Fully Amortized 5/1 & 7/1 Portfolio ARM Product Mix Primary Residence, Second Home and Investment Property Purchase, Rate & Term Refinance and Cash-Out Refinance STATED INCOME PROGRAM Rate Guide as of 12/07/2018 Rate & Pricing Adjustments Field Adjustments Product Description Rate Price Investment 0.250% to Rate 5/1 ARM 2/2/6 5.750% PAR Investment LTV > 60% 0.125% to Rate 7/1 ARM 2/2/6 5.875% PAR Cash-Out 0.250% to Rate *Pricing subject to change without notice Cash-Out > 60% 0.250% to Rate Foreign National 0.500% to Rate Margin 2.500% / Index: 1 yr LIBOR 2 Unit 0.125% to Rate 3 to 4 Unit 0.250% to Rate Asset Based Income Option 0.250% to Rate Asset Based Income Option >60% 0.250% to Rate Asset Based Income Option >50% 0.250% to Fee** Extension Fees 7-Day 0.125% to Fee 15-Day 0.250% to Fee Non-Traditional Credit with derogatories older than 36 months 0.125% to Rate 680 to 699 Fico 0.25% to Rate & 0.125% to Fee 700 to 719 Fico 0.125% to Fee **Asset Based Income LTV > 50% - 12 mo PI reserve in investor Account (0.250%) to Fee with ACH payment set up Alternative and Asset Based Income Option Documentations Max Loan Amount Max LTV / CLTV / HCLTV Min FICO 1 Unit SFR & PUD Up to $1,000,000 70 70 680 $1,000,001 to $1,500,000 65 65 700 $1,500,001 to $2,500,000 60 60 720 Condominium up to $1,000,000 65 65 680 $1,000,001 to $1,500,000 65 65 700 2-4 Unit Up to $1,500,000 60 60 700 Up to $1,000,000 60 60 NA Foreign Nationals $1,000,001 to $1,500,000 55 55 NA $1,500,001 to $2,500,000 50 50 NA Cash Out Transaction Max LTV/CLTV/HCLTV 65% / Max cash out amount $2.5MM (Foreign National Limited by Above LTV) 6 months seasoning required. (Delayed Financing Acceptable subject to UW Guidelines) Asset Based Income Option Foreign National and Cash Out Transactions are not available on Asset Based Income Option Asset Based Income Option INCOME DOCUMENTATION SELF EMPLOYED For application received on or before 6/30: YTD & 1 full year of Interim Profit & Loss Statement completed by an independent third-party. For application received on or after 7/1: YTD Profit & Loss Statement completed by an independent third-party. CPA Letter (from CPA that prepared previous 2 years tax returns) verifying prepared business ownership and same location for at least 2 years & business license. SALARY OR WAGE - EARNING EMPLOYEES Written Verification of Employment Form (FNMA Form 1005) completed by employer ASSET BASED INCOME OPTION (ABIO) SELF EMPLOYED CPA Letter verifiying business ownership for at least 2 years OR 2 years business license Definitive Description of Business, Industry, and Borrower's Title listed on 1003 Current Employment (1003) must show on credit report / Third-party listing to verify business name and phone number. SALARY OR WAGE - EARNING EMPLOYEES Verbal verification of employment / Current Employment (1003) must show on credit report. GENERAL UNDERWRITING GUIDELINES Maximum Front-End/Total Debt-to-Income (DTI) ratio allowed: 38/43% Qualifying Interest Rate: the greater of start rate or fully-indexed rate. Condo must be warrantable by Fannie Mae; non-warrantable condominiums will be reviewed on an individual basis. No minimum borrower contribution on Owner Occupied and Second Homes (excludes Foreign National). Gift is allowed for 100% of down payment for all occupancies and properties. ABIO will still require borrower's own funds to validate the income even if no minimum contribution is required for down payment and/or closing costs. Gift fund is not allowed for Reserves. Foreign Asset must be transferred to U.S. Institutional Bank to be used as downpayment, closing cost & reserves. Subject property cannot be listed for sale at the application date for Rate and Term and Cash Out. Loan amount > $1.5MM requires a prior investor approval and an