnings are defined as within an approximate 20% fluctuation or decrease over the trending period. If the self-employment income is decreasing greater than 20% over the trending period, a detailed analysis of the business will be performed by underwriting. Corporate Loss - If the corporation is experiencing losses, the Borrower s share of the losses, based on percentage of ownership, must be deducted from his/her income. Employment-Related Assets as Qualifying Income - An income stream from employment-related assets, not currently being used as another source of income, may be used to qualify the borrower subject to the following requirements: Broker-Glance Jumbo Saleable Page 8 of 19 01/12/2018

9 EMPLOYMENT/ INCOME Eligible Assets Must be liquid, owned by one or more of the borrowers, be available without penalty, and must be sourced as one of the following: Non self-employed severance package or lump sum retirement package (a lump sum distribution). The funds must be documented with a distribution letter from the employer (Form 1099-R) and deposited to a verified asset account. 401K or IRA, SEP, KEOGH retirement accounts. 70% of the value of retirement accounts, stocks, bonds and mutual funds remaining after costs for the transaction may be used to determine the income stream. Ineligible Assets - Non-employment related assets (i.e., stock options, non-vested restricted stocks, lawsuits, inheritance, or checking/savings not sourced to an eligible employment-related asset). Eligibility - The following criteria must be met in order for the employment-related assets to be used as income: Lesser of 70% LTV/TLTV or maximum allowed for the loan transaction Purchase or No Cash-Out refinance 1 Unit Primary Residence or Second Home Income Calculation - Divide the net documented assets by 360 months Ineligible Income Sources Ineligible income sources include, but are not limited to: Temporary or one-time occurrence income Trailing spouse income Retained earnings Projected income Deferred compensation Any income that is not legal in accordance with all applicable federal, state, or local laws. o Foreign Shell Banks o Medical Marijuana dispensaries o Any business or activity related to growing, selling, or supplying marijuana even if allowed under State or Local law o Business engaged in internet gambling o Educational benefits Rental Income Rental agreements are required for any rental listed in the Real Estate Owned section of the loan application and shown on Schedule E - Section 1 of the borrower s Federal Tax Returns when rental income is used for qualifying, including 2-unit owner occupied properties when the second unit is rented and commercial rental properties. Income Calculation For properties listed on Schedule E - Section 1, including commercial properties, of the borrowers Federal Tax Returns, income should be calculated as: Broker-Glance Jumbo Saleable Page 9 of 19 01/12/2018

10 EMPLOYMENT/ INCOME Rents Received Total Expenses + depreciation + interest + taxes + insurance + HOA (when applicable) divided by 12 months the current PITIA payment. If the current lease amount is less than the rental income reported on the tax returns, justification for using the income from the tax returns must be provided to warrant the use of the higher income. If there is no justification, the lease amount less expenses should be used to calculate rental income/loss. If the rental property is not listed on Schedule E - Section 1 of the borrower s tax returns, net rental income should be calculated using 75% of the gross rent current PITIA payment. Note: Current leases are not required if the property is vested in the name of the borrower s business and the rental income is being run through business tax returns. The income will be part of the business cash flow and it is not necessary to document the current PITIA. See Self- Employed Borrowers Profit & Loss / Balance Sheet requirements below for additional business requirements. Rental Income from a Borrower s Primary Residence On 2-unit properties, rental income from the second unit may be used for qualifying. As noted above, the rental income is to be documented with tax returns and/or lease agreements. The entire PITIA housing payment is added to the borrower s liabilities to calculate the housing ratio and debt-to-income ratio and the rental income from the second unit is added to the borrower s income. Rental income from a single-family residence with an accessory unit is not allowed. K-1 Income To utilize the borrower s percentage of ordinary income and net rental income derived from partnerships and S-corps, the following requirements must be met: This income can be included when determining cash flow provided: The K-1 reflects a documented, stable history of receiving cash distributions from the business consistent with the level of income being used to qualify If the K-1 does not reflect documented, stable history of receiving cash distributions of income from the business consistent with the level of income being used to qualify then the following is required: Borrower can document access to the funds (e.g. partnership agreement etc.) unless borrower is 100% of the business, and The business has adequate liquidity to support the withdrawal of earnings If the borrower has a 2-year history of receiving guaranteed payments on Schedule K-1, this income can be added to cash flow without any further documentation. Rental Income on Departing Principal Residence To use rental income on a departing primary residence, either a full or exterior only appraisal, dated within 6 months, must validate no less than 75% TLTV. Broker-Glance Jumbo Saleable Page 10 of 19 01/12/2018

