PORTFOLIO 5/1 ARM BANK STATEMENT ONLY & FOREIGN NATIONAL PROGRAM LTV Purchase & R/T Refi Cash-out Refinance O/O & SFR N/O/O 75% 65% N/O/O 2 to 4 units 70% 65% Foreign National (N/O/O) Based on subject property s Debt service Coverage (DSC) Foreign National (2 nd home) max 50% LTV LTV DSC 60% 1.3X 50% 1.2X 40% 1.1X Loan amount Minimum Maximum Cash-out limit $100,000 $1,000,000 $300,000 ARM TERMS MARGIN CAPS INDEX 3.500% 5/2/5 1yr LIBOR *available for CA, WA & OR properties REQUIRES INVESTOR APPROVAL All loans will be reviewed for unacceptable Red Flags such as Straw Buyers, Non Arms Length Transactions and Flip transaction. Loans which have been determined to have fall under those parameters will require Sr. Management review and will be denied for financing. www.mcflending.net PORTFOLIO ARM Update: 3/11/2014 1
SELF-EMPLOYED BANK STATEMENT INCOME PROGRAM Product Details Bank Statements Product Guidelines Income- for self employed individuals will consider 12 consecutive months personal bank statements (one account only) to verify ability to repay. Additionally, the self employed borrower must be able to provide, from a third party, acceptable documentation reflecting their self employed business and percentage of ownership. Personal Account (only one account maybe used to determine qualifying income you cannot mix checking and savings) Deposits must be consistent and typical Large Deposits more than 25% of the total monthly qualified income and/or typical deposits must be sourced to determine if funds came from a business source. If another person is on the bank statements (and not on the loan) other than the borrower who is 50% owner of the business only 50% of the total deposits can be used. Non borrowing spouse on the bank statements you must determine which portion of the income is the borrower. If the borrower owns rental properties you must provide a copy of the Sch. E and the monthly rental income must be backed out of the total deposits for the average of the total S/E qualified income. Determined Total monthly average deposited and divided by 12 to determine the qualifying income No non-sufficient funds AND no negative balances on the bank statements. Deposits that cannot be used in the average of the total S/E qualifying income are as follows Credit back from credit/debit returns Direct Deposit for spouses income Direct Deposits for VA/SSI/Disability Transfers from another account (if borrower transfers money from his business account to pay themselves the transfers must be consistent and not on off s) Interest paid Child Support or Foster Care income Payroll Advance Rental Income Large Deposits by more than 25% of total income that can t be determined as an income source In some instances may allow business bank statements to be used. If the following: The borrower(s) use their personal bank account as their business bank account The borrower is 100% owner of the business and uses business account for all transactions The borrower is paid 1099 and files a schedule C vs. Corporate returns www.mcflending.net PORTFOLIO ARM Update: 3/11/2014 2
Maximum Number of Properties Ineligible Property types: Transactions There is no maximum number of properties, but the total indebtedness to a single entity may not exceed $1 million. Log cabins Geodesic domes Cooperatives CondoHotels Mobile homes Manufactured homes Non warrantable condos (generally) Floating homes Purchases R/T Refinances C/O Refinances Could not have been purchased for cash in past six months using gift funds. Any transactions less than 6 months from acquisition must source all funds. Interested (Third) Party Contributions not to exceed 3% If current residence is being converted to rental or retained as second home the LTV on that property should be verified and leverage should not exceed 70% Can t be listed for sale in previous 6 months prior to the application date 6 months seasoning and must clearly reflect a benefit to the borrower Subordinate lien is purchase money second or was financed over 12 months if second lien is a HELOC document no withdraws in the last 12 months. Payoff of 1st lien and purchase money seconds only Payoff s of delinquent taxes, subordination cost or Hazard premiums are considered cash out Can t be listed for sale 6 months prior to the application date 12 Months seasoning Cash out refinance within 12 months of acquisition max LTV 65%. Will consider 75% LTV with value supported by an acceptable appraisal and loan request must be less than the total of 75% of acquisition plus hard dollar improvements (cost of improvements must be documented). Properties Purchased for Cash in past 12 months: Max LTV 65% value supported by an acceptable appraisal and loan request must be less than the total of 65% of acquisition plus hard dollar improvements (cost of improvements must be documented and the appraiser must also comment on the cost of improvements). www.mcflending.net PORTFOLIO ARM Update: 3/11/2014 3
Occupancy Delegation Borrower Eligibility Vesting Credit History Debt ratio Assets Owner Occupied Second homes Non Owner Requires Investor approval. Process speed subject to MCFI & Investor s combined turn-times U.S. Citizen Permanent Resident Alien (Green Card) Non Permanent Resident Aliens with acceptable Visa (must permanently reside in the US and have 2 years residency, 2 years credit and 2 years employment) Many vesting options available including LLC s and LLP s When Vesting in the Name of an LLC s and LLP s the borrowers must sign a Limited Liability Company Resolution to Borrow/Grant Collateral. If the borrower is not 100% owner all owners must sign. A copy of the Articles of Incorporation and/or By Laws. Non eligible vesting Irrevocable Trusts Minimum 3 trade lines open and active must have depth of credit. Ideally, one trade would include installment debt Non-traditional credit not acceptable for this program Min Credit Score 700 (Middle of three scores and Lowest of all borrowers listed on the application) Tri-merged report within 60 days of the Note Date (all mortgage ratings must be current for the month due) Bankruptcy, short sale or foreclosure 7 years from