conforming expanded criteria

Conforming Expanded CriteriaDecember 3, 2007

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December 3, 2007 PAGE 2

Conforming Expanded Criteria

What Is Conforming Expanded Criteria

The Conforming Expanded Criteria program provides qualified borrowers with good credit histories a cost-effective loan that enables them to choose alternative documentation options including: Reduced, No Ratio, and No Income/No Assets (NINA)—allowing you to help borrowers who are self-employed or have difficult-to-document income/assets, by offering loans that require minimal documentation which may help to expedite the loan closing.

More borrowers qualify for conforming programs

Agency-based pricing

Diverse documentation options



Current Market

The market continues to slow down

Availability of products in the marketplace continues to shrink, challenging lenders to find alternative financing solutions

Non-Agency products continue to experience liquidity issues

Purchases, refinances, and new home construction are declining

Overall home values are flat or depreciating throughout the country

There is a shift in the market to Agency and Government products

Agency and Government products may offer a better alternative to increase originations, lessen risk, and grow market share in this turbulent environment



Opportunity

There are still borrowers who

Are self-employed, salaried, or commissioned

Have passive or unearned income, such as income from a retirement plan, child support, trust, rental, etc.

Have difficult to document income sources

Have complex assets

Have good credit histories

Can document their income and assets, but prefer not to



Solution

Provide qualified borrowers with a conforming loan program that allows flexible income and asset documentation, by offering

SIVA, No Ratio, and NINA documentation types

Conventional financing option for borrowers with strong credit histories

More favorable rates associated with conventional financing

Up to 90% LTV (SIVA documentation only)

Purchase, rate/term, and cash-out refinances

1-4 unit primary residences, 1-unit second homes, and 1-4 unit investment properties allowed

Current offering adjustable-rate mortgages (ARMs)

Interest Only option (SIVA documentation only)

Up to 6% interested party contributions

Non-occupant co-borrower income allowed



Borrower Scenario #1

The owner of a successful dry cleaning business would like a $50,000 cash-out refinance to remodel his kitchen. His home is worth $325,000 and he owes $280,000. He has a 690 credit score and his credit report reflects a 1x30 mortgage late 10 months ago. He inherited the business from his parents and owns the building where it is located. He is able to verify his employment and assets, but prefers to state his income.

The SIVA documentation option is a great solution for borrowers whose primary source of income is difficult to verify. The primary source of income must be verified, while the amount of income, although disclosed, is not verified.

The presented scenarios are only hypothetical examples of how promoted loan programs might be useful. For illustration purposes only. All borrowers must meet loan program guidelines..



SIVA Documentation

Employment: stated and verified

Income: stated and not verified

Assets: stated and verified

Target audience: salaried, commissioned, self-employed, passive income borrowers

1-4 units owner-occupied, 1-unit second homes, and 1-4 unit investment properties

Purchase, rate/term, and cash-out refinance

Fixed period ARMs (currently 7/1 or 10/1)with an Interest Only option

Temporary buydowns allowed (owner-occupied only)



SIVA Documentation

Maximum LTV: 90% on purchase, rate/term and cash-out refinanceInstitutional secondary financing allowedMaximum 80% LTV on owner-occupied 3-4 units

Maximum DTI: 38% Higher DTIs may be approved through Investor AUS

Minimum credit score640 for purchase and rate/term at 75% LTV and 660 for 90% LTV660 for cash-out at 75% LTV and 680 for 90% LTV

3-month reserves required on owner-occupied properties6 months reserves required on second homes and investment properties

Mortgage lates1x30 in last 12 months0x60 in last 24 months

Bankruptcy, foreclosure, deed-in-lieu, and short sale: 48 months or greater Interested party contributions up to 6%

Second homes and investment properties with LTVs > 80% allow for a maximum 3%




After four years of retirement, a couple is looking to purchase a second home to be near their grandchildren. Their monthly income comes from a variety of sources including his pension plan, their combined Social Security benefits, dividend income, and rental income on a 2-unit duplex they own free-and-clear. In addition, the couple has no mortgage on their primary residence. They have excellent credit scores (his: 720 and hers: 700) and are receiving 3% from the property seller to be used towards closing costs. They are purchasing a $175,000 condominium and putting 20% down to avoid paying mortgage insurance.