11 EMPLOYMENT/ INCOME The rental income must be documented with: A copy of the fully executed lease agreement, and The receipt of a security deposit from the tenant and deposit into the borrower s account, and Six months PITIA in reserves Restricted Stock Units (RSUs) Vested RSUs may be used for qualifying income if there is a twoyear history of receipt and is identified on current paystubs, W-2s, and tax returns. The borrower must be currently employed by the employer issuing the RSUs which are used for qualifying. A vesting schedule must be provided and support that the income is expected to continue for a minimum of 3 years at the same level as the prior 2 years. Additional awards must support the RSU income being used to qualify. A two-year average of the income should be used for qualifying using a stock price based on the 52- week low for the most recent 12-month reporting schedule. The income used for qualifying must be supported by future vesting based on the stock price and vesting schedule. If vested restricted stock units or stock options are used for income qualifying, those same stock units or stock options cannot be used for reserves. Self-Employed Borrowers Profit & Loss Statements / Balance Sheets - When the borrower(s) own 25% or greater interest in a business, a signed Year-to-Date current quarter Profit and Loss (P&L) and Balance Sheet must be obtained. Year-to-Date P&L and Balance Sheets must cover the period ending as of the most recent tax return through the most recent quarter ending one month prior to the Note date. For tax returns on extension, the entire unfiled year is also required. The P&L and Balance Sheet must be signed before closing if it was not signed upon receipt. Exception: A year to date profit and loss and balance sheet is not required if all of the following are met: Borrower is a 1099 employee who does not actually own a business Schedule C in Block 28 (Total Expenses) must be analyzed in relation to gross income (Block 7). Expenses must be < 5% of gross income There are no expenses for advertising, contract labor, mortgage interest, rent/lease or wages Expenses for legal &/or professional services and office expenses indicate a nominal or zero expense Business Name in Block C is not a separate or formal type of business name Year-to-date earnings in the form of a WVOE or other acceptable pay history is provided by the employer issuing the 1099 The year-to-date earnings support prior years earnings Tax Returns - Required Tax Returns is Based on the Note Date When tax returns are required, which years are required is based on the Note Date, rather than the Application Date or the date of underwriting. For example, if the note date is April 15, 2015 or later, 2014 and 2013 tax returns would need to be obtained. If the borrower has filed an extension for the 2014 taxes, it would be necessary to obtain a copy of the extension plus 2013 and 2012 tax returns. The following is also required when an extension has been filed: Copy of the filed extension Broker-Glance Jumbo Saleable Page 11 of 19 01/12/2018

12 EMPLOYMENT/ INCOME Any W2s and 1099s Year-end P&L for prior year (see additional P&L requirements, above) Year-end balance sheet for prior year (see additional P&L requirements, above) IF THE NOTE DATE IS: MOST RECENT YEARS TAX RETURNS REQUIRED April 14, April 15, 2015 June 1, or extension 2014 or extension October 15, Note: If the borrower has recently filed their 2014 taxes, but tax transcripts are not available, underwriters have the option of calculating income based on the 2013 and 2012 income shown on the borrower s tax returns. However, the 2014 returns will still be required unless on extension. Tax Liability - If the most recent tax return or tax extension indicates that the borrower owes money to the IRS or State Tax Authority, evidence of sufficient assets to pay the tax liability must be documented if the amount due is within 90 days of the loan application date. The borrower would need to provide the following: Evidence the tax liability is paid in full Documentation verifying the source of the funds used to pay the tax liability to ensure no new debt was incurred. Signing Tax Returns - When tax returns are in the file, the borrower must sign the tax returns at or before closing. Trust Income Trust income is only allowed if the trust is irrevocable. Either a copy of the trust or a written statement from the trustee must confirm the trust is irrevocable. A two (2) year average income is determined from the following documentation: A written statement from the Trustee confirming the amount, frequency and duration of payments, and stating what portion, if any, is non-taxable; and Two (2) years individual federal income tax returns (1040) with all supporting schedules. Trust income is reported on a K-1 and is reflected in Schedule E. Note: The trust income must continue for at least three (3) years from the date of the mortgage application in order for it to be considered as income. If trust funds are being used for down payment or closing costs, the loan file must contain adequate documentation to indicate that the withdrawal of the assets will not negatively affect future trust income. Broker-Glance Jumbo Saleable Page 12 of 19 01/12/2018

