Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page 601-i

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1 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page 601-i Table of Contents CONFORMING PRODUCTS PRODUCT DESCRIPTION AND PRODUCT CODES Overview Rights of MSI FRM Product Description Conforming Fixed Rate Mortgage FRM Product Codes Conforming Fixed Rate Mortgage Fully Amortizing MSI Lender Paid Mortgage Insurance Option (LPMI) FRM Split Mortgage Insurance (MI) Option FRM Product Limitations Investment and Second Home ARM Product Description Conforming Adjustable Rate Mortgage ARM Product Codes Conforming Adjustable Rate Mortgage (ARM) LOAN DETAILS Overview Assumable Borrowers Eligible States Escrow/ Impound Waiver Energy Efficient Mortgages Price Adjustments Loan Limits Mortgage Credit Certificate Negative Amortization Occupancy Prepayment Penalty Property Types DOCUMENTATION REQUIREMENTS MSI Requirements GENERAL UNDERWRITING GUIDELINES Overview Underwriting Method Presentation Acceptable AUS Decisions AUS Excessive Submissions Bankruptcy - Foreclosure Condos Attached PUDs Ineligible Project List Construction to Perm Conversion of a Principal Residence Continued on Next Page

2 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page 601-ii Table of Contents, Continued Credit Score Down Payment Assistance/ Grants Financial Reform ATR/QM Gifts 100%-DU Only Qualifying Ratios Mortgage/ Rental History Mortgage Insurance Mortgage Insurance Lender Paid Multiple Mortgages to the Same Borrower Public Assistance and/or Section Purchase Contracts Re-Negotiated Refinance Transactions Reserve Requirements Short Sales Subordinate (Secondary) Financing RESTRICTIONS High Cost and Responsible Lending Restrictions State Restrictions MSI State-Specific Guidelines CONFORMING FRM Summary Loan Parameters Agency FRM 30 Year DU 97% Enhancement DU REFI PLUS Summary Maximum Loan Limits MSI Product Guidelines LP RELIEF REFINANCE MORTGAGE SM Summary Maximum Loan Limits MSI Product Guidelines MSI-LPMI CONFORMING FRM Summary Mortgage Insurance Restrictions Loan Parameters Standard Conforming FRM MSI-LPMI SPLIT MORTGAGE INSURANCE Summary Mortgage Insurance Restrictions Appraisal: Underwriting: Subordinate Financing Loan Parameters Conforming Split MI Year Continued on Next Page

3 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page 601-iii Table of Contents, Continued CONFORMING ADJUSTABLE RATE MORTGAGES ARM Summary Presentation Guidelines HPML Loan Parameters Agency ARM 30-Year FANNIE MAE HOMEREADY MORTGAGE Summary Maximum Loan Limits Loan Parameters Standard MyCommunity FRM 30 Year Product Guidelines FREDDIE MAC HOME POSSIBLE Summary Maximum Loan Limits Loan Parameters Standard Home Possible FRM 30 Year Product Guidelines MSI FANNIE MAE HIGH BALANCE Overview Guidelines MSI Loan Limits Products Eligibility Loan Parameters DU MSI Conventional High Balance FRM- Primary Residence Loan Parameters DU MSI Conventional High Balance FRM- Second Home and Investment... Error! Bookmark not defined. High Balance Requirements High Balance Requirements Matrix SPECIAL CONSIDERATIONS MSI FLEXIBILITY Summary

4 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page Conforming Products Product Description and Product Codes Overview This product suite provides specific product-related criteria which are in addition to those guidelines provided in the Underwriting chapter of this MSI Retail Guide. Should there be a conflict between the requirements contained in this product suite versus the guidelines contained in the Underwriting Chapter, MSI will follow the criteria set forth in this product suite. MSI should reference the Underwriting Chapter for guidelines not specifically addressed in this product suite. Additionally, Mortgage Services III, LLC (MSI) underwriting guidelines are based on Fannie Mae/Freddie Mac guidelines, unless specifically addressed in this product suite or the Underwriting chapter. Rights of MSI MSI reserves the right to change or eliminate any product without advance notice based on the current market conditions. If a product is not priced, it is not available. FRM Product Description Conforming Fixed Rate Mortgage The Conforming fixed rate mortgage (FRM) product has the option of a 10-, 15-, 20, 25, or 30-year amortization term.

5 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page Product Description and Product Codes, Continued FRM Product Codes CLAR (2/03/15) The following matrix outlines the applicable product codes for the Conforming FRM product suite: Notes: All product codes may not be listed herein. Verify the product code on the daily rate sheet. If a published product is not priced, it may not be available, contact Pricing. Product Product Code Loan Term Conforming Fixed Rate Mortgage Fully Amortizing 30-Year FRM Years 30-Year FRM DU High Balance Years 20-Year FRM Years 25-Year FRM Years 15-Year FRM Years 15-Year FRM DU High Balance Years 10-Year FRM Years 100% Gift Years Standard DU Refi Plus Standard DU Refi Plus With MI Standard LP Relief Refinance Mortgage (RRM) Standard LP Relief Refinance Mortgage with MI Years 20-Years 15-Years 30 Years 15 Years 30-Years 15-Years 30-Years 15-Years

