GMAC BANK CORRESPONDENT FUNDING VA FIXED RATE

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1 GMAC BANK CORRESPONDENT FUNDING 1. PRODUCT DESCRIPTION VA Fixed Rate Mortgage 15 to 30 years in 5 year increments Fully amortizing 2. PRODUCT CODE VA Fixed Rate 15 Year (075) VA Fixed Rate 30 Year (076) 3. INDEX N/A 4. MARGIN N/A 5. ANNUAL/ADJUSTMENT CAP N/A 6. LIFE CAP N/A 7. RATE AT ADJUSTMENT N/A 8. CONVERSION OPTION N/A 9. CONVERSION FEE N/A 10. DELIVERY Refer to GMAC Bank Broker/ Correspondent Lending Manual for acceptable delivery time frame 11. TEMPORARY BUYDOWNS Annual Maximum 1% per year 12. QUALIFYING RATE AND RATIOS Qualifying Ratios AUS Approve loans Ratios evaluated by AUS AUS Refer loans - 41% 41% <=50% require significant documented compensating factors: Excellent credit history Conservative use of consumer credit Minimal consumer debt Long-term employment Significant liquid assets Sizable down payment The existence of equity in refinancing loans Little or no increase in shelter expense Military benefits Satisfactory homeownership experience High residual income Tax credits for child care Tax benefits of home ownership. With Temporary Buy down Ratio 41% Qualify at note rate Residual Income Requirements Table of Residual Incomes by Region (For loan amounts $79,999 and below) Product Summaries contain eligibility guidelines only Page 1 Family 1

2 GMAC BANK CORRESPONDENT FUNDING Size Northeast Midwest South West 1 $390 $382 $382 $425 2 $654 $641 $641 $713 3 $788 $772 $772 $859 4 $888 $868 $868 $967 5 $921 $902 $902 $ Add $75 for each additional member up to a family of seven Table of Residual Incomes by Region (For loan amounts $80,000 and above) Family 1 Size Northeast Midwest South West 1 $450 $441 $441 $491 2 $755 $738 $738 $823 3 $909 $889 $889 $990 4 $1025 $1003 $1003 $ $1062 $1039 $1039 $ Add $80 for each additional member up to a family of seven Refer to #35 Special Requirements/Restrictions for a breakdown of states by region 13. TYPES OF FINANCING Purchase Mortgages Interest Rate Reduction Refinance Loan (IRRRL) 1 Appraisal required See VA Refinance Options Matrix for appraisal requirements & LTV requirements GMAC-to-GMAC IRRRL transactions do not require appraisal report or limit to LTV VA to VA refinances only No seasoning requirements of first mortgage Rate and Term/Cash-Out Refinance Not permitted in Texas Subject property must have an existing lien No seasoning of first mortgage or junior liens Refinance of Construction Loans and Installment Land Sales Contracts Loan amounts may not exceed the lesser of o The VA reasonable value plus the VA funding fee OR o The sum of the outstanding balance of the loan to be refinanced plus allowable closing costs (including the funding fee) and discount points Loan must be set up as a purchase in the system to permit the LTV to exceed 90% of the reasonable value 1 Refer to the VA Refinance Options Matrix for specific details Product Summaries contain eligibility guidelines only Page 2

3 GMAC BANK CORRESPONDENT FUNDING 14. MAXIMUM TOTAL LOAN AMOUNT (including financed Funding Fee) All Transactions Continental U.S. 1 unit - $417,000 2 unit - $533,850 3 unit - $645,300 4 unit - $801,950 Alaska and Hawaii 1 unit - $625,500 2 unit - $800,775 3 unit - $967,950 4 unit - $1,202, LOAN AMOUNT AND LTV LIMITATIONS Refer to the VA Refinance Options matrix for specific instruction on calculating the maximum loan amount Purchases & Interest Rate Reduction Refinances Continental U.S. (National Loan Limits) Units LTV* Max Total Loan Amount (including financed Funding Fee) 1 100% $417, % 1 $533, % 1 $645, % 1 $801,950 *For IRRRL loans only, LTV is calculated by Total Loan Amount (Base Loan amount plus VA Funding Fee) GMAC-to-GMAC IRRRL transactions do not require LTV limit Alaska and Hawaii (National Loan Limits) Units LTV* Max Total Loan Amount (including financed Funding Fee) 1 100% $ 625, % 1 $ 800, % 1 $ 967, % 1 $1,202,925 *For IRRRL loans only, LTV is calculated by Total Loan Amount (Base Loan amount plus VA Funding Fee) GMAC-to-GMAC IRRRL transactions do not require LTV limit 1 Regardless of the number of units, the maximum guaranty VA will provide will be based on the total loan amount for a 1 unit dwelling. For Purchase transactions: If the total loan amount is greater than $417,000, a down payment may be required and the LTV may be reduced accordingly. Refer to attached Maximum Guaranty Calculation Worksheet. For purchase transactions, total loan amounts > $144,000 and <= $417,000 VA will provide guaranty of 25% of the total loan amount subject to Veterans available entitlement The 25% minimum guaranty is considered satisfied for Interest Rate Reduction Refinance Loans regardless of the dollar amount of guaranty being transferred from the previous loan. Product Summaries contain eligibility guidelines only Page 3

