CONFORMING UNDERWRTING GUIDELINES DUREFIPLUS PROGRAM - WHOLESALE

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1 Table of Contents APPRAISAL & PROPERTY INFORMATION Appraisal Requirements... 2 LTVs > 95% Property Inspection Waiver (Property Field work Waiver Requirements) ELIGIBLE PROPERTIES... 3 BORROWER BENEFIT CREDIT REQUIREMENTS... 4 ELIGIBLE TRANSACTIONS... 4 General Eligibility FNMA LookUp Tool Cash Back to the... 4 Ineligible for Refi Plus Adding s to the Loan... 5 Removing s from the Loan Occupancy LOAN AMOUNTS....5 LOAN TERMS MORTGAGE INSURANCE... 6 NUMBER OF LOANS / PROPERTIES Maximum iapprove Lending Exposure....6 Number of Financed Properties... 6 SUBORDINATE FINANCING UNDERWRITING PROPERTY INSPECTION WAIVER DISCLOSURE

2 **For quick search results, utilize the word search option in the PDF document** DU REFI PLUS PRIMARY RESIDENCE RATE/TERM REFINANCE PROPERTY TYPE LTV CLTV/HCLTV FICO Loan Terms UNDW OPTIONS SFR Condo PUD 2-4 by exception 95% 115% 660 ALL DU Approve/Eligible SECOND HOME RATE/TERM REFINANCE SFR Condo PUD 2-4 by exception 95% 115% 660 ALL DU Approve/Eligible INVESTMENT - RATE/TERM REFINANCE SFR Condo PUD 2-4 by exception 95% 115% 660 ALL DU Approve/Eligible ITEMS NOT COVERED IN THESE GUIDELINES MUST FOLLOW IAPRROVE LENDING CONFORMING UNDERWRITING GUIDELINES 2

3 APPRAISAL & PROPERTY INFORMATION Appraisal Requirements LTV s <= 95% CONFORMING UNDERWRTING GUIDELINES DU to determine appraisal requirement. For certain DU Refi Plus loans, DU will offer Property Fieldwork Waiver or exterior-only inspection. Refinance of properties where the most recent transaction was an REO sale are eligible with LTV < 95% WITH an AIR Interior/Exterior Inspection regardless of DU requirement Transferred Appraisals ial will not accept appraisals prepared by an appraiser for a different lender. Property Inspection Waiver (Property Field work Waiver Requirements) Eligible per DU decision The final submission of the loan casefile to DU must result in a property fieldwork waiver offer The property fieldwork waiver offer does not exceed four months from the note date $75 fee On refinances of properties where the most recent transaction was an REO sale, an AIR interior/exterior inspection is required regardless of DU requirement A fieldwork waiver may not be used, and must order the minimum level of property fieldwork as specified by DU, if Iapprove Lending has reason to believe that fieldwork is warranted based on additional information obtained about the property or subsequent events (such as a hurricane or other natural disaster), or based on additional information provided by DU regarding the subject property and/or loan casefile Additional Disclosure Requirements The underwriter must condition for the following A Letter of Explanation from borrower disclosing the length of time the borrower has owned the property and confirmation the subject property is not currently for sale iapprove Lending Property Inspection Waiver Disclosure: NoticeAbout AppraisalofYourProperty (or FHLMC Form #1149) final disclosure to be signed at closing) ELIGIBLE PROPERTIES SFR Second Homes limited to 1 unit PUD Condos 2-4 by exception only No project review required for Condominium and PUD; however, satisfactory verification must be provided verifying subject project is not a Condo Hotel and confirmation of hazard, flood, liability and fidelity insurance coverage is required. Underwriting Condo Warranty Form is required to be completed and signed by iapprove Lending 3

4 BORROWER BENEFIT DU Refi Plus transactions must provide a benefit to the borrower in the form of either: Reduced monthly mortgage principal and interest payment, or More stable loan product (ARM to a Fixed Rate mortgage) Net Tangible Benefit to the borrower must be documented in the loan file The borrower benefit provision is met if: The monthly principal and interest payment is decreasing. The amortization period is shortened. The amortization period is extended (e.g., from 15 to 30 years) provided there is a reduction in the principal and interest payment. Note: An extension of the amortization period is not considered movement to a more stable product. The principal and interest payment is staying the same or increasing provided the borrower is moving to a more stable mortgage product. CREDIT REQUIREMENTS CREDIT SCORE CREDIT REQUIREMENTS A minimum credit score of 660 is required and all loans PAYMENT HISTORY OF MORTGAGES BANKRUPTCY, FORECLOSURE, DEED-IN- LIEU OF FORECLOSURE, AND PREFORECLOSURE SALE (SHORT SALE) 0 x 30 Mortgage late payment history in the past 12 months on ANY properties Lenders must comply with the waiting period and re-establishment of credit requirements for significant derogatory credit events for loan casefiles underwritten through DU. ELIGIBLE TRANSACTIONS General Eligibility Mortgages purchased by Fannie Mae prior to June 1, 2009 Credit score must meet the minimum score requirement in the guideline matrix Most recent year W-2 is required for salaried borrowers, regardless of findings 0 x 30 Mortgage late payment history in the past 12 months on the subject FNMA LookUp Tool to identify if a property is currently owned or securitized by FNMA Cash Back to the may receive up to $250 cash at closing If the amount exceed $250 a principal curtailment of 2% or $2000, whichever is less, is permitted at closing on must be on the HUD. 4