6 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page Product Description and Product Codes, Continued FRM Product Codes, Continued Product Product Code Loan Term MSI Lender Paid Mortgage Insurance Option (LPMI) FRM 30-Year LPMI- FRM 30-Year Piggy Back Buster 25-Year LPMI-FRM 25-Year Piggy Back Buster Years 30-Years 25-Years 25-Years 20-Year LPMI-FRM Years 15-Year LPMI- FRM Years 10-Year LPMI-FRM Years Split Mortgage Insurance (MI) Option FRM 30 Year Split MI Years 25 Year Split MI Years 20 Year Split MI Years 15 Year Split MI Years 10 Year Split MI Years See the Rate Sheet for UpFront and Monthly MI factors. Freddie Mac Home Possible 30 Home Possible Years Fannie Mae Home-Ready 30 Home Ready Years

7 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page Product Description and Product Codes, Continued Product Limitations Investment and Second Home When Borrowers are purchasing a Second Home or Investment Property: If the borrower(s) own more than one financed 1-4 unit investment property, the product is limited to 15-year, 20-year, 30-year FRM or 7/1 or 10/1 ARM only. ARM Product Description Conforming Adjustable Rate Mortgage The Conforming adjustable rate mortgage (ARM) product has only a 30-Year amortization but offers the following options: 5/1, 7/1 and 10/1 ARM Product Codes CLAR (2/03/15) The following matrix outlines the applicable product codes for the Conforming ARM product suite: Note: Verify the product code on the current daily rate sheet. If a published product is not priced, it may not be available, contact Pricing. Product DU Product Code LP Product Code Loan Term Conforming Adjustable Rate Mortgage (ARM) 5/1 LIBOR year Amortization 7/1 LIBOR /1 LIBOR

8 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page Loan Details Overview The following loan details are presented in alphabetical order. Unless otherwise noted in a specific product sub-section, the loan details noted herein apply to all loans in this product suite. See the specific product sub-sections for full details regarding loan parameters. Assumable Conforming FRM Not Assumable Conforming ARM May be Assumable under specific conditions. See ARM Summary. Borrowers See the Underwriting Chapter for Eligible Borrowers. Eligible States See the states in which MSI is able to accept loans on the Web Site at this link: MSI Eligible State List; see MSI State-Specific Guidelines for product /lending restrictions in these states. The Seller must be fully licensed or legally exempt to originate loans in the state. Escrow/ Impound Waiver Permitted per MSI guidelines for conventional loans with an LTV less than 80.00%, unless higher limits are permitted by state law (e.g., CA where waiver is permitted to 89.99%; LTV s require escrows.). The impound/escrow for hazard insurance and taxes may be waived. The impound/escrow for mortgage insurance may not be waived. The impound for hazard insurance only may be waived. The impound for taxes only may not be waived. Effective for loans locked on/after 11/19/10: In addition to the above: If the borrowers had a previous default/foreclosure or if the credit history is blemished or if the borrower s cash reserves are limited, the lender may not grant an escrow waiver, regardless of LTV. See Underwriting for additional details. See the Current Rates for applicable price adjustments. If the loan is HPML, the loan requires escrows, regardless of the LTV and/or state laws. After January 1, 2016, any loan designated in an A or V flood zone must have an escrow established for flood insurance irrespective of LTV.

9 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page Loan Details, Continued Energy Efficient Mortgages MSI does not accept mortgages which are subject to any type of special EEM mortgage programs or guidelines. Price Adjustments Price Adjustments may be applied against conventional conforming loans. All price adjustments are cumulative. See the Current Rates on for details. Loan Limits Maximum Loan Amount for Conforming Products Property Type 48 Contiguous States & DC 1 Unit $417,000 2 Units $533,850 3 Units $645,300 4 Units $801,950

10 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page Loan Details, Continued Minimum MSI will not accept mortgage loan amounts less than $20,000. Mortgage Credit Certificate Mortgage Credit Certificates (MCC) are not permitted unless the specific product permits. Negative Amortization Not Applicable or allowable for any offered Product. Occupancy Within specific product parameters, the following occupancy types are available: Owner-Occupied Second Vacation Home Investment (Non-owner occupied) See the Underwriting Chapter for additional details. Prepayment Penalty Not Permitted

11 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page Loan Details, Continued Property Types The following matrix outlines the applicable property types: Eligible Property Types Ineligible Property Types Unless otherwise specifically restricted or not Auction- Properties purchased at auction See permitted by the applicable loan parameters, the Underwriting/Property Types for the exception. following property types are acceptable to Commercial operations MSI/agency Guidelines: Condotels 1-4 Unit Properties Cooperative Projects Condominiums (condo) to MSI guidelines, Geodesic Domes regardless of AUS Findings (Low Rise and High Earth Homes Rise) See Underwriting/Condo Requirements for Houseboats details. Mobile (Manufactured) Homes, single- or double-wide Land Contract for Sale Model Home Leaseback properties Leasehold Estate properties must be common to Multi-dwelling or Multi-Unit condominiums the area. See Underwriting/Leasehold for full Non-conforming zoning projects details. Non Warrantable Condos Modular/Factory Built homes to Fannie Mae Timeshare/segmented ownership guidelines. See Underwriting/Modular Homes for Projects with pending litigation full details. Properties with deed restrictions that limit transferability of title, or PUDs to applicable agency guidelines contain a first right of refusal provision Rural Properties Properties located outside the contiguous United States; US Mixed use properties (See Underwriting for Territories; and any property located in a state where MSI does details) not lend. Properties with assignments of purchase (assigning the purchase contract to another party) Property located on an Indian Reservation Unimproved (Raw) Land Working farms, ranches or orchards Any property type not permitted by Fannie Mae or Freddie Mac Note: See Underwriting/Property Types for additional details and State Restrictions for any lending restrictions.

