loan programs - partner portal login · loan programs 1 the information contained in this document...

The information contained in this document is intended for the sole and exclusive use of the business entities to which it was distributed and is not intended for distribution to consumers. Interest rates, loan terms and other information are subject to change without notice. This is not an advertisement or solicitation. Terms and conditions apply. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act No. 4131040. NMLS ID 174457. loanDepot.com, LLC is an Equal Housing Lender.

Loan Programs Date: 6/15/2018

The information contained in this document is intended for the sole and exclusive use of the business entities to which it was distributed and is not intended for distribution to consumers. Interest rates, loan terms and other information are subject to change without notice. This is not an advertisement or solicitation. Terms and conditions apply. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act No. 4131040. NMLS ID 174457. loanDepot.com, LLC is an Equal Housing Lender.

loanDepot Wholesale Loan Programs

Conforming Loan Programs

Conforming Fixed Freddie Mac Home Possible 95%

Conforming Texas A6 Freddie Mac Home Possible 97%

Fannie Mae Conforming/High Balance ARM Freddie Mac Co-op Fixed/ARM

Fannie Mae HomeReady Freddie Mac Co-op Super Conforming Fixed

Freddie Mac Conforming ARM Freddie Mac Co-op Super Conforming ARM

Select Pay 1/1 Temp Buydown

High Balance Loan Programs

High Balance Fixed Executive High Balance

Fannie Mae Conforming/High Balance ARM Freddie Mac Super Conforming ARM

HARP Loan Programs

DURP – Fixed/ARM LP Open Access – Fixed

Non-Conforming Loan Programs

LD Jumbo Advantage

40 Year Interest Only

Equity Access

Government Loan Programs

FHA Fixed/ARM VA Fixed/ARM

FHA Streamline VA IRRRL

203(k) 203(h)

Loan Programs

1

The information contained in this document is for reference purposes only. It is the sole property of loanDepot Wholesale, and is not for public distribution.

Conforming Fixed Rate

Finance Type Purchase/Rate and Term Refinance

Property Type Primary Residence Second Home Investment

LTV/CLTV/FICO Max LTV/CLTV Min FICO Max LTV/CLTV Min FICO Max LTV/CLTV Min FICO

SFR/PUD/ Condo

95-97% (DU only)*

620

90%

620

85% - Purchase

620 95%

85%- LPA Refi

75% - DU Refi

2 Units 85% 620 N/A N/A 75% 620

3-4 Units 80% - LPA

620 N/A N/A 75% 620 75% - DU

Finance Type Cash Out Refinance



SFR/PUD/ Condo 85% - LPA** 740

75% 620 75% 620 80% 620

2 Units 75% 620 N/A N/A 70% 620

3-4 Units 75% 620 N/A N/A 70% 620

*LTV/CLTV/ HCLTV > 95%

Must receive DU Approve/Eligible recommendation Purchase Transactions: At least one borrower must be a first-time home buyer. See

Documenting First Time Homebuyers for more detail Limited Cash Out Transactions: Existing mortgage must be a Fannie Mae loan. Refer to

Documenting Fannie Mae Serviced Loans for more information on documenting a Fannie Mae loan

Non occupant co-borrower ineligible Mortgage Insurance (MI) coverage of 35% is required. See the Mortgage Insurance Section

for additional detail

https://ldwholesale.com/portaldocs/yoda/wholesale/First_Time.htm

https://ldwholesale.com/portaldocs/yoda/wholesale/Documenting_Fannie_Mae.htm

Loan Programs

2



Eligible Terms Fixed Rate only For ARM matrices, see the ARM Program Matrix The term options: 10-year, 15-year, 20-year, 25-year or 30-year,fixed fully-amortized

Eligible Property Types

SFR & PUDs (attached and detached) 2-4 units Condos (Low and High Rise)

Ineligible Transactions

Down payment assistance options Manufactured Homes Properties on more than 10 acres are typically ineligible but will be considered as an

exception Hawaiian Home Land Transactions Properties located in Hawaii Lava Zones 1 & 2

Interested Party Contributions

Principal Residence and Second Homes: LTV/CLTV >90%: 3%; LTV/CLTV 75.01-90%: 6%; LTV/CLTV ≤75%: 9%

Investment Properties: 2%, regardless of LTV/CLTV

Reserves

Reserves are determined by AUS but the following are generally required: Primary and 2nd Homes - 2 months PITI Non-owner Occupied – 6 months PITI Primary Residence 2-4 Units – 6 months PITI

Additional reserve requirements may apply if the borrower owns multiple properties or is departing primary residence

Listing History Refinance Transactions: Property must be taken off the market on or before the

disbursement date and borrower must confirm their intent to occupy the subject property (for principal residence transactions)

Cash Out Restrictions

If property was purchased in the past 6 months, borrower is ineligible for a cash-out refinance unless following delayed financing guidelines. or the borrower acquired property through an inheritance or was legally awarded the subject property (divorce, separation, or dissolution of a domestic partnership)

Majority ownership in a limited liability corp (LLC) by the borrower(s) may be counted towards meeting the borrower’s minimum 6 month ownership requirement. In order to close the new refinance transaction, title ownership must be transferred out of the LLC and into borrower’s name. Note: Title ownership from LLC to borrower’s name can be transferred at closing. (DU only)

**LTV 80.01 – 85% (LPA only) LPA Risk Class “Accept” Approved MI companies are Arch, Essent and Radian.

Note: Refer to the individual MI company for max DTI and published guidelines. Streamlined Project Review not allowed

https://portal.ldwholesale.com/portaldocs/yoda/wholesale/Program_Matrices_Summary_-_New.htm

http://hvo.wr.usgs.gov/hazards/lavazones/main.html

https://ldwholesale.com/portaldocs/yoda/wholesale/Delayed_Financing.htm

Loan Programs

3



Texas Cash Out (Second Home & Investment)

Second homes and investment properties that are NOT Texas Homesteads are eligible based on the above cash out eligibility Title must not reflect any Homestead exemptions or as a Texas 50(a)(6). This property

must not be the only property owned in TX If subject property previously established as a TX Homestead, borrower must document

that the current homestead has been “abandoned” by establishing another TX Homestead. Note: Pursuant to Texas property code section 41.003, “temporary renting of a homestead does not change its homestead character if the homestead claimant has not acquired another homestead” o Title company must verify the property is not the borrower’s homestead, and o A borrower’s affidavit confirming that the borrower has moved with the intention

of not returning to the property

Ratios Per AUS approval

Loans with Mortgage Insurance may have more restrictive requirements

Credit

Mortgage lates – 0x60 in past 12 months

Chapter 7 bankruptcy – 48 months since discharge/dismissal

Chapter 13 bankruptcy – 24 months since discharge / 48 months since dismissal

For DU loans only: If a mortgage debt has been discharged through bankruptcy, even if a foreclosure action is subsequently completed to reclaim the property in satisfaction of the debt, the borrower is held to the bankruptcy waiting periods and not the foreclosure waiting period. Documentation must be obtained to verify that the mortgage debt in question was in fact discharged as part of the bankruptcy

Short sale/deed-in-lieu/pre-foreclosure Effective for DU with loan applications taken on or after 8/16/14, 48 months since completion is required. This waiting period also applies to the charge-off of a mortgage account for DU loans only. LPA may allow for greater flexibilities provided an Accept recommendation is obtained

Foreclosure 84 months since completion

Borrowers with multiple BK filings – 60 months since most recent discharge/dismissal

Loan Programs

4



Mortgage Insurance

Loans with >80% LTV will require Mortgage Insurance and are subject to MI guidelines

BPMI (monthly and single premium) and LPMI (single premium) are eligible

LPMI (single premium) is eligible based on program LTV eligibility. LMPI is not allowed on Investment Properties when 1) FICO is less than 720 or 2) 10 year fixed term

Acceptable renewal types are Level/Constant and Non-refundable

Approved MI companies are Arch, Genworth, MGIC, NMI and Radian. Max DTI 45% for FICO < 700 apply and vary by MI company. Refer to the individual MI company guidelines

Required MI Coverage

Loan Term

LTV

80.01-85% 85.01-90% 90.01-95% 95.01-97%(DU Only)

25 & 30 Year 12% 25% 30% 35%

10,15 & 20 Year 6% 12% 25% 35%

Additional Restrictions

Minimum credit score is required regardless of AUS decision

Loans must receive an Approve/Eligible DU or Accept/Accept LPA Approval

Additional Underwriting Guidelines

Please access loanDepot Wholesale Underwriting Guidelines for a complete set of guidelines. For ease of access, we have included links to popular topics by category:

Assets Credit Eligibility Income Property Misc. Topics

Business Assets Contingent Liabilities

Continuity of Obligation

Employment History

Accessory Units Age of

Documentation

Gift Funds Disputed Accounts First Time Home

Buyer Non Borrowing

Spouse Hobby Farms Delayed Financing

Gift of Equity Payoff and

Paydown of Debt Multiple Financed

Properties Retirement

Income Leasehold

Departure Primary Residence

Large Deposits Student Loans Non Arms Length

Transactions Temporary Leave

Non Permitted Additions

Non Borrowing Spouse

Non Occupant Co-

Borrower Tax Transcripts Property Flips Power of Attorney

Non U.S Citizens Transferred Appraisals

v.06.14.18

http://ldwholesale.com/portaldocs/yoda/wholesale/SUM_UWDept.htm

http://ldwholesale.com/portaldocs/yoda/wholesale/assets/UWG_busassets.htm

http://ldwholesale.com/portaldocs/yoda/wholesale/credliab/UWG_CLconting.htm


http://ldwholesale.com/portaldocs/yoda/wholesale/Continuity_Obligation.htm


http://ldwholesale.com/portaldocs/yoda/wholesale/employinc/UWG_employincome.htm


http://ldwholesale.com/portaldocs/yoda/wholesale/FHA_apprAUD.htm

https://portal.ldwholesale.com/portaldocs/yoda/wholesale/UWG_agedocs.htm


http://ldwholesale.com/portaldocs/yoda/wholesale/assets/UWG_giftfunds.htm

http://ldwholesale.com/portaldocs/yoda/wholesale/credliab/UWG_disputeacct.htm

https://portal.ldwholesale.com/portaldocs/yoda/wholesale/First_Time.htm


http://ldwholesale.com/portaldocs/yoda/wholesale/NonBorrSpousePol.htm


http://ldwholesale.com/portaldocs/yoda/wholesale/Hobby_Farms.htm

http://ldwholesale.com/portaldocs/yoda/wholesale/Delayed_Financing.htm

http://ldwholesale.com/portaldocs/yoda/wholesale/assets/Gift_Equity.htm

http://ldwholesale.com/portaldocs/yoda/wholesale/credliab/PayoffDebt.htm


http://ldwholesale.com/portaldocs/yoda/wholesale/morteligb/UWG_multfinanprop.htm


http://ldwholesale.com/portaldocs/yoda/wholesale/employinc/UWG_retirepens.htm


http://ldwholesale.com/portaldocs/yoda/wholesale/morteligb/UWG_leaseholdestate.htm

http://ldwholesale.com/portaldocs/yoda/wholesale/propoccguides/UWG_departcurrentres.htm


http://ldwholesale.com/portaldocs/yoda/wholesale/LDPol3.htm

https://portal.ldwholesale.com/portaldocs/yoda/wholesale/Deferred_Debt.htm

http://ldwholesale.com/portaldocs/yoda/wholesale/morteligb/POL_nonarmslength.htm


http://ldwholesale.com/portaldocs/yoda/wholesale/employinc/Temporary_Leave_Income.htm

http://ldwholesale.com/portaldocs/yoda/wholesale/POL_unpermit.htm




http://ldwholesale.com/portaldocs/yoda/wholesale/borrelig/UWG_cosignguaretal.htm


https://portal.ldwholesale.com/portaldocs/yoda/wholesale/Tax_Transcripts_4506T_External.htm

http://ldwholesale.com/portaldocs/yoda/wholesale/Property_Flips.htm

http://ldwholesale.com/portaldocs/yoda/wholesale/PoA_Ovrvw.htm

http://ldwholesale.com/portaldocs/yoda/wholesale/borrelig/UWG_nonUScitz.htm

https://portal.ldwholesale.com/portaldocs/yoda/wholesale/Appraisal_Policy.htm


Loan Programs

1 The information contained in this document is for reference purposes only. It is the sole property of loanDepot Wholesale, and is not for public distribution.

High Balance/Super Conforming Fixed Rate




SFR/PUD/Condo 95%- DU

95%- LPA 620 90% 620

85% purchase DU

85% purch/refi LPA

75% - refi DU

620

2 Units 85% 620 N/A N/A 75% - DU

75% - LPA 620

3-4 Units 75%- DU

80%- LPA 620 N/A N/A

75% - DU

75% - LPA 620




SFR/PUD/Condo 80% - DU

80% - LPA 620

75% - DU

75% - LPA 620

75% - DU

75% - LPA 620

2 Units 75%- DU

75% - LPA

620 N/A N/A 70% - DU 70% - LPA

620

3-4 Units 620 N/A N/A 620

Eligible Terms Fixed Rate High Balance ▪ For ARM matrices see the High Balance ARM program matrices

The term options are 15-year, 20 year, 25-year or 30-year fixed fully-amortized ▪ Interest only not allowed


SFR & PUDs (attached and detached)

2-4 units

Condos (Low and High Rise)


Down payment assistance options

Texas 50(a)(6) loans

Manufactured Homes

Properties > 10 acres are typically ineligible but will be considered as exception

Hawaiian Home Land Transactions

Properties located in Hawaii Lava Zones 1 & 2



Loan Programs




Principal Residence and Second Homes: LTV/CLTV > 90%: 3%; LTV/CLTV 75.01-90%: 6%; LTV/CLTV ≤75%: 9%; ▪ Investment Properties: 2%

Reserves


Additional reserve requirements may apply if the borrower owns multiple properties

Qualifying Rate Note Rate


If property was purchased in the past 6 months, borrower is ineligible for a cash-out refinance unless following delayed financing guidelines. or the borrower acquired property through an inheritance or was legally awarded the subject property (divorce, separation, or dissolution of a domestic partnership)

(FNMA only) Majority ownership in a limited liability corp (LLC) by the borrower(s) may be counted towards meeting the borrower’s minimum 6 month ownership requirement. In order to close the new refinance transaction, title ownership must be transferred out of the LLC and into borrower’s name. Note: Title ownership from LLC to borrower’s name can be transferred at closing.



Ratios Per AUS feedback

Credit




For DU loans only: If a mortgage debt has been discharged through bankruptcy, even if a foreclosure action is subsequently completed to reclaim the property in satisfaction of the debt, the borrower is held to the bankruptcy waiting periods and not the foreclosure waiting period. Documentation must be obtained to verify that the mortgage debt in question was in fact discharged as part of the bankruptcy

Short sale/deed-in-lieu/pre-foreclosure- for DU, 48 months since completion is required. This waiting period also applies to the charge-off of a mortgage account for DU loans only. LPA may allow for greater flexibilities provided an Accept recommendation is obtained.




Loan Programs



Mortgage Insurance


BPMI (monthly and single premium) and LPMI (single premium) are eligible

LPMI (single premium) is eligible based on program LTV eligibility. LMPI is not allowed on Investment Properties when FICO is less than 720


Approved MI companies are Arch, Genworth, MGIC, NMI, and Radian. Max DTI 45% for FICO < 700 apply and vary by MI company. Refer to the individual MI company guidelines


Loan Term LTV

80.01-85% 85.01-90% 90.01-95%

25 & 30 Year 12% 25% 30%

10,15 & 20 Year 6% 12% 25%


Minimum credit score is required regardless of AUS decision Loans must receive an Approve/Eligible DU or Accept/Accept LPA Approval LPA loans- maximum loan amount $1,000,000






Employment History

Accessory Units Age of

Documentation

Gift Funds Disputed Accounts First Time Home

Buyer Non Borrowing

Spouse Hobby Farms Delayed Financing


Paydown of Debt Multiple Financed

Properties Retirement

Income Leasehold


Large Deposits Student Loans Non Arms Length

Transactions Temporary Leave



Non Occupant Co-

Borrower Tax Transcripts Property Flips Power of Attorney


Topic Date: 6/15/2018















































Loan Programs


Fannie Mae Conforming/High Balance ARM

Finance Type

Purchase / Limited Cash-Out Refinance

Property Type

Primary Residence

Second Home

Investment

LTV/CLTV/FICO Max LTV/CLTV Min FICO

Max LTV/CLTV

Min FICO

Max LTV/CLTV Min FICO

SFR/PUD/Condo 95/95% 620 90/90% 620

85/85%- Purch

75/75%- Refi

620

2 Units 85/85% 620 N/A N/A 75/75% 620

3-4 Units

75/75%

620

N/A

N/A

75/75%

620

Finance Type

Cash-Out Refinance

Property Type

Primary Residence

Second Home

Investment

LTV/CLTV/FICO Max LTV / CLTV Min FICO Max LTV / CLTV Min FICO Max LTV / CLTV Min FICO

SFR/PUD/Condo

80/80%

620

75/75%

620

75/75%

620

2 Units

75/75% 620 N/A N/A 70/70% 620

3-4 Units

75/75%

620 N/A N/A 70/70% 620

Eligible Terms / Loan Amounts

ARM's Only

The term options are 5/1 ARM, 7/1 ARM, 10/1 ARM. Fully-amortized over 30 year term

FNMA Conforming and High Balance Loan Limits

Eligible Property


Ineligible Transaction



Manufactured Homes

Hawaiian Home Land Transactions Properties located in Hawaii Lava Zones 1 & 2 Properties on more than 10 acres are typically ineligible but will be considered as exception

Interested Party Contribution

Principal Residence and Second Homes: LTV/CLTV > 90%: 3%, LTV/CLTV 75.01-90%: 6%, LTV/CLTV ≤75: 9% ▪ Investment Properties: 2%

Loan Programs




If property was purchased in the past 6 months, borrower is ineligible for a cash-out refinance

unless following delayed financing guidelinesor the borrower acquired property through an inheritance or was legally awarded the subject property (divorce, separation, or dissolution of a domestic partnership)

Majority ownership in a limited liability corp (LLC) by the borrower(s) may be counted towards meeting the borrower’s minimum 6 month ownership requirement. In order to close the new refinance transaction, title ownership must be transferred out of the LLC and into borrower’s name. Note: Title ownership from LLC to borrower’s name can be transferred at closing.

