NON-Interest Only. (W/ Secondary Financing)

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1 Property Type 3 Fixed & ARM Purchase and Rate Term Refinance Max LTV Max LTV/CLTV 1 (W/O Secondary Financing) (W/ Secondary Financing) Min. FICO/Max DTI 1-Unit Primary ,5-97% 4,5, % DU/DU 80.00%-95.00% %-95% 4 /80.00%-95% 4 DU/DU 2 Unit Primary 80%/80% 80%/80% DU/DU 3-4 Unit Primary 75% 75%/75% DU/DU 1-Unit 2 nd Home 90% 4 90% 4 /90% 4 DU/DU Fixed & ARM INVESTMENT Purchase Transactions 1 Unit Investment 80% 85% 4 /85% 4 DU/DU 2-4 Unit Investment 75% 75%/75% DU/DU Fixed & ARM INVESTMENT Rate/Term Refinance 1 Unit Investment 75% 75%/75% DU/DU 2-4 Unit Investment 75% 75%/75% DU/DU Fixed & ARM Cash Out Refinance 2 1 Unit Primary 85% 4 85% 4 /85% 4 DU/DU 2-4 Units Primary 75% 75%/75% DU/DU 1- Unit 2 nd Home 75% 75%/75% DU/DU 1 Units Investment 75% 75%/75% DU/DU 2-4 Units Investment 70% 70%/70% DU/DU Foot Notes: 1. HCLTV = CLTV: If Second is HELOC, loan amt + line amt cannot exceed the HCLTV/CLTV. Com. or Affordable/Subsidy Secondary program sponsored by nonprofit org, govt. entities, or affordable housing NOT allowed: E.G. Down payment Assistance (DAPS), Up-Front Cost Assistance (UCAP) and Housing Assistance Programs. Please refer to DU Refi Plus section for applicable CLTV/HCLTV parameters. 2. A six month ownership seasoning requirement must be met for all Cash-Out Refinance transactions. 3. Condo units with 600 sq ft GLA require certain criteria. Please refer to Condo topic below. 4. > 80% LTV: M.I. Requirements apply. Condo s in the states of NV and Fl not allowed. CA, NV, AZ and Florida condo s insured by Radian NO LONGER subject to addl. restrictions, except that condo s in the states of NV and FL are not permitted. Reminder: In addition to LTV/CLTV parameters and other criteria stated in this product guide, SPM P&P requirements must also be met and could potentially supersede applicable M.I. company s guidelines. 5. Financing with % LTV/CLTV is available ONLY with DU Approve/Eligible findings for standard conforming 1-unit (non-condo type) Primary residence Purchase or R/T refi loan transactions. Condo s are capped at 95.00% LTV. Borrower must provide min. 3% of own funds for minimum down payment contribution. 3/1 ARM not available. See criteria for applicable/additional requirements on following pages. Loans with LTV/CLTV > 95%: No funds may be disbursed to the borrower at closing. NO Secondary financing permitted for LTV s >95.00 (whether new or subordinated). 6 Maximum LTV for ARM product is 95% 1

2 APPRAISAL REPORTS ***Please refer to DU Refi Plus Section Appraisal Documentation Waiver Topic for applicable criteria. The following information pertains to NON-DU Refi Plus loan transactions only*** All SPM appraisal policies apply to this product, except that SPM will accept reduced appraisal reports (E.G. a Property Inspection Waiver, Drive by Only. or a Drive by with Exterior Inspection) for certain loan transactions approved with standard conforming FannieMae products. In order to qualify for PIW, 2055 or 2075 reduced appraisals, all of the following criteria must be met: DU Accept/Eligible finding must reflect PIW, #2055 or #2075 eligibility on FINAL DU report and Transaction must be fully Arms Length and 1-unit detached non-condo-type SFR or attached/detached PUD* and Standard conforming FannieMae products only and Pass result on CoreLogic LoanSafe OR Geo/AVM products and Loan transaction is a Purchase or Rate/Term Refi and When the PIW is utilized as permitted, the term Other must be entered in the appraiser license number field. GEO restrictions: Applicable for Alabama, West Virginia and Texas. See below for ineligible criteria and Additional #2055 requirements: The following Exhibits are required with this appraisal: A street map that shows the location of the subject property and of all comparables that the appraiser used; Clear, descriptive photos that show the front of the subject property, and that are appropriately identified. Any other data necessary to provide an adequately supported opinion of market value o The appraiser must be able to obtain adequate information about the physical characteristics (including, but not limited to, condition, room count, gross living area, etc.) of the subject