PRODUCTS: 15 yr Fixed Rate INVESTOR 1/1, 3/1, 5/1, 7/1 10/1 & 15/1 ARMs CODE: Conforming & Non-Conforming 085 BUSINESS TYPE: PORTFOLIO SERVICING: RETAINED REVISED: 10/01/2016 PRODUCT CRITERIA 1) PRODUCT BENEFITS: This product is designed for the borrower that may have a non-conforming request for a mortgage loan that, at this time, does not meet all the Secondary Market underwriting criteria but is considered to be a good and profitable loan for Huntington s mortgage portfolio. 2) GENERAL DESCRIPTION: Available Standard Amortization Products: 15 year Fixed Rate (21302) 1/1 ARM (21612) FNMA Plan 2721 2/2/6 caps; Rate adjusts annually. Libor index. 3/1 ARM (21624) FNMA Plan 2723 2/2/6 caps; Rate is fixed for the first 3 years then adjusts annually. Libor index. 5/1 ARM (21634) FNMA Plan 2737 5/2/5 caps; Rate is fixed for the first 5 years then adjusts annually. Libor index. 7/1 ARM (21642) FNMA Plan 2727 5/2/5 caps; Rate is fixed for the first 7 years then adjusts annually. Libor index. 10/1 ARM (21657) FNMA Plan 2729 5/2/5 caps; Rate is fixed for the first 10 years then adjusts annually, Libor index. 15/1 ARM (21658) FNMA Plan None 5/2/5 caps; Rate is fixed for the first 15 years then adjusts annually, Libor index. "Float-Down" Option: Borrower may lock in for any lock period prior to closing. If the market improves during the lock period, the "float-down" option can be exercised one time within 30 days prior to closing. Borrower can only float-down the interest rate one time during the lock period. If borrower chooses to float-down, the buyprice/discount points will remain the same with an adjustment to the interest rate only. Please refer to the Portfolio Rate Sheet for the pricing adjustment for utilizing this option, if applicable. Please submit a request for Huntington Special Approval to Third Party Lending to accomplish the "float-down." No disclosure or Special Feature Code is required to use this option "Float-Out" Option: Borrower may lock in for any lock period prior to closing. Borrower may float-out to a fixed rate product one time within 30 days prior to closing. Borrower can only float-out to a fixed rate product one time during the lock period and loan must meet underwriting criteria for the new fixed rate product. If borrower chooses to float-out, borrower will receive current market pricing for the fixed rate product chosen. Please refer to the Portfolio Rate Sheet for the pricing adjustment for utilizing this option, if applicable. Page 1 of 15
Please request a Huntington Special Approval to Third Party Lending to accomplish the float-out. No disclosure or Special Feature Code is required to use this option Please Note pertaining to Float-Down, and Float-Out Options: Refer to the Portfolio Rate Sheet for appropriate pricing adjustments for longterm locks and/or utilization of these options. 3) TERM: Fixed Rate: Minimum 120 months and maximum 180 months ARMs: Minimum 180 months and Maximum 360 months 4) MINIMUM LOAN AMOUNT: 5) MAXIMUM LOAN AMOUNT: N/A 1-2 Unit: $2,000,000 6) MAXIMUM LTV: See Below PURCHASE & LIMITED CASH-OUT REFINANCE (Standard Amortization) Principal Residence Loan Amount Units LTV/CLTV/HCLTV* Fixed Rate 95% $0 - $417,000 1-Unit 7/1, 10/1, 15/1 ARM 95% 1/1, 3/1 5/1 ARM 95% Fixed Rate 80% $0 - $533,850 2-Unit 7/1 10/1 15/1 ARM 80% 1/1, 3/1, 5/1 ARM 75% Fixed Rate 90% $417,001 - $650,000 1-Unit 7/1, 10/1, 15/1 ARM 90% 1/1, 3/1, 5/1 ARMs 85% Fixed Rate 80% $533,851 - $650,000 2-Unit 7/1, 10/1, 15/1 ARM 80% 1/1, 3/1, 5/1 ARM 75% Fixed Rate 85% 1-Unit 7/1, 10/1, 15/1 ARM 85% $650,001 - $1,000,000 1/1, 3/1, 5/1 ARM 75% Fixed Rate 80% 2-Unit 7/1, 10/1, 15/1 ARM 80% 1/1, 3/1, 5/1 ARM 75% Fixed Rate 75% $1,000,001 - $1,500,000 1-2 Unit 7/1, 10/1, 15/1 ARM 75% 1/1, 3/1, 5/1 ARM 70% Fixed Rate 70% $1,500,001 - $2,000,000 1-2 Unit 7/1, 10/1 15/1 ARM 70% 1/1, 3/1, 5/1 ARM 70% Page 2 of 15