Reserves

Reserves are determined by AUS but the following are generally required: o Primary and 2nd Homes – per DU o Non-owner Occupied – 6 months PITIA


Qualifying Rate/ARM Caps

Higher of note rate + 2% or fully indexed rate for 5/1 ARM's

Higher of note rate or fully indexed rate for 7/1 and 10/1 ARMs CAPS: 5/2/5


disbursement date, and borrowers must confirm their intent to occupy the subject property (for principal residence transactions)

Ratios

Per DU approval


Credit




If a mortgage debt has been discharged through bankruptcy, even if a foreclosure action is subsequently completed to reclaim the property in satisfaction of the debt, the borrower is held to the bankruptcy waiting periods and not the foreclosure waiting period. Documentation must be obtained to verify that the mortgage debt in question was in fact discharged as part of the bankruptcy

Short sale/deed-in-lieu/pre-foreclosure - 48 months since completion is required. This waiting period also applies to the charge-off of a mortgage account

Foreclosure 84 months since completion Mulitple BK filings – 60 months since most recent discharge/dismissal

HPML and HPCT Transactions

Higher-priced mortgage loan (HPML) underwriting requirements are applicable to all

occupancy types (not just primary residences). Non-primary residences are classified as higher-priced covered transactions (HPCT) which requires those properties to be underwritten just like HPML's

5/1 ARM not eligible if HPML or HPCT


Loans must be underwritten through DU and receive an Approve/Eligible finding

Minimum credit score is required regardless of DU decision

Loan Programs



Mortgage Insurance


BPMI (monthly and single premium) and LPMI (single premium) are eligible LPMI (single premium) is eligible based on program LTV eligibility. LMPI is not allowed

on: 1 ) 5/1 and 10/1 ARMs or 2) Investment Properties with FICO < 720 Acceptable renewal types are Level/Constant and Non-refundable Approved MI companies are Arch, Genworth, MGIC, NMI, and Radian. Max DTI 45% for

FICO < 700 apply and vary by MI company. Refer to the individual MI company guidelines Note: Investment 1-unit Purchase 85% LTV with 620 FICO must use MGIC for MI or the most restrictive guidelines of other MI companies.


Loan Term

LTV

80.01-85%

85.01-90%

90.01-95%

25 & 30 Year

12%

25%

30%

10, 15 & 20 Year 6% 12% 25%



Assets

Credit

Eligibility

Income

Property

Misc. Topics

Business Assets

Gift Funds

Gift of Equity

Large Deposits

Contingent Liabilities

Disputed Accounts

Payoff and Paydown of Debt

Student Loans


First Time Home Buyer

Multiple Financed Properties

Non Arms Length Transactions

Non Occupant Co- Borrower

Non U.S Citizens

Employment History


Retirement Income

Temporary Leave Tax Transcripts

Accessory Units

Hobby Farms

Leasehold


Property Flips

Age of Documentation

Delayed Financing


Power of Attorney

Transferred Appraisals

v.6.15.18
















































Loan Programs


Freddie Mac Conforming ARM

Finance Type Purchase/Rate Term Refinance


LTV/TLTV/ FICO Max LTV/TLTV Min FICO Max LTV/TLTV Min FICO Max LTV/TLTV Min FICO

SFR/PUD/ Condo 95% 620 90% 620 85% 620

2 Units 85% 620 N/A N/A 75% 620

3-4 Units 80% 620 N/A N/A 75% 620




SFR/PUD/ Condo 80% 620 75% 620 75% 620

2 Units 75% 620 N/A N/A 70% 620

3-4 Units 75% 620 N/A N/A 70% 620

Eligible Terms ARM's Only ▪ For Fixed Rate, see the Conforming Fixed Program Matrix The term options are 5/1 ARM, 7/1 ARM, 10/1 ARM. Fully-amortized over 30 year term



Ineligible Transaction Types

Down payment assistance options Texas 50(a)(6) loans Manufactured Homes Properties on more than 10 acres are typically ineligible but will be considered as exception Hawaiian Home Land Transactions Properties located in Hawaii Lava Zones 1 & 2


Principal Residence and Second Homes: LTV/TLTV > 90%: 3%; LTV/TLTV 75.01-90%: 6%; LTV/TLTV ≤ 75%: 9%

Investment Properties: 2%

https://portal.ldwholesale.com/portaldocs/yoda/wholesale/conffixed.pdf


Loan Programs



Reserves

Reserves are determined by AUS but the following are generally required: Primary and 2nd Homes – Per LPA Non-owner Occupied – 6 months PITI Primary Residence 2-4 Units – 6 months PITI



Higher of note rate + 2% or fully indexed rate for 5/1 ARM's Higher of note rate or fully indexed rate for 7/1 and 10/1 ARMs CAPS: 5/1 ARMS- 2/2/5 All Other Loan Programs- 5/2/5

Ratios Per AUS approval ▪ Loans with Mortgage Insurance may have more restrictive requirements

Rate/Term Refinance

For LPA refinance transactions when the mortgage being refinanced was a purchase money transaction, the mortgage being refinanced must be seasoned for at least 120 days. This is calculated from Note date to Note date


If property was purchased in the past 6 months, borrower is ineligible for a cash-out refinance. The time period is measured from recording date of original loan to note date of new loan

Texas Cash Out (Second Home & Investment)

Second homes and investment properties that are NOT Texas Homesteads are eligible based on the above cash out eligibility

Title must not reflect any Homestead exemptions or as a Texas 50(a)(6). This property must not be the only property owned in TX

If subject property previously established as a TX Homestead, borrower must document that the current homestead has been “abandoned” by establishing another TX Homestead. Note: Pursuant to Texas property code section 41.003, “temporary renting of a homestead does not change its homestead character if the homestead claimant has not acquired another homestead” o Title company must verify the property is not the borrower’s homestead, and o A borrower’s affidavit confirming that the borrower has moved with the intention of not

returning to the property

Listing History

Refinance Transactions: Property must be taken off the market on or before the disbursement date and borrower must confirm their intent to occupy the subject property (for principal residence transactions)

Credit

Mortgage lates – 0x60 is past 12 months Chapter 7 bankruptcy – 48 months since discharge/dismissal Chapter 13 bankruptcy – 24 months since discharge / 48 months since dismissal Short sale/deed-in-lieu/pre-foreclosure 48 months since completion is required. LPA may allow

for greater flexibilities provided an Accept recommendation is obtained. Foreclosure 84 months since completion Borrowers with multiple BK filings – 60 months since most recent discharge/dismissal

Loan Programs




Minimum credit score is required regardless of AUS decision Loans must be underwritten through LPA and receive an Accept recommendation. When Broker does not have access to LPA, file can be submitted to LDW for AUS approval

HPML and HPCT Loans

▪ Higher-priced mortgage loan (HPML) underwriting requirements are applicable to all occupancy types (not just primary residences). Non-primary residences are classified as higher-priced covered transactions (HPCT) and must be underwritten as HPML's ▪ 5/1 ARM not eligible as HPML or HPCT

Mortgage Insurance

Loans with >80% LTV will require Mortgage Insurance and are subject to MI guidelines BPMI (monthly and single premium) and LPMI (single premium) are eligible LPMI (single premium) is eligible based on program LTV eligibility. LMPI is not allowed on 1)

Investment Properties when FICO is less than 720 or 2) 5/1 and 10/1 ARMs. Acceptable renewal types are Level/Constant and Non-refundable Approved MI companies are Arch, Genworth, MGIC, NMI, and Radian. Max DTI 45% for

FICO < 700 apply and vary by MI company. Refer to the individual MI company guidelines


Loan Term

LTV

80.01-85% 85.01-90% 90.01-95%

25 & 30 Year 12% 25% 30%

10,15 & 20 Year 6% 12% 25%






Employment History

Accessory Units Age of Documentation

Gift Funds Disputed Accounts First Time Home Buyer


Hobby Farms Delayed Financing

Gift of Equity Payoff and Paydown of Debt


Retirement Income

Leasehold Departure Primary Residence

Large Deposits Student Loans Non Arms Length Transactions

Temporary Leave Non Permitted Additions



Tax Transcripts Property Flips Power of Attorney


v.06.15.18















































Loan Programs


Executive High Balance Fixed

Finance Type Purchase / Rate and Term Refinance

Property Type Primary Residence Second Home

LTV/CLTV/FICO Max LTV/CLTV/HCLTV Min FICO Max LTV/CLTV/HCLTV Min FICO

SFR/PUD/Condo 80% 700 80% 700

2 Units 80% 700 N/A N/A

3-4 Units 75%- DU

80%- LPA 700 N/A N/A



LTV / CLTV / FICO Max LTV/CLTV/HCLTV Min FICO Max LTV/CLTV/HCLTV Min FICO

SFR / PUD / Condo 80% 700 75% 700

2-4 Units 75% 700 N/A N/A

Eligible Terms High Balance Loan Limits 30-year Fixed Rate fully-amortized Qualify at the Note rate

Eligible Property SFR & PUDs (attached and detached) 2-4 units Condos (Low and High Rise)

Ineligible Property

Non-Warrantable Condo/Condotel Cooperatives Leaseholds Manufactured Homes Agricultural Properties Properties > than 10 acres are typically ineligible but will be considered as exception

AUS Requirements DU Approve/Eligible or LPA Accept - No Manual Underwrites

Ratios Max 45% DTI

Loan Programs



Borrower Eligibility

Eligible:

All borrower(s) must have a valid social security number U.S. Citizens Non-Permanent and Permanent Resident Aliens

Ineligible:

Borrower(s) without a social security number Individual Taxpayer Identification Numbers (ITINs) Foreign Nationals Diplomats – diplomatic immunity Loans > 4 borrowers

Credit

All borrowers on the loan must have a credit score and traditional credit Mortgage lates – 0x60 in past 12 months Chapter 7 bankruptcy – 48 months since discharge/dismissal Chapter 13 bankruptcy – 24 months since discharge / 48 months since dismissal For DU loans only: If a mortgage debt has been discharged through bankruptcy, even if a

foreclosure action is subsequently completed to reclaim the property in satisfaction of the debt, the borrower is held to the bankruptcy waiting periods and not the foreclosure waiting period. Documentation must be obtained to verify that the mortgage debt in question was in fact discharged as part of the bankruptcy

Short sale/deed-in-lieu/pre-foreclosure- for DU, 48 months since completion is required This waiting period also applies to the charge-off of a mortgage account for DU loans only LPA may allow for greater flexibilities provided an Accept recommendation is obtained

Foreclosure 84 months since completion Borrowers with multiple BK filings – 60 months since most recent discharge/dismissal

Reserves

Reserves are determined by AUS but the following are generally required: o Primary and 2nd Homes - 2 months PITI o Primary Residence 2-4 Units – 6 months PITI



Principal Residence and Second Homes: LTV/CLTV of 75.01-80%: 6%. LTV/CLTV ≤ 75%: 9%

Cash-Out Restrictions If property was purchased in the past 6 months, borrower is ineligible for a cash-out

refinance unless following delayed financing guidelines

Listing History



Loan Programs



Appraisal Requirements

Property Inspection Waiver (PIW) or an Automated Collateral Evaluation (ACE) appraisal waiver is not eligible

A full appraisal interior and exterior inspection is required

(LPA only) A Field Review is required if property is valued ≥ $1,000,000 and the LTV/TLTV/HTLTV > 75%


Investment properties Down payment assistance options Texas 50(a)(6) loans Interest only Hawaiian Home Land Transactions Properties located in Hawaii Lava Zones 1 & 2


Minimum credit score is required regardless of AUS decision Loans must receive an Approve/Eligible DU or Accept/Accept LPA Approval LPA loans- maximum loan amount $1,000,000






Employment History

Accessory Units


Gift Funds Disputed Accounts





Paydown of Debt

Multiple Financed

Properties

Retirement Income

Leasehold Departure Primary

Residence

Large Deposits Student Loans Non Arms

Length Transactions

Temporary Leave






V. 6.15.18























































Loan Programs


Eligible Terms Super Conforming ARM's Only For Fixed Rate, see the HB Fixed Program matrix. The term options are 5/1 ARM, 7/1 ARM, 10/1 ARM. Fully-amortized over 30 year term




Down payment assistance options Texas 50(a)(6) loans Manufactured Homes Properties on more than 10 acres are typically ineligible but will be considered as exception Hawaiian Home Land Transactions Properties located in Hawaii Lava Zones 1 & 2

Freddie Mac Super Conforming ARM




SFR/PUD/ Condo

95% 620 90% 620 85% 620

2 Units 85% 620 N/A N/A 75% 620

3-4 Units 80% 620 N/A N/A 75% 620




SFR/PUD/ Condo

80% 620 75% 620 75% 620

2 Units 75% 620 N/A N/A 70% 620

3-4 Units 75% 620 N/A N/A 70% 620



Loan Programs


Freddie Mac Super Conforming ARM

IPC’s

Principal Residence and Second Homes: LTV/TLTV > 90%: 3%; LTV/TLTV 75.01-90%: 6%; LTV/TLTV ≤ 75%: 9%

Investment Properties: 2%

Reserves




Higher of note rate + 2% or fully indexed rate for 5/1 ARM's

Higher of note rate or fully indexed rate for 7/1 and 10/1 ARMs

CAPS: 5/1 ARMS- 2/2/5 All Other Loan Programs- 5/2/5


If property was purchased in the past 6 months, borrower is ineligible for a cash-out refinance unless following delayed financing guidelines

Listing History Refinance Transactions: Property must be taken off the market on or before the disbursement

date and borrower must confirm their intent to occupy the subject property

Ratios Per AUS feedback

Credit

Mortgage lates – 0x60 in past 12 months Chapter 7 bankruptcy – 48 months since discharge/dismissal Chapter 13 bankruptcy – 24 months since discharge / 48 months since dismissal Short sale/deed-in-lieu/pre-foreclosure- LPA may allow for greater flexibilities provided an Accept

recommendation is obtained. Foreclosure 84 months since completion Borrowers with multiple BK filings – 60 months since most recent discharge/dismissal



Loans must receive an Accept/Accept LPA Approval

Maximum loan amount $1,000,000


Loan Programs


Mortgage Insurance

Loans with >80% LTV will require Mortgage Insurance and are subject to MI guidelines BPMI (monthly and single premium) and LPMI (single premium) are eligible LPMI (single premium) is eligible based on program LTV eligibility. LMPI is not allowed on 1)

Investment Properties when FICO is less than 720 or 2) 5/1 and 10/1 ARMs Acceptable renewal types are Level/Constant and Non-refundable Approved MI companies are Arch, Genworth, MGIC, NMI, and Radian: Max DTI 45% for



Loan Term LTV

80.01-85% 85.01-90% 90.01-95%

25 & 30 Year 12% 25% 30%

10,15 & 20 Year 6% 12% 25%




Business Assets



Employment History

Accessory Units








Retirement Income



Temporary Leave





Non U.S Citizens


V: 06/15/18



























































Loan Programs


Freddie Mac Home Possible 95% LTV

Finance Type Purchase / Rate & Term Refinance

Property Type Primary Residence

LTV / TLTV/ FICO Fixed Rate ARM

Max LTV / TLTV Min FICO Max LTV / TLTV Min FICO

SFR / PUD / Condo/ 2 Units

95% / 95% 620 95% / 95% 620

3-4 Units 95% / 95% 620 N / A N / A

Eligible Loan Amounts

Conforming Loan Limits only

Credit Score Minimum FICO 620 or higher as determined by Loan Product Advisor (LPA)

Eligible Terms

Fixed Rate: 15, 20, or 30 years, fixed fully-amortized

ARMs: 5/1 ARM, (LIBOR), Caps 2/2/5. 7/1 ARM & 10/1 ARM, (LIBOR), Caps 5/2/5

Fully-amortized over 30 year term.

3-4 Unit properties are not eligible for ARMs


Owner Occupied Principal Residence

1-4 Units

Condos

PUDs

Co-ops


U.S. Citizens

Non-Permanent and Permanent Residents

First Time Homebuyers

Ineligible

Foreign National

Non-occupant borrower(s)


Must obtain an appraisal with an interior and exterior inspection that meets the requirements of

FHLMC Guide Chapter 5601

Loan Programs




Super Conforming mortgages


Community Seconds/Grants/Affordable Seconds

Sweat Equity


Manufactured Homes

HomeStyle Renovation loans


Loan Product Advisor (LPA)

LPA Accept/Eligible required (No manual underwrites allowed)

Based on income, LPA will determine the income eligibility for Home Possible

Note: LPA feedback certificate will return Home Possible offer message(s) - “This loan meets Home

Possible income limits based on property location for address entered. If you choose to deliver this

loan as a Home Possible loan, it must meet all requirements of the Home Possible product selected.”