4 GMAC BANK CORRESPONDENT FUNDING Refer to VA Refinance Options Matrix. Rate and Term /Cash-Out Refinance Continental U.S. (National Loan Limits) Units LTV Max Total Loan Amount (including financed Funding Fee) 1 90% $417, % 1 $533, % 1 $645, % 1 $801,950 Alaska and Hawaii (National Loan Limits) Units LTV Max Total Loan Amount (including financed Funding Fee) 1 90% $ 625, % 1 $ 800, % 1 $ 967, % 1 $1,202,925 1 Regardless of the number of units, the maximum guaranty VA will be based on the total loan amount for a 1 unit dwelling. If the total loan amount is greater than the county limit for a one unit dwelling, available entitlement plus equity in the property must be >= 25% of the appraised value. If it is not, the LTV may be reduced accordingly. Refer to attached Maximum Guaranty Calculation Worksheet. Product Summaries contain eligibility guidelines only Page 4 For total loan amounts > $144,000 and <= $417,000 VA will provide guaranty amount of 25% of the total loan amount for a one unit dwelling subject to Veterans available entitlement. Note: For loans closed on or after 1/1/09, maximum guaranty is the same as purchase transactions. Bonus entitlement is available. Refer to attached Maximum Guaranty Calculation Worksheet. The loan-to-value ratio may not exceed 90% of appraised value. The total loan amount (Base Loan Amount plus Financed Funding Fee) may not exceed the conforming loan limits for the area. Refer to GMAC Bank Wholesale Mortgage Lending VA Refinance Options Matrix for details on arriving at the actual loan amount. Refinance of Construction Loans and Installment Land Sales Contracts Completed like cash-out refinances except: Maximum LTV can be 100% of determined value No cash back to borrowers 16. SECONDARY FINANCING Permitted. However, secondary financing cannot be used to offset required down payment, pay closing costs or cover any portion of the purchase price that exceeds the reasonable value Must be GMACB approved Secondary financing must meet requirements in VA Lender Handbook, for Secondary Borrowing, Chapter 9, Section 4. The second lien should not restrict the veteran s ability to sell the property (i.e. assumability feature) The total CLTV should never exceed 100% of the lesser of the sales price or appraised value. 17. PROPERTY TYPES Eligible Property Types 1-4 units

5 GMAC BANK CORRESPONDENT FUNDING See #35 Special Requirements/Restrictions for restrictions regarding 2-4 unit properties PUDs VA or GMACB approved Condos VA approved Modular Pre-Cut/Panelized housing Ineligible Property Types Co-ops Manufactured homes 18. OCCUPANCY Primary Residences 19. GEOGRAPHIC Continental US, Hawaii and Alaska LOCATIONS/RESTRICTIONS 20. ASSUMPTIONS Permitted Credit worthy borrowers only 21. ESCROW WAIVERS Not Permitted 22. PREPAYMENT PENALTY None 23. UNDERWRITING Underwritten by a VA Automatic & LAPP approved underwriter employed by GMAC Bank or a GMAC Bank VA Delegated Lender May follow AUS decision and documentation requirements Refer to Section 27 Credit for restrictions If loan requires VA s prior approval, additional underwriting turnaround time is required 24. PROCESSING STYLES Standard Streamline (IRRRL) VA Prior Approval Required For Joint loans involving a veteran and non-veteran who is not the veteran s spouse (Not on IRRRL loans). Joint loans involving two or more veterans who intend to use their entitlement and take title jointly (Not on IRRRL loans). Loans to veterans in receipt of VA non-service related pension (Not on IRRRL loans). Loans to veterans rated incompetent by VA (Not on IRRRL loans). Underwriting Prior Approval Loans The GMAC Bank or Delegated Correspondent VA Automatic Underwriter must first underwrite the loan and issue a credit decision The GMAC Bank or Delegated Correspondent VA Automatic Underwriter is required to access the VA Information Portal at and enter specific Loan analysis data in VA WebLGY system and submit data to the VA. Submit a copy of the loan file to the VA Regional Loan Center that has jurisdiction over the property state Files submitted to the VA for prior approval must be labeled PRIOR APPROVAL Additional documentation is required for Interest Rate Reduction Refinance Loans involving delinquencies of 30 days or more past due since date of application. Refer to the VA Refinance Options Matrix for details VA Reserves or National Guard Certification All veteran applicants whose income is being used to qualify for the loan transaction must complete and sign a VA Reserves or National Guard Certification form. The VA Underwriter must then use this information to determine the veteran borrower s true monthly qualifying income. 25. BORROWER ELIGIBILITY Must be a veteran who served the minimum duty with other than a dishonorable discharge Active duty with at least 181 days of duty Product Summaries contain eligibility guidelines only Page 5