CASH-OUT REFINANCE (Standard Amortization) Maximum Cash-Out of $100,000 Principal Residence Loan Amount Units LTV/CLTV/HCLTV Fixed Rate 80% $0 - $417,000 1-Unit 7/1, 10/1, 15/1 ARM 80% 1/1, 3/1 5/1 ARM 75% Fixed Rate 75% $0 - $533,850 2-Unit 7/1 10/1 15/1 ARM 75% 1/1, 3/1, 5/1 ARM 65% Fixed Rate 80% $417,001 - $500,000 1-Unit 7/1, 10/1, 15/1 ARM 80% 1/1, 3/1, 5/1 ARMs 75% Fixed Rate 80% $500,001 - $650,000 1-Unit 7/1 10/1 15/1 ARM 80% 1/1, 3/1, 5/1 ARM 75% Fixed Rate 75% $533,851 - $650,000 2-Unit 7/1 10/1 15/1 ARM 75% 1/1, 3/1, 5/1 ARM 65% Fixed Rate 70% 1-Unit 7/1 10/1 15/1 ARM 70% $650,001- $1,000,000 1/1, 3/1, 5/1 ARM 65% Fixed Rate 70% 2-Unit 7/1 10/1 15/1 ARM 70% 1/1, 3/1, 5/1 ARM 60% * Please refer to Section 19 for permitted subordinate financing structures The 7/1, 10/1 and 15/1 ARM Products will have the same LTV/CLTV/HCLTV limits as the 15 Year Fixed Rate for Purchase, Limited Cash Out and Cash Out Transactions. The appropriate ARM rates and pricing, however will continue to apply. NOTE: Non-Warrantable Condos are limited to a maximum of 90% LTV/CLTV/HCLTV Please Note: The Limited Cash-Out Refinance category will include only those loans that involve: The payoff of the outstanding principal balance of the existing first mortgage The payoff of the outstanding principal balance of any existing subordinate mortgage that was used in whole to acquire the subject property The financing of closing costs Other funds for the borrower s use (as long as the amount does not exceed 2% of the principal amount of the new mortgage or $2,000 whichever is less) Paying off any subordinate loan that was not for the expressed purpose of purchasing the home is considered a cash-out refinance. If the property was purchased by the borrower within the six months preceding the application for new financing, the borrower is ineligible for a cash-out refinance transaction. Page 3 of 15
7) PROPERTY TYPES: 1-2 Unit Owner Occupied Principal Residence Condominium (Condotels are not permitted) PUD Townhome Second Home Not Permitted Investment Property Not Permitted Manufactured Home Not Permitted 8) MARGIN: 2.25% (Refer to Portfolio Rate Sheet for additional adjustments that may apply) 9) INDEX: 1yr LIBOR (London Interbank Offered Rate): the average of interbank offered rates for one-year U.S. dollar-denominated deposits in the London market (LIBOR) as published in The Wall Street Journal The new interest rate is set forty-five (45) days prior to the adjustment by adding the margin to the index then rounding to the nearest 1/8% 10) INTEREST RATE ADJUSTMENT CAP: 1/1 ARM: 2/2/6 caps Annual Caps: plus/minus 2% of the initial rate at the first adjustment with every subsequent adjustment at plus/minus 2% of the preceding interest rate. Life Cap: plus/minus 6% over the initial interest rate (Rate may never be lower than the margin.) 3/1 ARM: 2/2/6 caps Annual Caps: plus/minus 2% of the initial rate at the first adjustment with every subsequent adjustment at plus/minus 2% of the preceding interest rate. Life Cap: plus/minus 6% over the initial interest rate (Rate may never be lower than the margin.) 5/1 ARM: 5/2/5 caps Annual Caps: plus/minus 5% of the initial rate at the first adjustment with every subsequent adjustment at plus/minus 2% of the preceding interest rate. Life Cap: plus/minus 5% over the initial interest rate (Rate may never be lower than the margin.) 7/1 ARM: 5/2/5 caps Annual Caps: plus/minus 5% of the initial rate at the first adjustment with every subsequent adjustment at plus/minus 2% of the preceding interest rate. Life Cap: plus/minus 5% over the initial interest rate (Rate may never be lower than the margin.) 10/1 ARM: 5/2/5 caps Annual Caps: plus/minus 5% of the initial rate at the first adjustment with every subsequent adjustment at plus/minus 2% of the preceding interest rate. Life Cap: plus/minus 5% over the initial interest rate (Rate may never be lower than the margin.) 15/1 ARM: 5/2/5 caps Annual Caps: plus/minus 5% of the initial rate at the first adjustment with every subsequent adjustment at plus/minus 2% of the preceding interest rate. Life Cap: plus/minus 5% over the initial interest rate (Rate may never be lower than the margin.) 11) BUYDOWN: Maximum 2/1 allowed Loan must be submitted through the AUS system as a Buydown Temporary buydowns are not permitted for 1/1 ARM Not permitted for Cash-out Refinance Not permitted for Interest Only products Page 4 of 15