12 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page Documentation Requirements MSI Requirements MSI, regardless of the AUS findings, requires the following minimum documentation on all loans: Income The VVOE (see below) Closing Verbal VOE must be done within 10 business days of settlement. A current YTD pay stub reflecting a minimum 30 day s earnings, and 2-Years W-2 and/or 2 Years Tax Returns, as applicable Assets MSI requires a copy of the 2 most recent consecutive bank statement to validate funds to close and/or reserves, regardless if a VOD is included in the loan file. Large Deposits, see Underwriting/Assets. Note: MSI still requires the 4506-T signed/dated by each borrower for personal and each business entity at underwriting to facilitate underwriting review. MSI Underwriting conditions for the 4506-T s to be signed at closing to facilitate post-funding quality audit/review.

13 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page General Underwriting Guidelines Overview The conforming loans in this section require submission through either Fannie Mae Desktop Underwriter (DU) or Freddie Mac Loan Prospector (LP). The underwriting guidelines (AUS findings) of each agency must be met, unless otherwise indicated in the loan parameters. All loans must meet the guidelines outlined in this General Underwriting Guidelines section unless otherwise noted in a specific product sub-set. Notes: Throughout the product suite references to the Underwriting chapter are indicated in the following manner, Underwriting/Credit this tells you to go to the Underwriting chapter, Credit section. References in blue with an underline indicate a link within this chapter, click on the link to go to that reference. Guidelines that are not provided in this product suite or in the Underwriting chapter default to the applicable Fannie Mae or Freddie Mac guidelines. Underwriting Method Conforming Conventional AUS Required Loans must be submitted through either Fannie Mae DU or Freddie Mac LP and receive an Approve or Accept to be eligible to MSI. Validation Loans must be validated by an underwriter in accordance with the applicable agency requirements. Note: Loans may not be manually underwritten under any circumstances. Presentation The guidelines in this section are presented in alphabetical order.

14 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page General Underwriting Guidelines, Continued Acceptable AUS Decisions MSI will accept Agency Conforming loans only with the following credit recommendations. Note: Manual Underwriting or Overturning loans is not permitted regardless of circumstances or compensating factors. Excessive submissions or manipulation of the AUS system is not acceptable. Credit Recommendation DU Approve/Eligible DU Approve/Ineligible All Other DU Recommendations Standard Accept Streamline Accept Caution DU Decision LP Decision Eligible for MSI Yes No (except for statutory increase in loan amount) Notes: A copy of the final AUS findings report and completed Fannie Mae 1008 must be in the loan file at time of submission to underwriting. The report/findings must be the most current used to close the loan and may not be older than 120 days from the date of closing. (Note date). The AUS Findings summary and executed Fannie Mae 1008 must reflect the terms of the closed loan and final No Yes Yes No AUS Loans may not be manually underwritten. All conventional conforming loans must be submitted to either DU or LP. Excessive Submissions MSI will not close loans with an Excessive Submission message in the DU or LP Findings. When you send loans to MSI for underwriting, ensure that you do not manipulate the data with multiple submissions; if the Excessive Submissions warning/message appears when MSI submits for final approval, the loan is not eligible for close by MSI. Bankruptcy - Foreclosure See the Underwriting Chapter/Credit/Bankruptcy for full details regarding guidelines and documentation requirements.

15 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page General Underwriting Guidelines, Continued Condos MSI will accept loans where the subject property is a Condo. The condo must meet all current MSI/Fannie Mae Guidelines. See the Seller Guide/Underwriting Chapter/Condo for full details. Condos may be submitted to DU or LP. See Special Considerations MSI Flexibility for MSI flexibility. MSI requires that Questionnaires be completed as required. Additional Notes: Loans must be identified as a condo at time of lock. Failure to do so may change pricing and also may delay underwriting decision. Condo projects that consist of only 2-4 units must have a 2-4 Unit project questionnaire completed. MSI will not submit condos for full Fannie Mae Approval, nor PERS nor CVAS. Ineligible Project List For ALL Conforming Condo loans, regardless of AUS Findings (Except DU Refi Plus and LP Open Access (HARP Loans). MSI must validate that the condo is not included on any Ineligible Project List. Construction to Perm Construction to Perm loans (as two separate transactions only) are permitted. See Underwriting/Construction to Permanent Financing and New Construction in the Underwriting Chapter for additional assistance. Conversion of a Principal Residence REV (8/17/15) For all conforming loans, when converting the departure residence to an investment property rental or retaining as a second home: No documented equity position is required for rental offset, though reserves are required for ownership of 2 properties, or more if applicable. If converting current principal residence to a second home, reserves for the additional property and full payment (PITI) included in the back ratio for qualifying If converting current principal residence to a rental/investment property, an executed lease, documented market rent is required for any offset to the payment in the qualifying.(lesser of lease or market rent will be used for the offset calculation).

16 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page General Underwriting Guidelines, Continued Credit Score Minimum score required by MSI, regardless of DU/LP, see the specific loan parameter matrices for details. Important Reminder: Regardless of the MSI minimum FICO, if the AUS or an MI company requires a higher FICO minimum, the loan must comply with that more restrictive guideline. Disputed Credit and Authorized User Accounts See Underwriting/Credit. Down Payment Assistance/ Grants MSI does not permit the use of Down Payment Assistance (DPA) programs or Grants as Down Payment, regardless of who funds the DPA or Grant unless permitted within a specific product subset. Loan must be registered with the accurate CLTV. Financial Reform ATR/QM MSI will accept only those loans that meet the Consumer Protection Financial Board Qualified Mortgages/Ability to Repay (QM/ATR) guidelines published in the final rule. See Underwriting/CFPB for full details.