6 GMAC BANK CORRESPONDENT FUNDING Product Summaries contain eligibility guidelines only Page 6 Un-remarried surviving spouse of eligible veteran (COE) Reservists/National Guard Certificate of Eligibility must have sufficient entitlement to meet minimum 25% guarantee Joint loans involving a veteran and a non-veteran who is not the veteran s spouse (VA prior approval required. Refer to #35 Special Requirements/Restrictions for more details) Joint loans involving two unmarried veterans (VA prior approval required. Refer to #35 Special Requirements/Restrictions for more details) 26. CO-BORROWERS All borrowers must occupy the subject property Non-Veteran co-borrower permitted. Refer to #35 Special Requirements/Restrictions for special restrictions 27. CREDIT VA Credit Standards apply Housing (Mortgage/Rental) Payment History (PITIA) is inclusive of all liens regardless of position, as well as all occupancy types. AUS Approved loans Credit evaluated by AUS AUS Refer and manually underwritten loans VA Credit Standards apply For purchase transactions: 12 month housing payment (mortgage/rental) history via a credit report, cancelled checks or VOM to reflect no more than 0 x 30 in the previous 12 months. For refinance transactions: Refer to Refinance Options Matrix for housing payment history requirements Minimum Fico Score Requirements Regardless of AUS Decision: 640 Refer to VA Refinance Options Matrix for additional requirements for IRRRL transactions Non-traditional credit is ineligible 28. ASSETS Minimum Borrower Investment No minimum borrower investment is required for loan amounts up to $417,000 or $625,500 in AK & HI provided the Veteran has full entitlement. For 2-4 unit dwellings, if the total loan amount is greater than the limit for a one unit dwelling, a down payment may be required. Refer to Section 15, Loan Amount and LTV Limitations. Seller Contributions Seller can pay 100% of discount points and borrower s non-recurring closing costs Seller can provide an additional amount not to exceed 4% of the estimated reasonable value to assist the borrower payment of buy down points, prepaid expenses and funding fee Gifts Acceptable Cash Reserves 1 unit No reserves required 2 4 units when rental income is not being used to qualify no reserves required 2 4 units when rental income is being used to qualify 6 months PITI required When retaining current principal residence as 2 nd Home 6 months PITI required for both properties required OR 2 months PITI required for each if 30% equity in existing principal residence is documented When converting current principal residence to rental property 6 months PITI required for both properties required OR No reserves required if one of the following circumstance is met: veteran is relocating outside geographic area and has secured tenant for property or 30% equity in existing principal residences is documented. When pending sale of other real estate is scheduled after the purchase date of current principal residence. 6 months reserves required for both properties OR 2 months reserves required if 30% equity in existing residence is documented. 29. LIMITATIONS ON OTHER. None

7 GMAC BANK CORRESPONDENT FUNDING R.E. OWNED See Special Requirements /Restrictions and Assets regarding converting current principal residence to rental property or second home 30. APPRAISER VA Approved/VA Fee panel appraisers REQUIREMENTS IRRRL Loans do not require VA Fee panel appraisers 31. APPRAISAL LAPP - Notification of Value (NOV) to be issued by GMACM - LAPP Approved Underwriter via The Appraisal System (TAS) at REQUIREMENTS VA Notice of Value issued by VA IRRRL transactions require HVCC-compliant conventional appraisal See VA Refinance Options Matrix VA REO s Properties purchased as VA Real Estate Owned (REO s) are not eligible for LAPP Appraisals. The VA will issue the Notice of Value (NOV) if the Liquidation Appraisal issued by the VA is less than 6 months old To request a NOV from the VA submit a completed paper copy of VA Form to the VA Regional Loan Center. VA will then transfer the appraisal from the current servicer, if applicable, to GMACM and issue a new case number The VA underwriter still needs to perform complete credit underwriting on these transactions 32. MORTGAGE INSURANCE VA Funding Fee applies unless veteran is exempt Refer to attached chart for specific percentages 33. ENGENIOUS ELIGIBILITY / Loans are not eligible for submission to Engenious. REQUIREMENTS 34. INVESTOR ELIGIBILITY Veterans Administration (VA) 35. SPECIAL REQUIREMENTS/ RESTRICTIONS Form 4506-T must be processed prior to closing. A new IRS Form 4506 T is required to be signed with the closing package as well as at application even when the form has been processed. Refer to the GMAC Bank Broker Manual/ Correspondent Funding Client Guide for eligibility guidelines. CAIVR System must be checked For loan amounts up to and including $144,000: The maximum amount of available entitlement minus the amount of entitlement currently in use equals the remaining amount of available entitlement. In our example ($36,000 - $7500 = $28,500). This means the veteran can obtain another zero down payment VA loan for no more than $114,000 ($28,500 x4 = $114,000). BONUS ENTITLEMENT Bonus Entitlement is available: Only for loan amounts greater than $144,000, up to $417,000 or $625,500 in AK & HI For veterans with full basic entitlement available For veterans with partial entitlement available Bonus Entitlement when the Veteran has FULL Entitlement If the veteran has full entitlement, Bonus Entitlement or additional entitlement is calculated as follows: $417,000 x 25% = $104, $36,000 = $68,250 (Continental US). $625,500 x 25% = $156,375-$36,000 = $120,375 (AK & HI) It is this bonus entitlement that allows a veteran to purchase a zero down payment home for greater than $144,000 and still received full VA guaranty up to $417,000 or $625,500 in AK& HI. Product Summaries contain eligibility guidelines only Page 7