additional underwriting fee of $1,460 CREDIT STANDARDS Mortgage Rent Max 1x30 in the past 12 months Tradelines 3 tradelines seasoned for at least 12 months required Bankruptcy / SS & DIL / Foreclosure 3 yrs / 2 yrs / 5 yrs Loan Modification 2 yrs ASSET / RESERVES Loan Amount Required Reserve (P&I) LTV <=60% & Loan Amt up to $1MM 6 months in US Financial Institution All Property Type LTV 60.01-70% & Loan Amt up to 1MM 12 months in US Financial Institution Loan Amount $1,000,001 to $2,500,000 12 months in US Financial Institution Asset Based Income Option Cash Out Refinance All Asset Based Income Option* All Cash Out Loans** 12 months in US Financial Institution 12 months in US Financial Institution Most recent 2 months bank statement required Business Funds: may be used up to 100% of current balance if borrower can demonstrate 100% ownership of the business. * Refer to Underwriting guidelines regarding down payment requirements for purchase loans. ** All Cash Out Assets Must be Liquid - Checking, Savings, or MMA APPRAISAL GUIDELINES Loan Amount Appraisal Requirement Up to $1,000,000 One Full Appraisal and One Automated Valuation Model (AVM) $1,000,001 - $2,500,000 One Full Appraisal and One Field Review FOREIGN NATIONALS Copy of passport, I-94 and valid VISA (F-1 AND F-2 type are not allowed). Copy of passport and either I-94W or proof of ESTA Approval required for borrowers on VISA Waiver Program. Borrower must have U.S. address when applying for loan. Foreign assets used for downpayment, closing cost, and/or reserves must be transferred to U.S. Institutional account prior to ordering loan docs. Most recent 3 months bank statement required. Automatic debit payment required from U.S. banking institution. 24 months P&I reserves required for subject property. 12 P&I reserves to be deposited into investor financial institution bank account prior to funding.
7/1 PORTFOLIO ARM 5/1 PORTFOLIO ARM (STATED INCOME) Page 1 of 23
PRODUCT FEATURES Available for Primary, Second Home and Investment Properties Available for Purchase, Rate/Term, and Cash-Out Transactions Does NOT have to be a business purpose loan Provides two options for income documentation: Alternative Documentation and Asset Based Income Option (ABIO) Page 2 of 23
WINPRIME LENDING 5/1 LIBOR ARM PRODUCT BASE RATE 5.750% 5/1LIBOR ARM (WSJ) Fixed for 5 years, adjustable for 25 years No Interest Only features No Balloon payments No Prepayment features Margin is 2.500% & Caps are (2/2/6) Page 3 of 23
WINPRIME LENDING 7/1 LIBOR ARM PRODUCT BASE RATE 5.875% 7/1 LIBOR ARM (WSJ) Fixed for 7 years, adjustable for 23 years No Interest Only features No Balloon payments No Prepayment features Margin is 2.500% & Caps are (2/2/6) Page 4 of 23
STANDARD ALT DOC OR ABIO? Alternative Documentation Asset Based Income Option (ABIO) No Paystubs No Tax Returns No Tax Transcripts Verification of Income Profit & Loss Statement verified by a licensed 3 rd party within 6 month coverage (Self Employed Borrower) Written VOE (Wage Earner) Verification of Job CPA Letter & Business License (Self Employed Borrower) Verbal VOE with 2 year history of employment (Wage Earner) Verification of Income Asset-Based Income Verification Verification of Job CPA Letter OR Business License (Self Employed Borrower) Verbal VOE (Wage Earner) Employment Listed on Credit Report Page 5 of 23
WHAT IS THE 6 MONTH P&L REQUIRMENT? If the current tax year has passed 6 months, provide current tax year P&L for two quarters If the current tax year has not passed 6 months, provide current year P&L and previous year full 12 month P&L. Page 6 of 23