17 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page General Underwriting Guidelines, Continued Gifts 100%- Permitted for Fannie Mae DU Approve/Eligible loans with an LTV 80.01% %. REV 10/30/15 Allowing for standard LP Accept also up to 95% LTV. Allowable for Conforming and High Balance. Requirements: MSI will accept a Gift for 100% of the down payment; no minimum Borrower contribution is required. For this 100% Gift program MSI will accept the following donors: Parent/Step-parent A domestic partner or fiancé An employer with an established employee assistance program Note: A spouse or domestic partner s funds, who has resided with the borrower prior 12 months and will occupy the subject property can be used as borrower s funds to close with the attestation of residency, prior and future, along with relationship to the borrower, are not considered gift funds. The gift must be documented to the more restrictive of AUS Findings or MSI published requirements. Additionally, the following product guideline requirements must be met: Minimum FICO = 640 DTI Maximum = 45% Property must be a single unit, primary residence Non-Occupant co-borrowers are not permitted on 97% Subject to final MI approval.

18 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page General Underwriting Guidelines, Continued Qualifying Ratios As determined by DU/LP/MI restrictions or the specific product limitations. The more restrictive guidelines for any product prevail. Mortgage/ Rental History Unless otherwise noted in a specific product sub-set, MSI will not accept any conventional loan for which the mortgage history shows more than 2 mortgage late in the past 12-months. (MSI accepts 2x30 in the past 12 months.) MSI always requires a mortgage payment history for any mortgage (reporting or not) for the past 12-months- unless held for less time. If the current mortgage has been held for less than 12 months the following applies: o If the borrower s are previous home owners, the previous mortgage history is required to provide a minimum 12-month mortgage history, or the previous duration of ownership. o If the borrower s did not previously own a home, MSI accepts the previous rental history as required by the AUS findings. Not required if not reflected in the AUS findings. Mortgage Insurance See Underwriting, Mortgage Insurance Requirements for details. Mortgage Insurance Lender Paid See MSI-LPMI Conforming FRM for details.

19 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page General Underwriting Guidelines, Continued Multiple Mortgages to the Same Borrower MSI applies the following limitations to borrowers that hold multiple financed properties: For Primary Residence: MSI imposes no limit to the number of financed or unfinanced properties a Borrower may own. See the Underwriting Chapter for details on Other Real Estate Owned. For Second Home and Investment: MSI permits a maximum of 4 financed residential properties (total) to one (all) borrower(s). See Special Considerations Investor Flexibility for MSI flexibility. DU only allows for the 5-10 financed property investment ownership with the reduced LTV and additional reserves required. LP allows for a maximum of 6 financed properties. See the Underwriting Chapter/Borrowers/Multiple Mortgages to the Same Borrower for full details. See Pricing/Aggregate Loan Limits for loan amount limits. See Product Limitations Investment for product limitations for borrowers owning more than four financed 1-4 family investment properties. Additionally, follow the more restrictive of MSI or the applicable agency (DU or LP) requirements for guidelines regarding the use of rental income to qualify. (market rent for properties not reflected on tax returns, conversion of current principal residence or newly acquired properties, must have third party support for market rental data). Note: Limits for multiple properties serviced by the same servicer. Each servicer has specific limits to the number of properties it will service for one borrower. Underwriting must take that into consideration at the time of Underwriting; if the limit is reached, MSI cannot approve the loan. Public Assistance and/or Section 8 MSI will accept public assistance and/or Section 8 assistance in accordance with current Fannie or Freddie guidelines. However, MSI requires that all housing payments must be made directly to the servicer by the Borrower; payment plans that provide for the assistance providers to make payments to the servicer to supplement the Borrower s housing payments are not acceptable under any circumstances. Purchase Contracts Re-Negotiated Please see the Underwriting Chapter, Property/Purchase Agreement (Contract)-Re-Negotiated for details regarding MSI s restrictions for renegotiated purchase contracts. Once appraisals have been uploaded to the agency portals, no alterations or changes to the purchase price are allowed except for a valuation below the purchase price.

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21 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page General Underwriting Guidelines, Continued Refinance Transactions Follow current applicable more restrictive of agency/msi requirements for refinance loans. See Underwriting/Refinance for full details. Notes: Cash out refinances are not permitted on primary (homestead) residences in the state of Texas. Reserve Requirements MSI requires that all conventional loans receive an Accept or Approve decision from either DU or LP. MSI requires specific reserve requirements, regardless of the AUS findings, please see Underwriting/Assets and Liquidity/Reserves and Underwriting/Conversion of a Principle Residence for details. Short Sales See the Underwriting Chapter/Short Sales for specific restrictions/ guidelines. Short sales and/or deed in lieu of foreclosure have a minimum 4 years from consummation/finalization. The exception is 2 years with a documented extenuating circumstance. Note: divorce is never an extenuating circumstance. Subordinate (Secondary) Financing Must meet the product-specific loan parameter requirements. As required by the product parameters, subordinate financing is permitted and must meet the more restrictive of MSI/agency (DU/LP) guidelines. MSI will not accept Employer seconds or seller seconds. Community seconds only per specific product allowance. Home Equity Lines of Credit (HELOC) must meet the applicable agency guidelines. See Underwriting/Subordinate Financing for details.

22 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page Restrictions High Cost and Responsible Lending Restrictions MSI high cost policy will conform to all Federal, State, County, City, and Agency requirements, including consumer laws per the CFPB. No loan sold may violate high cost regulations as set forth by the above mentioned entities.