property from the exterior-only inspection and reliable public and/or private sources to perform this appraisal. o There may be times when the appraisal option offered by DU is not acceptable. Where guidelines would otherwise permit a 2055 Exterior Only Inspection Residential Report, a full appraisal with an interior and exterior inspection is required (and the 2055 is not acceptable) if any of the following applies: The property does not conform to the neighborhood or Adverse physical deficiencies or environmental conditions are observed or Data sources do not provide sufficient information about the property to perform the appraisal. Anytime that UAD Condition ratings C5 or C6 or Quality rating of Q6 are assigned by appraiser on #2055 NOTE: The #2075 is NOT considered to be an appraisal report, and is therefore exempt from AIR requirements. It does not need to be ordered through an AMC. * Reminders: (1) Condo s or 2-4 unit properties are NOT eligible for reduced appraisal reports. See below for transactions that are not eligible for this feature. (2) The DU Refi Plus feature explicitly exempts Lenders from valuation or property condition reps and warrants. For this reason, DU Refi Plus appraisal requirements are addressed separately in the DU Refi Plus topic section. The following transactions will not be eligible for PIW, #2055 or #2075 considerations regardless of DU findings: Any Condo (regardless if attached or detached) or 2-4 unit properties Non-arms length transactions Cash Out Refinance REO/Short Sales/Foreclosure sales transactions Properties affected by natural or man-made disasters Note- Geographic restrictions has been updated to reflect the following: o Alabama: Properties located in Coliseum Boulevard Area of Montgomery are not eligible for reduced appraisal reports o West Virginia: PIW not eligible for properties located in W. Virginia. Min. of 2055 is required, unless DU requires full appraisal. o Texas: Texas (a)(6) loans are not eligible 2

3 ARM Products Maximum LTV for ARM is capped at 95% Margin: Libor Index: 2.25% Life Floor: The life floor will never be lower than the margin Index: Libor Index = the average of interbank offered rates for one year in U.S. dollar-denominated deposits in the London market (Libor) as published in The Wall Street Journal. Payment Adjustment Date: First payment change date is the 1 st mo. following the interest-rate adj. and every 12 mos. thereafter. Life Cap: 3/1 ARM- 6% over the Note Rate, 5/1, 7/1 & 10/1-5% over the Note Rate. Interest Rate Adjustment Cap and Date: o 3/1 ARM: Interest rate is fixed for the first 36 months. The maximum interest-rate adjustment at the first adjustment date is 2%. Thereafter, the interest rate adjusts annually with a maximum interest-rate change at one adjustment date of 2%. 3/1 ARM not available for 97% LTV option. o 5/1 ARM: Interest rate is fixed for the first 60 months. The maximum interest-rate adjustment at the first adjustment date is 5% maximum first-time adjustment. Thereafter the interest rate adjusts annually with a maximum interest-rate change of 2%, which will not cause deferred interest. o 7/1 ARM: Interest rate is fixed for the first 84 months. The maximum interest-rate adjustment at the first adjustment date is 5% maximum first-time adjustment. Thereafter the interest rate adjusts annually with a maximum interest-rate change of 2%, which will not cause deferred interest. o 10/1 ARM: Interest rate is fixed for the first 120 months. The maximum interest-rate adjustment at the first adjustment date is 5% maximum first-time adjustment. Thereafter the interest rate adjusts annually with a maximum interest-rate change of 2%, which will not cause deferred interest. Note: The interest rate must always be rounded to the nearest 1/8 th of 1% (0.125%) o Qualification: 3/1 & 5/1 ARMS qualify at the greater of Fully Indexed or Note Rate +2 %. 