12) CONVERSION: N/A 13) ASSUMABLE: 1/1, 3/1 ARM: Yes 5/1, 7/1, 10/1, 15/1 ARM: Yes, after initial adjustment Fixed Rate: No UNDERWRITING 14) DOCUMENTATION TYPES: Document to AUS findings Income/asset verification is required If the borrower does not qualify following Fannie Mae income documentation guidelines, then Underwriter may follow Appendix Q guidelines with regard to items outlined below when compensating factors exist (ex. low to moderate LTV, Low DTI, work history, reserves) without requesting an exception. Detailed notes should be made in Unifi regarding decision to follow Appendix Q and compensating factors should be noted. INCOME TYPE Alimony / Child Support Projected Income / New Employment Commission > 25% Self-Employed Income from K1 APPENDIX Q REQUIREMENT Provide Final Divorce Decree, Legal Separation Agreement, Court order or Voluntary Payment Agreement. Proof of receipt DURING past 12 months via cancelled checks, deposit slips, tax returns or court order. Periods less than 12 months is acceptable with adequate documentation of the payer s ability and willingness to make timely payment. Child support may be grossed up Provide copy of executed employment contract and proof of all contingencies have been met. Employment must begin within 60 days (Excluding Dr. Only program). Provide 2 years tax returns and most recent paystub. Commission earned > 1 year but < 2 years may be used if documented as likely to continue and underwriter notates sound rationalization for accepting income Business income reported on a K1 may be used if the business income is determined to be stable. If no compensating factors exist, then standard Fannie Mae guidelines should be followed. 15) QUALIFYING RATIOS: Conforming and Non-Conforming: 33% / 43% Fixed Rate are qualified at the note rate 1/1 ARMs are qualified at the greater of the fully indexed rate or note rate + 2.0% 3/1 and 5/1 ARMs are qualified at the greater of the fully indexed rate or note rate + 2.0% 7/1, 10/1 and 15/1 ARMS are qualified at the greater of the note rate or the fully indexed rate 16) UNDERWRITING GUIDELINES: Standard Fannie Mae / Freddie Mac guidelines except as stated below: Minimum 720 credit score is required Six months PITI Reserves are required for Non-conforming loan amounts If co-borrowers, credit score should be determined from the lower score. Page 5 of 15
Borrowers who have had a charge-off of a Huntington loan product in the last seven years are not eligible for a new Huntington Portfolio product. A signed, IRS 4506T form is required with all new loan submissions. Borrowers who are victims or potential victims of Identity Theft: IRS has implemented a new reject code for individuals have been a victim of, or a potential victim, of identity theft. When a request for tax transcripts from the IRS receives the response Due to limitations, the IRS is unable to process this request, the lender will be unable to obtain the tax transcripts. The taxpayer be contacted by mail and referred to the Identity Protection Security Unit, and may be able to receive the requested tax transcripts, but IRS will not mail the tax transcripts to third parties. Huntington has adopted the following: When IRS rejects the request for tax transcripts due to identity theft in lieu of tax transcripts, one of the following options may be used to document the file: For salaried borrowers, when available, utilized The Work Number s Instant Access Database which will show employment and income records provided by the employer s payroll system; or order W-2 or 1099 transcripts when the only income used to qualified is salaried W- 2 or 1099 reported income. Request the most recent 1040s from the borrower(s) with proof of filing (cancelled check for tax payment, or bank statement showing deposit of refund). Request the borrower obtain the transcripts from the IRS All loans must meet the Ability to Repay (ATR) rules established by the Consumer Financial Protection Bureau (CFPB). The ATR Rule requires that a reasonable, good-faith determination be made in determining that the consumer has a reasonable ability to repay the loan. Generally, ATR must consider the current or reasonably expected income or assets the borrower will rely on to repay the loan; the current employment status, the monthly mortgage payment for the subject loan; the monthly payment on any simultaneous loans secured by the same property; the monthly payments for property taxes and insurance that the consumer is required to buy; debts, alimony & child support obligations; monthly debt-to-income ratio or residual income, calculated in accordance with the ATR final rule; and credit history. Standard Fannie Mae / Freddie Mac guidelines Automated Underwriting System requirements: Conforming loan sizes: Fannie Mae DU/DO: Approve/Eligible An Approve/Ineligible finding in DU/DO for the 10/1 and 15/1 Portfolio ARM products is acceptable, as long as the only reason for the Ineligible finding is due to the ARM plan Freddie Mac LP: Accept An Accept/Ineligible or Invalid finding in LP for the 10/1 and 15/1 Portfolio ARM products is acceptable, as long as the only reason for the Ineligible finding is due to the ARM plan Page 6 of 15