23 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page Restrictions, Continued State Restrictions State All Arizona REV (12/02/14) California Florida (2/05/15) Nevada Ohio Texas MSI accepts loans on properties located only in specifically approved states. See Eligible States for full details. The matrix below outlines additional geographic restrictions applied by MSI. MSI State-Specific Guidelines MSI product or underwriting guidelines and/or restrictions do not supersede any more-restrictive regulatory, state or local requirements. Seller is responsible to ensure that each loan originated, underwritten and closed is in full compliance with all regulatory, state or local guidelines and/or restrictions. Condo Attached PUD Restrictions: AZ is restricted to a maximum 90.00% LTV, unless further restricted by the AUS or MI. MSI will not lend in the following California Counties: Merced; San Joaquin; Stanislaus Properties in Broward & Miami/Dade Counties not permitted. High Balance loans are not permitted. Single Family Primary= 90% Second Home = 80% Investment Properties not permitted Condos: Primary Residence Established Only/No new Projects o CPM/Limited Review = 75% o Existing PERS = 95% Condos: Second Home Established Only/No new Projects o CPM/Limited Review 70% o Existing PERS = 90% No loans on properties located in Clark County Nevada. Condo Attached PUD Restrictions: NV is restricted to a maximum 90.00% LTV, unless further restricted by the AUS or MI. The Seller must warrant that each loan secured by property located in Ohio, irrespective of the originating lender s exempt status under the Ohio Consumer Sales Practices Act, relies on full verified documentation of the borrower s financial resources to determine the borrower s probability of repayment. MSI requires that all supporting documentation used by the originating lender to analyze the probability of repayment at time of origination be included in the delivered mortgage loan file. Cash Out Refinance loans for primary (homestead) properties are not acceptable for purchase.

24 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page Conforming FRM Summary MSI s Conforming FRM products are the standard Fannie Mae/Freddie Mac products offered through the applicable Automated Underwriting System (AUS). The loans must be underwritten using either DU or LP. More restrictive parameters may apply. All loans must meet MSI loan parameters noted herein to be eligible for approval, regardless of the AUS finding.

25 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page Conforming FRM, Continued Loan Parameters Agency FRM 30 Year REV (9/10/15) Transaction Type Primary Residence Purchase & Rate/Term Number Of Units LTV No Second Fannie DU LTV W/ Second CLTV/HCLTV LTV No Second Freddie LP LTV W/ Second CLTV/HCLTV 1 97* 95 95/ / / / / /80 Cash Out / /80 Second Home Purchase & Rate/Term / / / /85 Cash Out / /75 Investment Properties Purchase / / / /75 Rate/Term / / / /75 Cash Out / / / /70 Notes: FICO : AUS Approve/Accept required. o Primary: Minimum FICO is 620. o Second Home: Minimum FICO is 640. o Investment Property: Minimum FICO is 700. DTI: Maximum DTI is 50% with AUS Approve/Accept. All loans must comply with QM/ATR guidelines which may result in a lower DTI despite the AUS. Fannie Mae DU 97% Enhancement *Straight 97% LTV must have a first time homebuyer on application. Also eligible for purchase under HomeReady and HomePossible products at 97% LTV. See State Restrictions for additional restrictions. Condo AZ and NV are restricted to a maximum 90.00% LTV, unless further restricted by the AUS or MI. Condos: See Special Considerations Investor Flexibility for additional restrictions. Texas Section 50a6 (True Texas Cash Out) loans are not permitted.

26 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page Conforming FRM, Continued DU 97% Enhancement Fannie Mae DU 97% LTV/CLTV/HCLTV under the following limited parameters, as long as the Borrower would otherwise qualify for a mortgage but may not have the resources for a larger down payment or cash contribution: Standard purchase transaction (non-mcm) only if at least one borrower is a first-time home buyer. The First Time Homebuyer must meet all Fannie Mae requirements for a FTHB. At least 1 borrower must be able to respond No to the question in Section VII: Have you had an ownership interest in a property in the last three years? Home Buyer Education is not required for Fannie Mae; however you must be in full compliance with CFPB. Standard contribution requirements apply. Purchases: Standard Conforming loan amounts only. All loans must be fixed-rate and secured by a one-unit principal residence. All loans must be underwritten with DU and receive an Approve/Eligible recommendation. o LTV = %; o CLTV = %, the second may not be a Community Seconds loan; o HCLTV = % 35% Mortgage Insurance Only, no reduced MI permitted, Monthly MI only.

27 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page DU Refi Plus Summary DU Refi Plus is a refinance option offered by Fannie Mae to achieve the goals set out for the Making Home Affordable program announced by the US Department of Treasury on March 4, Loans must have a Note date on or before May 31, 2009.to be eligible. MSI offers this Fannie Mae program with MSI overlays. MSI will close this product only if the loan meets our additional risk overlays. These overlays must be applied manually to the DU Approve/Eligible loan. Maximum Loan Limits MSI permits the DU Refi Plus to current Fannie Mae conforming loan limits, standard only. MSI Product Guidelines Topic Application Appraisal The following matrix outlines to key topics for the DU Refi Plus product. Topics in bold are MSI overlays to the Fannie Mae product. Topics not addressed in this matrix must meet the more restrictive current MSI/Fannie Mae requirements. If the topic is not addressed in this product sub-set or the MSI Underwriting Chapter, please follow current Fannie Mae guidelines. DU Refi Plus Requirements or Guidelines The application must provide a minimum 2 year history for residence and employment. Employer name, address, phone and income must be provided. Agency appraisal requirements apply. MSI will accept the appraisal requirement stated in the DU Finding, including the Property Field Waiver (PFW). The AUS Finding must clearly state in the Property and Appraisal Information that Fannie Mae will permit the Lender to exercise the property fieldwork waiver. The AUS finding must accept the value provided on the The 1008 must clearly indicate that the Underwriter has validated the property address; the loan is underwritten using the value on the 1003 as long as the AUS finding has accepted that value. Notes: If the PFW is not exercised, the loan must include a full appraisal as noted in the AUS Findings. If an appraisal is included in the loan file, the Underwriter must use the appraisal to underwrite the loan. MSI will not accept a PIW, regardless of AUS findings.

