PROGRAM: NON-WARRANTABLE CONDOMINIUM AND COOPERATIVE Last updated 03/06/17

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1 PRODUCTS: TERM: MINIMUM MORTGAGE: $50,000 Fixed rate mortgages, 5/1 and 7/1 ARMs. Fixed: 15 or 30 years; ARM: 30 years MAXIMUM MORTGAGE AND Minimum Purchase and Rate/Term Cash-Out Refinance LTVs: Credit Score Refinance Primary Homes 1 Unit %-$400,000 N/A %-$650, %-$1,000,000 N/A Second Homes 1 Unit %-$650,000 65%-$1,000,000 N/A CASH OUT LIMITS: Not applicable. ELIGIBLE PROPERTIES: 1 unit, non-warrantable condominiums and cooperatives. Santander Bank, N.A. will not finance more than 25% of the units in any one project. Maximum investor concentration for project is limited to 49%. Projects must have a minimum of 5 units. Commercial/non-residential space must be conforming to neighborhood and max 30% of project. Must be legal conforming use. Zoning must permit reconstruction as current use in the event of total destruction. Units must be at least 400 square feet. All units must have a kitchen with separate, well-defined areas and must include sink, countertops, cabinets, oven or microwave/convection combo, refrigerator and cooktop. In addition, standardized furniture, without the option to select an alternative, is not permitted. New Development Project o Minimum pre-sale requirement is 30% of legal phase sold and closed (conveyed) or under contract. o 50% of total number of units and 50% of common areas and facilities within the entire project must be complete. o The unfinished units in new development projects are not considered rental units and are therefore excluded from the maximum and single entity investor concentrations. Condo Conversion o No single entity can own more than 15% of the total units in a condo, except for: Those units held by the developer in an unfinished project that are occupied by Rent Controlled/ Rent Stabilized tenants. Those units are excluded from the total investor owned units, provided that: There are a minimum of 25 units in the project Co-op Conversion o No single entity can own more than 15% of the total shares in a co-op, except for: The Sponsor and/or Holder of Unsold Shares, OR. Those units held by the Sponsor/HUS in project that are occupied by Rent Controlled/ Rent Stabilized tenants. Those units are excluded from the total investor owned units provided: The remaining Sponsor/HUS owned market rent units do not exceed 25% of the total units. There are a minimum of 25 units in the project Page 1 of 5

2 The appraisal must address all abnormalities such as ownership of amenities, central metering, parking availability and marketability. Amenities must be owned by the HOA or Cooperative Corporation. Leased amenities are not permitted. Master Certificate of insurance for subject unit to include replacement, liability, and Fidelity Bond coverage. HO6 and Flood coverage required, as applicable. Santander Non Warrantable Condominium or Cooperative Questionnaire to be completed by authorized representative of the HOA or Cooperative Corporation. Income, asset, and age related resale restrictions may be allowed when comparables support marketability. The Sponsor Questionnaire is required when there has been a change to unsold shares since the last filed Amendment to the Offering Plan, or when the Sponsor/ Holder of Unsold Shares has not received a CPS-5 Exemption. Most recent budget is required on new cooperative projects. Ineligible projects: o 2-4 unit projects are not permitted; o Projects with time-shares or fractional ownership; o Projects with hotel services nightly/weekly rentals, cleaning services, on-site or off-site rental services owned/managed by the HOA or Cooperative Corporation; o Houseboat projects; o AIR (Artists in Residence) and Live-work projects (usually used for artist s studios, workshops, factories, or galleries); o Multi-dwelling unit condominium. A condominium project that permits an individual to hold title to more than one dwelling unit with ownership of all units evidenced by a single deed of trust or mortgage; o Own Your Own condominiums (normally identified in the legal description; gives borrowers the right to occupy a given unit, instead of actual ownership; o Projects in litigation. (Minor litigation may be acceptable if it is not related to the safety, structural soundness, habitability, or functional use of the project. Minor litigation includes non-monetary disputes; litigation where claim amount is known and coverage and defense will be covered by the HOA or Cooperative Corporation insurance; or cases where the HOA or Cooperative Corporation is named as the plaintiff in a foreclosure action or past due HOA dues.) o Non Market Sale projects. Cooperatives: TPO Company must be approved by Santander to submit cooperative property transactions. Contact your Santander Account Executive for further information. The cooperative property type is only available in the following geographic areas: o The five boroughs of New York City (Bronx, Brooklyn, Manhattan, Queens and Staten Island.) o Nassau, Rockland, Suffolk and Westchester counties in New York. o Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Passaic and Union counties in New Jersey. RESTRICTIONS: ELIGIBLE BORROWERS: Manufactured homes are not permitted. Titles cannot be held as corporations, partnerships, or trusts. Rate/Term Refinances permit the lesser of 2% or $2,000 cash back to borrower at closing. U.S. citizens and permanent resident aliens. Non-US Citizens/Non-Permanent Resident Aliens are not permitted. Page 2 of 5

