New York Consolidation, Extension and Modification Agreement (CEMA) Policy. Delegated Correspondent and Wholesale Lending July 17, 2017

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1 Company Logo New York Consolidation, Extension and Modification () Policy Delegated Correspondent and Wholesale Lending July 17, 2017 Table of Contents Policy Overview... 1 Transaction and Eligibility Details... 2 Eligible Transactions/Products... 2 Origination and Approval Requirements... 2 Attorneys and Title Vendors... 3 Net Tangible Benefit... 3 Required Legal Documentation... 4 Purchase Review... 5 Policy Overview New York Policy Page 1 of 5 07/17/2017

2 This policy details Company requirements for transactions structured through a New York Consolidation, Extension and Modification (NY or ). The state of New York charges a mortgage recording tax whenever a new mortgage or refinance is recorded. To reduce tax liabilities to borrowers, refinance transactions may be completed by consolidating, extending and modifying the existing loan, allowing the borrower to pay the recording tax only on the amount that exceeds the original loan. In lieu of the existing lien being paid off, the lien is assigned and transferred to the new lender, who then consolidates, extends and modifies the terms of the existing loan. The transaction may encompass multiple loans concurrently, such as rolling an existing first and second lien into a. The may also be a string of repeat refinances, where the is modifying numerous liens, continuing until a new transaction occurs that does not use a. The NY combines into one set of rights and obligations all the promises and agreements stated in existing notes and mortgages secured by the property. This includes a new note and mortgage if new funds are advanced to the borrower at time of the consolidation, resulting in the borrower having one consolidated loan obligation paid in accordance with the terms of the NY. Transaction and Eligibility Details This policy is applicable to refinance transactions secured by properties located within the state of New York that are purchased/funded through the Delegated Correspondent or Wholesale Lending Channel. Note: The state of New York allows purchases to be structured as transactions; however, Company only allows refinance transactions to be completed by a at this time. Eligible Transactions/Products Company policies for originating NY transactions are as follows: Refinance transactions only Eligible products: Conventional Fixed Rate (Fannie Mae only, Freddie Mac only, Conventional, Fannie Mae DU Refi Plus, Freddie Mac Relief Refinance-Open Access, Fannie Mae HomeReady, or Freddie Mac Home Possible or Home Possible Advantage) Conventional ARM (Fannie Mae only) FHA Fixed Rate and ARM Ineligible products: USDA and VA Non-Agency Prime and Non-Agency Expanded Prime Property must be held by individual, not an entity (i.e., corporation, partnership, etc.) Not eligible if original property owner is being deleted except in case of death Origination and Approval Requirements To apply to deliver and submit transactions for purchase/funding consideration by Company, clients must: New York Policy Page 2 of 5 07/17/2017

3 Be approved Company Delegated Correspondents or Wholesale Brokers in good standing in accordance with the requirements outlined in the Client Eligibility section of the Correspondent Lending Guide/Wholesale Lending Guide. Be licensed to complete originations for NY properties. Receive approval from Company to deliver NY s for purchase/funding consideration. Client Administration will maintain a list of authorized clients and their related transactions for review. Attorneys and Title Vendors Delegated Correspondents may use any preferred attorney and title vendor in connection with New York transactions. Approved Title Vendor Wholesale Title Source is Company s approved vendor for New York transactions funded through the Wholesale Channel. Net Tangible Benefit Company requires that all refinance transactions provide a net tangible benefit (NTB) to the borrower. When determining the benefit for transactions, all factors must be considered. In addition to cost determinations, as described below, another NTB consideration is the extended processing time involved to complete a vs. a straight refinance. Even when the is less costly, the turn time may sway the borrower to choose the non- option. Determination of the borrower s net savings through completion of the transaction as compared to a non- refinance should be based on the following: Loan Amount (* Gap Mortgage) New York Mortgage Tax Rate (based on Loan Amount/Gap Mortgage and County) Unpaid Principal Balance (UPB) of existing loan(s) Fees to complete the transaction (fee for the assignment, recording fee) *Note: The Gap Mortgage is defined as the amount that exceeds the original loan. For Example: 1. Calculate the mortgage tax without the : New loan amount multiplied by tax rate (i.e., $150,000 x 1.05% = $1,575) 2. Calculate the mortgage tax with the : New loan amount minus UPB multiplied by tax rate (i.e., $150,000- $147,552 = $2,448 x 1.05% = $25.70) 3. Determine gross tax savings by subtracting mortgage tax with from mortgage tax without ($1,575 - $25.70 = $1,549.30) 4. Determine total savings by subtracting all fees* and recording charges to be incurred by the from the gross tax savings ($1, $ = $799.30) *Wholesale Note: Refer to the Company Wholesale Fee Schedule for fees. New York Policy Page 3 of 5 07/17/2017

4 Required Legal Documentation Document Fannie Mae/ Freddie Mac Form 3172* Original Notes and Mortgages Exhibit A to Description of Content Consolidation, Extension and Modification, Form 3172* Dated 1/01 (rev.5/01) or later *Note: When the transaction involves modification of a FHA loan, all references to Fannie Mae/Freddie Mac Notes, Uniform Instruments and Mortgages must be removed and replaced with Federal Housing Administration. All prior original Notes signed by the borrower: Lost Note Affidavit, if applicable: This affidavit is acceptable only if a copy of the original executed note is attached and when all prior mortgages and the proposed are Conventional. Re-executing the old note is not allowed. A Consolidated Note on a prior is required even if the closed prior to May of Complete chain of endorsement stamps and/or Allonges to all prior notes assigned Assignment of Mortgage for all prior mortgages assigned with complete mortgage schedule Original Gap Note and Gap Mortgage signed by borrower, if applicable Original Consolidated Note and Consolidated Mortgage signed by borrower Listing of all obligations being consolidated, modified and extended. All notes, security instruments, assignments, consolidation agreements, and related agreements that modify, consolidate or extend prior underlying obligations and which predate the current NY must be listed separately in Exhibit A. Exhibit B to Exhibit C to Reference: NY Exhibit A (Fannie Mae/Freddie Mac Form 3172) List of mortgages, notes and agreements. The Property/Legal Description of the Mortgaged Premises. A copy of Schedule A (Property Description) to the New York Mortgage may be used but should be marked as Exhibit B to identify it as a NY exhibit. A copy of the complete Consolidated Note (including any applicable addenda) with Exhibit C added across the top of the first page. The following verbiage must be included/inserted at the top of the document: Consolidated Note/Consolidated Adjustable-Rate Note amends and restates in their entirety, and is given in substitution for, the notes described in Exhibit A of the New York Consolidation, Extension and Modification agreement dated the same date as this Note. Exhibit D to Note: Borrower signatures are not required. The most current version of the Consolidated Mortgage New York Single-Family Fannie Mae/Freddie Mac Uniform Security Instrument (Form 3033), with Exhibit D added across the top of the first page, and with all blanks completed and any applicable riders attached. Note: Borrower signatures are not required. New York Policy Page 4 of 5 07/17/2017

5 Correspondent Loan Purchase Review Company relies on the Delegated Correspondent s representations and warranties for compliance with agency, investor and state regulations in completing transactions. The Company Purchase Auditor will review files to ensure receipt of complete required legal documentation in accordance with this policy. New York Policy Page 5 of 5 07/17/2017