FOREIGN NATIONAL BORROWERS The Foreign National program allows for citizens of foreign countries to purchase a second home in United States. No FICO or international credit report is required. Borrower cannot be US Citizen or Green Card holder. Must follow Alternative Documentation income requirements by providing letter of employment and verification of income from company letterhead All documents must be translated by a third party translator Page 7 of 23
FICO SCORES No FICO score reporting on any of the 3 bureaus (if one fico score ineligible; if two fico scores falls under regular rules) Borrower can be US Citizen or Green Card holder Must follow standard streamline income requirements. Priced similar to the Foreign National program. Page 8 of 23
ALTERNATIVE DOCUMENTATION PARAMETERS 1 Unit SFR & PUD Condominium Max Loan Amount Max LTV/CLTV/HCLTV Min FICO Up to $1,000,000 70% 70% 680 $1,000,001 - $1,500,000 65% 65% 700 $1,500,001 - $2,500,000 60% 60% 720 Up to $1,000,000 65% 65% 680 $1,000,001 - $1,500,000 65% 65% 700 2-4 Unit Up to $1,500,000 60% 60% 700 Up to $1,000,000 60% 60% N/A Foreign Nationals $1,000,001 - $1,500,000 55% 55% N/A Cash-Out Transaction $1,500,001 - $2,500,000 50% 50% N/A Max LTV/CLTV/HCLTV 65% / Max cash out amount $2,500,000 (Foreign National Limited by Above LTV) 6 month seasoning required. (Delayed Financing is Acceptable subject to UW Guidelines) Page 9 of 23
EMPLOYMENT DETAILS CPA letters must be on a formal letterhead with tax preparer license numbers CPA s can be: Certified Public Accountant, Enrolled Agent, CTEC, or Tax Attorney Product is not eligible for borrowers employed by relatives, Property Sellers, Or Real Estate Brokers CPA license must be verifiable by 3 rd Party verification. Page 10 of 23
EMPLOYMENT SCENARIOS Self employed borrower who files their own taxes or cannot provide a CPA letter? Not eligible for Alt Doc, must go ABIO and provide 2 y ears business license from a regulatory agency or licensing bureau. Self employed borrower who uses a CPA but no business license? Acceptable if borrower s industry does not require a business license from a regulatory agency AND if they provide evidence of the legal entity (LLC, LP, or Inc.). Eligible for both ABIO and Alternative Doc. Documentation for Commission / 1099 Employee on Alt Doc? If Borrower can show 3 rd party verifiable license (e.g. realtors, insurance agents, etc.): Must provide a license, CPA Letter and P&L Statement VVOE If Borrower cannot show 3 rd party verifiable license (e.g. retail sales person): Provide written AND verbal VOE CPA Letter to confirm that they have been filing taxes as schedule C for two years. ABIO for commission / 1099 would still require either License or CPA letter. Page 11 of 23
ABIO PARAMEMETERS Asset Based Income Option (ABIO) Max Loan Amount Max LTV/CLTV/HCLTV 1 Unit SFR & PUD Up to $1,000,000 60% 60% 700 $1,000,001 - $1,500,000 55% 55% 720 $1,500,001 - $2,500,000 50% 50% 720 Condominium Up to $750,000 55% 55% 700 Min FICO 2-4 Unit Up to $1,500,000 50% 50% 720 Foreign Nationals / Cash Out Not Available for Asset Based Income Option Page 12 of 23
WHAT IS ACCEPTABLE ASSET-BASED INCOME? Stated Income means the borrower states their REASONABLE current income in the 1003 (Application). We verify that their monthly income can be SUPPORTED by the liquid assets pre-closing. Calculation: Assets / 6 must be greater than Stated Income Page 13 of 23
IS THIS SCENARIO ACCEPTABLE FOR ABIO? Medical Doctor who has $300,000 in assets and 1003 income of $20,000 a month? Yes, this scenario is eligible. $300,000 / 6 = $50,000 which is greater than $20,000 monthly income listed on the application. We use $20,000 for qualification. Wage Earning Gardener who has $100,000 in assets and stated income of $10,000 a month? No, this scenario is not eligible. $100,000 / 6 = $16,666 > $10,000 monthly income stated, however it is not reasonable for a gardener to make $10,000 a month. Self-Employed Import / Export Entrepreneur with $500,000 in assets and stated income of $100,000 a month? Yes, this scenario is eligible. $500,000 / 6 = $83,333 & borrower states $100,000 a month. However only $83,000 is used for qualification purposes. Page 14 of 23