13 LIABILITIES Alimony May be treated as a reduction in income or as a liability. Contingent Liability for Mortgage Assumed by Another Without Release of Liability - The debt on a previous mortgage may be excluded from DTI with the following requirements: Acceptable evidence that the borrower no longer owns the property, and Proof the assuming party has been making the payment for a full 12 months and the loan is paid as agreed in the last 12 months Student Loans For all student loans, whether deferred, in forbearance, or in repayment, a monthly payment must be included in the borrower s monthly debt obligation. If a monthly payment is provided on the credit report, the amount indicated for the monthly payment may be used in qualifying. If the credit report does not provide a monthly payment or if it shows $0 as the monthly payment, the monthly payment may be one of the options below: o 1% of the outstanding loan balance or o A fully amortizing payment using the documented loan repayment terms. LOAN AMOUNT RANGE NUMBER OF UNITS LOAN AMOUNT RANGE 1 Unit $453,101 to $2,500,000 2 Units $580,151 to $1,500,000 3 Units $701,251 to $1,000,000 4 Units $871,451 to $1,000,000 First-time Homebuyers Maximum $1,500,000 loan amount in CA, maximum $1,000,000 loan amount in OR and WA (only applies when all borrowers on the loan are first-time homebuyers) LTV/TLTV LTV/TLTV Refer to Rate Sheet LTVs > 80% - The following requirements apply: MI not required Secondary financing not allowed Maximum DTI 36% Non-permanent residents not allowed Gift funds not allowed Minimum loan amount is $1 above FNMA High Balance loan limit for the subject County Escrow/impound accounts required for LTVs greater than 80% unless prohibited by applicable laws NON-ARMS LENGTH TRANSACTIONS The following non-arm s length transactions are allowed for owner occupied and second home transactions only: Family sales or transfer Property seller acting as their own real estate agent Borrower acting as their own real estate agent Relative of the seller acting as the seller s real estate agent Relative of the borrower acting as the borrower s real estate agent Borrower is the employee of the originating lender with an established employee loan program Broker-Glance Jumbo Saleable Page 13 of 19 01/12/2018

14 NON-ARMS LENGTH TRANSACTIONS Originator is related to the borrower (Wholesale Loans only) Borrower purchasing from their landlord (cancelled checks or bank statements are required to verify a satisfactory rental payment history) Real estate agents that are interest parties to the transaction may apply their commission to pay closing costs and/or prepaids as long as the amounts do not exceed the interested party contribution. OCCUPANCY Primary Residences Second Homes Investment Properties the following requirements apply: Gift funds not allowed A Comparable Rent Schedule or Operating Income Statement is required even if rental income is not being used to qualify First-time homebuyers not allowed The borrower must complete the Jumbo Saleable Investment Property Attestation to state whether or not the property is used 100% of the time as a rental/investment property. OWNERSHIP INTEREST/ VESTING Title must be in the borrower s name at the time of application for refinance transactions and at time of closing for all transactions. Borrowers may hold title as follows: Fee Simple with Title Vesting as one of the following: o Individual o Joint tenants o Tenants in Common Leasehold Estates Not allowed PROPERTY TYPES Eligible SFRs, Attached & Detached PUDs, 2-units (not allowed on second homes), 3-4 units (investment properties only). Ineligible Condominiums, manufactured homes, log homes, mixed-use properties, properties/leaseholds located on land not subject to the laws of the U.S. Federal Government, properties with a private transfer covenant unless said covenant is excluded under 12 CFR 1228 as an excepted transfer fee. Leaseholds Not allowed. Acreage - Maximum 40 acres. Properties with > 20 acres, the max LTV/TLTV is reduced by 10%. Properties with > 10 acres are allowed under the following circumstances: A land-to-value ratio no greater than 35%. 30 year fixed-rate only Property does not have any income producing attributes Existing Oil/Gas Leases - Properties subject to existing oil/gas leases require the following: Title endorsement providing coverage to the lender against damage to existing improvements resulting from the exercise of the right to use the surface of the land, which is subject to an oil and/or gas lease. No active drilling. Appraiser to comment or current survey to show no active drilling. No lease recorded after the home construction date. Re-recording of a lease after the home was constructed in permitted. Must be connected to public water. Broker-Glance Jumbo Saleable Page 14 of 19 01/12/2018