7/1 & 10/1 ARM: Qualify at the Note rate. AUTOMATED ALL LOANS MUST RECEIVE FNMA DU APPROVE/ELIGIBLE RECOMMENDATION. FNMA Expanded Approvals are not eligible. UNDERWRITING Manual Underwriting or FHLMC LP is not permitted. Please refer to DU Refi Plus section below for specific DU Refi Plus parameters. Cash Reserve Requirements Condo Approvals Construction Take Out CREDIT LTV 95% follow DU/MI company guidelines LTV % minimum 2 months PITI reserves required. Standard FannieMae condo approvals are permitted. Also refer to DU Refi Plus section for applicable criteria Projects must be FannieMae approved. FHA approved (type U ) are no longer acceptable for conventional loans. Condo properties with 600 sq. ft. or less located in resort areas will require Corporate Exception approval. Loan transactions secured by Condo s with LTV > 95% LTV are not eligible for financing. For investment detached condo s w/ Limited Review the following restrictions apply*: o Projects located in resort areas may NOT contain units less than 600 sq. ft GLA o Condo s with loan amounts <100K not eligible for Limited Review process Please refer to DU Refi Plus for applicable criteria. Not permitted for LTVs % Standard SPM credit policies apply including: o All Borrowers must meet credit score criteria stated in matrix. o No mortgage (0x30 days) in the last 12 months. Please refer to SPM P&P for specific criteria regarding Major derogs and individual M.I. company s guideline criteria for loans > 80% LTV. 3

4 DU REFI PLUS Appraisal documentation waivers: o Fannie Mae Index Property Valuation Options - Not permitted o PIW: Permitted if DU finding allows. DU will indicate type of fieldwork recommendation required, and if applicable, that a fieldwork waiver is permitted. OPS programming has been completed: Corporate Exception for PIW no longer needed. UW must disregard Core Logic s valuation findings: SPM is not required to rep & warrant property valuation or condition. DU will waive the requirements of an appraisal or exterior-only property inspection for a fee of $75. A DU Refi Plus Property Inspection Waiver (PIW) may only be exercised if: The final submission of the loan case file to DU resulted in a property fieldwork waiver offer; and The property fieldwork waiver offer is not more than four months old on Note and the mortgage o DU Refi Plus PIW may not be exercised if there is reason to believe fieldwork is warranted based on additional information obtained or subsequent events such as hurricane or other natural disaster, or based on additional information provided by DU regarding the subject property for these loans. In these situations the minimum level of property fieldwork as specified by DU must be ordered. o For those eligible, DU will issue two DU Refi Plus property fieldwork recommendation messages: The first message will indicate that the loan case file is eligible for the property fieldwork waiver. The second message will indicate the minimum level of fieldwork required if the lender does not elect to exercise the property fieldwork waiver when delivering the loan to Fannie Mae. Approve/Eligible: DU REFI PLUS Finding Required. o 5/1, 7/1 and 10/1 ARM products are permitted. (3/1 ARM not available) o 10 Year Fixed Rate T305 product is not eligible for DU Refi Plus o DU Refi Plus loans with LTV/CLTV/HCLTV exceeding published parameters will require a Corporate Exception. o Acceptable DU findings MUST specifically state that Mortgage Insurance Is NOT required E.G. Mortgage insurance is not required for this DU Refi Plus loan case file. See Max. LTV topic below for all applicable criteria. If the loan does NOT receive this M.I. message, then loan must be re-submitted to DU as a Standard LCOR. Benefit to Borrower: Reminder: DU cannot determine if the following requirement is met, therefore, the UW must represent and warrant that the borrower is receiving a benefit from refinancing. The following requirements apply: o For applications dated prior to Dec. 1, 2011: DU Refi Plus must provide a benefit to the Borrower of either (A) Reduced monthly principal and interest payment OR (B) More stable loan product. A more stable loan product can be defined as all of the following: Refinancing an ARM product to a Fixed Rate Refinancing an Interest Only product to a fully amortizing product Refinancing a short-term ARM to a longer term ARM (example: 3/1 to 5/l, etc.) Refinancing a 30 year term to a 15 year term whereby amortization is accelerated and equity is built o For applications dated on or after Dec. 1, 2011: A reduced monthly mortgage principal and interest payment; or A reduction in the interest rate, or A reduction in loan