3 TEMPORARY BUYDOWNS: Not available. DOCUMENTATION: Standard full documentation required regardless of AUS findings. Verbal verification of employment is required for all salaried borrowers within 10 business days of closing. Recent 30 days paystub(s) required with YTD earnings for all salaried borrower(s). Verbal verification of employment for self-employed borrowers requires an independent verification of the existence of the borrower s business within 30 calendar days prior to closing through a third party, such as a CPA, regulatory Agency, or the applicable licensing bureau and verifying the phone listing and address for the borrower s business using a telephone book, Internet or directory assistance. IRS form 4506-T is required to be completed and signed at the time of application and at the time of closing, regardless of income source or documentation level. Signed IRS Form 4506T must be included with all loan submissions. Santander Bank will process 4506T and verify income reported to IRS per current internal procedures. Any difference between income documented in the tax return information and qualifying income must be reasonable and supported by information and documentation contained within the loan file. UNDERWRITING: AUS: All Santander underwriting guidelines regarding ability to repay must be met. Cooperative: DU Approve response only. Condominium: DU/LP Accept/Approve responses only. A minus and refer with caution responses are not permitted. Note: Ineligible response is acceptable only due to the loan amount exceeding conforming loan limits. Underwriter(s) will not have the authority to override such decisions for loan delivery to Santander Bank regardless of loan circumstances.) Manual: Not permitted. Housing History: Prior mortgage/rental payment history must evidence 0x30 days late in the last 24 months, if applicable, regardless of DU/LP response. Credit: Foreclosures/Bankruptcies: Three credit scores are required per borrower. If multiple borrowers, use the lower middle credit score to determine eligibility. Foreclosures reported within the last 7 years are not permitted. Bankruptcies: Chapter 7 or Chapter 11 bankruptcies not permitted unless 4 years from the discharge or dismissal date. Chapter 13 bankruptcies not permitted unless two years from the discharge date, or four years from the dismissal date. All bankruptcies must be fully discharged. Deed-in-lieu of foreclosure, short sales, pre-foreclosure sales reported within 48 months of the credit report date are not permitted. Page 3 of 5

4 Non-occupant Co-borrowers: Not permitted. Maximum Financed Properties: Ratios: Down Payment: Gift Funds: For Second Home mortgages, a Borrower may not own more than four 1- to- 4-unit properties that are financed, including the subject property. Maximum 40% - regardless of AUS response. 5/1 ARMs must be qualified at greater of note rate plus 2%, or the fully indexed rate. 7/1 ARMs must be qualified at greater of note rate or the fully indexed rate. All revolving debt is required to be included in the DTI ratio, regardless of the number of payments remaining. Minimum 5% down payment must be from borrower s own funds. Conforming: As permitted by DU or LP feedback. Non-conforming: Permitted on primary residences only. Gift donor must be an eligible gift donor per FNMA/FHLMC guidelines. Reserves: Seller Contributions: APPRAISAL: SECONDARY FINANCING: MORTGAGE INSURANCE: LATE CHARGE: Conforming 2 months PITI required. Non-Conforming 6 months PITI required Second Homes - In addition to above requirements, 2 months PITI required for each additional home owned by the borrower, regardless of the AUS decision. 6% maximum. 3% maximum on all jumbo loan amounts. Complete interior appraisal report required for all loans. Appraisal reports are valid for 120 days only. Re-certifications and appraisal updates are not acceptable. Not permitted. Not applicable. 5% or maximum permitted by state. ESCROWS: May be waived. See price sheet for adjustment. If real estate taxes for the subject property that are due within 60 days of closing are financed in a rate/term refinance transaction, escrows are mandatory. ARM PARAMETERS: 5/1ARM 2/2/5 7/1 ARM 5/2/5 Rate/Payment Adjmt Annually after initial 60 months. Annually after initial 84 months. Annual Cap Maximum 2% increase/decrease at first adjustment. Maximum 2% increase/decrease annually thereafter. Maximum 5% increase/decrease at first adjustment. Maximum 2% increase/decrease annually thereafter. Life Ceiling 5% above start rate. 5% above start rate. Life Floor Margin Margin Margin 2.25% 2.25% Indexes LIBOR - Average of interbank offered rates for one-year U.S. dollar denominated deposits in the London market (LIBOR). Conversion Option Not available. Not available. Page 4 of 5 LIBOR - Average of interbank offered rates for one-year U.S. dollar denominated deposits in the London market (LIBOR).

5 PROGRAM CODES: Fixed Non-Warrantable Condo 15 Yr Fixed Non-Warrantable Condo 30 Yr /1 ARM LIBOR Non-Warrantable Condo /1 ARM LIBOR Non-Warrantable Condo Fixed Non-Warrantable Co-op 15 Yr Fixed Non-Warrantable Co-op 30 Yr /1 ARM LIBOR Non-Warrantable Co-op /1 ARM LIBOR Non-Warrantable Co-op Page 5 of 5