Or “This loan meets Home Possible income limits based on property location for address entered.

This loan must also meet all other Home Possible product requirements for delivery to Freddie Mac.”

Eligible in LPA with at least one borrower has traditional credit

LPA Offering Identifier Code 241

Standard FHLMC underwriting and property guidelines apply unless specifically referenced within

this matrix

Mortgage Insurance

Financed MI is not available

Custom or reduced MI not eligible

Standard MI: BPMI (monthly and single premium), LPMI (single premium) is eligible based on

program LTV eligibility. LPMI is not available for 5/1 or 10/1 ARMS


Approved MI companies are Arch, Genworth, MGIC, NMI, and Radian. Max DTI 45% for



Loan Term LTV

80.01% - 85% 85.01% - 90% 90.01% - 95% Fixed Rate ≤20

Years 6% 12% 25%

Fixed / ARMs

> 20 Years 12% 25% 25%


Loan Programs



Homebuyer Education

Homeownership Education required prior to Note date for at least one qualifying borrower if all

borrower(s) are First-Time Homebuyers

Homeownership Education must not be provided by an interested party to the transaction, the

seller or by the originating Lender

Copy of Exhibit 20, Homeownership Education Certification or similar document (such as the

CreditSmart – Steps to Homeownership Certificate of Completion) containing comparable

information must be retained in the mortgage file

The following types of Homeownership Education are acceptable:

Programs developed by HUD-approved counseling agencies

Homeownership Education programs developed by mortgage insurance companies or other

providers’ programs that meet the standards of the National Industry Standards for

Homeownership Education and Counseling

o An alternative to the types listed above, Freddie Mac’s free financial literacy curriculum from

CreditSmart modules: CreditSmart®- Steps to Homeownership Tutorial 1) Module 1 Your Credit

and Why It is Important, 2) Module 2 Managing Your Money, 3) Module 7 Thinking Like a

Lender, 4) Module 11 Becoming a Homeowner, and 5) Module 12 Preserving Homeownership:

Protecting Your Investment. The financial literacy curriculum is not provided by an interested

party to the transaction, the seller or by the originating Lender

Landlord Education (2 – 4 Unit Primary Residence)

Purchase Transaction – At least one qualifying borrower must participate in a landlord education

program prior to the Note date

Landlord education must not be provided by an interested party to the transaction, the seller or

the originating Lender

Copy of a certificate evidencing successful completion of the landlord education must be

retained in the mortgage file

Refinance Transactions – Landlord education is not required but is recommended by FHLMC for

borrower(s) refinancing particularly those who have not previously attended

Borrower Income Eligibility

LPA will determine the income eligibility of the mortgage or can be validated using the Home

Possible Income & Property Eligibility tool

Determine whether or not the borrower(s) satisfied the income limits, the income must be

calculated as described in FHLMC Guide 4501.9(e)

Borrower(s) qualifying income submitted to LPA cannot exceed 100% of the area median income

limits or the higher percentage in designated high-cost areas as indicated in FHLMC Guide 4501.7

Income (O.T., bonus, etc.) not used to qualify the borrower is not required to be included in the

income limit eligibility

No income limits apply if the subject property is located in an Underserved Area

http://www.homeownershipstandards.com/


http://www.freddiemac.com/creditsmart/tutorial.html

http://www.freddiemac.com/homepossible/eligibility.html


Loan Programs



Income

Follow standard FHLMC income guideline requirements to verify qualifying income in accordance

with FHLMC Guide Chapters 5302 through 5307

Any discrepancies, income underreported income, must be corrected before submitting to LPA

Rental income (Boarder) from a 1 unit primary residence that meets the requirements of FHLMC

Guide 5306.1 may be considered as stable monthly income or the following:

The person providing the rental income and the borrower:

o Have resided together for at least one year

o Will continue residing together in the new residence, and

o The person providing the rental income must provide documentation to evidence residency

with the borrower (i.e., driver’s license, bill, bank statement, etc.) that shows the address of

that person to be the same as the borrower’s address

Rental income from the person residing in the mortgage premises (subject):

o Rental income has been paid to the borrower for the past 12 months on a regular basis

o Evidence of receipt of regular payments of rental income for the past 12 months via copies

of cancelled checks

o Rental income does not exceed 30% of total income used to qualify

The file must contain a written statement from the borrower affirming:

o Source of the rental income

o The fact that the person providing the rental income has resided with the borrower for the

past year and intends to continue residing with the borrower in the new residence for the

foreseeable future

Rental income from 2-4 unit primary residence that meets the requirements of FHLMC Guide 5306.1

may be used as qualifying income

Qualifying Ratios

As determined by LPA Accept Risk Classification


Qualifying Rate

Note rate for Fixed-rate

Higher of note rate + 2% or fully indexed rate for 5/1 ARMs

Higher of note rate or fully indexed rate for 7/1 ARMs & 10/1 ARMs

Subordinate Financing

Subordinate financing must comply with FHLMC Guide 4204.1

No Affordable Seconds

Subordinate financing of a seller-held mortgage is ineligible with Home Possible

Loan Programs



Assets

Minimum contribution from borrower personal funds – Purchase Transaction > 80% LTV:

Number of Units Minimum Borrower

Contribution

Minimum Down Payment

Requirement

One None 5%

Two 3% 5%

Three or Four 3% 5%

No minimum contribution required for LTV<80% & limited cash-out refinance transaction

Acceptable source of funds for down payment and closing costs:

Borrower Personal Funds as described in FHLMC Guide 5501.3(b)

Gifts FHLMC Guide 5501.3(c)

Cash-on-hand permitted as a source of funds for down payment; Refer to FHLMC Guide

4501.10(i)(2) for requirements. Refer to MI company guidelines that would allow cash-on-hand

for Home Possible loans

Note: Cash-on-hand may not be used to fund the borrower’s reserve requirement, if applicable.

Refer to FHLMC Guide 5501 and 4501.10 for more information.

Reserves

Must verify all reserves required by LPA as stated on feedback certificate. The below required

reserves are included in the amount of reserves required by LPA:

o 1-unit: No reserves requirement

o 2-4 unit: 2 months reserves required

Refer to FHLMC Guide 4501.10 for eligible sources of funds


LTV/TLTV > 90%: 3%

LTV/TLTV 75.01 - 90%: 6%

LTV/TLTV ≤ 75%: 9%

First Time Homebuyer

No requirement for the borrower(s) to be a First Time Homebuyer

HPML and HPCT Loans

Higher-priced mortgage loan (HPML) underwriting requirements are applicable to all occupancy

types (not just primary residences)

5/1 ARM not eligible as HPML or higher-priced covered transactions (HPCT)

Loan Programs


v. 06/15/18


Property Ownership

All borrower(s) must occupy the subject property as a primary residence

Borrower(s) may not have any individual or joint ownership interest in any other residential

properties as of the Note date except as stated below.

The borrower may have an ownership interest in a residential property other than the subject

property if the borrower does not occupy the other property and documents the following:

Borrower inherited ownership interest in the other property and shares ownership with another

party; ineligible if borrower inherited other property as a sole owner

Borrower owns the other property with another party and the debt associated with the

property is assigned to the other party by a court order (i.e. divorce decree)

Borrower is a cosigner/guarantor on the mortgage debt and someone other than the borrower

has made payments for the most recent 12 months to the other property; must document most

recent 12 months cancelled checks


Minimum credit score is required regardless of LPA Accept/Eligible decision

No MCC

No Temporary Buydowns


Please access loanDepot DWholesale Underwriting Guidelines for a complete set of guidelines. For ease

of access, we have included links to popular topics by category:


Business Assets



Employment History

Accessory Units

Appraisal Policy

Gift Funds Deferred

Installment Debt

Multiple Financed

Properties


Hobby Farms Delayed

Financing

Gift of Equity Disputed Accounts

Non Arms Length

Transactions

Retirement Income

Leasehold Departure

Primary Residence

Large Deposits Payoff and

Paydown of Debt


Temporary Leave


Power of Attorney

Non U.S Citizens

Tax Transcripts Property Flips






















































Loan Programs


Freddie Mac Home Possible Advantage

Finance Type Purchase / Rate & Term Refinance


LTV /TLTV/FICO Fixed Rate Only

Max LTV Max TLTV Min FICO

SFR / PUD / CONDO 97% 97% 620

Eligible Loan Amounts

Conforming Loan Limits only

Credit Score Minimum FICO 620 or higher as determined by Loan Product Advisor (LPA)

Eligible Terms Fixed Rate: 15, 20, or 30 years, fixed fully-amortized


1 Unit Owner Occupied Principal Residence

SFR

Condos

PUDs

Co-ops


U.S. Citizens

Non-Permanent and Permanent Residents

First Time Homebuyers

Ineligible

Foreign National



Super Conforming mortgages


Community Seconds

Grants/Affordable Seconds

Sweat Equity


Manufactured Homes




Loan Programs



Loan Product Advisor (LPA)

LPA Accept/Eligible required (No manual underwrites allowed)

Based on income, LPA will determine the income eligibility for Home Possible

Note: LPA feedback certificate will return Home Possible offer message(s) - “This loan meets

Home Possible income limits based on property location for address entered. If you choose to

deliver this loan as a Home Possible loan, it must meet all requirements of the Home Possible

product selected.” Or “This loan meets Home Possible income limits based on property location

for address entered. This loan meets Home Possible income limits based on property location for

address entered. This loan must also meet all other Home Possible product requirements for

delivery to Freddie Mac.”

Eligible in LPA with at least one borrower has traditional credit

LPA Offering Identifier Code 250

Standard FHLMC underwriting and property guidelines apply unless specifically referenced within

this matrix

Homebuyer Education

Homeownership Education required prior to Note date for at least one qualifying borrower if all

borrower(s) are First-Time Homebuyers

Homeownership Education must not be provided by an interested party to the transaction, the

seller or by the originating Lender

Copy of Exhibit 20, Homeownership Education Certification or similar document (such as the

CreditSmart – Steps to Homeownership Certificate of Completion) containing comparable

information must be retained in the mortgage file

The following types of Homeownership Education are acceptable:

Programs developed by HUD-approved counseling agencies

o Homeownership Education programs developed by mortgage insurance

companies or other providers’ programs that meet the standards of the National

Industry Standards for Homeownership Education and Counseling

(http://www.homeownershipstandards.com/)

o An alternative to the types listed above, Freddie Mac’s free financial literacy curriculum

from CreditSmart modules: CreditSmart®- Steps to Homeownership Tutorial 1) Module 1

Your Credit and Why It is Important, 2) Module 2 Managing Your Money, 3) Module 7

Thinking Like a Lender, 4) Module 11 Becoming a Homeowner, and 5) Module 12

Preserving Homeownership: Protecting Your Investment

The financial literacy curriculum is not provided by an interested party to the transaction,

the seller or by the originating Lender

Assets

No minimum contribution from borrower personal funds is required Acceptable source of funds for down payment and closing costs:

Borrower Personal Funds as described in FHLMC Guide 5501.3(b) Gifts FHLMC Guide 5501.3(c) Cash-on-hand permitted as a source of funds for down payment; Refer to FHLMC Guide and

MI company guidelines that would allow cash-on-hand for Home Possible loans


http://www.freddiemac.com/creditsmart/tutorial.html

Loan Programs



Reserves No reserve requirements


LPA will determine the income eligibility of the mortgage or can be validated using the Home

Possible Income & Property Eligibility tool

Determine whether or not the borrower(s) satisfied the income limits, the income must be calculated as described in FHLMC Guide 4501.9(e)

Borrower(s) qualifying income submitted to LPA cannot exceed 100% of the area median income limits or the higher percentage in designated high-cost areas as indicated in FHLMC Guide 4501.7

Income (O.T., bonus, etc.) not used to qualify the borrower is not required to be included in the income limit eligibility

No income limits apply if the subject property is located in an Underserved Area

Qualifying Ratios As determined by LPA Accept Risk Classification Loans with Mortgage Insurance may have more restrictive requirements

Income

Follow standard FHLMC income guideline requirements to verify qualifying income in accordance with FHLMC Guide Chapters 5302 through 5307

Any discrepancies, income underreported income, must be corrected before submitting to LPA

Rental income (Boarder) from a 1 unit primary residence that meets the requirements of FHLMC Guide 5306.1 may be considered as stable monthly income or the following: The person providing the rental income and the borrower:

o Have resided together for at least one year o Will continue residing together in the new residence, and o The person providing the rental income must provide documentation to evidence

residency with the borrower (i.e., driver’s license, bill, bank statement, etc.) that shows the address of that person to be the same as the borrower’s address

Rental income from the person residing in the mortgage premises (subject): o Rental income has been paid to the borrower for the past 12 months on a regular basis o Evidence of receipt of regular payments of rental income for the past 12 months via

copies of cancelled checks o Rental income does not exceed 30% of total income used to qualify

The file must contain a written statement from the borrower affirming: o Source of the rental income o The fact that the person providing the rental income has resided with the borrower for

the past year and intends to continue residing with the borrower in the new residence for the foreseeable future


Must obtain an appraisal with an interior and exterior inspection that meets the requirements of FHLMC Guide Chapter 5601



Loan Programs



Mortgage Insurance

Financed MI is not available. Custom or reduced MI not eligible

Standard MI: BPMI (monthly and single premium), LPMI (single premium) is eligible based on program LTV eligibility




Loan Term LTV

80.01% - 85% 85.01% - 90% 90.01% - 95% 95.01% - 97%

Fixed Rate ≤ 20 Years 6% 12% 25% 25%

Fixed / ARMs > 20 Years

12% 25% 25% 25%


No subordinate financing allowed No Affordable Seconds


LTV/TLTV > 90%: 3%

LTV/TLTV 75.01 - 90%: 6%

LTV/TLTV ≤ 75%: 9%

First Time Homebuyer

No requirement for the borrower(s) to be a First Time Homebuyer

Property Ownership

All borrower(s) must occupy the subject property as a primary residence Borrower(s) must not have any individual or joint ownership interest in any other residential

properties as of the Note date except as stated below. The borrower may have an ownership interest in a residential property other than the subject property if the borrower does not occupy the other property and documents the following:

Borrower inherited ownership interest in the other property and shares ownership with another party; ineligible if borrower inherited other property as a sole owner

Borrower owns the other property with another party and the debt associated with the property is assigned to the other party by a court order (i.e. divorce decree)

Borrower is a cosigner/guarantor on the mortgage debt and someone other than the borrower has made payments for the most recent 12 months to the other property; must document most recent 12 months cancelled checks


Minimum credit score is required regardless of LPA Accept/Eligible decision No MCC No Temporary Buydowns

HPML and HPCT Loans

Higher-priced mortgage loan (HPML) underwriting requirements are applicable to all occupancy types (not just primary residences). ▪ 5/1 ARM not eligible as HPML or higher-priced covered transactions (HPCT)

Loan Programs


v: 06/15/18





Business Assets



Employment History

Accessory Units

Appraisal Policy

Gift Funds Deferred

Installment Debt

Multiple Financed

Properties


Hobby Farms Delayed

Financing


Non Arms Length

Transactions

Retirement Income

Leasehold Departure

Primary Residence

Large Deposits Payoff and

Paydown of Debt


Temporary Leave


Power of Attorney

Non U.S Citizens






















































Loan Programs


DU Refi Plus

Finance Type No Cash-Out Refinance


LTV/CLTV/FICO Max LTV/CLTV Min FICO



SFR/PUD/Condo

Fixed: No Max

Per DU

Fixed: No Max

Per DU

Fixed: No Max

Per DU

ARM: 105% LTV/ No Max CLTV



2 – 4 Units

Fixed: No Max

N/A N/A

Fixed: No Max



Eligible Terms

Conventional Fixed Rate: 10,15, 20, 25 and 30-year, High Balance Fixed Rate: 15, 20, 25 and 30 year- Conforming ARM: 5/1 ARM, 7/1 ARM, and 10/1 ARM High Balance ARM: 5/1 ARM, 7/1 ARM, and 10/1 ARM ARM's subject to maximum 105% LTV

Eligible Property Types/Occupancy

1-4 unit, detached and attached condos and PUDs Primary Residence, Second Home and Investment Property allowed Co-ops not allowed

AUS DU Approve/Eligible

DU cert must be run on all loans and must render SFC 147

Ineligible Mortgages/DU Recommendations

DU Refer or Ineligible recommendations through DU Existing loans that are government loans, second mortgages, reverse mortgages or

mortgages subject to outstanding repurchase request from FNMA Mortgages secured by manufactured homes or co-ops HomeStyle renovation and MyCommunityMortgage loans Cash Out transactions Mortgage loans with temporary interest rate buydowns Properties on more than 10 acres are typically ineligible but will be considered as

exception Hawaiian Home Land Transactions Properties located in Hawaii Lava Zones 1 & 2


Loan Programs


DU Refi Plus

Borrower Eligibility & Benefit

A borrower can be removed provided at least one existing borrower(s) is retained on the new loan

Borrower(s) may be added to the new loan, provided the existing borrower(s) is retained Must show benefit of: 1) reduced P&I payment, 2) reduction in interest rate, 3) a more

stable mortgage product or 4) reduction in amortization term Borrowers who are currently on a modification are eligible for the DU Refi Plus program.