15 RATE LOCK POLICY Quick Locks Not allowed Lock Hours 9 AM to 5 PM PST, Monday through Friday This product contains limitations for maximum net borrower credit. Refer to the rate sheet for details. Refer to the Wholesale Lending At-a-Glance Rate Lock policy for additional information. REFINANCES All borrowers must be on title at time of application for all refinance transaction. Continuity of Obligation Acceptable continuity of obligation must be established and verified by one of the following: At least one of the borrowers who will be obligated on the new loan was also obligated on the existing loan being refinanced. The borrower has been on title for at least 24 months prior to the disbursement date of the new loan. The borrower has been on title for at least 12 months and meets at least one of the following: o Has been residing in the property for at least 12 months, o Has paid the mortgage for at least 12 months, or o Can demonstrate a relationship (relative, domestic partner, etc.) with the current obligor. The borrower recently inherited or was legally awarded the property through divorce or separation. Verification must be documented in the loan file. The borrower purchased the property for cash, has taken title to the property and can document the purchase with a HUD-1 Settlement Statement or a Certified Closing Statement. The borrower was recently added to title through a transfer from a trust, or a limited liability company (LLC) or a partnership. The following requirements apply: o The borrower must have been a beneficiary/creator (trust) o Borrower was 25% or more owner of the LLC or partnership prior to the transfer. Note: Transfer of ownership from a corporation to an individual does not meet the continuity of obligation requirement. No Cash-Out Refinances Loan-To-Value - Loan-to-Value calculation is the lesser of current appraised value or purchase price if property was purchased within the last 12 months. A copy of the final HUD-1 to confirm the purchase price is required. The 12-month timeframe is defined as prior Note Date to subject Note Date. A copy of the Note would be needed to verify the prior Note Date. Property Listed For Sale - Loans for properties that were listed or are for sale within 6 months prior to the loan application date are acceptable with the following requirements: No Cash-Out Refinances only Required Documentation Proof of cancelled listing An acceptable letter of explanation from the borrower detailing rationale for changing intention to sell. Recoup of Funds - If a borrower purchased a property for cash and is requesting to recoup the funds used to purchase the property, the transaction can be eligible as a rate/term refinances if all of the below items are met Owner occupied primary residences and second homes Investment properties are allowed as long as the borrower is not a builder or in the construction industry and prior transaction was arm s length. Broker-Glance Jumbo Saleable Page 15 of 19 01/12/2018

16 REFINANCES Copy of HUD-1 Settlement Statement or Certified Final Closing Statement for the purchase of the subject property which confirms that no mortgage financing was used to obtain the subject property. Funds used to purchase the property must be verified as the borrower s own funds. Gift funds and business funds are ineligible sources of funds. Funds drawn from a HELOC on another property owned by the borrower, funds borrowed against a margin account or a 401(k) loan are acceptable sources of funds when: o o The borrowed funds are fully documented The borrowed funds are reflected on the CD as a pay off on the new refinance transaction. The preliminary title search or report must also confirm no liens on the subject property. The Closing Statement must be reviewed for anything Union Bank would consider as a sales concession. Any sales concessions must be deducted from the purchase price. A copy of the sales contract with all counter offers and/or addendums and a copy of the certified escrow instructions to confirm if any personal property was included in the sales price. The sales contract must be reviewed for anything Union Bank would consider a discrepancy. Any discrepancies/red flags must be addressed. Seasoning - There is no seasoning requirement on payoff of a present first lien. This includes the payoff of a first mortgage that was a cash-out refinance in the previous 12 months. A no cash-out refinance may include the payoff of a seasoned secondary lien. A seasoned secondary lien is defined as a lien in place for 12 months. A seasoned equity line is defined as not having draws in excess of $2000 in the past 12 months. Inherited Property Seasoning A borrower that inherits a property is eligible for a no cash-out refinance of the existing mortgage(s) on the property and/or to buy out the co-inheritor s interest. There is no minimum seasoning requirement for inherited properties. The co-inheritor must be paid through escrow. A written agreement signed by all parties must be included in the loan file and must address: Cash-Out Refinances The terms of the property transfer, and The disposition of the proceeds from the refinance. Cash-Out Limitations - Refer to Transactions below. Loan-to-Value - Loan-to-Value calculation is the lesser of current appraised value or purchase price if property was purchased within the last 12 months. A copy of the final HUD-1 to confirm the purchase price is required. The 12-month timeframe is defined as prior Note Date to subject Note Date. A copy of the Note would be needed to verify the prior Note Date. Payoff of Derogatory Credit Loan proceeds may not be used to pay off judgments, liens, chargeoffs, collections or any other past due accounts. Derogatory accounts must be paid from the borrower s own funds. Broker-Glance Jumbo Saleable Page 16 of 19 01/12/2018