term ( i.e., refinancing a 30-year term to a 15-year term, whereby amortization is accelerated and equity is built up faster), or A more stable mortgage product (i.e., replacing an Adjustable-Rate Mortgage (ARM), Interest-Only Mortgage or a Balloon/ Reset Mortgage with a Fixed Rate Mortgage.) Note: If the Borrower Benefit results in a P&I increase >20%, Corporate Exception is required. Cash Back Limitation: Cash back limitation of $ for changes in closing costs may NOT be exceeded. If changes are > $250.00, the loan amount must be adjusted, there are no principal curtailments permitted. Condo or PUD project reviews: Not required. We are required to represent and warrant that the property is not in a condominium or cooperative hotel or motel. While we are not required to complete a project review, if the appraisal report indicates the subject project consists of an in-complete conversion and/or there is a presence of a rental office for unconverted apt. units, the project will not be eligible for DU Refi Plus regardless of DU findings. Condo type V and PUD type E must be selected. Continued on following page 4

5 DU REFI PLUS DU REFI PLUS Continued from previous page Credit Requirements: DU will not apply FICO score requirement for DU Refi Plus. UW must ensure the minimum FICO score requirements are met o Minimum Credit Score requirements are: Owner-Occupied: 620 Second Home or Investment: 680 o 0 x 30 day Mortgage late history in the past 12 months o Bankruptcy discharge must reflect at least 48 months since discharge. Multiple Bankruptcies in the last 84 months are not allowed o Foreclosure: 84 months since discharge Escrow waivers: Not available at this time. Standard Escrow/Impound policy applies Income Documentation Requirements: o Income doc waivers: Not eligible, minimum income doc requirements are: (A) Salary/Bonus/Overtime: One current paystub and a verbal VOE (B) Commission/Self-Employed: One year s federal income Tax Return. o Rent income used for qualifying: Standard FannieMae documentation. o For all investment properties AND all 2-4 unit primary residences, when rental income is not used to qualify, the gross monthly rental income for each unit in the subject property must be documented with one of the following: Form 216: Operating Income Statement for investment and 2-4 unit owner occupied properties (including those in which the Borrower occupies one of the units as a principal residence), or Form 1007: A Single Family Comparable Rent Schedule for one-unit investment properties or Small Residential Income Property Appraisal Report Form 1025 or Current Lease Agreement(s) or If the property is not currently rented, an opinion of market rents provided by the appraiser or Borrower to provide gross monthly rent being charged or to be charged for the property. Monthly rental amounts must be stated separately for each unit. The disclosure from the Borrower must be in the form of: A written statement from the Borrower or An addition to the loan application Note: All income must be validated with processed #4506 Max. LTV/CLTV/HCLTV: to 105%* permitted ONLY if Mortgage insurance is NOT required (new or existing) AND all of the and herein stated DU Refi Plus criteria must be met. * The Maximum LTV/CLTV/HCLTV is 105/105 (with Corp. Exception) Occupancy: All occupancy types are eligible. The gross monthly rent for each unit in the subject property for investment and all 2-4 unit Primary residences must be documented even if Borrower is not using rental income to qualify. See income documentation and credit/fico topics. o For LTV >80 %: The DU Refi Plus eligibility findings MUST specifically state that Mortgage Insurance Is NOT required. (E.G. Mortgage insurance is not required for this DU Refi Plus loan case file. ) If the loan does NOT receive this M.I. message, then loan must be resubmitted to DU as a Standard LCOR. o If subject property is a Second Home or Investment property, Borrower may NOT own >4 financed properties. Requirements: All other standard conventional requirements and AUS overlays including maximum number of financed properties and manufactured housing restrictions apply. Continued on following page 5