The terms of the modified mortgage must be used when determining the benefit

Mortgage Proceeds

Points, prepaids and closing costs may be rolled into the new loan Points and fees including origination, underwriting fees, broker fees, processing fees,

etc. regardless of the party paying the fee may not exceed 5% of the mortgage amount Discount points and prepaids are not included in the 5% limitation Existing purchase money second mortgages may not be satisfied with loan proceeds Maximum cash out $250 (zero cash out allowed in Texas)

ARM Qualifying Rate/CAPS

5/1 ARMs: Higher of note rate + 2% or fully indexed rate 7/1 ARMs & 10/1 ARMs: Higher of note rate or fully indexed rate CAPS: 5/2/5 for all loan plans

Higher Priced Mortgage Loans (HPML)

Allowed but requires minimum FICO of 620 and maximum DTI of 45% for loans with application dates on or after 1/10/14

These requirements must be followed even if DU approves at a lower FICO/higher DTI These requirements apply to all occupancy types

Texas 50(a)(6) Not allowed

Credit

No minimum FICO / per DU unless HPML loan with application date on or after 1/10/14 Mortgages must be current and 0X60 last 12 months Borrowers who are currently on a modification are eligible for the DU Refi Plus program.

The terms of the modified mortgage must be used when determining the benefit Not required to comply with the waiting period and re-establishment of credit

requirements for significant derogatory events (bankruptcy, foreclosure, etc.) provided DU issues an acceptable recommendation

Income/Assets

No max DTI / per DU unless HPML loan with application date on or after 1/10/14 Income Documentation required per FNMA's DU Refi Plus Documentation Matrix or per

DU Note: Unemployment income is an acceptable source of income whether it is seasonable or non-seasonable Verbal verification of employment required within 10 days of closing A fully executed IRS form 4506T is required for each borrower on the loan. Refer to

Tax Transcripts-4506-T Policy for when transcripts are required Assets and Reserves must be verified to the extent of DU findings report Large deposits do not have to be explained or sourced Proof of liquidation of assets is not required even if those assets are used by the

borrower to pay closing costs

http://yoda/Sandbox/mergedProjects/Loan%20Programs/FNMA_DURP__Income_DocumentationB5-5-2-02.pdf


Loan Programs


DU Refi Plus

Mortgage Insurance

None required if LTV ≤ 80% None required if existing loan does not have MI regardless of LTV Refer to DU Cert for MI requirements. If MI is required, must obtain level of coverage in

force on existing loan

MI coverage must extend for the life of the new loan, or until cancellation or termination of coverage as required by law or FNMA guidelines, whether the MI company modifies the existing MI cert or issues a new one

Continuation of existing LPMI on the new loan is permitted provided it is single premium LPMI (transfers of annual and monthly LPMI not permitted)

Approved MI companies are Arch, Genworth, MGIC, NMI and Radian: Max DTI 45% for FICO < 700 apply and vary by MI company. Refer to the individual MI company guidelines

Appraisal

Must follow appraisal requirements per DU Value discrepancies between Broker DU findings and Broker 1003 can be cured using a

2055 or appraisal to establish value Properties damaged as a result of a disaster are not required to be repaired prior to

delivery as long as the loan meets FNMA's property insurance requirements. Thus, an additional inspection and/or new appraisal is not required

Condos

A project eligibility review is not required Properties in condo motels, condo hotels, timeshares, houseboats or segmented

ownership projects are not eligible Verification of Hazard, Flood and Liability insurance is required

Max Financed Properties

No limitation on the number of financed properties a borrower may own

Property Listed for Sale Okay if subject property is currently listed for sale


Existing subordinate liens must be re-subordinated and must meet FNMA’s requirements for secondary financing

Existing subordinate financing may not be satisfied with the proceeds of the new DU Refi Plus mortgage loan

New subordinate financing is not allowed

Revised: 06/15/2018

Loan Programs


LPA Open Access



LTV/TLTV/FICO Max LTV / TLTV Min FICO Max LTV / TLTV Min FICO Max LTV / TLTV Min FICO

SFR/PUD/Condo No Max Per LPA

No Max Per LPA No Max Per LPA

2 - 4 Units No Max N/A N/A No Max

Eligible Terms ▪ Conforming Fixed Rate: 15, 20, 25 and 30-year ▪ Super Conforming Fixed Rate: 15, 20, 25 and 30-year

Eligible Property Types/Occupancy

▪ 1-4 unit, detached and attached condos and PUDs. ▪ Primary Residence, Second Home and Investment Property allowed ▪ Manufactured homes and Co-ops not allowed

Ineligible Mortgages

▪ Cannot refinance existing Fixed Rate mortgage to an ARM ▪ Cash-out refinances ▪ Neg Am or Option ARM ▪ Special purpose cash-out refinance ▪ Mortgages that convert interim construction financing to permanent financing ▪ Mortgages subject to a temporary subsidy buy down ▪ FHA or VA mortgages ▪ Section 502 GRH Mortgages ▪ Section 184 Native American Mortgages ▪ Home Possible Mortgages, and any affordable mortgage, including mortgages originated under the seller's proprietary affordable program ▪ Affordable Merit Rate Mortgages ▪Prepayment penalty mortgages ▪ FHLMC Relief Refinance/Same Servicer ▪ Mortgages using an AVM other than HVE to determine value ▪ Seasoned mortgages ▪ Mortgages submitted to any other AUS excluding LPA ▪ Mortgages with original loan amounts > $1,000,000 Properties on more than 10 acres are typically ineligible but will be considered as exception Hawaiian Home Land Transactions Properties located in Hawaii Lava Zones 1 & 2 ▪ Mortgages secured by manufactured homes or co-ops

Borrower Eligibility & Benefit

▪ A borrower obligated on the Note of the mortgage being refinanced may be omitted/removed from the Note of the new loan. And a borrower(s) may be added to the Note of the new loan, except that a non-occupying borrower may not be added to a loan secured by a primary residence. However, in all cases, at least one borrower must be retained ▪ The existing and new mortgage do not have to represent the same occupancy ▪ Must show benefit of: 1) reduced P&I payment, 2) reduction in interest rate, 3) replace ARM, Initial Interest Mortgage or any mortgage with an interest-only period, or a


Loan Programs


LPA Open Access

balloon/reset mortgage with a fixed-rate, fully amortizing mortgage, or 4) reduction in amortization term ▪ There is no limitation on the amount of the increase in the borrower's principal and interest payment

Mortgage Proceeds

▪ Payoff the existing first mortgage – only the unpaid principal balance and interest accrued through the date the mortgage being refinanced is paid off ▪ Pay related closing costs, financing costs and prepaids/escrows not to exceed $5000 ▪ Maximum cash out $250 ▪ If cash back exceeds $250, the mortgage amount must be reduced OR the excess amount must be applied as a principal curtailment and clearly reflected on the HUD-1 or Closing Disclosure

AUS ▪ LPA cert with Risk Class of Accept

Higher Priced Mortgage Loans (HPML)

▪ Allowed ▪ For applications taken on or after 1/10/14, a minimum 620 FICO and a maximum DTI of 45% is required even if LPA approves at a lower FICO and/or higher DTI. These requirements apply to all occupancy types

Credit ▪ No minimum FICO (unless HPML – see HPML requirements above) or mortgage payment history requirement so long as LPA renders a Risk Class of Accept that meets the requirements in Chapter C33 of the Selling Guide

Income/DTI

▪ Max DTI is determined per LPA (see HPML section above for DTI restrictions on HPML loans) ▪ Income must be documented. In lieu of meeting LPA's Streamlined Accept or Standard Documentation requirements, income may be documented according to FHLMC's Open Access Income Documentation Table. Note: Unemployment income is an acceptable source of income provided evidence is obtained to show it is associated with seasonal employment. ▪ For employed income, a VVOE is required within 10 business days prior to the Note Date ▪ For self-employed income, verification of the business is required within 30 calendar days prior to the Note Date ▪ For income other than employed or self-employed income, the income source must be eligible per FHLMC guidelines and verification of the source is required A fully executed IRS form 4506T is required for each borrower on the loan. Refer to

Tax Transcripts-4506-T Policy for when transcripts are required ▪ When using assets as a basis for qualification, refer to Section 37.22(a) of FHLMC's Seller Guide

Assets/Funds to Close ▪ Funds to close must be verified with the most recent monthly or quarterly account statement. Large deposits or increases in balances are not required to be addressed nor is proof of liquidation of funds required

Mortgage Insurance

▪ Not required if the existing loan does not have MI regardless of new mortgage LTV ▪ If existing mortgage has MI and new mortgage LTV is > 80%, the same percentage of MI coverage must be maintained Continuation of existing LPMI on the new loan is permitted provided it is single premium

LPMI (transfers of annual and monthly LPMI not permitted) ▪ Approved MI companies are Arch, Genworth, MGIC, NMI, and Radian. Max DTI 45% for FICO < 700 apply and vary by MI company. Refer to the individual MI company guidelines

http://yoda/Sandbox/mergedProjects/Loan%20Programs/FHLMC_OA_IncomeDocumentation_B24-3.pdf

http://yoda/Sandbox/mergedProjects/Loan%20Programs/FHLMC_OA_IncomeDocumentation_B24-3.pdf


Loan Programs


LPA Open Access

Living Trusts

▪ A living trust (inter vivos revocable trust) may be made irrevocable by a settlor’s death. To be an eligible borrower at the time of the refinance transaction, the borrower must continue to be a living trust that meets FHLMC’s revocability and, as applicable, other eligibility requirements

Appraisal

▪ Value to be determined by one of two options: Value estimate from HVE or full appraisal ▪ HVE Eligibility: 1) Must be 1 or 2 unit attached or detached SFR, PUD or condo, 2) HVE must have a Forecast Standard Deviation that is no greater than 0.20 (corresponding to a Confidence Score of “H” [high] or “M” [medium]), 3) Dwelling cannot be a leasehold estate, manufactured homes or co-op, 4) A written copy of the HVE must be in the loan file, 5) As of the note date, the HVE value may not be more than 120 days old. Value discrepancies between Broker LPA findings and Broker 1003 can be cured using a 2055 or appraisal to establish value ▪ Full Appraisal Eligibility: 1) Condition ratings of C5 or C6 and/or a UAD quality rating of Q6 completed on an “as-is” basis is acceptable. The appraisal does not have to be completed “subject to” needed repairs being completed

Condos

▪ Condo project review is not required provided that the project is 1) Not located in a Hotel/Resort Project, houseboat project, timeshare project or a project with fragmented or segmented ownership, AND 2) The project has insurance that meets FHLMC's insurance requirements

Properties Affected by Disaster

▪ Not required to obtain a property inspection or new appraisal when a property valuation (either HVE or appraisal) was relied on prior to a disaster provided the loan meets FHLMC's property insurance requirements ▪ Can use an HVE value estimate with a high or medium confidence score after a disaster without obtaining a property inspection or appraisal to determine property condition, provided the loan meets FHLMC’s property insurance requirements


▪ No limitation on the number of financed properties a borrower may own

Property Listing ▪ Okay if subject property is currently listed for sale


▪ Existing subordinate liens must be re-subordinated and must meet FHLMC’s requirements for secondary financing ▪ An increase in the current unpaid principal amount of any junior lien is prohibited to curtail the Relief Refinance/Same Servicer loan or to pay related closing costs, financing costs or prepaids/escrows

▪ No new subordinate financing allowed

Revised: 06/15/2018

Loan Programs


LD Jumbo Advantage

Primary Residence – Purchase & Rate/Term2

Property Type Maximum

Loan Amount

Minimum Credit Score

Maximum

LTV / CLTV3

Minimum

Reserves (PITIA)4

1-Unit1

$1,000,000 700 80%

6 months

$1,500,000 9 months

$2,000,000

720

80%

9 months $2,500,000 75%

$3,000,000 70%

2 Units $1,000,000 700

75% 6 months

$2,000,000 720 9 months

3-4 Unis $1,000,000 700

70% 6 months

$2,000,000 720 9 months

Primary Residence - Cash-Out Refinance2,5


Loan Amount Minimum

Credit Score

Maximum

LTV / CLTV3

Minimum

Reserves (PITIA)4

1-Unit1

$1,000,000

720 70% 6 months

$1,500,000 70% 9 months

$2,000,000 65% 9 months

Second Home – Purchase & Rate/Term


Loan Amount Minimum

Credit Score

Maximum

LTV / CLTV3

Minimum

Reserves (PITIA)4

1-Unit1

$650,000

720

80% 6 months

$1,000,000 75%

$1,500,000 75% 9 months

$2,000,000 70%

Second Home – Cash-Out Refinance5


Loan Amount


Maximum

LTV / CLTV3

Minimum

Reserves (PITIA)4

1-Unit1

$650,000

720

70% 6 months

$1,000,000 65%

$1,500,000 65% 9 months

$2,000,000 60%

Investment – Purchase & Rate/Term


Loan Amount


Maximum

LTV / CLTV3

Minimum

Reserves (PITIA)4

1-Unit1 $1,000,000

740 60% 6 months

$2,000,000 9 months

Investment – Cash-Out Refinance5


Loan Amount Minimum

Credit Score

Maximum

LTV / CLTV3

Minimum

Reserves (PITIA)4

1-Unit1 $1,000,000

740 60% 6 months

$2,000,000 9 months

Loan Programs


LD Jumbo Advantage

Footnotes

1Florida Condo (attached): Maximum LTV for an established project in the state of Florida is the lesser of the program maximum or:

• 75% LTV/CLTV for a primary residence • 70% LTV/CLTV for a second home • 60% LTV/CLTV for an investment property

2 TX 50 (a)(6) Restrictions

Max 80% LTV (TXA6 requirement) or program maximum, whichever is less

Fixed Rate only

Primary residence only

1-Unit ≤ 10 Acres

3 Existing Subordinate Financing only: New secondary Financing is not allowed. Max 80% LTV (or program maximum) when existing subordinate

financing is present. 4 Two (2) months PITIA required for each additional financed property owned 5 Maximum Cash Out:

Primary Residence Second Home Investment Property

≤ 65% LTV/CLTV: $500,000

≤ 70% LTV/CLTV: $350,000

≤ 60% LTV/CLTV: $400,000 ≤ 65.01%-70% LTV/CLTV: $400,000

Minimum Loan Amount

• Minimum $1 above the Conforming loan limit for the area and number of units Note: Minimum $1 above High-Cost County Note: DU must receive an “Approve/Ineligible” recommendation for loan amount. High Balance loan amount DU Approve/Eligible recommendation must be submitted as High Balance program.

Eligible Terms

• 30 Year Fixed Rate

• 5/1 LIBOR 2/2/5 CAPS • 7/1 LIBOR 5/2/5 CAPS • 10/1 LIBOR 5/2/5 CAPS • Margin 2.25%

• Fully amortizing over 30 years for Fixed Rate and ARM loans • Qualify at the Note rate for 30 Year Fixed Rate • Qualify higher of initial Note rate + 2% or fully indexed rate for 5/1 ARM • Qualify higher of initial Note rate or fully indexed rate for 7/1 and 10/1 ARM loans

Geographic Restrictions

• Hawaiian Home Land Transactions • Hawaii properties located in Lava Zones 1 or 2 not allowed

Eligible Borrower

• All borrower(s) must have a valid social security number • U.S. Citizens • Permanent Resident Aliens • Non-Permanent Resident Aliens who have a minimum of 2 years credit history and

employed in the U.S. or borrowing with a U.S. Citizen or a Permanent Resident Alien o G1-G5, H-1, L-1, E-1, or E-2 visa o Additional Visa may be reviewed for acceptability on a case by case basis

• Non-occupying co-borrowers allowed – qualifying ratios are calculated based on the occupying borrower’s income only (blended ratios are not permitted)

• Inter Vivos” Living Trusts

Loan Programs


LD Jumbo Advantage

Ineligible Borrower

• Borrower(s) without a social security number • Individual Taxpayer Identification Numbers (ITINs) • Foreign Nationals • Diplomats – diplomatic immunity • Loans with > 4 borrower

First Time Homebuyer (FTHB)

A FTHB living rent free is acceptable as long as the following requirements are met:

• Borrower meets Fannie Mae’s definition of first time home buyer

• Borrower is not a co-signer or co-borrower on any other mortgage loan

• Borrower currently lives with relatives (as defined by Fannie Mae) and the relatives provide a sign and dated letter verifying the borrower’s current housing payment

• If the loan file contains documentation evidencing the borrower is currently or has made rent payments in the past 12 months, the housing payment history (rental) covering the most recent 12 months must reflect a 0x30 history

• No foreclosures, short-sale, or mortgage charge-offs in the past 7 years

• Refer to FTHB Housing Payment History for additional guidelines

Documentation • Full

AUS Requirements • Manual Underwrite, and All loans must be submitted through Desktop Underwriter (DU)

and receive an "Approve/Ineligible" recommendation. The only reasons for the "Ineligible" recommendation must be the loan amount and “Limited Cash-out” (exceeding 2% or $2K)

