First Guaranty Mortgage Corporation Lock Policy and Procedures

First Guaranty Mortgage Corporation Lock Policy and Procedures Locking Loans (Updated 06/09/2014) All Correspondent Sellers have the ability to submit locks, extensions, and change request online. Off sheet pricing requests, transactions requiring a manual lock request or locks done via FGMC extended lock option will need to be submitted using a manual lock form to cdlock@fgmc.com To view a current list of manual lock reasons, review Transactions Requiring a Manual Lock Request (http://fgmccorrespondent.com/printableform.aspx) Correspondent Sellers access online locking by logging into the TPO Web Center http://fgmccorrespondent.com For more information please review our TPO Product Pricing User Guide located on the FGMC Correspondent website under forms (http://fgmccorrespondent.com/printableform.aspx) or contact your Account Executive. If you are having trouble with our online portal or locking, please contact submissionhelp@fgmc.com FGMC Lock desk is open until 7:00 p.m. EST for Conforming and Non-Conforming products. Locks received after 7:00 p.m. EST will be processed with the following business days pricing once pricing is made available. Pricing is made available every morning once Rate Sheets have been updated and sent. Pricing is updated between 9:45 a.m. and 10:30 a.m. EST every business day. Pricing may also be updated throughout the day as needed and new Rate Sheets will be sent out. FGMC does not offer overnight price protection. Note: Correspondent Sellers may access historical pricing via our online locking system if available but it is the responsibility of the Correspondent Seller to keep historical records of FGMC rate sheets and lock confirmations. FGMC Correspondent Lock Policy and Procedures Page 1

BEST EFFORTS / MANDATORY LOCKS Via Correspondent Rate Sheet only Best Efforts Lock Definition (Updated 02/10/2014) A Best Efforts Lock is an agreement between FGMC and the Correspondent Seller for the purchase and sale of specified eligible Mortgage loans by a specific date for a specific price. The Correspondent Seller commits to provide their best efforts to sell the loan to FGMC. Best Efforts locks are borrower and property specific. For loans that do not close, Correspondent Sellers may cancel the lock without incurring a pair-off fee. For Re-Locks, Correspondents are obligated to perform within the Re-Lock terms of this policy. Note: A loan may not be switched from Best Efforts to Mandatory after a loan has been locked. Mandatory Lock Definition (Updated 02/10/2014) A Mandatory Lock is an agreement between FGMC and the Correspondent Seller for the purchase and sale of specified eligible Mortgage loans by a specific date for a specific price. The Correspondent Seller commits to sell loan(s) to FGMC and failure to do so may result in a pair-off. Note: A loan may not be switched from Mandatory to Best Efforts after a loan has been locked. Service Release Premium (SRP) (Updated 02/10/2014) FGMC pays the Correspondent Seller a Service Release Premium (SRP) on each loan based on specific loan criteria. The SRP is included in the GNMA (FHA, VA, USDA loans) base pricing. The SRP grid for FNMA loans can be found on the FGMC Correspondent Rate Sheet on the tab labeled SRP Grid. FGMC Correspondent Lock Policy and Procedures Page 2

Loan Registration (Updated 02/10/2014) All loans must be registered prior to requesting a lock. For instructions on how to register a loan please refer to Web Portal Instructions located on the FGMC correspondent website under forms (http://fgmccorrespondent.com/printableform.aspx) Lock Confirmations (Updated 02/10/2014) Lock confirmations are sent automatically via email to the Correspondent Seller upon FGMC confirming a lock that was requested via FGMCs online locking system. All lock confirmations will be sent to the email assigned to the User during their online portal setup when they signed up with FGMC. If you do not receive a lock confirmation upon locking a loan online please email cdlock@fgmc.com to ensure that your most recent contact email is on file. In addition, all Lock Confirmations for loans that are locked online may be retrieved after a loan is locked by the Correspondent Seller at any time. For Instructions on how to retrieve lock confirmations online, please refer to the TPO Product Pricing User Guide located on the FGMC Correspondent website under forms (http://fgmccorrespondent.com/printableform.aspx) or contact your Account Executive. Lock confirmations for all manual requests will be sent via email by the FGMC lock desk within 24 hours of request. Off sheet Pricing Request (Updated 04/29/2014) Request for off sheet pricing must be submitted to cdlock@fgmc.com no later than 4 p.m. EST and confirmed with FGMC no later than 5 p.m. EST. In addition, off sheet pricing is only available as a mandatory delivery. Duplicate Locks (Updated 02/10/2014) Correspondent Sellers must monitor their pipeline to prevent duplicate loans and double locks (same borrower, same property address, etc.). A lock commitment is associated with one specific physical address. If a property address changes, a new lock is required and will not be considered a duplicate lock. In the event that the Correspondent Seller locks a loan with the same property address more than once, the following procedures will apply FGMC Correspondent Lock Policy and Procedures Page 3