5 Ineligible for Refi Plus Loans with Mortgage Insurance if DU does not require it Refinances of mortgage purchased by Fannie Mae after May 31, 2009 Loans with new subordinate financing or payoff of existing subordinate financing - (re-subordination of existing financing is acceptable with DU approval) Interest-only programs Adjustable rate mortgage programs Balloon mortgages MyCommunityMortgage loans Loans subject to temporary interest rate buydowns Loans subject to any outstanding repurchase request from Fannie Mae Loans that do not meet current iapprove Lending LTV/CLTV guidelines Properties currently listed for sale Adding s to the Loan A borrower may be added, as long as the original borrower remains Removing s from the Loan s may be removed from the new transaction, subject to the following requirements: - The remaining borrower must provide evidence that he or she has been making payments on the existing mortgage from his or her own funds for the most recent 12-months prior to the origination of the new mortgage (the 12-month payment history must be on the existing mortgage) AND - The borrower(s) removed from the loan must also be removed from the deed - If a borrower is removed as a result of a death, the 12-month payment history and removal of the borrower from the deed is not required, although the remaining borrower must provide evidence of the previous borrower s death. A copy of the deed for the current mortgage should be reviewed to confirm the original borrower Occupancy The existing mortgage and the new DU Refi Plus mortgage loan do not have to represent the same occupancy. The occupancy of the subject property may have changed by the time of the new mortgage transaction LOAN AMOUNTS Standard and High Balance loan amounts are eligible LOAN TERMS - 30 year fixed and 15 year Fixed loans 5

6 MORTGAGE INSURANCE Mortgage Insurance transfers not available NUMBER OF LOANS / PROPERTIES Maximum iapprove Lending Exposure iapprove Lending will only make 5 loans (or $2.0 million, whichever is less) to any one borrower in any 12-month period, regardless of occupancy. iapprove Lending limits exposure in any given condo project to 5 units or 10% of the project, whichever is greater. Number of Financed Properties There are no limits on the number of financed properties the borrower may own, regardless of occupancy. SUBORDINATE FINANCING Re-subordination of existing financing is acceptable with DU approval (loans with new subordinate financing or payoff of existing subordinate financing are ineligible). Existing subordinate financing that is re-subordinated must meet the Subordinate Financing guidelines in the iapprove Lending Conforming Underwriting guidelines. The max allowable CLTV is unlimited when the subordinating lien is a verified purchase money 2 nd. UNDERWRITING DU Approve/Eligible DU Refi Plus decisions will be identified by the presence of the following message on the certificate: This loan case file was underwritten according to the DU Refi Plus expanded eligibility guidelines offered on certain limited cash-out refinance loan case files where the borrower s existing loan is identified by DU as a Fannie Mae loan. This loan case file must be delivered with Special Feature Code 147. DU Refi Plus transactions must provide a benefit to the borrower in the form of either: Reduced monthly mortgage principal and interest payment, or More stable loan product (ARM to a Fixed Rate Mortgage) Loans that receive DU Refi Plus findings must be approved, locked and closed as DU Refi Plus 6

7 PROPERTY INSPECTION WAIVER DISCLOSURE NOTICE ABOUT APPRAISAL OF YOUR PROPERTY I have been advised that iapprove Lending, LLC has given me the option of waiving the requirement for an appraisal to be completed for the property I am purchasing or refinancing under the FNMA DU Refi Plus Program. If your mortgage loan meets certain requirements, your lender may decide not to obtain an appraisal of your property as a condition for approving or granting your mortgage loan. A decision by your lender not to obtain an appraisal would be strictly for loan processing purposes and would not mean the lender has valued your property. Therefore, you should not rely on such a decision as support of the value of your property or for any other purpose. You may decide that you want an appraisal to protect your own interests in the transaction. For example, you may decide to obtain an appraisal of your property in order to confirm that you are not paying too much for the property. If you decide that you want an appraisal to be performed to protect your interests in the transaction, you will be required to pay for the appraisal. By signing in the space below, you agree that your lender may approve and grant your mortgage loan WITHOUT obtaining an appraisal of your property. I wish to exercise this option and hereby hold harmless from any valuation or property related issues. 7