Age of Documents

• Credit Documents: 120 days max at time of closing • Appraisal: 120 days from date Note is signed. If appraisal is older than 120 days but less than

one year: o Obtain an update from the appraiser indicating the property value has not declined

since the original appraisal date o If the effective date of the appraisal exceeds one year or the value has declined, a new

appraisal is required

Eligible Property

• Single family detached or attached dwellings • Condominiums/PUDs • Modular Factory built housing (except manufactured and mobile homes, not part of a PUD

or condominium project) • Properties with 10 acres or less • Primary residence 2-4 Units

Loan Programs


LD Jumbo Advantage

Ineligible Property

• Time-share projects • Unimproved land • Mobile home/Manufactured housing • Non-Warrantable Condos/Condotels/Resort/Hotel Condos • Commercial/Agriculture property • Log/Earth/Dome Homes • Hobby Farms • Leasehold Land • Cooperative (Co-op) projects

Credit

• All borrowers must have a credit score and minimum two credit scores are required • Borrower with the lower of the middle scores is used as the credit score for the transaction • Minimum of 24 months history in file and 3 trade lines are required for the qualifying

borrower(s). One must be open and active for 24 months and the remaining two trade lines must be rated for minimum 12 months. Trade lines with patterns of reoccurring delinquency are not considered acceptable when determining minimum requirements

• Insufficient credit history is defined as: 1) Fewer than 3 trade lines, 2) No trade line with activity in the most recent 12 months, 3) No trade line with at least a 24-month history, 4) Non-traditional credit, and 5) Authorized-user account

• Authorized user accounts can be excluded from DTI ratio if borrower is not the credit account owner on an authorized user account

• Housing Payment History: o 0 x 30 mortgage history in the last 12 months verified by the credit report with the

exception of a recently acquired property that requires at least 6 months housing payment (VOM/VOR) verification (0 x 30 in the past 6 months).

o Private lender/landlord requires most recent and consecutive 12 months bank statements showing regular withdrawals, money order or cash receipts are acceptable. Note: Cash receipts are not acceptable when landlord is a relative or has an established relationship with the borrower prior to loan application.

o First-time Home Buyer: Housing payment history (rental) covering the most recent minimum 12 months with no late payments must be verified by the credit bureau or by direct verification (12 months must be most recent and consecutive months)

A professional management company or a private landlord may verify rental housing payments. Private landlord requires canceled checks, bank statements, money order or cash receipts

Cash receipts are not allowed if landlord is a relative or has an established relationship beyond renter and landlord

If using cash receipts, must provide the name, address, and telephone number of the individual receiving the payments

Living with family or no mortgage or rental payment history can be obtained: A letter of explanation is required and Credit report verifying an acceptable traditional credit history and

minimum credit score requirements are met • Calculating HELOC payments on any property: When the HELOC is still in the draw period,

the payment will be calculated based on the higher of the credit report payment or 1% of

the line amount

• Foreclosure: 7 year Waiting Period; 5 years with extenuating circumstances*

Loan Programs


LD Jumbo Advantage

Credit cont’d

• Bankruptcy – Chapter 7 or 11: 7 year Waiting Period; 5 years with extenuating circumstances*

• Bankruptcy – Chapter 13: 7 year Waiting Period from discharge date or 2 years from dismissal date; 5 years from discharge date or 2 years from dismissal date with extenuating circumstances*

• Modification/Deed-in-Lieu of Foreclosure/Pre Foreclosure Sale/Charge-Off of Mortgage Amount: 7 year Waiting Period; 5 Years with extenuating circumstances*

• Multiple Bankruptcies Filings: 7 year Waiting Period; 7 years with extenuating circumstances*

*Note: LTV > 70% - history of foreclosures, bankruptcies, deed-in lieu, short sale, repossession, or loan modifications are not allowed in the past 7 years regardless of extenuating circumstances. • Collections, judgments, and judgment liens that have not already been satisfied are subject

to payoff and requirements as outlined:

Collections, Judgments, and Judgment Liens

Account Types (Not Attached to Title)

Dollar Amount per Tradeline

Required Payoff

Included in DTI

Judgment / Judgment Lien Any Yes N/A

Collection ≤ $500 No No

Collection > $500 Yes1 N/A

Charge Off > $500 Yes No

Charge Off ≤ $500 No No

1. Account(s) may not be paid down to $500 to avoid payoff.

Note: Medical collections may be ignored. Accounts that may impact title to the property must be paid at or before loan closing.

Non-Real Estate settled for less accounts that settled < 2 years prior to application date are not eligible

Credit re-scoring/rapid re-score/credit repair is not acceptable during the loan application

Disputed trade line message on the AUS with a reported derogatory payment within the last 2 years must confirm the accuracy and completeness of the information reported on the credit report:

o If it is determined the disputed trade line is accurate, must consider the credit risk assessment by including the balance and payment in the ratio analysis

o Tradelines with zero balance may be ignored Note: Tradelines reported as medical debt are not shown in the disputed trade line message and are not required to be investigated.

Debts < 10 months remaining may be excluded except for auto lease

Revolving/open-ended accounts, regardless of balance are included in DTI ratio even if account appears likely to be paid off within 10 months or less. If credit report does not specify minimum monthly payment, calculate the highest of 5% of balance or $10. The actual monthly payment can be documented from lender or copy of most recent statement reflecting monthly payment:

Loan Programs


LD Jumbo Advantage

Credit cont’d

o Open-ended accounts such as American Express may use one the following for qualifying: Document sufficient assets to pay off the full balance (beyond the cash required

to close and reserves) If assets are not available, use full balance and calculate payment higher of 5% of

balance or $10; if a lower payment can be documented from creditor, that amount may be used for qualifying purposes

Alimony payment may be treated as a reduction from the borrower’s gross income when calculating DTI ratio rather than as a monthly obligation since there are tax consequences

Court order obligation that has been assigned to another person by a court order such as a divorce decree, the payment may be excluded from DTI ratio and the following documents are required: 1) Copy of the court order or divorce decree, and 2) For a mortgage debt, a copy of the documents transferring ownership of the property (e.g. quit claim)

Contingent Liability/Cosigned Obligations: In order to not include debt into DTI ratio, provide 12 months cancelled checks to show that the debt is paid by another party and not by the borrower

Student loans in deferment, forbearance, or not reporting a payment on the credit report: Calculate a payment using 1.15% of the current balance

Student loans on credit report: compare credit report payment and the calculated 1.15% of current balance and use higher of the two payments. Actual payment may be used via direct verification from creditor or copy of installment loan agreement in lieu of the 1.15% calculation:

o Documentation must be reviewed to validate the reported payment is fully amortizing

o If student loan is an income based repayment plan, documentation must be reviewed to validate that the qualifying income on the loan application matches the qualifying income used to assess the student loan payment:

If student loan payment will be re-assessed < 12 months after the borrower started the most recent job, additional investigation is needed to determine that the borrower will not experience payment shock upon re-assessment. The 1.15% calculation should be used for qualifying unless file contains documentation to support the use of a lower payment

If student loan payment will be re-assessed > 12 months after the borrower started the most recent job, the documented payment may be used for qualifying

• Projected obligations (Deferred Payments): o Debt payments, such as a student loan or balloon-payment note scheduled to begin

or come due within 12 months of loan closing, must be included in DTI ratio o Deferred payments documented outside the 12-month timeframe may be excluded

Business debts may be excluded if the account has a satisfactory payment history and all of the following documents the business is paying the debt:

o Account does not have a history of delinquency, o Minimum 12 months of consecutive canceled checks from the business, and o The cash flow analysis (as supported by tax returns) of the business takes payment

obligation into consideration

Debts paid off to qualify must be documented per Fannie Mae guidance

IRS tax payment plan acceptable as long as not a lien and must include payment into

Loan Programs


LD Jumbo Advantage

qualification

Employment/Income

Document most recent 2 full years of employment: o LOE explaining any gaps ≥ 1 month and o If borrower was in school/military for recent 2 years, provide evidence such as

college transcripts or discharge papers o Extended absence from workforce ≥ 6 months, borrower must be employed in

current job for a minimum of 6 months or longer and can document a 2 year work history prior to the extended absence using: Traditional employment verifications, and/or Copies of IRS Form W-2s or paystubs

4506T/Tax Transcripts: o A complete signed 4506-T form is required for each borrower regardless of income

source at or before closing. A separate complete signed business 4506-T are required for each additional business income used to qualify

o When federal income tax returns are used to document the borrower(s) income, tax transcripts of the applicable federal income tax returns directly from the IRS are required

Note: A tax transcript obtained directly from the IRS may be used in lieu of signed tax returns

Salaried: Current paystubs and 2 years W-2s

Overtime/Bonus: 2 year history of receipt and continuance

Commission: Recent 2 years tax returns required in addition to paystubs/W-2s

VVOE is required within 10 business days prior to the Note date

Self-Employment: 2 year history and recent 2 years (personal and business) tax returns including all applicable schedules and K-1s are required for ≥ 25% ownership:

o YTD P&L statement and balance sheet are required and must be prepared/signed on or before the Note date. It should cover at least through the period ending in the most recent quarter that ended one month prior to the application date

Retirement/Social Security: o Retirement income must be verified from the former employer, or tax returns along

with proof of current receipt and must continue for 3 years o Social Security should be verified by SSA award letter, proof of current receipt and

the benefits must not expire within first 3 years of the loan. If SSA verification letter does not have a defined expiration date within 3 years of loan origination, the income is considered likely to continue. SS income may be grossed up by 25% if deemed non-taxable by the IRS

Temporary Leave Income: Must be reviewed and confirm employment as follows: o Borrower’s employment/income history must meet standard eligibility

requirements o Written confirmation from borrower of intent to return to work o Documentation from borrower’s employer verifying agreed-upon date of return to

work File must not contain evidence from employer indicating that the borrower

does not have the right to return to work after the leave period File must contain a verbal verification of employment. If employer confirms

Loan Programs


LD Jumbo Advantage

Employment/Income Cont’d

borrower is currently on temporary leave, borrower is considered to be employed

Tip income requires VVOE, recent paystubs, 2 years W-2s and 2 years tax returns. History of receipt for at least 2 years is required

Family Owned Business: Standard 2 years of employment/income verification, in addition, must evidence borrower is not an owner of the business with copies of signed personal tax returns or a signed copy of the corporate tax return showing ownership percentage

Alimony/Child Support/Maintenance income requires final divorce decree, legal separation or court order, and:

o Evidence payments received during most recent 12 months (cancelled checks, deposit slips, tax returns, or court records) and will likely be received consistently for the first 3 years of the mortgage

Note: Child support may be grossed up by 25% under the same provisions as non-taxable income sources.

Military pay in addition to housing/clothing allowances, flight or hazard pay, and rations/proficiency pay are acceptable income sources as long as the probability of such pay to continue is verified in writing

VA benefits for service-related disabilities are acceptable. Provide supporting documentation verified directly from VA. VA education benefits used to offset education expenses are not an acceptable source of income

Rental Income: Documentation to support rental history for previous 24 months that is free of unexplained gaps > 3 months

o Both 1040s Schedule E AND current lease/rental agreement(s) are required to verify rental income (only if subject property is the investment property)

o Borrower may use a current signed lease or other rental agreement along with receipt of the rental payments for a property that was acquired since the last income tax filing and not shown on Schedule E:

Reduce 25% factor for vacancy/maintenance, Subtract PITIA mortgage payment, and Apply amount to income if positive or as debt if negative

o Rents for tenant occupied units of a multi-unit primary residence may be used for qualifying after deducting 25% factor for vacancy/maintenance and not be used as a direct offset to the mortgage payment

o Boarder income in borrower’s single family residence is acceptable as long as the rental income is reported on borrower’s recent 2 years filed tax returns

o The business tax returns, including IRS Form 8825 may be used to offset monthly obligations for rental property reported through a Partnership or an S Corporation

If the resulting net cash flow is positive, the PTIA from the property may be excluded from DTI ratio

If resulting net cash flow is negative, the negative rents is to be included in borrower’s DTI ratio

Loan Programs


LD Jumbo Advantage

Departure Residence

Relocations: New employer is relocating borrower or current employer is transferring borrower to an area not within reasonable distance and locally-recognized commuting distance. An executed lease agreement is required at least one year’s duration effective no more than 60 calendar days from the Note date. Receipt of security deposit and/or first month’s rent (no cash receipts)

Sufficient Equity in Vacated Property: Documented LTV ≤ 75% as determined either by: o A current residential appraisal ≤ 6 months old. Note: Full appraisal Form 1004/70 or an

exterior only appraisal 2055 or Condo Form 1075/466. Validation of 25% equity is only required when using rents to qualify. OR

o Comparing unpaid principal balance to the original sales price of the property, AND o An executed lease agreement is required at least one year’s duration effective no more

than 60 calendar days from the Note date. Receipt of security deposit and/or first month’s rent (no cash receipts)

o Additional 2 months reserves are required. The reserves must be calculated, greater of the subject property PITIA or departure residence PITIA. This requirement is above and beyond all other reserves required for program (See Reserves)

Departure Residence Pending Sale: Current principal residence pending sale will not close prior to the subject transaction requires: o Current PITIA must be used in qualifying the borrower, and

Note: Can only be excluded with the following documentation: 1) An executed sales contract for current departure residence and 2) Verification that any financing contingencies have been met.

o Proposed PITIA must be used in qualifying the borrower

2106 Expense

2106 expenses should only be subtracted from income when the borrower’s commission income ≥ 25%. If tax returns or tax transcripts obtained for reasons other than documenting employment income and the borrower reported 2106 expenses on Schedule A/IRS Form 2106, the 2106 expenses do not have to be subtracted from borrower’s income provided borrower does not earn commission income ≥ 25% Note: Commission income percentage calculation cannot include income received from income sources outside of employment (e.g. self-employment, rental income, interest/dividends, retirement income, etc..)

Income Trends

Income Trends: o Self-Employment: If P&L statements show income stream considerably greater than

previous years filed tax returns, income analysis should be based solely on verified tax returns. If income stream is declining, the most recent year tax return or P&L should be used to calculate income

Note: If self-employment income has declined in current tax year > 20%, loan may be ineligible. o Wage earning trends stable or increasing, should be averaged. If earnings decline,

additional analysis must be conducted and the lower income is to be used

DTI Ratio Maximum 43% DTI

Assets

• Checking/Savings Accounts: o Two most recent consecutive months’ statements for each account are required o Large deposits inconsistent with monthly income or other deposits must be verified

Loan Programs


LD Jumbo Advantage

Assets cont’d

• Securities/Stock Account: o Two most recent consecutive months or quarter stock/securities account statements

are required. Must verify borrower’s ownership of asset, value at time of sale/liquidation, and receipt of funds realized from sale/liquidation

o Proof of liquidation must be documented o 70% value of stocks/bonds/mutual funds/U.S. Gov’t Securities can be considered in the

calculation of assets available for closing and reserves o Non-vested or restricted stock accounts are not eligible for use as down payment or

reserves • Retirement Accounts:

o Most current retirement account statement covering a minimum two month period o Evidence of liquidation required when funds are used for down payment or closing costs o 60% of the vested value of retirement accounts, after reduction of any outstanding

loans, may be considered toward the required reserves o Retirement accounts that do not allow any type of withdrawal are ineligible

• Business Funds: o Business assets may be used for down payment, closing costs, and reserves when

borrower is self-employed, and the federal income tax returns including business tax returns are in file as applicable. Borrower must be listed as owner of the account

o Cash flow analysis required using 3 months business bank statements to determine no negative impact to business based on withdrawal of funds, or

A letter from the business CPA must be obtained to confirm that the withdrawal will not negatively impact the business

o Borrower must have access to the funds o Borrower must be the sole proprietor or 100% owner of the business (or all borrowers

combined own 100%) Gift Funds allowed for primary residence only after contributing 5% of his/her own funds Purchase: Borrower must contribute 5% of own funds Foreign Assets – Assets held in a foreign bank must be transferred to a U.S. bank. Document

funds belong to borrower before the date of transfer. Provide 2 months bank statements of the transferred assets from the foreign account. Statements must be translated into English by a certified translator and accompanied by a translator’s certificate of accuracy

Large Deposits: Single deposits > 50% of borrower’s monthly qualifying income must be explained and documented

1031 Exchange are eligible if properly documented and in compliance with IRS Code 1031 Use of credit card on fees associated with loan transaction (appraisal, credit report,

origination/commitment/lock-in/extended lock fees): 1) Must have sufficient liquid assets to pay the amount charged (in addition to all other closing costs), 2) May not be used for down payment, 3) Amount charged/advanced must be included in total debt balance and repayment amount must be included in DTI (greater of $10 or 5% of outstanding balance), 4) Copy of charged receipt must be included in loan file, and 5) Closing Disclosure must reflect a paid outside/before closing (POC) credit to the borrower for the amount charged

Ineligible Assets: 1) Non-vested funds, 2) Accounts that do not allow any type of withdrawal , 3) Privately held stock, 4) Non-vested stock options/restricted stock, 5) Use of IPCs other than for closing costs, 6) Cash-out proceeds from refinance transaction of subject property, 7) Sweat Equity, 8) Group savings, 9) Pooled Funds, 10) Cash funds, and 11) Assets held in UGMA/UTMA accounts

Loan Programs


LD Jumbo Advantage

Reserves

• Loan amount ≤ $1,000,000 require 6 months PITIA • Loan amount > $1,000,000 require 9 months PITIA • 2 months PITIA required for each additional financed property owned • 2 months PITIA required for sufficient equity in vacated property option (See Departure