8 GMAC BANK CORRESPONDENT FUNDING Bonus Entitlement when the Veteran has PARTIAL Entitlement Product Summaries contain eligibility guidelines only Page 8 If veteran only has partial entitlement, meaning he still has an open VA loan, he may still be able to obtain another VA loan for more than $144,000, using bonus entitlement, provided he intends to occupy this property. Example For loan amounts over $144,000* Current entitlement in use $7500. Veteran s wishes to purchase a home for $250,000. $250,000 X 25% = $62,500 (Purchase Price x 25% as required by Ginnie Mae) $104,250 - $7500 (in use)= $96,750 --Maximum amount of available entitlement for the new loan The maximum loan amount the veteran can obtain without a down payment is $96,750 x 4 = $387,000. In this case the borrower is able to purchase this property without a down payment. Joint Loans Joint loans must be underwritten by GMACB and then forwarded to the VA for FINAL approval before closing A joint loan is a loan made to: The veteran and one or more non-veterans (not spouse) The veteran and one or more veterans (not spouse) who will not be using their entitlement The veteran and one or more veterans (not spouse) ALL of who will use their entitlement. Example: Two unmarried veterans The veteran and the veteran s spouse who is also a veteran and both entitlements to be used A loan involving a veteran and his/ her spouse will not be treated as a joint loan if the spouse is not a veteran or is a veteran who will not be using his/her entitlement on the loan Guaranty Guidelines The maximum guaranty amount for loans up to and including $144,000 is $36,000. The maximum guaranty amount for loans above $144,000 is calculated as Sales Price/Appraised Value (whichever is less) x 25%. The minimum guaranty of 25% must be based on the lesser of the purchase price or appraised value. VA s guaranty will be limited to that portion of the loan allocable to the veteran s interest in the property The veteran must qualify for his or her percentage of ownership interest in the property; i.e., if ownership interest is 50/50, the veteran must qualify for half (50%) of the PITI plus his or her portion of other personal debts VA Funding Fee The funding fee is calculated on the veteran s portion of the loan. If a reduced funding fee percentage is required as a result of a down payment requirement, the veteran benefits from this reduction as the funding fee will be calculated on his/her portion of the loan 2-4 Unit Properties Prospective rental income may only be included in effective income if both of the following are met Evidence indicates the borrower has a reasonable likelihood of success as a landlord Documentation to support the borrower's prior experience managing rental units or other background involving both property maintenance and rental must be provided It can be verified that borrower has cash reserves totaling minimum 6 months PITI The amount of rental income to include in effective income is based on 75% of either Verified prior rent collected on the units of existing properties OR The appraiser s opinion of the subject property s fair monthly rental for new construction Converting Current Principal Residence to Second Home or Rental property Qualify veteran with both the current PITI and proposed PITI for new loan.

9 GMAC BANK CORRESPONDENT FUNDING Product Summaries contain eligibility guidelines only Page 9 Rental income can only be used to offset the PITI for current principal residence if veteran is relocating to new geographic area (MSA) due employment OR if 30% equity is documented. When retaining current principal residence as 2 nd Home 6 months PITI required for both properties required OR 2 months PITI required for each if 30% equity in existing principal residence is documented When converting current principal residence to rental property 6 months PITI required for both properties required OR No reserves required if one of the following circumstances is met: veteran is relocating outside geographic area and has secured tenant for property or 30% equity in existing principal residences is documented. Pending Sale of Real Estate Qualify veteran with both PITI for Pending Sale and PITI for new property Omit PITI of Pending Sale from qualifying DTI, if financing contingencies to purchase home have been cleared and documented and cash reserves described below are met. When pending sale of other real estate is scheduled after the purchase date of current principal residence. 6 months reserves required for both properties OR 2 months reserves required if 30% equity in existing residence is documented. Maintenance and utility costs for all regions: 14 cents per square foot Example: 1500 square foot home X.14 = $ / mo Geographic Regions for Residual Income Guidelines Northeast Midwest Connecticut Illinois Missouri Maine Indiana Nebraska Massachusetts Iowa North Dakota New Hampshire Kansas Ohio New Jersey Michigan South Dakota New York Minnesota Wisconsin Pennsylvania Rhode Island Vermont South West Alabama Alaska Arkansas Arizona Delaware California District of Columbia Colorado Florida Hawaii Georgia Idaho Kentucky Montana Louisiana Nevada Maryland New Mexico Mississippi Oregon North Carolina Utah Oklahoma Washington Puerto Rico Wyoming South Carolina Tennessee

10 GMAC BANK CORRESPONDENT FUNDING Texas Virginia West Virginia NON-PURCHASING SPOUSE IN A COMMUNITY PROPERTY STATE List of Community Property States Arizona New Mexico California Texas Idaho Washington Louisiana Wisconsin Nevada IF PROPERTY IS LOCATED IN A COMMUNITY PROPERTY STATE, OR THE BORROWER RESIDES IN A COMMUNITY PROPERTY STATE, THE FOLLOWING REQUIREMENTS APPLY A credit report for the non-purchasing spouse is required to determine any joint or individual debts. The spouse s authorization to pull a credit report must be obtained. If the spouse refuses to provide authorization for the credit report, the loan must be rejected Even if the non-purchasing spouse does not have a social security number, the credit reporting company should verify that the non-purchasing spouse has no credit history and no public records recorded against him/her. Credit Company should be given non-purchasing spouse information: Name(s), address, birth date and any other significant information requested in order to do the records check. Except for those obligations specifically excluded by state law (see chart below for AZ, NV, WI), the debts of the non-purchasing spouse must be considered in the qualifying ratios. If the debts are the sole responsibility of the non-purchasing spouse, do not consider debt in the DTI. The greater of the monthly payment amount or 5% of the outstanding balance (if minimum payment is not reflected on credit report) of the non-purchasing spouse must be included in the qualifying ratios Disputed debts of the non-purchasing spouse need not be counted provided the file contains documentation to support the dispute. Credit history of the non-purchasing spouse should not be the basis for declining the loan. The FICO score for the non-occupying co-borrower is not considered for eligibility or MIP. When are Community Property State laws effective Include debts in DTI analysis (ratios) Arizona California Idaho Louisiana Nevada New Mexico Texas Washington Wisconsin Married Same Same Same Same Same Same Same Determination date and ( either day of domicile in marriage and/or same state date domicile was established in WI or 1/1/1986 or later (effective date of the Marriage Yes, exclusions apply (see below) Yes Yes Yes, unless spouse agrees to waive Homestead rights Yes, exclusions apply (see below) Yes Yes Yes, exclusions apply (see below), as long as proceeds are not provided to nonpurchasing Property Act) Yes Product Summaries contain eligibility guidelines only Page 10