date of discharge less than 7 year will be considered on a case by case basis with a satisfactory written explanation (and will require a reduced LTV) No mortgage lates in past 12 months and no more than 1x30 in the last 24 months with a satisfactory explanation Judgments must be released and over 24 months old etc. Must include Cleared OFAC name check and SSN Fraud Verification 50% Max Must include the following when calculating the debt to income ratio for recurring obligations: Other continuing Obligations (example 401K loans) Revolving account monthly payment calculation if the credit report reflects an outstanding balance but no specific minimum payment, the payment must be calculated as the greater of 5% of the outstanding balance or $10.00. Contingent liability on Co-signed debt must be included in the debt unless documented proof that the other obligor has been making regular payments during the previous 12 months, and does not have a history of delinquent payments on the loan. No non occupant co-borrowers allowed All assets used to qualify a borrower must be sourced and verified (12 months statements) Gift funds, the borrower must have at least 5% of own funds into the transaction on owner occupied properties. Gift funds are not allowed on N/O/O transaction. www.mcflending.net PORTFOLIO ARM Update: 3/11/2014 4
Reserves Purchase Contracts Appraisal No Flip transactions Title Policy All loans require 6 months PITI in verified liquid reserves. Borrowers who own additional rental properties must have 6 months PITI for each additional financed property. Must be executed by all parties and include all addendums No assignments of contract Must not include personal property in the purchase price Must not be expired at time of funding All loans require a full appraisal No health and safety issues with property Escrow holdbacks are discouraged, and if permitted by exception they cannot exceed 3% of appraised value Maximum of 2 refinances in a 12 month period (Field Review required, maximum appreciation is 10%) Full Alta Policy only: Effective date of 90 days or less from the Note Date Must included all applicable endorsements Fee Simple only www.mcflending.net PORTFOLIO ARM Update: 3/11/2014 5
FOREIGN NATIONAL PROGRAM Product Details Borrower Eligibility Occupancy Product Guidelines Foreign National Not U.S. Citizens, or Permanent Resident Aliens, or Non Permanent Resident Aliens who have resided and worked in the US for 2 years or more on a work Visa. Valid Visa (B-1 or B-2 Visitors visa with I-94 stamp front and back). Visa must display a photo the borrowers name, address and date of birth) or EB- 5 Visa or Resident Alien Card (if date of birth is not included on the visa we will require a second form of identification i.e. Foreign Military Id Card, Foreign Drivers License, National Identification Card, Civil Birth Certificate) All borrowers must have a ITIN (Individual Tax Identification Number) or a Social Security Number Second homes Second home 50% LTV - foreign nationals purchasing a second home must provide satisfactory income documentation, full documentation. Investment Properties - Will not require Foreign Tax Returns rather document ability to repay based on Debt Service Coverage using market rents and verified reserves, Assets Non-owner 60% LTV with DSC of 1.30 50% LTV with DSC of 1.20 40% LTV with DSC of 1.10 Delegation Maximum number of Properties Ineligible Property types: (Foreign Nationals purchasing an investment property must verify where their source of income is generated i.e. employment) Requires Investor approval. Process speed subject to MCFI & Investor s combined turn-times There is no maximum number of properties, but the total indebtedness to a single entity may not exceed $1million. Log cabins Geodesic domes Cooperatives CondoHotels Mobile homes Manufactured homes Non warrantable condos (generally) Floating homes www.mcflending.net PORTFOLIO ARM Update: 3/11/2014 6
Transactions Assets Credit History Income Purchase Contracts Appraisal No Flip transactions Title Policy Purchases Interested (Third) Party Contributions not to exceed 3% Requires 12 months seasoning Can t be listed for sale in previous 6 months prior to the application date 6 months seasoning and must clearly reflect a benefit to the borrower Subordinate lien is purchase money second or R/T Refinances was financed over 12 months if second lien is a HELOC document no withdraws in the last 12 months. Payoff of 1st lien and purchase money seconds only Payoff s of delinquent taxes, subordination cost or Hazard premiums are considered cash out Requires 12 months seasoning C/O Refinances Can t be listed for sale 6 months prior to the application date All assets used to qualify a borrower must be sourced and verified (3 months statements) 50% gift allowed on 2 nd home. Gift not allowed on investment property. 12 months reserves PITI for the subject property borrower are required to replenish required reserves every 6 months to keep the balance at a sufficient level to cover the next 12 months payments. Establish a US bank account prior to closing for down payment and reserves allowing for ACH withdrawal of Monthly Mortgage Payments All documents in a Foreign language must be translated by a certified third party translator International Credit Report or 3 Credit References from Country or origin one of which should be from a financial institution All documents in a Foreign language must be translated by a certified third party translator Must be executed by all parties and include all addendums No assignments of contract Must not include personal property in the purchase price Must not be expired at time of funding All loans require a full appraisal No health and safety issues with property Escrow holdbacks are discouraged, and if permitted by exception they cannot exceed 3% of appraised value Maximum of 2 refinances in a 12 month period (Field Review required, maximum appreciation is 10%) Full Alta Policy only: Effective date of 90 days or less from the Note Date Must included all applicable endorsements Fee Simple only www.mcflending.net PORTFOLIO ARM Update: 3/11/2014 7