Correspondent Overlay Matrix The Overlay Matrix is a summary of Pacific Union Financial, LLC (Pacific Union) guideline overlays. This document should be used in conjunction with Pacific Union published guidelines and is not intended as a replacement to those guidelines. Where the Overlay Matrix is silent or conflicts with published guidelines, the published guidelines will prevail. NDC - Non Delegated Correspondent DC -Delegated Correspondent 4506T/Tax Transcripts Automated Underwriting Systems (AUS) (excluding USDA/GUS) Topic Overlay NDC DC Ineligible Borrowers Ineligible Property Types All Products Tax return transcripts must be provided for each year of income documentation. Note: Refer to DU Refi Plus and Freddie Mac Relief Refinance for requirements. Income reported on the transcript must support the income entered in the AUS system. Any major discrepancies between the income verified in the file and tax transcripts must be reasonable and supported by documentation in the file. Loans submitted to DU or LPA that do not receive a credit approval may not be submitted to the other automated underwriting system. Note: This rule does not apply to loans that do not receive an AUS approval due to non-credit related items, such as product/program eligibility. New York: CEMA purchase transactions are not allowed Note: CEMA refinance transactions may be allowed, refer to the applicable product guidelines and overlays for eligibility. Borrowers without a Social Security Number. ITIN s are not eligible. Loan may not be in the name of a Trust No Co-op properties in any state. Loan Terms Loan term available in five year increments only Minimum Loan Amount Mortgage Credit Certificates Minimum $50,000 loan amount Not allowed No Property Assessed Clean Energy (PACE) loans applies to new or existing subordinate financing on purchase and refinance transactions. Overlay Matrix Correspondent External Page 1 of 8 January 16, 2017
Verbal VOE Required within five business days of closing. Required within ten business days of closing. FHA Credit Scores Debt-to-Income Ratio Income Ineligible Features Ineligible Products Specialty Purchase and Rate/Term Refinance: 560 if LTV 90% - Conforming and High Balance Credit Qualifying Streamline Refinance: 560 if LTV 90% - Conforming and High Balance If a Pacific Union serviced loan is being paid off, no minimum score required Cash-out Refinance: Conforming Balance: 600 if LTV >75% but 80% 560 if LTV 75% High Balance: 580 if LTV 75% 2-4 unit properties with Total Scorecard Approve / Accept Eligible Transactions regardless of geographic location: Maximum 50% DTI ratio if ANY borrower is a first-time homebuyer. New Jersey Overlays TOTAL Scorecard approved and manually underwritten loans for 2-4 unit properties: Maximum 50% DTI ratio 2 units: Three months PITI required 3-4 units: Six months PITI required Satisfactory 12 months housing expense must be verified by credit report or cancelled checks. Borrowers living rent free during the most recent 12 months are NOT eligible. Section 8 subsidies may NOT be used to offset the borrower s mortgage payment. Mortgage Credit Certificates (MCC) are not allowed. Building on own land Construction to Perm Easements and Deed Loans with resale deed restrictions Proposed or Under Construction Section 203(k) Rehabilitation Mortgage Economic Life / Section 223(e) loans Energy Efficient Mortgages (EEM) Hawaiian Homelands Loans to Non-Profit Organizations Texas: Texas Home Equity loans Reverse Mortgages Section 248 Mortgages on Indian Reservations and Other Restricted Lands Good Neighbor Next Door Overlay Matrix Correspondent External Page 2 of 8 January 16, 2017
Ineligible Property Loan Terms Property Listed for Sale Refinance Transactions Restructured Mortgages Section 203(h) Mortgage Insurance Disaster Victim Credit Scores Debt-to-Income Ratio for Credit Qualifying Transactions Ineligible Features Ineligible Products Ineligible Property Condos not on FHA s Approved List (DELRAP Approvals by another lender are not acceptable). Manufactured Homes in a mobile home park 15 Year Fixed Rate High Balance 10 Year term Eligible for Rate/Term, Simple Refinance or Streamline Refinance if listing was expired or cancelled prior to application date. Eligible for Cash-Out Refinance if listing was expired or cancelled >90 days prior to loan application date. Simple Refinance and Credit Qualifying Streamline: Effective with loans locked on or after November 8, 2016: Six consecutive monthly payments are required prior to the case number assignment date. Non-Pacific Union Financial serviced loans must meet agency requirements and must have a 24 month mortgage payment history immediately after the loan was restructured. In addition to meeting the agency requirements during the 6-12 month payment period, no late payments are allowed during the 13-24 month period immediately after the loan was restructured. Note: A 24 month payment history is not required if Pacific Union to Pacific Union refinance transaction. 