If two loans are registered and locked with same borrower/property address and Then the... Both loans have locks that are active, Original loan will remain active and FGMC will apply worse case pricing between the two locks. The second loan will be canceled and will count against the Seller s fallout percentage. the original loan is canceled and a new loan, Worse case pricing and applicable relock fee with the same property address is locked 30 will apply, in addition to all previous relock days from the cancellation date, and extension fees. The second loan will be canceled and will count against the seller s fallout percentage. Note: In the event that the Correspondent Seller locks a loan mandatory with the same property address more than once and both locks are active; the second loan will be canceled and subject to a pair-off fee and count towards the Correspondent Sellers fallout percentage. Fallout (Updated 02/10/2014) FGMC will monitor Correspondent Sellers fallout percentages. FGMC will contact Correspondent Sellers with excessive fallout percentages (Typically over 20%) to determine the origin. FGMC Correspondent Lock Policy and Procedures Page 4

Lock Periods (Updated 03/05/2014) The standard lock periods include 15, 30, 45, and 60 days. Extended Locks are available; see Extended Lock Option in this policy. Remember that before a lock can be tracked and confirmed from FGMC s system, the loan must be registered in the portal. Additionally: - Loans must be in Approval prior to lock expiration (i.e. cleared for purchase) The closed loan package must be received AND Loan has been reviewed and cleared by FGMC Due Diligence for all prior to purchase (suspense) conditions. - For loans that are delivered to FGMC by the lock expiration date, an automatic and free 10 day extension will be applied. - The 10 day free extension will provide additional time to clear prior to purchase suspense conditions. - If loan has not been cleared for purchase after the free 10 days, automatic extensions will be charged per the rate sheet in increments of 15 days. - After 45 days of automatic extensions at a charge, the lock will expire and subject to re-lock or pair-off fees per this policy. Note: Loans must be delivered to FGMC in fundable condition (credit and closed loan package) on or before 11:59pm EST one calendar day prior to the lock expiration date. If FGMC detects a deficiency during the funding review process, suspense condition(s) will be issued on the online portal for the Correspondent Seller to access or through direct email contact with the Correspondent Seller. It is the Correspondents responsibility to review and clear these suspense items quickly in order to avoid extension charges. ***Free and Auto Extensions do not apply to Non-Conforming loans*** Lock Expiration Date (Updated 02/10/2014) When the initial lock expiration date falls on a weekend or holiday the lock expiration date is automatically moved to the next business day. Loans must be delivered in fundable condition (credit and closed loan package) on or before 11:59pm EST one calendar day prior to the lock expiration date. Loans delivered after the lock expiration date will be subject to FGMC Relock policies. FGMC Correspondent Lock Policy and Procedures Page 5

Lock Extensions (Updated 04/29/2014) (Only applies to lock extensions done prior to delivery of loan to FGMC. Otherwise, charged Auto Extensions apply as listed in Lock Periods section of this policy) Correspondent Sellers may request an extension on or before the lock expiration date. If a lock is expired an extension may not be requested and the loan must be relocked. When requesting an extension before the lock expiration date, request may only be submitted and will only be granted by FGMC when the loan is within 15 days of lock expiration. For example, if a loan is locked on the 1st of the month for 30 days then an extension can be submitted any day after the 16th of that same month. The number of days selected for extension will be added to the expiration date. Lock extension days are available in 7, 15, or 30 day increments at the extension price listed on the FGMC Correspondent Rate Sheet. See below for the maximum number of extensions and the total maximum of extension days. Conforming Non-Conforming Max extension requests 3 2 Max extension days 45 45 Extension Days Extension Cost 7 Days (.125) 15 Days (.250) 30 Days (.500) All extension requests done prior to delivery of loan to FGMC must be submitted online. FGMC will only accept email extension request for loans that were originally locked manually. FGMC Correspondent Lock Policy and Procedures Page 6