The No Ratio documentation option is an attractive option for this couple. With excellent credit and no mortgage delinquencies, borrowers with multiple income sources and complicated assets can qualify for a expedited loan process.

The presented scenarios are only hypothetical examples of how promoted loan programs might be useful. For illustration purposes only. All borrowers must meet loan program guidelines.

.



No Ratio Documentation


Income: not stated or verified

Assets: stated and verified

Target audience: salaried, commissioned, self-employed, passive income borrowers

1-4 units owner-occupied, 1-unit second homes, and 1-4 unit investment properties

Purchase, rate/term, and cash-out refinance

Fixed period ARMs (currently 7/1 or 10/1)

Secondary financing not allowed

Temporary buydowns not allowed



No Ratio Documentation

Maximum LTV: 90% on purchase, rate/term, and cash-out refinanceMaximum 80% LTV on owner-occupied 3-4 units

Maximum DTI: not calculated

Minimum credit score640 for purchase and rate/term at 75% LTV and 660 for 90% LTV

660 for cash-out at 75% LTV and 680 for 90% LTV

3-month reserves required on owner occupied properties6 months reserves required on second homes and investment properties

Mortgage lates0x30 in last 12 months

0x60 in last 24 months

Bankruptcy, foreclosure, deed-in-lieu, and short sale: seven years

Interested party contributions up to 6%Second homes and investment properties with LTVs > 80% allow for a maximum 3%




A husband and wife are both police officers and provide part-time security on their days off and weekends. They have more than five years on the police force and their private security business just passed its three year anniversary. The couple is hoping to start a family and has made an offer on a larger home and have just put their condominium on the market. Both borrowers have good credit, two years remaining on an auto loan, and some credit card debt.

The NINA documentation option is a great solution for these law enforcement professionals. Their employment can easily be stated and verified, but they prefer to not state their income or assets.



NINA Documentation


Income: not stated or verified

Assets: not stated or verified

Target audience: salaried and self-employed borrowers

1-4 unit owner-occupied, 1-unit second homes, and 1-4 unit investment properties

Fixed period ARMs (currently 7/1 or 10/1)

Secondary financing not allowed

Temporary buydowns not allowed



NINA Documentation

Maximum LTV: 90% purchase and rate/term refinance75% LTV on cash-out refinance

Maximum DTI: not calculated

Minimum credit score680 for purchase and rate/term at 75% LTV and 700 for 90% LTV

700 for cash-out at 75% LTV and 90% LTV not applicable

Reserves: Not applicable

Mortgage lates0x30 in last 12 months

0x60 in last 24 months

Bankruptcy, foreclosure, deed-in-lieu, and short sale: seven years

Interested party contributions up to 6%Second homes and investment properties with LTVs > 80% allow for a maximum 3%



Loan Limits

$801,950 4-units

$645,300 3-units

$533,850 2-units

$417,000 1-unit

Loan LimitsProperty Type



Resources

Visit our website at http://www.ahedirect.comASAP Pricer

ASAP Pipeline- View loans - Lock requests- View conditions - View reports

Ratesheets & Forms

Contact Sales staff



For More Information

Contact your Account Executive

or call our National Headquarters at

877-945-9500

American Home Equity Corp2677 N. Main Street, Suite 225

Santa Ana, CA 92705



American Home Equity Corp is an Equal Housing Lenders. © 2008 American Home Equity Corp (“AHEC”). AHEC is licensed by the California Department of Real Estate.

Provided to mortgage professionals only and not intended or authorized for public distribution.

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