Non-Conforming loan sizes: Fannie Mae DU/DO: Approve/Eligible An Approve/Ineligible due to loan size and LTV/CLTV is permitted An Approve/Ineligible finding in DU/DO for the 10/1 and 15/1 Portfolio ARM products due to ARM plan is acceptable Freddie Mac LP: Accept Accept/Ineligible due to loan size and LTV/CLTV is permitted An Accept/Ineligible or Invalid finding in LP for the 10/1 and 15/1 Portfolio ARM products due to ARM plan is acceptable *The following Fannie Mae ARM Plans should be used when using DU/DO: 1/1 Plan 720 3/1 Plan 651 5/1 Plan 3252 7/1 Plan 750 10/1 Plan 2729 15/1 Plan None Age of Credit Documents Effective with new loans registered on or after July 1, 2013, the maximum age of credit documents is 120 days. Credit documents include credit reports and employment, income, asset, and appraisal documentation. Title Commitment and any applicable Endorsements cannot be dated more than 60 days prior to closing date. The time frame covered by the maximum age of credit documents goes from the date of the document to the date the note is signed. Maximum Number of Properties: Borrowers are limited to a maximum of two financed properties in the Huntington portfolio including their primary residence Borrowers may have a first mortgage and second mortgage on each of the two financed properties Huntington s aggregate mortgage loan obligation per borrower in the portfolio is not to exceed $2,000,000 Non-US Citizens who are lawful permanent or non-permanent residents: Must follow Fannie Mae guidelines; Single family detached housing only; 2 years US credit history required; Must provide documented evidence of residency or a work visa; Not allowed if borrower has diplomatic immunity. Deferred Debt For conforming loan sizes, follow Fannie Mae guidelines using the greater of 1% of the outstanding balance; or the actual payment documented in the credit report or documentation from the student loan servicer supplied by the borrower. If the payment amount cannot be verified, 1% of the outstanding principal balance must be used. Page 7 of 15
For non-conforming loan sizes, follow Appendix Q requirements for deferred debt: Deferred Debt Student loans in Deferment: Student Loan NOT in Deferment: Appendix Q Requirement: Student loan payments do not have to be counted as a monthly obligation if the borrower provides written evidence from a party vendor that the debt will be deferred more than 12 months from the date of closing. Student loan payments not deferred (as defined above) must be included as a monthly obligation for qualifying. The current monthly payment must be verified by a third party vendor such as a credit report or letter from the servicer. Appendix Q does not allow for the use of 1% of the balance when a payment does not report to the credit bureau. The actual payment must be used in qualifying. Use of Business Assets for Closing and/or Reserves Business assets may be an acceptable source of funds for down payment, closing costs and financial reserves when a borrower is self-employed and the individual federal income tax returns have been evaluated by the lender, including, if applicable, the business federal income tax returns for that particular business (non-schedule C). The borrower must be listed as an owner of the account and the account must be verified in accordance with Selling Guide B3-4.2-01, Verification of Deposits and assets. A business cash flow analysis must be performed to confirm that the withdrawal of funds for this transaction will not have a negative impact on the business. Maximum Builder/Seller Contributions: All Huntington Portfolio products must follow Fannie Mae builder contribution guidelines or as outlined below: The maximum permitted builder/seller (interested party) contributions follow Fannie Mae guidelines and are based on the lesser of the property s sales price or appraised value: LTV/CLTV Max Contribution 75.01% to 90% 6% <=75% 9% Condos The following documentation is required for Condo reviews: Fully completed and executed Condominium Project Certification. Condominium project budget Condominium project insurance certificate evidencing Hazard walls-in 100% Replacement Cost, $1,000,000 Liability and Fidelity and HO6 dwelling/building coverage of at least 20% of the appraised value Complete appraisal with all attachments Condominium project Declarations and By-Laws and all amendments. Page 8 of 15