28 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page DU Refi Plus, Continued MSI Product Guidelines, Continued Topic Assets Borrower Benefits Borrower Eligibility Cash Back Credit DU Refi Plus Requirements or Guidelines Asset documentation in accordance with DU Findings with the following exception: Asset documentation in accordance with DU Findings with the following exception: If the borrower must bring funds to closing, MSI requires asset documentation to support the ability to pay the funds from personal assets, regardless of any AUS findings. The underwriter must document in the file and validate on the 1008 that the following borrower benefits apply: The refinance reduces the monthly mortgage principal and interest payment OR The new mortgage is more stable (movement from an ARM to a FRM) OR The refinance provides a reduction in interest rate OR The refinance provides a reduction in loan amortization term. The borrowers on the new mortgage must be identical to the borrowers on the existing mortgage. New borrowers may be added, as long as the existing borrower(s) is retained. Adding a new non-occupant co-borrower is not permitted, regardless of AUS. Removing a Borrower: Borrowers may be deleted; however, a minimum of 1 of the original Borrowers must remain on the new Note. Note: MSI permits a maximum of 4 borrowers per transaction. The borrower may not receive any cash back (in pocket) from the refinance. Due to differences between actual loan pay-off and/or closing costs versus estimated loan pay-off and/or closing costs a tolerance of no more than $ is permitted. If at closing, the cash back is more than $250.00, the loan amount must be corrected and resubmitted to underwriting (DU) if applicable, the excess may not be applied to principal and the borrowers are not permitted under any circumstances to receive more than $ cash back. MSI is unable to sell any loan where the funds at closing in excess of $ have been applied to principal. Payoff Letter Required To ensure that the loan amount is calculated properly, the underwriter must review a current, valid pay-off letter and condition the loan carefully to ensure that the borrowers meet the allowable maximum mortgage amount and do not receive more than $ in pocket at closing. Bankruptcy 4 years since discharge, multiple bankruptcies in the past 84 months is not permitted, regardless of AUS. See the Underwriting Chapter for Bankruptcy Documentation Requirements. Foreclosure 7 years since discharge, regardless of AUS.

29 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page DU Refi Plus, Continued MSI Product Guidelines, Continued DTI Topic DU Findings DU Required Message Escrow Account FICO HPML Loans and DU Refi Plus Refinance Income Documentation Maximum DTI = 50%, regardless of AUS. DU Refi Plus Requirements or Guidelines For loans submitted to DU on/after April 4, 2009 identified as DU Refi Plus eligible, MSI will accept only the following: DU Approve/Eligible No exceptions. No Freddie Mac LP permitted. Identified as DU Refi Plus in the latest DU Findings Report (To validate the mortgage is currently held by Fannie Mae.) The messaging in DU must clearly state that the Summary and the Underwriting Analysis is based on the expanded guidelines of DU Refi Plus. The Recommendation must state: The DU Refi Plus recommendation for this case is: Approve/Eligible Reminder: If the LTV of the new loan LTV is greater than 80%, MSI does require an escrow account in accordance with our published policy. See Escrow/ Impound Waiver for details. Primary: To a maximum LTV of 105%/CLTV of 110% FICO is 660, regardless of AUS. To a maximum LTV /CLTV of 105% FICO is 640, regardless of AUS. Second Home: Minimum FICO 680, regardless of AUS. DU is unable to determine if a loan is a Higher Priced Mortgage Loan; therefore, the test must be applied to each DU Refi Plus Loan prior to or at time of underwriting. If the loan is HPML, the maximum DTI is 45%, regardless of the AUS approval. If the loan is not HPML the maximum DTI is 50% (or lower if so noted on the AUS finding.) MSI requires the following additional income/employment documentation, regardless of AUS Findings: Salaried Borrowers (1) AUS requirements plus: One paystub covering a 30-day period and year-to-date income. The most recent W-2 for the past year. One Year IRS Transcripts and a signed IRS 4506-T for each applicable borrower. MSI will perform a Verbal VOE prior to close. See Underwriting/Verbal Verification of Employment for details. Any differences between income documented and income entered into DU must be supported by documentation included in the loan file. Self-Employed(1) and Passive Income Sources(1) AUS Requirements plus: Personal and applicable Business Tax return for most current 1-year. One Year IRS Transcripts and a signed IRS 4506-T for each applicable borrower and each business entity used for qualifying income. MSI will perform a Verbal VOE prior to close. See Underwriting/Verbal Verification of Employment for details. Any differences between income documented and income entered into DU must be supported by documentation included in the loan file. (1) As defined by Fannie Mae. If AUS requires more documentation, the AUS must be followed.