Residence) • Ineligible assets for reserves: 1) Gift funds, 2) Borrowed funds, 3) Stock in a closely held

corporation, 4) Proceeds from sale of assets other than sale of a residence, and 5) Proceeds from a cash-out refinance transaction (any cash-out proceeds received within 3 months from application date)


• Primary Residence – 6% • Second Homes - 3% • Investment Properties- 2%

Mortgage Credit Certificates (Hawaii only)

• Hawaii Mortgage Credit Certificates (MCCs) may be considered as qualifying income. • Loan file must contain copy of the MCC and the calculation of the amount used as qualifying

income • The amount used as qualifying income must be calculated as follows:

o (mortgage amount) x (note rate) x (MCC rate %) divided by 12 o The amount used as qualifying income cannot exceed the maximum mortgage interest

credit permitted by the IRS. A history of receipt of MCC tax credit is not required

The amount of the subsidy should be added to gross income, before calculating the qualifying ratios, even when it is being paid directly to the lender

CEMA • CEMA loan allowed as long as the consolidation mortgage is documented in accordance with

Fannie Mae Selling Guide and using Fannie Mae’s Consolidation, Extension and Modification Agreement (Form 3172)

Listing History

• Property listed for sale must be off the market prior to the loan application as follows: o Rate/Term: Must be off the market > 4 months prior to loan application o Cash-Out: Must be off the market > 6 months prior to loan application o LOE is required from borrower on why property was listed for sale and he/she is

retaining the property

Multiple Loans To One Borrower

• The following guidelines apply to the number of 1-4 unit financed properties (including the

subject property) owned by all borrowers, not just the primary borrower:

Property Type Maximum number of 1-4

unit properties that may be financed with loanDepot:

Total maximum number of 1-4 unit properties financed with all

Lenders including loanDepot:

Primary 6 Unlimited

2nd Home and Investment 6 10

Loan Programs


LD Jumbo Advantage

Rate and Term Refinance

• The new first lien amount may not exceed the sum of: o Payoff of the current mortgage (principal balance plus accrued interest, and any

required prepayment penalty, only) If first mortgage is a HELOC, provide a copy of settlement statement/closing

disclosure evidencing proceeds used to purchase subject property or documentation to support proceeds used for home improvement(s) made to subject property

o Payoff of any subordinate mortgage lien used in its entirety to acquire or improve the subject property

o Payoff any other mortgage lien against the subject property opened for at least 12 months and total draws in the past 12 months do not exceed 2% of the new first mortgage amount

o Standard Loan fees (e.g., closing costs on the new mortgage; prepaids, such as interest, taxes and insurance, etc. and points)

o Incidental cash to the borrower not to exceed 1% of the principal balance of the new loan. Note: DU Approve/Ineligible recommendation for limited cash-out of 2% or $2k acceptable.

• Inherited properties refer to Fannie Mae Selling Guide requirements

Cash-Out Refinance

• Any refinance transaction not meeting the requirements of a rate/term will be considered a cash-out refinance

• All consumer debt balances being paid through closing are to be included in the maximum cash-out limits above

• Property must have been purchased (or acquired) by the borrower at least 12 months prior to the disbursement date of the new mortgage loan except for the following: o There is no waiting period if the borrower documents that the property was acquired

through an inheritance or was legally awarded the property (divorce, separation, or dissolution of a domestic partnership)

o Delayed financing permitted for borrower(s) who purchased subject property within the past 12 months (measured from the date on which the property was purchased to the disbursement date of the new mortgage loan) and

o All other Fannie Mae Delayed Financing Exception requirements apply Loan file must contain a 12 months chain of title documenting the required acquisition

waiting period above

Non-Arm’s Length / Interested-Party Transaction

• There must not be any potential risk of bailout situations for the selling party. The following may be considered on a case by case basis only:

o When the borrower is purchasing the property as a primary residence o Family sales

Loan Programs


LD Jumbo Advantage


• Subordinate financing must be recorded and clearly subordinate to loanDepot’s 1st lien • Existing subordinate financing such as Closed End or HELOC, is allowed. The maximum

LTV/CLTV may not exceed guideline limits above for product and occupancy type. • New Secondary Financing is not allowed • Negative amortization is not permitted – scheduled payments must be sufficient to cover at

least the interest due

• For existing Closed End Loans: subordination of a balloon note due and payable within 5 years from Note date of new mortgage is not permitted

• Refer to credit section for HELOC payment calculation used for qualifying

Condo/PUD

• Fannie Mae guidelines must be followed when reviewing condominium and PUD projects • Florida Condo: Maximum financing for an established project (attached condos) in the state

of Florida is the lesser of the above LTV eligibility or: o 75% LTV/CLTV for a primary residence o 70% LTV/CLTV for a second home o For all other condos in Florida, a full project review is required. Additionally, all new

construction/conversion projects in Florida requires a PERS approval by Fannie Mae

Site Condos consists of single family detached homes requires no project review/analysis but is still required to be coded as a condo property type

Additional eligibility project review is required for the following characteristics: o Project is in an area zoned primarily for transient accommodations, o Projects with leased back recreational facilities, o The unit does not have a full kitchen

Property Flip • Prior owner(s) must have owned the property > 6 months. (Bank Owned REO are eligible,

does not apply to an arm’s length purchase of a rehabbed home and not considered a flip)

Qualified Mortgage (QM/ATR / Appendix Q / Other Requirements)

Ability To Repay

All loans purchase must meet all Ability to Repay (ATR) standards established by the CFPB

Required to provide documentation and income calculation worksheet completed by underwriting that the loan meets ATR standards

Income Requirements

Income requirements follow Appendix Q regulations. For anything not specified in Appendix Q, Fannie Mae guidelines must be followed

Note: All other policy not stated, refer to Fannie Mae guidelines

HPML/HPCT

HPML and Higher-Priced Covered Loans

Loans that fall under HPML/HPCT are not allowed. This is defined as any loan where the APR exceeds the average prime offer rate (APOR) by 2.50% or more and applies to ALL occupancy types

Loan Programs


LD Jumbo Advantage


• One appraisal required as long as Fannie Mae’s Collateral Underwriter (CU) score is 2.5 or less and there are no over-valuation or comparable selection flags. Otherwise, a desk review through an LDW approved AMC is required which may result in additional appraisal requirements, including a field review and/or second appraisal

• One full appraisal and an LDW approved AMC desk review required for loan amounts > $1,000,000

• Properties with more than 10 acres and log homes are not eligible • Properties owned < 12 months must use lesser of original purchase price or new appraised

value for LTV purposes • A transferred appraisal is acceptable as long as all Appraiser Independence Requirements

are met • Properties located on islands must be suited for residential use and occupancy year-round.

Properties that do not have public or private utilities available year-round and no central heat source are ineligible for financing except for properties located in the state of Hawaii where the appraiser demonstrates market acceptance:

o Island must be accessible via public transportation even if a boat or ferry is the only means of access, it should be public not private transportation

o Due to location, access, and availability of utilities, property may suffer limited marketability. Marketability must be demonstrated by sales comparables

Mix-Use properties that have a business use in addition to the residential use such as day care facility, beauty/barber shop or a doctor’s office are eligible for financing and the following must be met:

o Property must be 1 unit dwelling that the borrower occupies as a principal residence and must be primarily residential in nature,

o Borrower must be both the owner and operator of the business, o Dwelling may not be modified adversely impact on its marketability as a residential

property, and o Appraiser must provide a detailed description of mix-use characteristics:

Property is a legal, permissible use of property under the local zoning requirements

Report any adverse impact on marketability and market resistance to the commercial use of the property and

Report market value of property based on the residential characteristics, rather than the business use or any special business-use modifications that were made

Any adverse environmental factors affecting the subject property must be addressed by the appraiser. Any factors affecting safety, habitability or marketability of the unit will render the property ineligible

Agriculture property that is a working farm or ranch is ineligible. Agricultural zoning acceptable only if highest and best use is residential in nature, and as long as there are sales comparables with similar zoning. See FNMA Subject Property Zoning for additional requirements

https://www.fanniemae.com/content/guide/selling/b4/1.3/04.html#Subject.20Property.20Zoning

Loan Programs


LD Jumbo Advantage

Principal Curtailment

If a curtailment is required to refund overpayment of fees or charges paid by the borrower, in any amount, in accordance with applicable regulatory requirements

If borrower receives cash back more than permitted on a limited cash-out refinances, the max curtailment amount not to exceed the lesser of $2,500 or 2% of the original loan amount for the subject loan

The curtailment amount must be clearly documented on the settlement statement

v. 06.01.18

Loan Programs


40 Year/10 Year Interest Only

Primary Residence - Purchase / Rate & Term Refinance

Property Type Loan Amount Max LTV/CLTV Maximum DTI Minimum FICO

SFR/PUD/Condo

$150,000 - $2,500,000 95%* 35% 720

$150,000 - $2,000,000 85% 43% 680

Primary Residence - Cash Out Refinance


SFR/PUD/Condo

$150,000 - $2,500,000 90%* 35% 720

$150,000 - $2,000,000 80% 43% 680

*90.01 - 95% Purchase / R & T Refinance

*85.01 - 90% Cash Out Refinance

Minimum credit Score of 720 required Maximum DTI 35% Primary residence only; Single Family, PUD's and Warrantable Condos only Maximum combined loan balance = $1,500,000 First Time Homebuyer (FTHB) permitted with restrictions. See FTHB guidelines Loans that fall under the HPML category are allowed

Second Home - Purchase / Rate & Term Refinance


SFR/PUD/Condo

$150,000 - $2,500,000 85% 43% 720

$150,000 - $2,000,000 85% 43% 680

Second Home - Cash Out Refinance


SFR/PUD/Condo

$150,000 - $2,500,000 80% 43% 720

$150,000 - $2,000,000 80% 43% 680

Eligible Terms

40 Year Term, fully amortizing mortgage loan that pays interest only during the first 10 years and amortizes down over the remaining 30 years. 10 Year I/O Term Only

Qualify at the Note rate fully amortizing over 30 years (P & I repayment period). Borrower will not be qualified on the interest only payment amount or 40 year term

Geographic Restrictions

Texas 50(a)(6) loans not allowed


Hawaii properties located in Lava Zones 1, 2 or 3 not allowed

Eligible Borrowers US Citizens, Permanent Resident Aliens, Inter Vivos Revocable trusts allowed

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Limited Power of Attorney (except on cash-out transactions). The POA must be specific to the transaction and e-sign disclosures and documents are not permitted.

Non-Occupant co-borrowers (except for First Time Homebuyer transaction)

Note: Primary Borrower is the individual who earns the most income. Non-occupant co-borrowers cannot be the primary borrower.

Ineligible Borrowers Non-Permanent Resident Aliens, Foreign Nationals and Co-Signers are ineligible

Borrower(s) without at least 2 FICO scores and/or a social security number

Loans with > 4 borrowers

First Time Homebuyer (FTHB)

Primary Residence Only

Single Family, PUD and Warrantable Condos only

9 Months PITIA reserves required

Must meet minimum credit criteria and 24 months rental housing history requirements

Non-occupant co-borrowers are not allowed

AUS N/A -- Manual Underwrite

Non-Occupant Co-Borrower

Primary borrower’s (occupant) credit profile will be used as the primary FICO score determination and primary borrower max DTI ≤ 60%

Minimum 5% down payment must come from the primary occupant borrower’s own funds. Gift funds allowed with LTV < 80%

Secondary Financing is not allowed

Non-occupant co-borrower must not be listed as the primary borrower and must be a close family member (parent, child, grandparent, or sibling)

Credit must meet the minimum credit / trade line requirements

Must provide income and/or assets documentation used to qualify for the loan

Must be listed on title and vested on subject property for a minimum of 6 months for rate/term and 12 months for a cash-out refinance transactions

Maximum up to 2 non-occupant co-borrowers allowed

Age of Documents

Credit/Income/Assets 90 days of the Note date; Appraisal 120 days of Note date

Documentations must not expire on closing/disbursement date

Note: Documents must be dated within 60 days of investor submission

Eligible Property

Single -Family (Attached and Detached)

PUDs (Attached and Detached)

Warrantable Condos (Low, Mid, and High-Rise)

Ineligible Property

Condo-hotels or condo/motel conversions

Multi-family properties > 4 units

Mixed Use Properties

Cooperatives, time share units/projects

Condominiums and PUDs with pending structural litigation/non-warrantable condos

Manufactured/Mobile/Modular/Log/Earth-sheltered//Geodesic/Dome homes

Working farms, ranches or orchards/Agricultural zoned

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Ineligible Property, cont.

Unimproved/Vacant land

Group homes/Boarding houses

Property condition ratings of C5 & C6

Properties located in a retirement or senior community with limited age restrictions

Properties that do not have full utilities installed meeting all local health/safety standards

Properties zoned commercial/industrial/business as highest and best use

Properties modified to accommodate home businesses such as catering service, in-home day care, animal boarding facilities or auto repair businesses

Any property with health & safety, habitability or structural issues

Bed & Breakfast properties

Properties not suitable for year-round occupancy regardless of location

Properties not readily accessible by roads that meet local standards

Property in below average condition

Properties located in declining markets

Properties with any type of litigation

Acreage > 20 acres

Indian/Native American Tribal Land

Condos or attached properties < 700 living area square foot

Detached dwellings < 800 living area square foot

"Subject to" values without a Completion Certificate (Fannie Mae Form 1004D)

Properties that are currently listed for sale, or that have been listed for sale in the past six months are ineligible for refinance transactions

Rural Properties

Credit

Minimum 2 FICO scores are required for each borrower (whose income and/or assets are used to qualify loan).

The Primary Borrower’s selected FICO score is used for qualifying (individual who earns the most income). If both borrowers earn equal income, the borrower with the lower FICO score will be used for qualifying

Minimum Credit Trade Line Requirements- A valid and usable FICO score must contain:

o Minimum 3 open and active trade lines:

One reported for a minimum of 24 months

All active in the last 12 months (defined as last activity within 12 months of credit report date)

At least one of the three established trade line with a minimum $2,500 high credit limit

o Borrower(s) not able to meet the 3 trade lines criteria but have a minimum of 1 open and active trade line ≥ 12 months reporting history can be considered without exception if the following requirements are met: 8 or more trade lines reported with at least one being a mortgage trade line and Minimum 7 years of established credit history OR 6 months additional reserves and meets one of the following: DTI < 35%,

LTV/CLTV < 70%, or the program maximum, whichever is less

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Credit cont’d

FTHB requires rental housing payment history for the previous 24 months via an institutional VOR form or cancelled checks/bank statements

Borrower(s) that own a free and clear property requires a copy of the title or credit report to document free and clear status

Recent college graduate or living with family members must meet the minimum credit trade line requirements

Unacceptable Trade Lines: 1) Collections, 2) Charge-offs, 3) Public records and derogatory credit, included in or prior to a bankruptcy, 4) Accounts currently > 90 days delinquent, 5) Student loans not currently in repayment, and 6) Authorized User accounts

Note: A charged off or collection student loan requires a copy of repayment agreement and 6 months cancelled checks OR If not in repayment, document it will not affect title.

LOE required for all credit inquiries in the last 90 days

Mortgage/rental housing rating must be 0x30 in the last 24 months to application date at time of submission. Must fully document, recent consecutive primary housing history

Timeshare payments will be treated as an installment debt regardless of how it’s reported on the credit report

Third-party verification or copies of cancelled checks (front/back) are always required for interested party or private party verifications (private mortgage, lease option to purchase, related landlord, seller landlord, employer or any interested party to the transaction).

Note: To use rental history as a trade line, must verify rent via copies of cancelled checks.

A borrower with a history of moderate to slow payment of obligations must have strong offsetting characteristics to be considered favorably. The borrower must provide a written explanation for all major adverse credit information

If the first and second lien on a property are delinquent, it would be considered two delinquencies in the investor’s credit grade determination of the borrower

Waiting periods for the following delinquency events are as follows from application date: o Chapter 7 Bankruptcy (BK) discharged ≥ 4 years o Chapter 13 BK discharged ≥ 4 years o Foreclosure ≥ 7 years o Deed-In-Lieu/NOD/Loss Mitigation/Modification ≥ 4 years prior to application

date o Short Sale ≥ 4 years prior to application date o Consumer Credit Counseling (CCC) is considered the same as Ch. 13 BK

(discharged ≥ 4 years). The plan must have been paid in full. A payment history is required. The CCC paid date will be considered the discharge date

Borrower(s) with multiple BKs and foreclosures are ineligible. The BK dismissal dates are treated the same as discharge dates. If a foreclosure is included in the BK, each event is treated separately. UW must determine the seasoning for each event accordingly

Note: Any repossession or 120-day delinquency on a mobile home, manufactured home or timeshare even if shown as an installment debt will be considered a foreclosure

The following is not considered as multiple bankruptcies:

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Credit cont’d

o Ch. 13 rolls into Ch. 7 BK o Individual borrowers each filed separate BKs o BKs discharged > 15 years from application date

The following is not considered as multiple foreclosures: o Individual borrowers each have completed separate foreclosures o Foreclosures discharged > 15 years from application date

Any lawsuit or pending litigation is ineligible

Adverse Credit: All delinquent credit that will impact title – including delinquent taxes, IRS tax payment plan, judgments, charge-off accounts, tax liens and mechanic's liens – must be paid off prior to or at closing

Divorce debt delinquent credit belongs to ex-spouse may be excluded when all of the following apply: 1) Provide copy of recorded divorce decree or separation agreement documenting the accounts belong solely to the ex-spouse, 2) Late payments occurred after the date of the divorce or separation, and 3) If debt in question is a mortgage, must document title transfer prior to the delinquent debt and evidence of “buyout” as part of court proceedings

Co-Signed delinquent credit belongs to a co-signer must be considered in determining the borrower’s credit acceptance

Re-pulling of credit including Rapid Rescores are not allowed

DTI

Max DTI per program matrix above

Home equity lines of credit (HELOC), use the payment on the credit report or recent billing statement; if no balance, no payment used. New HELOC, use initial draw at the present rate over the amortization term.