Each request will be reviewed by the Huntington Condo Group for Portfolio eligibility. Calculating Monthly Rental Income (or Loss): o Federal Income Tax Returns, Schedule E: When Schedule E is used to calculate qualifying rental income, the lender must add back any listed depreciation interest, homeowner s association dues, taxes or insurance expenses to the borrower s cash flow. Non-recurring property expenses may be added back, if documented accordingly. o If the property was in service: o For the entire tax year, the rental income must be averaged over 12 months; or o For less than the full year, the rental income must be averaged over the number of months that the borrower used the property as a rental unit. o Lease Agreements: When current lease agreements are used, the lender must calculate the rental income by multiplying the gross rent(s) by 75%. The remaining 25% of the gross rent will be absorbed by vacancy losses and ongoing maintenance expenses. o Treatment of the Income (or Loss): The amount of monthly qualifying rental income (or loss that is considered as part of the borrower s totally monthly income (or loss) and its treatment in the calculation of the borrower s total debt-to-income ratio varies depending on whether the borrower occupies the rental property as his/her principal residence. o Rental income related to principal residence: o The monthly qualifying rental income (as defined above) must be added to the borrower s total monthly income. (The income is not netted against the PITIA of the property.) o The full amount of the monthly payment (PITIA) must be included in the borrower s total monthly obligation when calculating the debt-to income ratio. o Rental Income (or loss) related to a property other than the borrower s principal residence: o If the monthly qualifying rental income (as defined above) minus the full PITIA is positive, it must be added to the borrower s total monthly income. o If the monthly qualifying rental income minus PITIA is negative, the monthly net rental loss must be added to the borrower s total monthly obligations. o The full PITIA for the rental property is factored into the amount of the net rental income (or loss); therefore, it should not be counted as a monthly obligation. o The full monthly payment for the borrower s principal residence (full PITIA or monthly rent) must be counted as a month obligation. o Offsetting Monthly Obligations for Rental Property Reported through a Partnership or an S Corporation: If the borrower is personally obligated on the mortgage debt (as evidenced by inclusion of the related mortgage(s) on Page 9 of 15
o o the credit report) and gross rents and related expenses are reported through the partnership or S corporation, the business tax returns may be used to offset the property s PITA. Following the steps outlined below: o Obtain the borrower s business tax returns, including IRS From 8825 for the most recent year; o Evaluate each property listed on Form 8825, as shown below: From total gross rents, subtract total expenses. Then add back insurance, mortgage interest, taxes, homeowners association dues (if applicable), depreciation, and nonrecurring property expenses (if documented accordingly) Divide by the number of months the property was in service; Subtract the entire PITIA (proposed for subject property or actual for real estate owned) to determine the monthly property cash flow. o If the resulting net cash flow is positive, the lender may exclude the property PITIA from the borrower s monthly obligations when calculating the debt-to-income ratio. o If the resulting net cash flow is negative (that is, the rental income derived from the investment property is not sufficient to fully offset the property PITIA), the calculated negative amount must be included in the borrower s monthly obligations when calculating the debt-toincome