30 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page DU Refi Plus, Continued MSI Product Guidelines, Continued Topic Loan Types LTV/CLTV/TLTV Mortgage History Mortgage Insurance DU Refi Plus Requirements or Guidelines Standard loan limits only: The new loan may be a 15, 20, or 30-year Fixed Rate Mortgage. LTV 105%/CLTV 110%. MSI Product Code: Year Term only MSI Product Code: Year Term With MI MSI Product Code: Year Term only. MSI Product Code: Year Term only. MSI Product Code: Year Term With MI High Balance loan limits are not permitted MSI will accept the maximum LTV/CLTV/TLTV permitted by the DU Findings with the following exceptions: LTV/CLTV may not exceed 135% regardless of AUS finding. CLTV may not exceed 135%, regardless of AUS findings. Special pricing adjustment applies. See rate sheet. MSI underwriter must ensure that any Condo is not a co-op, hotel/motel, houseboat project, or a timeshare or segmented ownership project. The mortgage history must document: The existing mortgage must be current. 1X30 late mortgage payment in the past 12 months. Loans which require mortgage insurance are only allowed when continued or transferred from one of the following MI companies: Radian, PMI, MGIC, RMIC, TRIAD, CMG, Genworth or United Guaranty (UG). No other Mortgage Insurance companies are allowed. If the lender determines the existing loan has mortgage insurance, MSI requires that the current MI be transferred. (MSI will not permit the purchase of new MI coverage.) MI with Declining Renewals are not permitted. Monthly or Annual LPMI are not permitted under any circumstances. The premium must be converted to BPMI. Split Premium MI is not permitted. Note: Depending on the MI company, the MI transfer can take as long as 3 weeks. DU findings will tell you which MI Company currently has and issued the original MI. Only that original MI company can do the HARP transfer/extension of the policy. Follow MSI guidelines.

31 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page DU Refi Plus, Continued MSI Product Guidelines, Continued Topic Multiple Properties Property Types Seasoning Subordinate Financing DU Refi Plus Requirements or Guidelines Maximum 4 properties per borrower regardless of the occupancy of the subject property. (Primary, secondary or investment.) 1-2 Unit Primary Residence. Single unit Second Homes. No 3-4 Primary Residences permitted. No 1-4 Units Investment Properties permitted. Fannie Mae does not require that the Seller warrant the condo project. However, MSI does require that appraisal does not include any negative statements regarding marketing for the condo project. If negative comments regarding marketability are included in the appraisal, MSI does not consider the loan to be eligible. Leasehold properties are not acceptable. All State Restrictions apply. The project must be identified with the current Fannie Mae project code for Refi Plus on the Loan must be eligible under Fannie Mae guidelines for the DU Refi Plus product. AUS must clearly state eligibility. MSI will not accept any DU Refi Plus loan where the subject property was listed for sale within the past 6-months. New subordinate financing is not permitted under any circumstances. Existing subordinate financing must be subordinated to the new mortgage. Current existing subordinate financing (including purchase money subordinate financing) may not be satisfied by proceeds of the new mortgage.

32 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page LP Relief Refinance Mortgage SM - Summary LP Relief Refinance Mortgage (LP RRM) is a refinance option offered by Freddie Mac to achieve the goals set out for the Making Home Affordable program announced by the US Department of Treasury on March 4, Loans must have a Note date on or before May 31, 2009.to be eligible. MSI offers this Freddie Mac program with MSI overlays. MSI will accept this product only if the loan meets our additional risk overlays. These overlays must be applied manually to the LP Accept loans. Maximum Loan Limits MSI permits the LP Relief Refinance Mortgages (LP RRM) only to current Freddie Mac standard conforming loan limits. Super Conforming (Conforming High Balance) limits are not acceptable to MSI. MSI Product Guidelines Topic Application The following matrix outlines to key topics for the LP RRM product. Topics in bold are MSI overlays to the Freddie Mac product. Topics not addressed in this matrix must meet the more restrictive current MSI/Freddie Mac requirements. If the topic is not addressed in this product sub-set or the MSI Underwriting Chapter, please follow current Freddie Mac guidelines. See Freddie Mac Bulletins , and the Freddie Mac Seller Guide, available from the Freddie Mac Web Site. LP RRM Requirements or Guidelines The application must provide a minimum 2 year history for residence and employment. Employer name, address, phone and income must be provided. The fully completed application must be signed by each borrower.

33 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page LP Relief Refinance Mortgage SM -, Continued MSI Product Guidelines, Continued Topic Appraisal Assets/ Reserves Borrower Benefits LP RRM Requirements or Guidelines Sellers may choose one of two options to validate value: OPTION ONE Provide a full Freddie Mac/Fannie Mae appraisal (URAR). Standard Freddie/MSI appraisal requirements apply. In addition to a full URAR, a field review is required if the LTV/CLTV/TLTV/HTLTV is > 75.00% and the home value is > $1 Million. OPTION TWO If offered, an HVE may be used on a 1-unit and 2-unit attached or detached dwellings if the HVE point value has a Forecast Standard Deviation that is less than or equal to 0.20 as reported by the HVE report and a Confidence Score of High or Medium. A HVE value from any source other than the most current LP Response is not valid. Freddie Mac permits the use of any HVE value provided it is dated within 120 days of the Note Date. It is not necessary to resubmit when a different value is obtained from LP, provided the loan was resubmitted with the initial point value estimate. The Loan Prospector feedback certificate reflecting the submitted point value estimate must be included in the loan file. If an appraisal is obtained, the appraised value must be used to calculate the LTV/TLTV; the HVE cannot be used in the transaction, even if it is more favorable. It is no longer an option. Seller must be in full compliance with Freddie Mac and CFPB for providing borrowers with notification of property valuations. Bank Statement covering the most recent month s transactions. If the borrower must bring funds to closing, MSI requires asset documentation to support the ability to pay the funds from personal assets, regardless of any AUS findings. Primary Single Units: Reserves are not required; however they should be considered in the underwriting review. If reserves are submitted to LP, they must be verified. Primary 2 Units: Borrower must have 6 months PITI in verified reserves regardless whether or not rental income is used to qualify the borrower. Second Home-single unit: Borrower must have 2 months PITI in verified reserves for subject property, and an additional 2 months PITI in reserve for each other financed second home or 1-4 investment property for which the borrower is obligated. Gift funds are permitted to Freddie Mac LP guidelines. Current primary residence being converted must follow current Freddie Mac guidelines. The underwriter must document in the file and validate on the 1008 that the following borrower benefits apply: The refinance reduces the interest rate or the monthly mortgage principal and interest payment OR The new mortgage is more stable (movement from an ARM to a FRM; from an Interest Only to a FRM, or from a Balloon Reset to a FRM, etc.) OR The refinance reduces the amortization term of the mortgage. The new mortgage can have a term exceeding the original term of the Mortgage being refinanced as long as one of the above benefits apply.