6 DU REFI PLUS Continued from previous page Subordinated financing: New subordinate financing and/or paying off existing subordinate financing with loan proceeds is not allowed. o Payoff of existing subordinate liens from the borrower's own funds is allowed. o Re-subordination of existing subordinate financing is allowed, (excluding existing subordinate mortgages from municipalities for down-payment assistance programs) subject to Corporate Exception Approval noted in CLTV/HCLTV limitation noted above. Underwriting: All other standard conventional requirements and AUS overlays including maximum number of financed properties, and manufactured housing restrictions apply. Texas (A)(6) loan transactions are NOT eligible for this loan product, DU Refi Plus are also not eligible FannieMae loan look up table: Vesting: An existing borrower may be removed provided: o The remaining borrower(s) provide evidence that they have been making the payments on the existing mortgage from their own funds for the most recent 12 months prior to the origination of the new mortgage. o This 12-month payment history must be for the existing mortgage only it may not be satisfied using multiple consecutive mortgages. o If the borrower is being removed due to death, the 12 month payment history is not required; however, the remaining borrower must provide evidence of the deceased borrower's death. Note: the borrower being removed must also be removed from the deed (or provide evidence of death, as applicable) Vesting: An existing borrower may be removed provided: o Remaining Borrower(s) must provide evidence that the payments on the existing mtg. was made from their own funds for the most recent 12 mos prior to the origination of the new mortgage. o This 12 mo. payment history must be for the existing mortgage only it may not be satisfied using multiple consecutive mortgages. o If Borrower is being removed due to death, the 12 mo. payment history is not required; however, remaining Borrower must provide evidence of the deceased borrower's death. Note: the borrower being removed must also be removed from the deed (or provide evidence of death, as applicable). Texas (a) (6) loans are not eligible for DU Refi Plus. FannieMae loan look up table: 6

7 ELIGIBLE PROPERTY TYPES GEOGRAPHIC RESTRICTIONS INTERESTED PARTY CONTRIBUTIONS LOAN TERMS Eligible property type: Attached and Detached SFRs and PUDs; Low-/High-Rise- Warrantable Condos*; 2-4 Units Ineligible property type: *Condo s for loan transactions with LTVs %, Non-warrantable condo s, Manufactured Housing and Co-ops. *Please refer to P&P for details on property eligibility. All condo types (attached/detached/high rise/low rise in all states are ineligible for financing at LTV >95%) Geographic restrictions may apply. Please refer to the Geographic Restrictions posted in the Underwriting tab of the web. Standard Fannie guidelines apply pertaining contributions. HOA subsidies or the payment of HOA fees may not be made by the builder, property seller, or any other interested third party even if within the allowable interested party contribution limits or if treated as a sales concession and deducted from the sales price. Interested parties may still contribute any fees charged to the borrower at closing to set up or administer an HOA account, provided the combined contributions from interested parties do not exceed allowable limits. Fixed Rate: 10, 15, 20, 25, or 30 years. Fixed Period ARMs: 30 years 7

8 MAXIMUM #FINANCED PROPERTIES UNLESS CAN BE MET AS STATED FOR EXCEPTIONS BELOW, the maximum number of financed properties for Second Home & Investment transactions is limited to four (4) residential properties including subject property. (Not applicable to Primary Res.) o ALL financed 1-4 unit residential properties for all Borrowers on the loan transaction must be included in the total. An EXCEPTION ( via standard Corporate Exception procedures) for standard conventional Purchase or Rate/Term Second Home or Investment properties may be permitted for 5-10 financed properties subject to ALL of the following criteria : o The subject property MUST count towards the allowable max 10 properties. (E.G. Borrower may own 9 financed properties prior to the acquisition of subject property) o DU findings with Accept Eligible and compliance to all other applicable SPM policies in addition to criteria