11 GMAC BANK CORRESPONDENT FUNDING Product Summaries contain eligibility guidelines only Page 11 Exclude debts in DTI analysis if acquired prior to the marriage The Nonpurchasing Spouse Can Sign the Mortgage (VA ONLY) Yes No. Can only be excluded with a specific Premarital agreement No. Can be exclude d with a specific Premarital agreem ent No. Can be excluded with a specific Pre-marital agreement No Yes Yes No, if waiving Homestead rights Additional State Specific restrictions: Yes No. Can be excluded with a specific Pre-marital agreement No. Can be excluded with a specific Pre-marital agreement spouse or joint assets of the spouse and nonpurchasing spouse are used in the transaction. Yes, As long as proceeds are not provided to nonpurchasing spouse or joint assets of the spouse and nonpurchasing spouse are used in the transaction. Yes Yes Yes Yes No Yes Arizona The satisfaction of collections and judgments of non-purchasing spouses for FHA loans in AZ will no longer be required under the following circumstances: The non-purchasing spouse is not contributing towards any of the down payment or costs on the transaction (including gifts or monies from joint accounts) The non-purchasing spouse signs the title disclaimer in order to prevent any judgments from attaching to the property. (Condition at closing). The non-purchasing spouse cannot sign the Deed of Trust/Security Instrument. California All delinquent debts, including those of the non-purchasing spouse, must be satisfied prior to or at closing. Louisiana The non-purchasing spouse is permitted to sign or intervene in the mortgage to indicate his/her intention to waive homestead exemption rights. Item #23 on the Mortgage addresses the Waiver of Homestead. When the non-purchasing spouse chooses to intervene in the mortgage to waive homestead exemption rights: A copy of the recorded document ( Waiver of Interest and Ownership ), evidencing such waiver, must be included in the loan file. This document is executed and recorded at the time of the execution of the sales contract. The Direct Endorsement Underwriter must condition the file (closing condition) for evidence that the non-purchasing spouse signed the mortgage as the Intervenor

12 GMAC BANK CORRESPONDENT FUNDING Exclude debts of the non-purchasing spouse in the qualifying ratios. VA FIXED Washington Debts of the non-purchasing spouse are excluded from the qualifying ratios if the non-purchasing spouse receives no money from the transaction. When no funds are received form the transaction, the non-purchasing spouse may Quit Claim his/her interest to the purchasing spouse. 36. INTERNET LINKS The Appraisal System. Order Case Numbers, Appraisals and obtain Automated Certificates of Eligibility. VA Lenders Handbook Loan Guaranty Service, Home Page (U.S. Department of Veterans Affairs) VA Lender's and Servicer's Home Page Loan Guaranty Service - Lenders, Servicers and Real Estate Professionals (U.S. Department of Veterans Affairs) VA Regional Loan Centers R ATE Product Summaries contain eligibility guidelines only Page 12

13 VA FUNDING FEE TABLE Effective for loans closed on or after January 1, 2004 PURCHASE TRANSACTIONS TYPE OF VETERAN DOWN PAYMENT PERCENTAGE FOR FIRST TIME USE PERCENTAGE FOR SUBSEQUENT USE 1 10/1/04 to 9/30/ /1/2006 to 9/30/2007 0% to 4.99% 2.15% 3.35% 10/1/2007 to 9/30/ % Active Duty or Veteran >=5% <10% >=10% Reserves or National Guard 0% to 4.99% >=5% <10% >=10% 1.50% 1.25% 2.40% 1.75% 1.50% CASH OUT REFINANCE 10/1/2004 to 9/30/ % 1.25% 10/1/2006 to 9/30/ % 10/1/2007 to 9/30/ % 10/1/2004 to 9/30/ % 1.50% TYPE OF VETERAN PERCENTAGE FOR FIRST TIME USE PERCENTAGE FOR SUBSEQUENT USE 1 Reserves or National Guard 10/1/2007 to 9/30/ % 10/1/2006 to 9/30/ % 3.35% TYPE OF LOAN Interest Rate Reduction Refinancing Loans Assumptions 0.50% INTEREST RATE REDUCTION LOANS AND ASSUMPTIONS (FUNDING FEE REMAINS UNCHANGED) PERCENTAGE FOR EITHER TYPE OF VETERAN WHETHER FIRST TIME OR SUBSEQUENT USE 0.50% 1 The higher subsequent use fee does not apply to these types of loans if the veteran s only prior use of entitlement was for a manufactured home NOT classified as real estate Funding Fee Calculations All loans EXCEPT IRRRLS - Apply the appropriate funding fee percentage to the loan amount IRRRLs - Calculate the funding fee by completing VA Form VA Interest Rate Reduction Refinancing Worksheet Joint Loans- Apply the appropriate funding fee percentage to any portion of the loan allocable to a veteran using his/her entitlement who is not exempt from the funding fee. Product Summaries contain eligibility guidelines only Page 13