17 REFINANCES Properties Listed for Sale - Properties listed for sale within the last 12 months from the date of application are ineligible for a cash-out refinance. Seasoning - Borrower must have owned the property for a minimum of 6 months prior to the application date. For Recoup of Funds transactions, refer to No Cash-Out Refinances above. Inherited Property Seasoning - Borrowers who have inherited a property are eligible for Cash-Out Refinances subject to the following: Property Inherited <= 6 Months o Primary residence o Maximum 50% LTV o Cash-Out not to exceed $100,000 Property Inherited > 6 to 12 months o Primary Residences No restrictions o Second Homes Maximum 50% LTV Cash-Out not to exceed $100,000 Property Inherited > 12 months o No restrictions Seasoning Seasoning for inherited properties is based on when the borrower became legal owner of the property to the disbursement date of the new loan. Payoff of a Loan Secured by a Pledged Asset/Retirement Account, Unsecured Family Loan or Replenishing Business Funds Used to Purchase the Property - When proceeds from a cash-out refinance are being used to pay off a loan against a pledged asset/retirement account loan, the following guidelines apply: o o o o o Cash-out limitation is waived if previous transaction was a purchase. Seasoning requirement for cash-out refinances is waived (borrower is not required to have owned the subject property for six months). Funds used to purchase the subject property must be documented and sourced. HUD-1 for subject transaction must reflect payoff or pay down of pledged asset/retirement account loan, unsecured family loan or business asset account. If cash-out proceeds exceeds payoff of loans, excess cash must meet cash-out limitations. The purchase must have been arm s length SOLAR LEASE FINANCING If the property owner is the owner of the solar panels, standard eligibility requirements apply (e.g. appraisal, insurance etc.) If the solar panels are leased from or owned by a third party under a power purchase agreement or other similar arrangement, the following applies: The solar panels may not be included in the appraised value The property must maintain access to traditional electric utilities to ensure consistent access to electricity in the event the solar panels become non-functioning. The lease payment must be included in the debt-to-income ratio unless: Broker-Glance Jumbo Saleable Page 17 of 19 01/12/2018

18 SOLAR LEASE FINANCING The lease is structured to provide delivery of a specific amount of energy at a fixed payment during a given period and Has a production guarantee that compensates the borrower on a prorated basis in the event the solar panels fail to meet the energy output required for in the least for that period or Payments under power purchase agreements when the payment goes entirely to pay for the energy produced. Any portion of the payment not going toward the purchase of energy must be included in the debt-to-income ratio. The owner of the solar panels must not be named loss payee (or named insured) on the property owner s hazard insurance policy If applicable, the lease or power purchase agreement must indicate the following: Solar panels are removable without causing damage to the mortgage premises Damage that does occur as a result of the removal of the solar panels is the responsibility of the owner of the equipment and the owner must be obligated to repair the damage and return the improvements to their original condition In the event of foreclosure, either: o The lender may terminate the lease /purchase agreement and require the third party owner to remove the equipment o The lender has the right to become the beneficiary of the borrower s lease/purchase agreement with the third party without charge or o The lender has the right, but not the obligation, to enter into a new lease/purchase agreement with the third party under terms no less favorable than the prior owner Note: Any lease/purchase agreement in which the lender becomes a party in connection with a foreclosure, must also be assignable to a subsequent purchaser of the realty from the lender. Title exceptions with respect to the solar panels may be present on title provided the interest is not superior to the new first mortgage lien. Title cannot reflect any liens related to the ownership or maintenance of the solar panels that will result in a lien superior to the new first mortgage lien. SUBORDINATE FINANCING Seller Carryback financing is not allowed. Employer provided secondary financing is allowed; investor approval is required. TITLE POLICY A Long Form Title Insurance Policy is required. The long Form Title Insurance Policy includes all CC&Rs and easements, and includes other details such as recording information and instrument numbers. Plat maps are also included along with separate and individual endorsements. TRANSACTIONS Purchases No Cash-Out Refinances Cash-Out Refinances Primary residences and second homes, 1-unit properties only Cash-Out on Second Homes Schedule E cannot reflect any income for the subject property Maximum Cash-Out Limitations Occupancy LTV/TLTV Max Loan Amount Min Credit Score Max Cash-Out Broker-Glance Jumbo Saleable Page 18 of 19 01/12/2018

19 TRANSACTIONS Owner Occupied Second Home Up to 70% $1,000, $250,000 Up to 65% $1,000, $250,000 Up to 65% $1,500, $500,000 Up to 60% $2,000, $500,000 Up to 50% $2,500, $750,000 Up to 60% $1,000, $250,000 Up to 55% $1,500, $500,000 Up to 50% $2,000, $750,000 Non-ARMs Length Transactions Allowed only under the following circumstances: Family Sales/Transfers Property sellers or borrowers representing themselves as an agent in real estate transactions Renter purchasing from landlord. Twenty-four months cancelled checks verifying satisfactory pay history is required. Owner occupied and second homes only. Broker-Glance Jumbo Saleable Page 19 of 19 01/12/2018