stated herein is required. Fixed Rate Max. Financed Properties Exception Table > 4 Properties Transaction Type Number of Units Max. LTV/CLTV Min. FICO Second Home or Investment Purchase 1-Unit 75/75/ Rate/Term Refinance 1-Unit 70/70/ Investment Property Purchase & Rate/Term Refi 2-4 Unit 70/70/ Note: ARMs, Cash Out Refinance or DU Refi Plus transactions are not eligible. o o o o No history of Bankruptcy or Foreclosure within the past 7 years Effective immediately, Rental income used in loan qualifying must meet all of the following criteria: Properties that are newly acquired (exclusive of subject property) and therefore not reported on current tax returns may be underwritten at 75% off the actual lease (E.G. using 25% vacancy factor) Tax return schedule E cash flow analysis for properties owned listed on tax return must be completed to include principal payment reductions. This requirement has been in full force and effect prior to the P&P update clarification and is still applicable to this product. For specific calculation requirements, please refer to the P&P. Full documentation must be obtained: DU messages for reduced rental income documentation are not eligible. Required tax returns must be validated by transcripts Reserve Requirements: Second Home: 2 months' PITIA reserves on the subject property (except if noted differently in the individual program fact sheets, then the higher amount is required); and Investment: 6 months' PITIA reserves on the subject property; and In addition to the above reserve requirements the Borrower must also have 6 months' PITIA reserves on every other financed second home and investment property. Other Eligibility Requirements- Loan transactions with the following features are not eligible for >4 financed properties: Revocable/Living/Intervivos Family or any other kind of Trust vestings Use of Business funds All Non-Arms length transactions including Lease Options, FSBO, Gift of Equity and Family sales. OPS field must be populated as follows: In # financed properties field enter the TOTAL # of properties borrower owns INCLUDING subject property. Please Note: No other exceptions to this listing of criteria are available: ALL requirements must be met 8

9 M.I. Requirements MIN. DOWN PAYMENT REQUIREMENT NON OCCUPUANT CO- BORROWER TEMPORARY BUY-DOWNS TEXAS All MI information has been moved to the P&P Radian M.I.: The following requirements are applicable to Radian insured loan transactions only: o For Radian M.I. company, use the following link : o Condo s in the states of NV and FL are not permitted. SPM policies and procedures must be met, and may not supersede any M.I. company s guidelines. o While Radian has eliminated Declining Market restrictions, other M.I. companies may still have those policies in place. Always consult specific M.I. company s guidelines for their individual eligibility criteria. All loan transactions with LTVs % will require a minimum 3% of Borrower s own funds. Loan transactions with LTV/CLTV >80% up to 95% require minimum 5% minimum contribution of own funds. M.I. companies may have additional requirements/restrictions. LTV 80% may use all gift funds. Not permitted for LTVs %. T303 only. Allowed for Purchase or Rate/Term Owner-Occupied 1-2 unit or Second Home 1-unit Transactions, 30 Year Fixed Rate with 2-1 Buy-down Plan. 97% LTV option NOT available May not extend more than 2 years beyond first scheduled payment. Qualification requirements: Must qualify at the Note Rate. Trailing spouse transactions not eligible. The following applies to Texas (a)(6) loans. Please see additional appraisal and property restrictions stated in the Geographic Restriction Table: o Cash-out Refinance transactions are eligible up to a maximum 80% LTV/CLTV o Maximum loan amount may not exceed $417, o Only 1-unit primary residence homestead properties are eligible. o Texas (a)(6) loans are not eligible for ARM or Interest Only products: must be fully amortizing Fixed Rate product. o The pay-off of a Home Improvement junior lien is not eligible as a Rate/Term refinance. Loan proceeds used to pay off a legitimate purchase money (a) (5) home improvement loan are acceptable to originate as a Rate/Term. o As stated in DU Refi Plus section, Texas (a) (5) loans are not eligible. 9