14 VA ENTITLEMENT CODES VA ENTITLEMENT CODES Entitlement Code Meaning 01 World War II 02 Korean 03 Post Korean 04 Vietnam 05 Entitlement Restores 06 Un-remarried Surviving Spouse 07 Spouse of POW/MIA 08 Post World War II 09 Post Vietnam 10 Persian Gulf War 11 Selected Reserves Product Summaries contain eligibility guidelines only Page 14

15 REQUIRED CASH DOWNPAYMENTAND PERCENTAGE OF GUARANTY CALCULATION WORKSHEET FOR LOAN AMOUNTS up to $417,000 (or $625,500 in AK & HI) Purchase Transactions Refer to 2010 VA County limits If the county name does not appear on this list, the VA limit is set at $417,000 The primary goal is to verify that the minimum guaranty required by Ginnie Mae is satisfied through veteran s available entitlement/maximum VA guaranty and or cash down payment. Special reminders: No portion of the cash down payment may be derived from borrowed funds. Minimum Guaranty required by Ginnie Mae is calculated as 25% of the lesser of the sales price or Appraised Value. Maximum VA Guaranty/Available Entitlement is based on the loan amount including the funding fee, if financed into the loan. Refer to table below. Loan Amount (Base Loan plus Financed Funding Fee) Up to $45,000 Maximum Potential Guaranty (subject to veteran s available entitlement) 50% of the loan amount $45,001 to $56,250 $22,500 $56,251 to $144,000 40% of the loan amount $144,001 to $417,000 25% of the loan amount or 25% of the county limit, whichever is less Example 1: Veteran has Full Entitlement Property is located in: VA County Limit for Montgomery County Sales Price (SP) Appraised Value (AV) Veteran Funding Fee factor) First Time Use of entitlement) Borrower is requesting Loan Amount (Base + Financed FF) Min Guaranty required by GNMA ( 25% of $300,000 (SP) Maximum VA Guaranty/Available Entitlement = 25% of $306,450 Since the Min Guaranty required by GNMA is less than the maximum guaranty VA will provide, no cash down payment is required from the borrower and the requested loan amount is acceptable Montgomery County, PA $417,000 $300,000 $300, % $306,450 $ 75,000 $ 76, Product Summaries contain eligibility guidelines only. 8/23/10 - Page 15

16 Example 2 Veteran has Partial Entitlement Available (Veteran has used $36,000 of entitlement on a prior loan, which may not be restored) Property is located in VA County Limit for Montgomery : Property Appraised for Sales Price Veteran Funding Fee factor (Subsequent Use of entitlement) Borrower is requesting Loan Amount of (Base + Financed FF) Min Guaranty required by GNMA = 25% of $320,000 (AV) Maximum VA Guaranty/(Remaining) Available Entitlement = 25% of $417,000 = $104,250 less $36,000 Montgomery County, PA $417,000 $320,000 $320, % $330,560 $80,000 $68,250 Since the Min Guaranty required by GNMA is greater than the maximum guaranty VA will provide less the entitlement in use, the veteran needs to have a cash down payment to meet the GNMA requirement Down payment = Minimum GNMA Requirement less Remaining Available Entitlement $11,750 $80,000 less $68,250 Since a down Payment is required, the base loan amount must be reduced by the amount of the down payment Adjusted base loan amount = Sales Price less Down Payment $320,000 less $11,750 Percentage of Guaranty = Available Entitlement plus cash down payment divided by sales price $68,250 plus $11,750 = $80,000 divided by $320,000 $308,250 25% Min Guaranty is met loan is saleable Adjusted Funding Fee = Base Loan Amount X applicable factor $308,250 X 3.3% $10, Adjusted Total Loan Amount = Base Loan Amount plus Funding Fee $308,250 plus $10, $318,422 Product Summaries contain eligibility guidelines only Page 16

17 REQUIRED CASH DOWNPAYMENTAND PERCENTAGE OF GUARANTY CALCULATION WORKSHEET FOR LOAN AMOUNTS GREATER THAN $417,000 (or $625,500 in AK & HI) Purchase Transactions Refer to 2010 VA County limits for High Balance Loans The primary goal is to verify that the minimum guaranty required by Ginnie Mae is satisfied through the veteran s available entitlement/maximum VA guaranty and or cash downpayment. As a reminder, no portion of the cash down payment may be derived form borrowed funds. Minimum Guaranty required by Ginnie Mae is calculated as 25% of the lesser of the sales price or Appraised Value. Maximum VA Guaranty/Available Entitlement is lesser of 25% of county limit or 25% of the loan amount. Example 1: Veteran has Full Entitlement Property is located in: VA County Limit for Pike County Sales Price (SP) Appraised Value (AV) Veteran Funding Fee factor (First Time Use of entitlement) Borrower is requesting Loan Amount (Base + Financed FF) Min Guaranty required by GNMA = 25% of $1,000,000 (SP) Maximum VA Guaranty/Available Entitlement = 25% of $747,500 (County Limit) = (Since $747,500 is less than $1,000,000 VA will not guarantee more the county limit) Pike County, PA $747,500 $1,000,000 $1,200, % $1,021,500 $ 250,000 $ 186,875 Since the Min Guaranty required by GNMA is greater than the maximum guaranty VA will provide, a cash down payment is required from the borrower and the loan amount needs to be reduced by the amount of the down payment. Required Down Payment = Minimum Guaranty less maximum available entitlement ($250,000 - $186,875) Adjusted Base Loan Amount = Sales Price less required cash down payment: ($1,000,000 less $63,125) Adjusted Base Loan Amount plus Financed FF = $936,875 + $20,142) Percentage of Guaranty = Available Entitlement plus cash down payment divided by lesser of sales price or Appraised value o ($186,875 +$63,125 = $250,000 divided by $1,000,000) $63,125 $936,875 $957,017 25% Example 2 Veteran has Partial Entitlement Available Product Summaries contain eligibility guidelines only. 8/23/10 - Page 17