Revolving debt – If no payment on credit report, use 5% of outstanding balance or minimum $10. Paying down revolving debt is not allowed but may be paid off and closed

Installment debt < 10 payments that is substantial (> 5% of borrower’s qualifying income), then the debt must be included in DTI calculation. Paying down of installment debts to < 10 payments to qualify is not allowed. A credit supplement or loan statement is required for no payment reported on the credit report

Auto leases must be included in DTI regardless of the number of payments remaining

Student loans in deferment, forbearance or in repayment (not deferred), use 1% of balance or the actual documented payment

Monthly paid charge accounts (Amex), payment will not be included but the balance amount must be netted out of available assets

Mortgage payment shock > 150% may require further review and additional compensating factors and/or documentation(s) may be required

Other 1st mortgage lien payments is an ARM, must qualify at the greater of the Note rate plus 2% or the fully indexed rate using the fully amortizing principal and interest payment

Co-signed debt payment can be excluded with minimum 12 months consecutive cancelled checks documenting the primary debtor makes the payments - 0x30

Current primary residence is pending sale that will not close prior to the new subject transaction purchase; both current and proposed PITIA must be used in qualification. The current PITIA will not be required to be included if can document: 1) The executed sales

Loan Programs



contract for the current residence and 2) Confirmation of any financing contingencies have been cleared

Business debts may be excluded via 12 months consecutive cancelled checks from the business documenting borrower is not personally liable; must include if new or < 12 months

Employment / Income

All income used to qualify must be documented in accordance with Appendix Q guidelines to Part 1026 – Standards for Determining Monthly Debt and Income. In the absence of a definition for a specific topic in Appendix Q, FNMA guidelines must be followed

Two years proof of income required with same employer or in a similar line of work for salary/wage earner(s): 1) Most recent 30-day period with YTD earnings, and 2) Most recent 2 years of W-2s OR A Written VOE for the past two years and YTD earnings

Note: Bonus, commission, overtime and gratuity income must have a 2 year history of receipt in order for the income to be included for qualifying. If bonus or commissions represents ≥ 25% borrower’s income, 2 years tax returns are required.

Income from a family-owned business requires recent 2 years personal tax returns in addition to verification of employment.

Two years proof of self-employment with same business entity and document ownership for self-employed borrower(s): All self-employment income must be documented by prior 2 years personal and business tax returns including all schedules and K-1s (if applicable)

Note: If > 120 days has elapsed since filing the latest Schedule C or business tax returns, a dated YTD profit and loss (P&L) statement is required.

Non-taxable fixed income may be grossed up by 125% provided that the income is likely to continue for 3 years and will remain untaxed:

Only net income will be used for determining disposable/residual income; medicare and insurance payments must be omitted

Borrower benefits as a result of income being grossed-up to qualify

Borrower’s net income (before gross-up) is sufficient to pay all debts

Note: Do not gross up foster care and parsonage housing incomes.

Rental income for non-subject properties calculated using from the most recent 2 years tax returns schedule E. Rental income from a family member requires a minimum 6 months cancelled rent checks provided by the tenant family member.

Departure Residence income: In order to use rental income from a property (transaction must close) the borrower is vacating as a result of the new transaction, the following is required: 1) An executed lease agreement with a minimum 1 year term (must be arm’s length), and 2) Copies of cancelled checks for 1st month’s rent and the security deposit from the tenant. OR if there is no lease agreement, then a rent survey from the appraiser is required and use 75% of rental amount

Other income: includes 2nd job, seasonal employment income, housing allowance, etc. must have a 2 year consecutive history of receipt and likely to continue for at least 3 years

Income types not referenced must follow Fannie Mae Selling Guide (ie: Temporary Leave..)

In all cases, tax returns for the current year must be filed by June 30th, rather than

http://ldcorp/sites/Enterprise/Enterprise/Appendix_Q.pdf

Loan Programs



Employment / Income, cont.

October 15. If borrower has filed an extension and does not file by June 30th, loan is ineligible

Verbal VOE (VVOE) is required within 10 business days before the Note date for wage income with a phone number obtained from an independent source (not supplied by the borrower). Verification of self-employed businesses by a third party source must be obtained within 30 calendar days from the Note date covering the most recent 2 years

Employment history with gaps > 30 days require an explanation from the borrower

A borrower that recently finished school or military service who does not meet the 2 years employment history must provide copy of diploma or discharge papers may be considered due to their extensive training

The borrower must sign an IRS Form 4506T. Tax transcripts required (personal and business as applicable)

Ineligible Income: 1) Foreign Income, 2) Contributions or support from family members (other than alimony/child support), 3) Deferred income not presently available, 4) Educational benefits, 5) Illegal income, 6) One-time capital gains, 7)Projected income, 8) Refund of federal or state income tax, 9) Rental income on a 2nd home or an ineligible second unit, 10) Reimbursable income, 11) Gambling winnings, 12) Auto allowances, 13) Per Diem income, and 14) Unverified sources

Residual Income $800 for the primary borrower and $200 for each additional family member; to calculate

borrower’s residual income: subtract total monthly expenses from the total monthly income

Income Trending / Declining Income

A significant increase of income should be averaged and may not be used to qualify unless sufficient documentation to determine the increase is stable and likely to continue

When current income decreased from prior year, the lower amount must be used for qualifying instead of the averaged income; provide an explanation for the decline income

Assets

All assets must be deposited in a U.S. financial institution and sourced: 1) Most recent two months bank statements for each account are required, or 2) VOD completed by the financial institution and must cover a minimum of 60 consecutive days. Note: Newly opened accounts within 90 days or account balances considerably greater than average balance must be explained and documented. 100% access letter needed for joint accounts.

Acceptable borrower’s own funds are: 1) Checking, savings, money market, certificate of deposit, 2) Retirement, 401K/IRA/SEP/Keogh ( < 59.5 years old use 55% and if ≥ 59.5 years old use 65% vested amount), and 3) Public traded stocks/bonds (use 70% vested amount). Note: Borrower(s) not of retirement age must document having unrestricted access to all retirement funds. If the account only allows for withdrawals in connection with borrower’s termination of employment, retirement, or death then the vested funds may not be used for reserves

Gift Funds: 100% gift funds are allowed for LTV ≤ 80% with no secondary financing. Borrower must provide minimum 5% own funds when LTV > 80%. Gift funds must not be used to meet reserve requirements and ineligible for refinances. Donor must be an immediate family member, and/or spouse/domestic partner verified by the following: 1) An executed gift letter, 2) Receipt of gift funds, and 3) Proof of donor’s ability to provide

Loan Programs



Assets, cont.

funds and must be sourced/seasoned for 60 days. Note: Gift funds are not permitted from any donor that is a party to the transaction or is a builder, developer, or in business of owning/financing/selling real estate (except gifts of equity from Seller).

Gift of Equity (GOE): Eligible on purchase transactions between immediate family members; property must be owner occupied and verification of a gift of equity must be reflected on the purchase contract and/or settlement statement/closing disclosure. Appraised value must be supported at fair market value and generally sales price less than or greater than 10% of fair market value are subject to further review and documentation

GOE transactions must meet the Interfamily Transfer requirements: 1) Existing lien(s) on the property must be current, and 2) Owner occupied maximum LTV/CLTV is 80%

Business Funds: Using these funds must be analyzed to determine borrower’s percentage business ownership, validate ability to access business funds without any detrimental effect to the business, and ensure there is strength and stability within the business: 1) Most recent two consecutive months’ business bank statements, 2) Most recent 2 years personal/business tax returns with all schedules/K1s and the approval of other partners, stockholders with a corporate resolution (as applicable), 3) A cash flow analysis on the business is required to be performed by the CPA, 4) Document borrower has full use of business funds and there is no required repayment, 5) Document the funds are not an advancement against future earnings or future cash distributions, and 6) Loan documents must include a review of any potential tax implications on the funds received

Large Deposits are defined as any amount that exceeds 50% of borrower’s gross monthly income. Borrower must provide a written explanation along with acceptable documentation of the source of large deposit reflected on the bank statement

Earnest Money Deposit (EMD) must be sourced and verified via cancelled check and 2 months bank statements up to and including date the check cleared

Ineligible Assets: 1) Stocks held by private corporations, 2) Stock options, 3) Non-vested restricted stock, 4) Windfall assets (i.e. inherited funds, proceeds from a law suit, lottery winnings), 5) Cash-out refinance proceeds, 6) Unliquidated non-financial assets (collectibles, stamps, coins, artwork, etc.), 7) Assets titled in irrevocable trust, 8) Custodial accounts, 9) Escrow accounts, 10) 529 accounts, 11) Accounts already pledged as collateral, 12) Below investment grade corporate and municipal bonds, 13) Cash value of life insurance, and 14) Foreign assets

Reserves

6 months PITIA required for LTV ≤ 80%

9 months PITIA required for LTV >80%, Loan Amt >$1M, Second Home, and First Time Homebuyer

6 months PITIA reserves required for each additional financed property – up to a maximum of 36 months PITIA reserves

Mortgage Insurance No MI on LTVs > 80%

Loan Programs




Interested Party Contributions (IPC) includes funds contributed by an interested party to pay closing costs and prepaid expenses. HOA dues are not allowed to be included in an interested party contribution. Any excess of the allowed percentage are considered a sales concession and the sales price must be reduced.

IPC limits for Primary Residences and Second Homes as follows: 1) LTV ≤ 90% = 6%, and 2) LTV > 90% = 3% max


Maximum loans for the same borrower(s):

LDW limits exposure to a maximum aggregate of $4M

If the loan is secured by the borrower's principal residence, there are no limitations to the number of properties owned or currently financed

If the loan is secured by borrower's second home, the borrower may have up to 10 financed properties (incl. primary residence) or an unlimited amount of financed properties when the subject transaction has a maximum LTV/CLTV of 70% or less

See Reserves requirement for each additional financed property

LTV Calculations

Purchases – LTV/CLTV is calculated on the lesser of purchase price or the appraised value

Refinances – LTV/CLTV calculation for the following:

o Rate/Term: Appraised value can be used for calculating LTV/CLTV

o Cash-out: 1) Owned < 12 months must use the lesser of purchase price + documented improvements or the appraised value, or 2) Owned > 12 months use the appraised value. Note: Purchase price must be documented using the closing statement from the original purchase; value of each improvement(s) must be documented.

Lease Option to Purchase – Lease options must be treated as purchases for disclosure/documentation purposes. A rescission notice is not required. 1) < 12 months seasoning treat as a purchase using the lesser of lease option price or the appraised value or 2) ≥ 12 months seasoning treat as rate/term refinance transaction using the appraised value only to pay off the contract and is ineligible for a cash-out refinance

Note: Lease option to purchase must be set up at time the borrower started renting the property. Any excess of “fair market rent” may be applied to the down payment. Copy of the executed Lease Option to Purchase agreement is required, proof of EMD cancelled checks and payments covering all months residency for the past 12 months.

Inherited Property – Inherited property < 12 months prior to application are subject to: 1) Current appraised value is used to calculate LTV/CLTV, 2) Proceeds are used to buy-out the documented equity interest of others. Equity owners must be paid through settlement, and 3) Subject mortgage property must have cleared probate and property is vested in the borrower’s name. Note: R/T max LTV/CLTV 80% & cash-out 70% LTV/CLTV.

Loan Programs




All refinance transactions must meet one of the following continuity of obligation requirements:

At least one borrower who on the existing mortgage is also a borrower on the new refinance transaction

Borrower has been on title and residing in the property for at least 12 months and has either paid the mortgage for the recent 12 months or can demonstrate a relationship (e.g. relative, domestic partner) with the current obligor

Loan being refinanced and the title to the subject property are in the name of natural person or a limited liability company (LLC) where the borrower is a member of the LLC prior to transfer. Note: transfer of ownership from a corporation to an individual does not meet these requirements

Borrower recently inherited or was legally awarded the subject property through a court supervised transfer process (divorce, separation, or dissolution of a domestic partnership)

If the borrower on title and unable to demonstrate continuity of obligation or if there is no lien, loan is still acceptable as a cash out refinance:

o If the purchase date is within 6-12 months prior to 1003 date and no lien, the LTV must be based on lesser of original sales price or current appraised value

o If purchase date > 12 months and no lien, LTV may be based on current value o If a lien exist and borrower has been on title for at least 6 months, LTV is limited

to 50% or program maximum, whichever is less based on the current value

R & T Refinance

The new loan amount is limited to the payoff of the current payoff of the first mortgage and reasonable/customary closing costs

Pay off closed end subordinate mortgage that: 1) Have been seasoned for at least 1 year, 2) Used to purchase the mortgaged property, 3) Used for documented home improvements, and 4) Pay off a seasoned HELOC not having any or total draws > $2000 in the last 12 months OR the proceeds have been used for documented home improvements

The Max Cash Back Amount is 1% of the loan amount or $2,000 whichever is less

Cash-Out Refinance

Pay off of the following: 1) Non-seasoned, closed-end subordinate mortgage(s), 2) Debt consolidation, 3) HELOC draws > $2000 or cash drawn in the last 12 months, 4) Property tax liens, 5) Federal and state tax liens, and 6) Cash-in-hand or property owned free/clear

Minimum 6 months ownership seasoning is required

No maximum cash-out limits

Lien Position

The first mortgage must have a valid first lien position

Title I (contract for deed, home renovation loan) must be paid off

Levied special assessments must be combined with the first and second mortgage when calculating combined LTV ratios (pending special assessments may be ignored)

The borrower takes title as fee simple. No leasehold or cooperatives

Subordinate financing is allowed up to maximum CLTV shown above and must be from an institutional lender

Loan Programs




1 Full Appraisal if combined loan amount ≤ $1,500,000

2 Full Appraisals if combined loan amount >$1,500,000

Appraisals must be dated within 120 days of Note and must not expire on date of closing/disbursement. Recertification of value is not allowed

Maximum acceptable acreage is 10 acres. Value should only be given to 5 acres unless comparable sales show that 5 to 10 acres is typical for the area

Living area minimum square footage: Condos ≥ 700 sf and detached dwellings ≥ 800 sf

Transferred appraisals are not allowed

Collateral Desktop Analysis (CDA) required. LDW to order upon receipt of appraisal(s).

CDA must include the MLS data

CDA must be completed on lower of the two appraisals

CDA value to establish LTV/CLTV:

If CDA returns a value > appraisal value, then the appraisal value can be used to determine the LTV/CLTV

If CDA returns a value ≤ 5% of appraisal value, then the appraisal value can be used to establish the LTV/CLTV

If CDA returns a value > 5% but ≤ 10% of appraised value, then the following three options are available:

CDA value can be used to establish the LTV/CLTV only if the maximum LTV/CLTV is 70% or less

A Broker Price Opinion (BPO) and a Value Reconciliation of Three Reports may be ordered. Note: In the case where 2 appraisals were required, the 2 appraisals and the CDA can be used for the Value Reconciliation of Three Reports. The final reconciled value will be used to determine the LTV/CLTV

A Field Review may be ordered. The lowest value between the appraisal, CDA and field review will be used to determine the LTV/CLTV

If CDA returns a value “Indeterminate” or > 10% of appraisal value, then a BPO and a Value Reconciliation of Three Reports must be ordered. The final reconciled value will be used to determine the LTV/CLTV

Disaster Areas: Property located in a declared federal disaster requires a full property inspection report (interior/exterior)

Condo Review Type

Condominiums and Attached PUDs require a HOA Certification Form

Full condo review is required

Warrantable Condo project must meet Agency eligibility standards and insurance requirements; see Fannie Mae Selling Guide for eligibility

Note: Investor at its sole discretion may limit the number of units and overall concentration in any specific project or condo. Also may limit the number of loans in any one market area.