580 minimum credit score Ineligible features and transaction types include the following: Refinance transactions 2-4 unit properties HUD REO transactions Manufactured homes VA Standard 620 - All occupancy, loan purposes and loan amounts Specialty Primary Residence 560 Conforming Balance Purchase 560 Conforming Balance and High Balance Cash-Out 600 High Balance Purchase Refer/Eligible recommendations or manually underwritten loans: 43% DTI, with the exception of insufficient credit. 41% DTI for insufficient credit transactions (no credit references or only group II non-traditional credit references) New York: CEMA transactions are not allowed Loans for Alterations and Repairs Loans to Native American Veterans on Trust Lands One Year, 7/1 and 10/1 ARM Texas: Texas Home Equity Condos not on the VA approved list - VA Prior Approval required Leaseholds Overlay Matrix Correspondent External Page 3 of 8 January 16, 2017
Loan Amount Maximum $1,200,000 base loan amount Loan Terms LTV/CLTV Modified Mortgages Prior Approval Loans Refinance Transactions Restructured Mortgages 15 Year Fixed Rate - High Balance 10 Year term Cash-Out- Specialty Primary Residence: 1-4 units: 90% max LTV/CLTV IRRRL: Standard Primary Residence: 1 unit: 130% max LTV/CLTV 2-4 units: 100% max LTV/CLTV Specialty Primary Residence: 100% max LTV/CLTV Standard and Specialty Second Home and Investment Properties: 100% max LTV/CLTV Non-Pacific Union Financial serviced loans must be current and have no late payments during the 24 month period immediately after the modification. Note: A 24 month payment history is not required if Pacific Union to Pacific Union refinance transaction. Loans that require VA prior approval (such as Joint Loans, loans to veterans that have been rated incompetent, and IRRRL of a delinquent loan) are NOT eligible. Interest Rate Reduction Refinance: Effective with loans locked on or after November 8, 2016: Six consecutive monthly payments are required prior to the loan application date. Non-Pacific Union Financial serviced loans must meet agency requirements and must have a 24 month mortgage payment history immediately after the loan was restructured. In addition to meeting the agency requirements during the 6-12 month payment period, no late payments are allowed during the 13-24 month period immediately after the loan was restructured. Note: A 24 month payment history is not required on Pacific Union to Pacific Union refinance transactions. USDA Escrow Holdbacks Not allowed Ineligible Products Modified Mortgages Restructured Mortgages/Short Pay-off New York: CEMA transactions are not allowed Proposed/New Construction Rural Energy Plus Provisions Texas: Texas Home Equity loans Non-Pacific Union Financial serviced loans must be current and have no late payments during the 24 month period immediately after the modification. Note: A 24 month payment history is not required on Pacific Union to Pacific Union refinance transactions. Non-Pacific Union Financial serviced loans must meet agency requirements and must have a 24 month mortgage payment history immediately after the loan was restructured. In addition to meeting the agency requirements during the 6-12 month payment period, no late payments are allowed during the 13-24 month period immediately after the loan was restructured. Overlay Matrix Correspondent External Page 4 of 8 January 16, 2017
Note: A 24 month payment history is not required if Pacific Union to Pacific Union refinance transaction. Conventional Credit Score Fannie Mae/Desktop Underwriter (DU) 10.0 casefile submissions on or after September 24, 2016: A qualifying credit score 620 is required for at least one borrower on the transaction, regardless of DU approval. Loan casefiles that include borrowers without a usable credit score are eligible only when the borrower with the credit score contributes more than 50% of the total monthly qualifying income. Note: The borrower without a credit score must contribute 50% or less of the qualifying income and non-traditional credit is not acceptable, regardless of DU messaging. Freddie Mac/Loan Product Advisor (LPA): Minimum 620 credit score required, regardless of LPA approval. Income Self-Employed: Requires an audited Profit and Loss statement if a higher income than what is supported on the tax returns is used to determine qualifying income. Ineligible Features Energy Efficient Mortgages (EEM) Ineligible Products Ineligible Property Property Listed for Sale Refinance Transactions with a PACE Lien Underwriting Fannie Mae HomeStyle Renovation Freddie Mac Renovation Mortgages Manufactured Homes are not allowed Resale restricted properties: Fannie Mae/Desktop Underwriter (DU): Not allowed Freddie Mac/Loan Product Advisor (LPA): Income-based resale restrictions that survive foreclosure or completion of a deed-in-lieu of foreclosure are not allowed. Properties listed for sale are eligible subject to the following: The listing must have been cancelled at least one day prior to the disbursement date of the new loan. A copy of the MLS cancellation meeting this requirement must be included in the loan file. A signed letter of explanation from the