18 (Veteran has used $104,250 of entitlement on a prior loan, which may not be restored) Property is located in VA County Limit for TETON : Property Appraised for Sales Price Veteran Funding Fee factor (Subsequent Use of entitlement) Borrower is requesting Loan Amount of (Base + Financed FF) Min Guaranty required by GNMA = 25% of $815,000 (AV) Maximum VA Guaranty/Available Entitlement = 25% of $703,750 = $175,937 less $104,250 Since the Min Guaranty required by GNMA is greater than the maximum guaranty VA will provide minus the entitlement in use, the veteran needs to have a cash down payment to meet the GNMA requirement Down payment = Minimum GNMA Requirement less Remaining Available Entitlement TETON, WY $703,750 $815,000 $815, % $841,895 $203,750 7 $1171,687 $ 71,687 $132,063 $203,750 less $71,687 Since a down Payment is required, the base loan amount must be reduced by the amount of the down payment Adjusted base loan amount = Sales price less Down Payment $815,000 less $132,063 Percentage of Guaranty = Available Entitlement plus cash down payment divided by sales price $682,937 25% $71,687 plus $132,063 = $203,750 divided by $815,000 Adjusted Funding Fee = Base Loan Amount X applicable factor $757,000 X 3.3% $22,536 Total Loan Amount = Base Loan Amount plus Funding Fee $757,000 plus $24,981 $705,473 Product Summaries contain eligibility guidelines only Page 18

19 VA CASH-OUT REFINANCE REQUIRED EQUITY AND PERCENTAGE OF GUARANTY CALCULATION WORKSHEET LOAN AMOUNTS up to $417,000 Bonus Entitlement is available for Cash Out Refinance loans closed on or after 1/1/09 Your primary goal is to verify that: 1. Ginnie Mae s required minimum 25% guaranty is met (Ginnie Mae requires a minimum of 25% of Appraised Value in the form of entitlement and/or Equity in the property) 2. The base LTV does not exceed 90% of Appraised Value (While VA permits LTV on a cash-out to 100%, GMACM/GMACB continues to restrict the LTV to 90% of the appraised value). Maximum VA Guaranty Amount / Veteran s Available Entitlement provided by VA: Loan Amount Maximum Potential Guaranty (subject to veteran s available entitlement) Up to $45,000 50% of the loan amount $45,001 to $56,250 $22,500 $56,251 to $144,000 40% of the loan amount $144,001 to $417,000 25% of the loan amount 2010 VA County Limits Greater than $417,000 For all counties not appearing on this list, the 2010 VA Limit is $417,000 Example 1: Veteran has Full Entitlement Property is located in: Montgomery County, PA VA County Limit for Montgomery County $417,000 Appraised Value (AV) $300,000 Veteran Funding Fee factor (First Time use of entitlement - Reservist) 2.4% Borrower is requesting Loan Amount (Base + Financed FF) 90% of Appraised + FF ($270,000 + $6,480) $276,480 Min Guaranty required by GNMA ( 25% of $300,000 (A) $ 75,000 Maximum VA Guaranty/Available Entitlement = 25% of $276,480 $ 69,120 Since the Min Guaranty required by GNMA is greater than the maximum guaranty VA will provide, the borrower must have sufficient equity in the property to help meet the minimum required guaranty and the requested base loan amount must be reduced. Equity is calculated as appraised value less base loan amount $300,000 less $270,000 $30,000 Minimum required Equity = $75,000 less $69,120 $5,880 Since additional Equity is required, the base loan amount must be reduced by the amount of the min required equity Percentage of Guaranty = Available Entitlement plus Minimum Required equity divided by Appraised Value $69,120 + $5880 = $75,000 divided by $300,000 Adjusted base Loan Amount = Requested Base Loan Amount less Required Equity ($270,000 less $5,880) Adjusted Funding Fee = Adjusted Base Loan Amount X applicable factor ($264,120 x 2.4%) 25% Min Guaranty is met loan is saleable $264,120 $6, Adjusted Total Loan Amount = 6,338.88) $270,458 Product Summaries contain eligibility guidelines only. 8/23/10 - Page 19