ratio. o In order to include a positive net rental income received through partnership or an S corporation in the borrower s monthly qualifying income, the lender must evaluate it according to Fannie Mae guidelines for income received from a partnership or an S corporation. Rental Income Calculation Worksheets: Lenders may use the following worksheets to determine rental income: o Principal Residence, 2-4 unit Property (Form 1037) o Individual Rental Income from Investment Property(s) (Form 1038) o Business Rental Income from Investment Property(s) (Form 1039) Entering Rental Income in DU/DO Subject Property: For entry into DU/DO, the subject net cash flow applies to 1-4 unit investment properties and 2-4 unit principal residences secured by the subject property. DU/DO does not calculate the subject net cash flow. The lender must calculate and enter the income in the Subject Net Cash in Section V of the online loan application. o NOTE: Although negative subject net cash flow values appear to reduce the gross monthly income in Section V, DU/DO actually treats the negative value as a liability and includes in in the debt-to-income ratio. o Calculation of Subject Net Cash Flow: The calculation of subject net cash flow for the security property is the same of loans underwritten through DU/DO as it is for manually underwritten loans. o 2-4 units Principal Residence: Calculate the subject net cash flow, and enter this amount in Section V. It will be included in the total qualifying income. Do not subtract the PITIA from the rental income, as the PITIA is included in the total proposed mortgage payment and is considered in the qualifying ratio. Do not enter a negative subject Page 10 of 15
net cash flow value, because the entire PITIA is already included in the qualifying ratio. o Investment Properties: calculate the subject net cash flow. If the subject net cash flow is negative, enter the amount in Section V as a negative value. DU/DO will include it in the debt-to-income ratios calculation as a liability. If income from the subject property is no included in the qualifying ratios, the lender should enter the entire proposed PITIA as a negative amount in the Subject Net Cash field in Section V. Entering Rental Income in DU/DO Property other than Subject Property: To submit net rental income to DU/DO, the lender can either: o Calculate the total net rental income for all rental properties (except the subject property) and enter the amount (either positive or negative) in the Net Rental field in Section V. If the Real Estate Owned (REO) data is entered, DU/DO will ignore a zero value in this Net Rental field. Therefore, the lender must enter either $0.01 or $-0.01. Otherwise, DU/DO will use the values form Section VI R. o Complete the REO data entered in the URLA (Form 1003) (or in a loan origination system) for each rental property (except the subject property). DUDO will preliminarily calculate the net rental income using the following formula: (gross rental income x 75%) - property PITIA expense = net rental income o The lender should override DU s/do s preliminary calculation, if it is different from the lender s calculation, by entering the net rental income amount directly in the Net Rental field in the Full 1003, Section VI R. o If both methods are used, DU/DO will use the net rental income from Section V (if it is a value other than zero) and issue a message when there is a conflict of data. o If the combined total net rental income for all rental properties is positive, DU/DO adds the net rental income to the qualifying income. If the total is negative, DU/DO treats the loss as a liability and includes it in the debt-to-income ratio. Pending Sale If the borrower s current residence is pending sale and he or she is purchasing a new principal residence, both the current and proposed mortgage payments must be used in qualifying the borrower for the new mortgage loan. Minimum PITI reserves of six months PITI for both properties are required or, if 30% equity in the existing property is documented, two months PITI is required. Current residence PITI will not be required in qualifying the borrower as long as six months of reserves (or 2 months with documented equity) for both properties and the following additional documentation is provided: The executed sales contract for the current residence Confirmation that any financing contingencies have been cleared Property Listing History Page 11 of 15