borrower explaining why property was listed for sale and removed, and if Primary Residence, statement of intent to continue to occupy the property. Additional Requirements for Cash-Out Refinance Transactions A property that was listed for sale within the six months prior to the disbursement date of the new loan is limited to the lower of 70% LTV/CLTV/H(CLTV) or the maximum allowed for the transaction. Note: Portions of this policy are an overlay to Fannie Mae loans. The entire policy is an overlay to Freddie Mac/Conventional loans as Freddie Mac does not have a policy for property listed for sale. Fannie Mae/Desktop Underwriter (DU): Rate/Term refinance transactions are not allowed when loan proceeds will pay off a PACE or PACE-like obligation. Loans with Community/Affordable Seconds subordinate liens are not eligible. Manual underwriting not allowed. DU Approve/Eligible or LPA Accept/Eligible required. Overlay Matrix Correspondent External Page 5 of 8 January 16, 2017
Verbal Verification of Employment (VOE) Assets Credit Score Income For casefile submissions to DU 10.0 on or after September 24, 2016: Non-traditional credit is not allowed. Desktop Underwriter (DU) Self-Employed Income: The existence of the borrower s business must be verified within 30 days prior to the Note Date. Fannie Mae HomeReady Sweat Equity For casefile submissions to DU 10.0 on or after September 24, 2016: A qualifying credit score 620 is required for at least one borrower on the transaction, regardless of DU approval. Loan casefiles that include borrowers without a usable credit score are eligible only when the borrower with the credit score contributes more than 50% of the total monthly qualifying income. Note: The borrower without a credit score must contribute 50% or less of the qualifying income and non-traditional credit is not acceptable, regardless of DU messaging. New York: CEMA refinance transactions are not allowed Boarder Income Non-Borrower Household Income Ineligible Products Adjustable Rate Mortgages (ARMs) Loan Amount Limits Conforming loan limits only; High Balance loans are not allowed. LTV/CLTV Mortgage Insurance Property Temporary Buydowns Underwriting Verbal Verification of Employment (VOE) Purchase: Maximum 97% LTV/CLTV Rate/Term: Maximum 95% LTV/CLTV LPMI Minimum MI Coverage (with an LLPA) No 2-4 unit properties No resale restricted properties No Community Seconds Not allowed Manual underwriting is not allowed. For casefile submissions to DU 10.0 on or after September 24, 2016: Non-traditional credit is not allowed. Self-Employed Income: The existence of the borrower s business must be verified within 30 days prior to the Note Date. Freddie Mac Home Possible Overlay Matrix Correspondent External Page 6 of 8 January 16, 2017
Assets Topic Overlay NDC DC Cash on Hand Sweat Equity Credit Score Minimum 620 credit score required, regardless of LPA approval. Income Boarder Income is not allowed Ineligible Products Adjustable Rate Mortgages (ARMs) LTV/CLTV Maximum 97% LTV/CLTV on Home Possible Advantage Mortgage Insurance Property Temporary Buydowns LPMI Custom Minimum MI Coverage (with an LLPA) No 2-4 unit properties No income-based resale restrictions that survive foreclosure or completion of a deed-in-lieu of foreclosure. No Affordable Seconds Not allowed Underwriting Manual underwriting is not allowed. Credit Score DU Refi Plus Effective for loans locked on or after September 20, 2016: Minimum 620 credit score required, regardless of DU approval. Ineligible Products ARMs not allowed Ineligible Property Manufactured Homes are not allowed LTV/CLTV Primary Residence (1-4 unit), Second Home, Investment Property (1-4 units): Maximum 135% LTV with unlimited CLTV. Primary Residence (1 unit): Maximum 200% LTV/CLTV All occupancies and units: Maximum 200% LTV Mortgage Payment History Non-Pacific Union to Pacific Union transactions: The existing loan must be current Property No resale restricted properties Loans with Community/Affordable Seconds subordinate financing are not eligible Tax Transcripts Non-Pacific Union to Pacific Union transactions: Tax transcripts are required. Verbal Verification of Employment (VOE) Self-Employed Income: The existence of the borrower s business must be verified within 30 days prior to the Note Date. Overlay Matrix Correspondent External Page 7 of 8 January 16, 2017
Credit Score Topic Overlay NDC DC Freddie Mac Relief Refinance Effective for loans locked on or after September 20, 2016: Minimum 620 credit score required, regardless of LPA approval. Ineligible Products ARMs not allowed Leaseholds Not allowed LTV/CLTV Primary Residence (1-4 unit), Second Home, Investment Property (1-4 units): Maximum 135% LTV with unlimited CLTV Primary Residence (1 unit): Maximum 200% LTV/CLTV All occupancies and units: Maximum 200% LTV Property No income-based resale restrictions that survive foreclosure or completion of a deed-in-lieu of foreclosure. Tax Transcripts Non-Pacific Union to Pacific Union transactions: Tax transcripts are required. Overlay Matrix Correspondent External Page 8 of 8 January 16, 2017