20 Example 2 Veteran has Partial Entitlement Available (Veteran has used $27,500 of entitlement on a prior loan, which may not be restored) Property is located in: Montgomery County, PA VA County Limit for Montgomery County $417,000 Appraised Value (AV) $320,000 Veteran Funding Fee factor (Subsequent Use of entitlement) 3.3% Borrower is requesting Loan Amount of (Base + Financed FF) Appraised Value x 90% + FF $288,000 + $9,504 $297,504 Min Guaranty required by GNMA ( 25% of $320,000 (SP) $ 80,000 Maximum VA Guaranty/(Remaining) Available Entitlement = 25% of $417,000 = $104,250 less $27,500 $ 76,750 Since the Min Guaranty required by GNMA is greater than the maximum guaranty VA will provide less the entitlement in use, the veteran needs to sufficient equity in the property to meet the GNMA requirement Equity is calculated as appraised value less base loan amount $320,000 less $288,000 $32,000 Min Required Equity = Minimum GNMA Requirement less Remaining Available Entitlement (80,000 - $76,750) $$3,250 Since additional Equity is required, the base loan amount must be reduced by the amount of the min required equity Adjusted base Loan Amount = Requested Base Loan Amount less Required Equity ($288,000 less $3,250) Percentage of Guaranty = Available Entitlement plus Minimum Required equity divided by Appraised Value $284,750 $76,750 plus $3,250 = $80,000 divided by $320,000 Adjusted Funding Fee = Adjusted Base Loan Amount X applicable factor ( $284,750 X 3.3%) $9, % Min Guaranty is met loan is saleable Adjusted Total Loan Amount = Base Loan Amount plus Funding Fee ($284,750 plus $9,396.75) $294,146 Product Summaries contain eligibility guidelines only Page 20

21 VA CASH-OUT REFINANCE REQUIRED EQUITY AND PERCENTAGE OF GUARANTY CALCULATION WORKSHEET FOR LOAN AMOUNTS Greater than $417,000 Bonus Entitlement is available for loans closed on or after 1/1/09 Your primary goal is to verify that: 1. Ginnie Mae s required minimum 25% guaranty is met (Ginnie Mae requires a minimum of 25% of Appraised Value in the form of entitlement and/or Equity in the property) 2. The base LTV does not exceed 90% of Appraised Value (While VA permits LTV on a cash-out to 100%, GMACM/GMACB continues to restrict the LTV to 90% of the appraised value). Maximum VA Guaranty Amount provided by VA: Loan Amount greater than $417,000 the maximum guaranty varies depending on the location of the property and is calculated as: Lesser of 25% of the loan amount or 25% of the VA County Limit for a one family dwelling, provided the veteran has full basic entitlement available Example 1: Veteran has Full Entitlement Property is located in: Westchester, NY VA County Limit for Westchester County $681,250. Appraised Value (AV) $1,000,000 Veteran Funding Fee factor (Subsequent use of 3.3% entitlement) Borrower is requesting Loan Amount (Base + $929,700 Financed FF) 90% of Appraised + FF ($900,000 + $29,700) Min Guaranty required by GNMA ( 25% of $1,000,000) $ 250,000 Maximum VA Guaranty/Available Entitlement = 25% of $681,250. Since the Min Guaranty required by GNMA is greater than the maximum guaranty VA will provide, the borrower must have sufficient equity in the property to help meet the minimum required guaranty and the requested base loan amount must be reduced. Equity is calculated as appraised value less base loan amount ($1,000,000 less $900,000) Minimum required Equity = Minimum required GNMA Guaranty less VA Guaranty/Available entitlement ($250,000 less $170,312.) Since proposed equity of $ 100,000. is greater than minimum required equity calculated above, no further reduction or adjustment in loan amount is required. Percentage of Guaranty = Available Entitlement plus equity divided by Appraised value $170,312 + $100,000. ($270,312) divided by $1,000,000 $ 170,312 $100,000 $79,688. Proceed to test below 27% Minimum Guaranty of 25% is met Loan is GNMA eligible Product Summaries contain eligibility guidelines only. 8/23/10 - Page 21

22 Example 2 Veteran has Partial Entitlement Available (Veteran has used $104,250 of entitlement on a prior loan, which may not be restored) Property is located in: Teton County, WY VA County Limit for Teton County $703,750. Appraised Value (AV) $815,000 Veteran Funding Fee factor (Subsequent use of entitlement) Borrower is requesting Loan Amount (Base + Financed FF) 90% of Appraised + FF ($733,500 + $24,205.50) 3.3% $757,705 Min Guaranty required by GNMA ( 25% of $815,000) $ 203,750 Maximum VA Guaranty/Available Entitlement = 25% of $703,750. (VA County Limit) minus $104,240 (un-restorable entitlement), This is the partial entitlement available. $ 71,697 Since the Min Guaranty required by GNMA is greater than the maximum guaranty VA will provide, the borrower must have sufficient equity in the property to help meet the minimum required guaranty and the requested base loan amount must be reduced. Equity is calculated as appraised value less base loan amount ($815,000 less $733,500) Minimum required Equity = Min required Guaranty less VA Guaranty/Available entitlement ($203,750 less $71,697) $81,500 $132,053 Since $132,053. is more than proposed equity of $ 81, 500., additional Equity is required, the proposed base loan amount must be reduced by the difference ($50,553) between required minimum equity amount of $ 132,053 and proposed equity amount of $81,500 from initial Base Loan amount. New Adjusted Base Loan Amount - $733,500 minus $682,947. $50,553. = $682,947. For New Base Loan Amount. NEW Equity Amount = $815,000 minus $682,947. $132,053. New Adjusted Total Loan amount = Base Loan amount plus VA Fee of 3.3% ($682,947. PLUS $ 22,537.) Test for New Loan amount : Percentage of Guaranty = Available Entitlement plus Min required Equity divided by Appraised value $71, $132,053.= $203,750,000 divided by $815,000 $ 705,484 25% Min Guaranty is met loan is saleable Product Summaries contain eligibility guidelines only Page 22