Properties listed for sale in the six months preceding application for new financing are limited to 70% LTV for Cash-Out Refi s Properties must currently not be on the market at the time of application 17) APPRAISAL REQUIREMENTS: Conforming: Minimum property appraisal requirement is a 1004 interior and exterior inspection. Property Inspection Waivers (PIW) are not permitted Non-Conforming: Minimum property appraisal requirement is a 1004 interior and exterior inspection. Appraisals for high loan amounts/high property values may be subject to technical review by the Huntington Residential Valuation Services Group. Appraisal: If the appraiser states that utilities are not on at the time of the inspection, utilities are not required to be turned on (unless otherwise stated in the purchase agreement) if the appraiser/reviewer can assess that there are no signs of damage or reason to believe there may be cause for concern. If there are signs of damage, (i.e. water marks in drywall, buckling of floor or wall, evidence of mold, age of wiring, limited number of electrical outlets, etc.) loan may be conditioned for the appraiser to comment and/or verify by inspection that utilities/mechanicals are in good working order The borrower(s) has (have) a right to receive copies of all written property valuations sent to them free of charge, regardless of whether credit is extended, denied, or incomplete. 18) INVESTOR APPROVAL REQUIRED: 19) SUBORDINATE FINANCING: Loans will be underwritten by the Huntington Corporate Underwriting Automated Underwriting System (AUS) decisioning required No new subordinate financing is permitted Resubordination of an existing lien is permitted CLTV and HCLTV limits outlined in the LTV grids must be followed 20) MI REQUIREMENTS: REQUIRED ON ANY LOAN WITH LTV > 80.01% Agency approved MI Companies, with coverages as follows: Standard Mortgage Insurance Coverage Requirements Term > 20 years (240 months) Term < 20 years (240 months) 85.01 90% LTV = 25% 85.01 90% LTV = 12% 80.01 85% LTV = 12% 80.01 85% LTV = 6% Single Premium LPMI and Financed Borrower-Purchased Mortgage Insurance are not permitted MI Company Guidelines Please note that MI Carrier guidelines are subject to change at any time. Any loan that is approved under standard Huntington or Investor guidelines must also be insurable. If Huntington is unable to get Page 12 of 15
Mortgage Insurance on a loan for which it is required, the loan will be denied. For more information, please refer to the MI Company web sites for current rate cards The following MI Companies are eligible for this program: MGIC, Radian, Genworth Essent, UG PROCESSING 21) ANCILLARY FEES: Tax Service Fee: $69.00 Insurance Fee: $30.00 Underwriting Fee: $315.00 Flood Certification Fee: $8.10 Title Insurance is required in all markets Escrow Waiver Fee: Please refer to applicable rate sheet for fee. For complete list of fees, refer to applicable rate sheet. 22) PROCESSING DOCUMENTATION: Standard Fannie Mae / Freddie Mac documentation unless otherwise stated below: Exceptions may be granted on a case-by-case basis. Approval must be granted by Huntington Corporate Underwriting HMG Portfolio Exception Form must be completed and signed A signed, executed IRS 4506T form is required with all new loan submissions. 23) DISCLOSURE: The appropriate ARM disclosure must be provided for all ARM loans. Lock and Shop Addendum to the Huntington Mortgage Group s Interest Rate and Points Agreement (if applicable) Integrated Disclosures for loans with application date on or after October 3, 2015 Initial Loan Estimate Initial Loan Estimate issued must be issued within 3 business days of receiving an application. The loan may not close prior to the seventh business day after the initial disclosure was sent A re-disclosed Loan Estimate must be provided when there is a valid change in circumstance. Follow Huntington Policy & Procedures for redisclosure. Closing Disclosure The Closing Disclosure must be received by the borrower within 3 business days prior to closing. Additional time must be added if the Closing Disclosure is provided by mail. Dodd-Frank Related RESPA Requirements Effective for all applications taken on or after January 10, 2014: o A Homeownership Counseling disclosure must be provided to applicants within three (3) business days of receiving a loan application. Evidence must be included in the loan file that the disclosure was provided in the appropriate time frame required. Page 13 of 15