ABIO RATE GUIDE BASE RATES: 5/1 LIBOR = 5.750% 7/1 LIBOR = 5.875% Field Investment Investment LTV >60% Cash Out Cash Out > 60% Foreign National Rate & Pricing Adjustments Adjustments 0.25% to Rate 0.125% to Rate 0.25% to Rate 0.25% to Rate 0.50% to Rate 2 Unit 0.125% to Rate RATE & FEE ADD-ONS 3 to 4Unit 0.25% to Rate 680 to 699 FICO 0.25% to Rate & 0.125% to Fee 700 to 719 FICO 0.125% to Fee Asset Based Income Option Asset Based Income LTV >60% 0.25% to Rate 0.25% to Rate Asset Based Income LTV > 50% 0.25% to Fee ** No-Traditional Credit with Derogatories older than 36 months ** Asset Based Income LTV > 50% - 12 mo PI reserve in Investor Account with ACH payment set up 0.125% to Rate (0.25%) to Fee Page 15 of 23
WINPRIME LENDING PRODUCT RATE EXAMPLES Alternative Documentation, Purchase, SFR, Investment LTV > 60%, $1M Loan Amount, 686 FICO Rate / Adjustments 5/1 LIBOR ARM 7/1 LIBOR ARM Base Rate 5.750 5.875 Investment + 0.25% + 0.25% Investment LTV>60% + 0.125% + 0.125% FICO Score + 0.25% + 0.25% FINAL RATE % 6.375% 6.500% Page 16 of 23
WINPRIME LENDING PRODUCT RATE EXAMPLES 5/1 LIBOR ARM Alternative Documentation, Purchase, Second Home, PUD, Foreign National, $1.5 Million Loan Amount 5.750% Base Rate +0.50% Foreign National 6.250% Final Rate Page 17 of 23
WINPRIME LENDING PRODUCT RATE EXAMPLES 7/1 LIBOR ARM ABIO, Purchase, Owner Occupied, $1 Million Loan Amount, 2 Units, 705 FICO 5.875% Base Rate + 0.25% ABIO + 0.25% 2-4 Unit 6.375% Final Rate Page 18 of 23
FREQUENTLY ASKED QUESTIONS Can a borrower have two jobs on this product? Yes, as long as the borrower has 2 years history of holding two jobs and can document the employment and income for both jobs as required by documentation type. Page 19 of 23
FREQUENTLY ASKED QUESTIONS How do you calculate other REO when tax returns are provided? We calculate as follows: (75% of lease x % of Ownership) PITIA Properties without lease agreements cannot use the income to qualify. Page 20 of 23
FREQUENTLY ASKED QUESTIONS Can you use multiple income streams? Yes! For instance, if the borrowers have chosen the alternative documentation option and the borrower received self employed income while the co-borrower receives a wage, we can utilize both incomes to qualify. The self employed borrower s income will be supported by a valid P&L, and the co-borrower s income will be supported by a written verification of employment with the total monthly amount used to qualify. Page 21 of 23
FREQUENTLY ASKED QUESTIONS Can I gross up non-taxable income like social security? No. Since WINPRIME LENDING does not receive or require tax returns, we cannot determine what portion of the income is non-taxable. We will qualify at the monthly amount derived from the award letter. Page 22 of 23
Asset Based Income Option (ABIO) Income Calculation Worksheet Loan Number: Employer Name: Borrower Name: Property Address: Calculation #1 Income from Assets Total Verified Seasoned Assets = Assets as Monthly Income = (Total Assets / 6 Months) Calculation #2 Income from 1008 Total Income on 1008 = # of Months of Income per Assets = The Qualifying Income must be the lower of the two incomes in Calculation #1 & #2 Total Qualified Monthly Income: $ Calculation #3 Income from Payment History (R&T Refi Only) Total Income on 1008 = Number of Months Payment History = The Qualifying Income on Rate & Term Refinances will require an established payment history. If a payment history is established, we will utilize the income listed on the 1008. Total Qualified Monthly Income: $ Page 23 of 23