34 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page LP Relief Refinance Mortgage SM -, Continued MSI Product Guidelines, Continued Topic Borrower Eligibility Cash Back New Mortgage Limits Credit Documentation Requirements (8/21/14) DTI Escrow Account LP RRM Requirements or Guidelines Borrowers on the new loan must be the same as borrowers on the existing loan, except Adding Borrowers: MSI will permit a borrower(s) to be added to the Note provided that at least one borrower from the original loan (Note) is retained in the new refinance. Non-occupant borrowers may not be added. Deleting Borrowers Borrowers may be deleted; however, a minimum of 1 of the original Borrowers must remain on the new Note. All LTV s/cltv s: The maximum loan amount can be an amount (not to exceed the maximum LTV) to pay the unpaid principal balance of the loan plus Closing Costs, Pre-Paids, Financing Costs and Escrows not to exceed $5000. Maximum of $250 cash back to borrower is allowed. Any funds in excess of the allowable cash back must be applied to the new refinance as a principal curtailment. (Principal curtailments-principal reductions are limited to a maximum cap of the lesser of 1% of the new loan amount or $1, ) Proceeds cannot be used to pay off or pay down any subordinate financing. Payoff Letter Required To ensure that the loan amount is calculated properly, the underwriter must review a current, valid pay-off (non-expired) letter and condition the loan carefully to ensure that the borrowers meet the allowable maximum mortgage amount and do not receive more than the permitted cash in pocket at closing. Bankruptcy 4 years since discharge, multiple bankruptcies in the past 84 months is not permitted, regardless of AUS. See MSI Underwriting Chapter for Documentation Requirements. Foreclosure 7 years since discharge, regardless of AUS. MSI requires a copy of the payoff statement for accurate calculation of the loan amount based on unpaid principal balance. All documentation requirements must meet the more restrictive of MSI as noted in this matrix or the LP Feedback Certificate. Maximum DTI = 50%, regardless of AUS. Reminder: If the LTV of the new loan LTV is greater than 80%, MSI does require an escrow account in accordance with our published policy, except for Flood Insurance. See Escrow/ Impound Waiver for details.

35 Version 5/28/14 REV (6/27/16) Posted 6/27/16 Page LP Relief Refinance Mortgage SM -, Continued MSI Product Guidelines, Continued FICO Topic Freddie Mac Loan Number Income Documentation HPML Loans and LP Relief Refinance LP Findings Loan Types LP RRM Requirements or Guidelines Primary: To a maximum LTV of 105%/CLTV of 110% FICO is 660, regardless of AUS. To a maximum LTV /CLTV of 105% FICO is 640, regardless of AUS. Second Home: Minimum FICO 680, regardless of AUS. To be eligible for close as a Freddie Mac Relief Refinance Loan, the final LP Feedback Certificate must include the following: In the Loan Processing Information Section The Freddie Mac Loan Number must be included. If the Freddie Mac Loan Number is not provided in the Feedback Cert, the loan is not eligible for our investors (or Freddie Mac). MSI requires the following additional income/employment documentation, regardless of AUS Findings: Salaried Borrowers 1 AUS requirements plus: One paystub covering a 30-day period and year-to-date income. The most recent W-2 for the past year. One Year IRS Transcripts and a signed IRS 4506-T for each applicable borrower. MSI will perform a Verbal VOE prior to close. See Underwriting/Verbal Verification of Employment for details. Any differences between income documented and income entered into LP must be supported by documentation included in the loan file. Self-Employed 1 and Passive Income Sources 1 AUS Requirements plus: Tax return for most current 1-year. One Year IRS Transcripts and a signed IRS 4506-T for each applicable borrower and each business entity for which income has been used to qualify. MSI will perform a Verbal VOE prior to close. See Underwriting/Verbal Verification of Employment for details. Any differences between income documented and income entered into LP must be supported by documentation included in the loan file. (1.) As defined by Freddie Mac. LP is unable to determine if a loan is a Higher Priced Mortgage Loan; therefore, the test must be applied to each LP Relief Refinance prior to or at time of underwriting. If the loan is HPML, the maximum DTI is 45%, regardless of the AUS approval. If the loan is not HPML the maximum DTI is 50% (or lower if so noted on the AUS finding.) Only LP Accept, no other LP Decision is acceptable. The loan must meet Freddie Mac LP requirements unless otherwise restricted by MSI. The new loan may be a 15 or 30-year Fixed Rate Mortgage. 30-Year Term: MSI Product Code: Year Term: MSI Product Code: With MI 15-Year Term: MSI Product Code: Year Term: MSI Product Code: With MI