o o The disclosure must provide a clear and conspicuous written list of homeownership counseling organizations that provide relevant services in the loan applicant s location (zip code) The list provided to each loan applicant must be obtained no earlier than 30 days prior to the date the list is provided RESPA/TIL Disclosures for loans with application dates prior to October 3, 2015 RESPA Requirements Initial GFE issued must be incompliance with Reg X and be complete and accurate. Re-disclosed GFE s due to a Change of Circumstance must be documented and a Change of Circumstance re-disclosure log must be included in the loan package. The Final HUD-1 must reflect the accurate GFE amounts in the GFE Column and must match the last valid GFE disclosure. Truth-in-Lending (TIL) Disclosure The TIL disclosure must be complete and accurate and proper and accurate fees must be included in the finance charge calculations. A new TIL disclosure must be provided when the APR is no longer considered accurate. (An APR is inaccurate if it increases by more than.125% from the last disclosed APR.) The loan may not close prior to the seventh business day after the initial disclosure was sent. If the loan is re-disclosed, the loan may not close prior to the third business day after re-disclosure was received by the borrower. 24) AUDIT GUIDELINES: Huntington Standard Policies and Procedures 25) HAZARD INSURANCE: Purchase transactions: Required with one year paid receipt and 2 months reserves Refinance transactions: Proof of insurance is required and applicable number of months escrow collected to ensure full payment at renewal 26) SURVEY: Survey required only if title company will not issue a final policy without exceptions. 27) ESCROW AGGREGATE ACCOUNTING: Huntington Standard Policies and Procedures LEGAL DOCUMENTS 28) NOTE: Fixed: Fannie Mae Form 3200 1/1 & 3/1 ARMs: Fannie Mae Form 3526 5/1, 7/1, 10/1 & 15/1 ARMs: Fannie Mae Form 3528 29) RIDER: Fixed Rate: N/A 1/1 & 3/1 ARMs: Fannie Mae 3189 5/1, 7/1, 10/1 & 15/1 ARMs: Fannie Mae Form 3187 Page 14 of 15
30) SECURITY INSTRUMENT: State specific Fannie Mae/Freddie Mac Form OTHER 31) MARKET RESTRICTIONS: Can lend in all 50 states except the areas identified below: Cannot lend on properties in Dade or Broward County in the State of Florida 32) CONSTRUCTION PERMANENT MODIFICATIONS: N/A PROFILE REVISION HISTORY 02/01/2012 Appraisals for high loan amount & high property values may be subject to technical review by HNB Residential Valuation Services Group 03/01/2012 Added language regarding DRIVE Report 06/01/2012 Used of Business Assets for Closing and/or Reserves 07/01/2012 Added requirements for detached condos 11/19/2012 Eliminate 30 due in 15 product & added 10/1 and 15/1 ARM products 04/01/2013 Clarification of when survey is required. 07/01/2013 Age of Credit Docs 120 days 07/26/2013 Discontinued Interest Only Products (3/1, 5/1, 7/1 ARMs) 10/11/2013 Clarification: see Portfolio Rate Sheet for additional adjustments 01/10/2014 Max DTI reduced from 45% to 43%; Incorporated ATR and RESPA, TILA & HB Counseling disclosure requirements 02/08/2014 Tax Service Fee reduced to $69 5/15/2014 Title commitment & endorsements cannot be dated more than 60 days prior to closing 06/01/2014 Flood cert fee reduced to $7.50 (from $8.10) 11/01/2014 Use of business assets for closing/reserves follow Fannie Mae guidelines 12/15/2014 Appraisal: clarification for when utilities are required to be turned on 04/01/2014 Further clarification on appraisals when utilities are turned off 06/01/2015 Options to be used when IRS rejects a request for tax transcripts due to identity theft 10/01/2015 Requirements for Non-US Citizens; New TRID Disclosures 12/01/2015 Instructions for the calculation of rental income 01/11/2016 Increase in Loan Amount and LTV for Purchase & LCO transactions 02/01/2016 Appendix Q: documenting compensating factors 02/11/2016 Appendix Q requirement for deferred debt 09/13/2016 Removed ARM disclosures. TPL client to provide own ARM disclosures 10/01/2016 Non-warrantable condos are limited to a maximum of 90% LTV/CLTV/HCLTV Page 15 of 15