Relocks (Updated 01/22/2015) Relocks may only be submitted on expired locks. If a loan has been expired for at least 30 days for Conforming & 90 days for Non-Conforming products, then it is considered a new lock and pricing will be based on current market. Loans that have been expired for less than 30 days (Conforming) or 90 days (Non-Conforming) can be relocked for 15, 30, 45, or 60 days. Relocks for loans expired for less than 30 days (Conforming) or 90 days (Non-Conforming) are subject to worse case pricing plus the applicable relock fee, and all previous extension/relock fees. Relock fees can be found on the table below. Loans may only be relocked one time. Relock Days Relock Fee 15 Days (.250) 30 Days (.500) If at the time of Relock the rate has increased, the worst of pricing between existing price and current price on the new rate lock will apply. If at the time of Relock the product is changed, the worst of pricing between the existing price on the original product and the current price on the new product will apply. The price may not improve regardless of product change. Renegotiations (Updated 01/22/2015) Correspondent Sellers may submit Renegotiation request from the time the first rate sheet is generated until 4 p.m. EST to cdlock@fgmc.com. Correspondent Sellers are responsible for calculating the Renegotiated gross price using the Renegotiated Price Calculation in this policy. The Renegotiation price is based on the FGMC Correspondent Rate Sheet that is in effect when the request is received. Request received after 4 p.m. EST will not be processed and a new request must be submitted the next business day within the renegotiation hours listed in this policy. Renegotiated rate must result in a minimum of 0.125 improvements in rate to the borrower. Only one renegotiation is permitted per loan and product changes are only permitted if requested at the same time of the renegotiation. The final pricing for the renegotiated product and/or rate cannot exceed the final pricing from the original product and rate. Relocked loans are NOT eligible for renegotiation. FGMC Correspondent Lock Policy and Procedures Page 7

Conforming Renegotiation Price Calculation: Current 60 day Base Price + Renegotiation fee (-0.25) +/- Current day Price adjustments - Prior extension or relock fees + Current day SRP (if applicable) = Renegotiated Gross Price Non-Conforming Renegotiation Price Calculation: These will be considered on a case by case basis. Email cdlock@fgmc.com for inquires. Extended Lock Option (Updated 01/22/2015) FGMC offers extended lock options to Correspondent Sellers. Upfront pricing for extended locks are outlined on the FGMC Correspondent Rate Sheet. Correspondent Sellers must use 60 day pricing when requesting extended locks. The adjustments listed on the Rate Sheet under the Extended Lock Option tab will be in addition to all other adjustments. Extended locks must be submitted manually using the manual lock form with extended lock adjustments applied and notating on the lock form the extended period being requested. Upfront fees must be received by FGMC within 5 business days of initial lock. Proceeds sent directly from borrowers are not accepted. FGMC will cancel the lock if the upfront fee is not received within 5 business days. Upfront fee will be credited back to the seller upon purchase of loan. If a loan does not fund, the upfront fee will be forfeited. Proceeds must be submitted to: Mail To: Wire To: First Guaranty Mortgage Corporation Bank Name: Texas Capital Bank National Association Attention: Secondary Marketing Bank Address: 2350 Lakeside Blvd, Suite 800 1900 Gallows Road, Suite 800 Richmond, TX 75082 Tysons Corner, VA Account Number: 2111035230 ABA Number: 111017979 Account Name: First Guaranty Mortgage Corporation Upfront fees for extended locks are non-refundable unless the lock is canceled within 7 days or FGMC rejects the loan during a Non-Delegated Underwriting review prior to the loan closing. FGMC Correspondent Lock Policy and Procedures Page 8

Pair-offs via Mandatory Rate sheet locks (Updated 01/22/2015) Mandatory locks are subject to a pair-off when current market price is greater than the market price when the lock was originally committed or when the mandatory lock has been extended. Pair-offs applies to: Canceled locks Non delivery prior to lock expiration Duplicate locks Example of Pair off fee calculation Locked loan amount: $100,000 Original Price: 100 Current Price: 100.25 Positive Market Movement: 0.25 Extension Charges (15 Day): 0.25 Total Pair-off 0.50 $100,000 x (0.25%+0.25%) = $500 (pair-off fee due to FGMC) Amount x (Market Movement + Extension Cost) = Pair-off fee due FGMC will not remit for negative market movement pair-offs. Pair-off fees are due within 15 calendar days and must be sent to: Mail To: Wire To: First Guaranty Mortgage Corporation Bank Name: Texas Capital Bank National Association Attention: Secondary Marketing Bank Address: 2350 Lakeside Blvd, Suite 800 1900 Gallows Road, Suite 800 Richmond, TX 75082 Tysons Corner, VA Account Number: 2111035230 ABA Number: 111017979 Account Name: First Guaranty Mortgage Corporation Canceling Mandatory Locks via Rate sheet (Updated 02/10/2014) Correspondent Sellers may cancel the lock but may be subject to a pair-off fee if current market pricing is higher than market price from the original lock date. See Pair-Off fee calculation in this policy. FGMC Correspondent Lock Policy and Procedures Page 9

Swaps on Mandatory Locks via Rate sheet (Updated 02/10/2014) Swaps will be considered on mandatory commitments locks via the FGMC Correspondent Rate Sheet on a case by case basis. All requests should be sent to cdlocks@fgmc.com by 4 p.m. EST for consideration. Swaps should be the same product and will be subject to a 2% loan amount tolerance. FGMC Correspondent Lock Policy and Procedures Page 10

FGMC Mandatory Trade Desk FGMC has a mandatory trade desk that offers bid indications on mini-bulk, bulks, forwards, and supports AOTs transactions. To receive a bid indication, a data tape should be sent to trading@fgmc.com A sample data tape can be found on FGMCs Correspondent website under Forms (http://fgmccorrespondent.com/printableform.aspx) For any inquiries please contact your Account Executive. Mandatory Trade Desk Transaction Types Mini-bulk or Bulk Definition Correspondent Seller submits a pool of loans on a data tape(s) to trading@fgmc.com. If the trade is awarded, the pool(s) of loans are then delivered to FGMC under the specified trade commitment terms. Pools must be a minimum of 2 million in unpurchased principal balance per trade. Exceptions can be considered upon request. (Updated 02/10/2014) Assignment of Trade (AOT) Correspondent is responsible for negotiating a trade price directly with FGMC trade desk, and the applicable security must be taken out via a FGMCapproved Broker / Dealer. Upon completion, the trade is assigned to FGMC, and the pool of loans is delivered under the specified commitment terms. The minimum AOT commitment amount is 2 million in unpurchased principal balance. Exceptions can be considered upon request. All AOT letters must be to trading@fgmc.com. (Updated 02/10/2014) FGMC Correspondent Lock Policy and Procedures Page 11

Forward Trades Correspondent negotiates a forward trade price that is non-loan specific directly with FGMC, and a pool of loans are delivered to fill the forward commitment under the specified forward commitment terms. A commitment report will need to be sent to trading@fgmc.com reflecting new loans as they are added. The minimum forward commitment amount is 2 million in unpurchased principal balance. Exceptions can be considered upon request. (Updated 02/10/2014) Trade Confirmations (Updated 02/10/2014) Trade confirmations will be provided via email after a bid indication is awarded and final acceptance of the final price is made by FGMC. All bid indications are subject to market movement prior to confirmation, and may require a re-price without notice. Delivery Timeframes (Updated 02/10/2014) Terms and conditions of trades will be made available at the time a bid indication is provided. Loans are required to be registered within the FGMC Portal within 72 hours, or the commitment may be cancelled and Pair-Offs assessed if applicable. Bulk registration options are available by request. Delivery Tolerance (Updated 02/10/2014) All Mandatory Trade Desk transactions must be filled to within 2% (above or below) of the commitment amount. Full re-pricing may occur if any material loan characteristic changes appear during delivery. FGMC Correspondent Lock Policy and Procedures Page 12

Pair-offs (Updated 01/22/2015) All non-delivery of any type of Mandatory Trade Desk transactions is subject to a pair-off when current market price is greater than the market price when the transaction was originally committed or when the mandatory trade has been rolled. Example of Pair-off fee calculation Locked loan amount: $100,000 Original Price: 100 Current Price: 100.25 Positive Market Movement: 0.25 Roll Charges (1 Month): 0.30 Total Pair-off 0.55 $100,000 x (0.25%+0.30%) = $550 (pair-off fee due to FGMC) Amount x (Market Movement + Extension Cost) = Pair-off fee due FGMC will not remit for negative market movement pair-offs. Pair-off fees are due within 15 calendar days and must be sent to: Mail To: Wire To: First Guaranty Mortgage Corporation Bank Name: Texas Capital Bank National Association Attention: Secondary Marketing Bank Address: 2350 Lakeside Blvd, Suite 800 1900 Gallows Road, Suite 800 Richmond, TX 75082 Tysons Corner, VA Account Number: 2111035230 ABA Number: 111017979 Account Name: First Guaranty Mortgage Corporation Rolling Mandatory Trade Desk Transactions (Updated 02/10/2014) The undelivered balance of any mandatory trade desk transaction may be rolled to the next settlement month at a cost of 30 basis points for 30 days. There is a maximum of 3 rolls for any mandatory trade desk transaction. Note: It is important to monitor commitment pipelines closely, and notify the FGMC Mandatory Trade Desk of any transactions that cannot be filled to mitigate Pair Off exposure during periods of market volatility. FGMC Correspondent Lock Policy and Procedures Page 13

Swaps (Updated 02/10/2014) Correspondent Sellers may substitute a loan in a mini-bulk or bulk transaction. The substitution does not need to match the original commitment or loan parameters, but is subject to worse of spread from the original commitment date, or in the case of an AOT, the date of the original trade, or current date. A new trade commitment will be established, canceling the swapped undelivered amount from the original commitment. Canceling a Mandatory Trade Desk Transaction (Updated 02/10/2014) To cancel a mandatory trade desk transaction, email a request to trading@fgmc.com. Pair-offs may be assessed if applicable according to Mandatory Pair-off rules and calculation listed in this policy. A single cancellation request can made while in due diligence by notifying your assigned Transaction Manager and Account Executive. FGMC Correspondent Lock Policy and Procedures Page 14