Loan Programs



Escrows Escrows required on all loans with LTV > 80% and all HPML loans

CA loans, escrows required on LTV ≥ 90%

Escrow waivers deduct 25bps from price

Disclosure Requirements

Sunday Rule: E-Consent is not valid on Sundays. Day count must start on the following business day


NDC transactions not eligible

Escrow Holdbacks not eligible

Property Flips are not eligible

Temporary Buydown not eligible

Mortgage loans are not assumable

Down payment assistance options are not eligible

Delayed Financing not eligible

Principal curtailments are not allowed

High cost loans (HPCT) are not allowed

CEMA loans not eligible

Investment Property / 1031 Tax Exchanges not eligible

Non-Arm’s Length not eligible (except Gift of Equity, inherited properties, lease option to purchase)

Multiple refinances within 12 months: If refinanced twice in the past 12 months, borrower is ineligible for another refinance transaction (rate/term or cash-out) under this program

Solar Panels power purchase agreements and/or UCC-1 title liens are not allowed to be subordinated. Solar panels must be common to the area and not have a negative marketability impact. At least one comparable with solar panels should be provided

v.03.23.2018

Loan Programs


FHA Fixed/ARM

Maximum LTV/CLTV / FICO

Purchase No Cash Out Refinance Cash Out Refinance FICO

96.50% 97.75% 85% 580

FHA mortgage limits for all areas: https://entp.hud.gov/idapp/html/hicostlook.cfm

Loan Programs Names and Terms

Fixed Rate Programs Terms ARM Programs Terms

FHA Fixed 10, 15, 20, 25 and 30 Year Fixed FHA CMT 3/1 and 5/1 ARM 1/1/5 Caps 30 Year

FHA High Balance Fixed 10, 15, 20, 25 and 30 Year Fixed FHA CMT 3/1 and 5/1 ARM High Balance

1/1/5 Caps 30 Year

Mortgage Insurance Premiums ( UFMIP / MIP )

> 15 Year term (base loan amount ≤ $625,500) ≤ 15 Year term (base loan amount ≤ $625,500)

LTV UFMIP Annual MIP Duration LTV UFMIP Annual MIP Duration

> 95% 1.75% .85% Mortgage Term > 90% 1.75 .70% Mortgage Term

90.01% - 95% 1.75% .80% Mortgage Term ≤ 90.00% 1.75 .45% 11 Years

≤ 90% 1.75% .80% 11 Years

> 15 Year terms (base loan amount > $625,500) ≤ 15 Year term (base loan amount > $625,500)

LTV UFMIP Annual MIP Duration LTV UFMIP Annual MIP Duration

> 95% 1.75% 1.05% Mortgage Term > 90% 1.75 .95% Mortgage Term

90.01% - 95% 1.75% 1.00% Mortgage Term 78.01% - 90% 1.75 .70% 11 Years

≤ 90% 1.75% 1.00% 11 Years ≤ 78.00% 1.75 .45% 11 Years

MIP Notes:

Program eligibility is determined using the base loan amount prior to financing UFMIP

Pricing is determined using the Note loan amount (base loan amount + UFMIP)

UFMIP must be 100% financed into the mortgage or paid entirely by cash; partial financing is not allowed

https://entp.hud.gov/idapp/html/hicostlook.cfm

Loan Programs


FHA Fixed/ARM

Underwriting

580 minimum credit score for all loans, regardless of AUS decision

All loans must be submitted through FHA TOTAL scorecard by DU or LPA. "Refer" decisions may be eligible for manual underwriting with minimum 580 FICO

Foreclosure and deed-in-lieu: Minimum 3 year seasoning required (at case # assignment date)

Pre-Foreclosure Sales (Short Sales): 3 year seasoning required if borrower was in default on the mortgage at the time of short sale. Manual underwrite allowed when Short Sale is within 3 years at the time of case # assignment date if the borrower was current on the mortgage at the time of short sale: 1) All mortgage payments on the prior mortgage were made within the month due for the 12-month period preceding the Short Sale, and 2) installment debt payments for the same time period were also made within the month due. In addition, there can be no evidence that the borrower pursued a short sale on his/her principal residence simply to take advantage of declining market conditions, and purchase a similar or superior property within a reasonable commuting distance at a reduced price as compared to current market value

Chapter 7 or Chapter 13 bankruptcy: 2 year seasoning from discharge required (at case # assignment date). Manual underwrite allowed for Chapter 13 bankruptcy if the following guidelines are met: 1) One year of the pay-out period under the bankruptcy has elapsed, 2) The borrower’s payment performance has been satisfactory and all required payments have been made on time 3) The borrower has received written permission from bankruptcy court to enter into the mortgage transaction and 4) DE UW must document that the borrower’s current situation or event(s) that led to the bankruptcy are not likely to recur

Consumer Credit Counseling: Acceptable if the following requirements are met: 1) One year of the pay-out period has elapsed under the plan, 2) The borrower’s payment performance has been satisfactory and all required payments have been made on time, and 3) The borrower has received written permission from the counseling agency to enter into the mortgage transaction. A manual downgrade is not required if TOTAL Scorecard issues an Approve/Accept recommendation. No explanation or other documentation is needed for TOTAL Approve/Accept recommendation

Credit report for non-borrowing spouse must be pulled in community property states with individual debts being included in the DTI. This applies if the subject property is located in a community property state or if the borrower's primary residence is in a community property state even though the subject property is not in a community property state. The non-borrowing spouse’s SSN must match with the Social Security Administration and/or must obtain non-borrowing spouse’s consent and authorization to verify the SSN with the SSA

Whenever a borrower must document funds to close and/or reserves and does not hold a deposit account solely, all non-borrower parties on the account must provide a written statement that the borrower has full access and use of the funds

3-4 unit properties require minimum 3 months PITIA + MIP in reserves (gift funds not allowed)

Loan Programs


FHA Fixed/ARM

Documentation

All borrowers must have at least one valid credit score on manually underwritten loans.

Borrowers using non-traditional credit are not allowed

A fully executed IRS form 4506T is required for each borrower on the loan. Refer to Tax Transcripts-4506-T Policy for when transcripts are required

Loan Purpose

Purchase

No Cash-out Refinance

Cash-out Refinance

Property Types 1-Unit attached and detached SFR/PUD condo (must be HUD approved)

2-4 Units

Eligible Borrowers

US citizens

Non-occupant co-borrowers

Inter vivos revocable trusts

Permanent and non-permanent resident aliens


EEM (Energy Efficient Mortgage)

FHA Section 8 loans

FHA Secure

203 (k)

Hope for Homeowners



Manufactured Homes

Second homes and Investment properties



DTI Ratios 31/43%

Note: AUS approved loans may exceed this ratio

Qualifying Rate 3/1 and 5/1 ARM - Note Rate

Manual Underwrite

DE UW must downgrade and manually underwrite as required within the new FHA handbook 4000.1 II.A.4.v TOTAL Accept Risk Classifications Requiring a Downgrade to Manual Underwriting. (e.g. mortgage payment history requires a downgrade, borrower has undisclosed mortgage debt, business income shows a greater than 20% decline over the analysis period…etc.)

AUS “Refer/Eligible” finding allowed on an exception basis subject to manual underwriting requirements (i.e. loan cannot have layered risk, compensating factors are required).

Subject to manual underwriting downgrade if additional information is identified in the loan file that was not considered in the AUS “Approve/Eligible” findings



Loan Programs


FHA Fixed/ARM


All appraisals must be completed by HUD-approved appraisers

Resales occurring 90 days or less after date of acquisition is no longer eligible for FHA-insured mortgage

Please refer to the HUD Handbook for more information on the following appraisal requirements: Resales occurring between 91 and 180 days after acquisition where the resale price is 100% or more over the price paid by the seller when the property was acquired

When a 2nd appraisal is required, the appraisal must be ordered from a different, HUD-approved appraiser. If the value of the 2nd appraisal is more than 5% below the original appraisal, the lesser value must be used. The cost of the 2nd appraisal may not be charged to the borrower

Max Mortgage Amount

The maximum insurable mortgage amount is the lesser of: o FHA Nationwide Mortgage Limit for the applicable area or o Maximum LTV percentage of the Adjusted Value for the program type

The Adjusted Value is calculated as follows: o Purchase transactions: The Adjusted Value is the lesser of, 1) purchase price less any

inducements to purchase, or 2) current property value o Refinance transactions: Properties acquired by the borrower within 12 months of case #

assignment date - The Adjusted Value is the lesser of, 1) purchase price plus any documented

improvements made subsequent to the purchase, or 2) current property value By inheritance or through a gift from family member may utilize calculation of

Adjusted Value for properties purchased ≥ 12 months Properties acquired by borrower ≥ 12 months prior to case # assignment date, the

Adjusted Value is the current property value

No Cash-Out Refinance

At the time of case # assignment date, the maximum LTV is 97.75% for borrower that occupied subject property for previous 12 months

Borrower who has occupied the subject property < 12 months or if owned < 12 months has not occupied subject property for that entire period is subject to maximum 85% LTV

The total amount of existing debt and costs associated with the transaction below less any UFMIP refund: o Existing 1st lien, any junior liens > 12 months old, borrower paid closing costs, prepaid expenses and borrower

paid repairs (if required) o Any junior lien balance or portion of HELOC > $1000 advanced within past 12 months was for purpose(s) other

than repairs/rehabilitation of subject property is not eligible to be included in the new FHA-mortgage o Prepaid expenses may include per diem interest, hazard/mortgage insurance, and real estate taxes needed to

establish the escrow account

Subordinate financing maximum CLTV is 97.75%

Maximum $500 cash back allowed

Loan Programs


FHA Fixed/ARM

Cash-Out Refinance

Subject property must have been owned and occupied as the borrower’s principal residence for the 12 months prior to the date of case # assignment. Properties owned ≤ 12 months are not eligible for cash-out (Except in the case of inheritance, refer to FHA handbook 4000.1 for further guidance)

DE UW must review borrower’s employment documentation or obtain utility bills to evidence the borrower has occupied the subject property for 12 months prior to the case # assignment

Borrowers whose loans are delinquent or who have mortgage lates in the last 12 months are not eligible

Properties with mortgages must have a minimum of 6 months consecutive payments (FHA requirement / GNMA overlay) AND

A minimum of 210 days must have passed between the 1st payment due date of the initial loan and the 1st payment due date of the new loan (GNMA overlay- applies when current loan that is being paid off is FHA, VA or USDA)

Properties owned free and clear may be financed as cash-out transactions

The maximum LTV/CLTV is 85% of the Adjusted Value. The combined mortgage amount of the 1st lien and any subordinate liens cannot exceed FHA Nationwide Mortgage Limit

Co-borrowers or co-signers added to the note or currently on the note must occupy the subject property Non-occupant co-borrowers income may not be used to qualify for a cash-out refinance






Employment History

Accessory Units Age of Documentation







Retirement Income



Temporary Leave






Revised 06/15/2018






















































Loan Programs


FHA Streamline

Maximum LTV/CLTV Maximum Loan Amount

None

New base loan amount cannot exceed the lesser of the original loan amount (including financed UFMIP) or the maximum loan amount calculation (below).

Primary Residence & HUD-approved 2nd Home

The lesser of: o Outstanding principal balance + interest due + annual MIP; or o Original principal balance (including financed UFMIP)

Subtract any refund of UFMIP

Investment Property

The lesser of: o Outstanding principal balance or o Original principal balance (including financed UFMIP)

Subtract any refund of UFMIP

PRE 2009 loan programs = existing FHA loan endorsed prior to 6/1/09

POST 2009 loan programs = existing FHA loan endorsed on or after 6/1/09

Loan Limits

FHA Streamline Refinance transactions without an appraisal are not subject to FHA Mortgage Limits. It is governed only by the maximum mortgage amounts under Section 223(a)(7) of the National Housing Act and 24 CFR 203.43(c).

Loan amounts exceeding Conforming High Cost Limits require an Executive level exception.

Loan Programs Names and Terms

Fixed Rate Programs Terms ARM Programs Terms

FHA Streamline 203(B) 10, 15 ,20,25,30 Year Fixed 3/1 and 5/1 CMT ARM 1/1/5

Caps 30 Years

FHA Streamline High Balance 203(B)

10, 15, 20, 25, 30 Year Fixed 3/1 and 5/1 ARM High Balance

1/1/5 Caps

30 Years

Loan Programs


FHA Streamline

Mortgage Insurance for Case Number Assignments on or after 01/26/15 AND existing FHA loan endorsed after 5/31/09


LTV UFMIP Annual LTV UFMIP Annual

> 95% 1.75% .85% > 90% 1.75 0.70%

≤ 95% 1.75% .80% 78.01% - 90.00% 1.75 0.45%

> 15 Year terms (base loan amount > $625,500) ≤ 15 Year term (base loan amount > $625,500)


> 95% 1.75% 1.05% > 90% 1.75 .095%

≤ 95% 1.75% 1.00% 78.01% - 90% 1.75 0.70%

≤ 78.00% 1.75 0.45%

PRE 2009 Loan Programs: Existing FHA loan endorsed prior to 6/1/2009


UFMIP Annual UFMIP Annual

0.01% 0.55% 0.01% 0.55%

MIP Notes:

Program eligibility is determined using the base loan amount prior to financing UFMIP.

Pricing is determined using the Note loan amount (base loan amount + UFMIP).

UFMIP must be 100% financed into the mortgage or paid entirely by cash; partial financing is not allowed.

Underwriting- Requirements for all FHA Streamlines

On the case # assignment date, the borrower must have made at least 6 consecutive payments on the FHA mortgage being refinanced (FHA requirement/GNMA overlay), and at least 6 full months must have passed since the first payment due, and at least 210 days have passed from the closing date Note: Assumed mortgage - borrower must have made at least 6 monthly payments since the time of assumption.

A minimum of 210 days must have passed between the 1st payment due date of the initial FHA loan and the 1st payment due date of the new FHA loan (GNMA overlay)

Mortgage history: 0x30 required for 6 months prior to case number assignment. Max 1x30 in months 6-12

Existing subordinate financing may remain in place and must be resubordinated. New

Loan Programs


FHA Streamline

subordinate financing is permitted only if proceeds are used to reduce the existing FHA insured principal amount or finance origination fees, other closing costs or discount points associated with the refinance. No CLTV maximum

$500 max cash back allowed for minor adjustments in estimated vs final closing costs

TOTAL scorecard usage is not to be utilized - manual underwriting only

Maximum loan term must be the lesser of 30 years or the remaining term of the mortgage plus 12 years

3-4 unit properties require minimum 3 months PITIA + MIP in reserves (gift funds not allowed)

ARMS not allowed for 2nd homes and investment properties

Minimum loan amount $75,000

Energy Efficient Mortgages (EEM) are not permitted

3/1 and 5/1 ARMs Qualify at Note Rate

Occupancy Requirements: o Must obtain either the borrower’s current employment documentation or obtain

utility bills to evidence that the borrower currently occupies the property as their primary residence

o Must obtain evidence that the secondary residence has been approved by the jurisdictional HOC

o Must process as an investment property if no supporting documentation to evidence that the borrower occupies either as a primary or HUD-approved 2nd home

Net Tangible Benefit

A Net Tangible Benefit determination is required for all transactions: A Net Tangible Benefit is a reduced combined rate, a reduced term, and/or change from an ARM to a fixed rate Mortgage resulting in a financial benefit to the borrower

Combined Rate is interest rate for mortgage + MIP rate (see table below)

Reduction in Term NTB test is met if: o Mortgage term is reduced; o New interest rate does not exceed current interest rate; and o The combined principal, interest and MIP payment of the new mortgage does

not exceed the current combined principal, interest and MIP by more than $50

Combined Rate NTB Table

TO

FROM Fixed Rate-

New Combined Rate Hybrid ARM-

New Combined Rate

Fixed Rate At least 0.5 percentage points below the prior

Combined Rate

At least 2 percentage points below the prior

Combined Rate.

Any Arm Loan No more than 2

percentage points above the prior Combined Rate

At least 1 percentage points below the prior

Combined Rate

Loan Programs


FHA Streamline

Property Types

1-unit detached and attached SFR, PUD, condo and 2-4 units eligible. Manufactured homes, Co-ops, and Native American Housing Section 184 properties are ineligible

Refinancing of Texas 50(a)(6) is not allowed

Principal residences, HUD approved 2nd homes and investment properties eligible.

ARMS not allowed on 2nd homes/investment properties

Hawaiian Home Land Transactions are ineligible

Properties located in Hawaii Lava Zones 1 & 2 are ineligible

Eligible Borrowers

When a borrower is removed, the remaining borrower must be fully credit qualified unless: 1) Divorce proven by divorce decree, OR 2) Death proven by death certificate. Remaining borrower must prove that the last 6 payments were made from non-joint funds by the remaining borrower or full credit qualification is required (see Credit Qualifying)

Borrowers can be added provided the existing borrower(s) is retained

A copy of the original note is required to document all borrowers

Credit Report Mortgage Only credit report required on non-credit qualifying streamlines

Collateral/Appraisal Requirements

For all streamlines without an appraisal, properties in FEMA declared disaster areas do not require an inspection unless the loan did not have a Homeowner's policy in effect at the time the disaster was declared

Properties listed for sale allowed

Condo approval is not required. If approval of a condo project has been withdrawn, only streamlines without an appraisal are allowed

Higher Priced Mortgage Loans (HPML)/Higher Priced Covered Transactions (HPCT)

HPML/HPCT is a transaction where the APR exceeds the average prime offer rate (APOR) as of the date the interest rate is locked by 1.5% or more. For case numbers assigned on or after 1/10/14, HPML/HPCT is defined has having an APR that exceeds the APOR as of the date the interest rate is locked by 1.15% + the annual MIP. This applies to all occupancy types

Any mortgage that exceeds HPML tolerances must credit qualify (i.e. verify income and assets) and meet all requirements of FHA Manual Underwriting Requirements and LDW’s FHA Manual UW Policy. Further, an escrow account must be established and cannot be cancelled for at least 12 months. Pre-payment penalties not allowed


http://portal.hud.gov/hudportal/documents/huddoc?id=40001HSGH.pdf

https://ldwholesale.com/portaldocs/yoda/wholesale/FHAManualUW.htm

Loan Programs


FHA Streamline

Requirements for Non-Credit Qualifying Streamline Without Appraisal

580 minimum credit score required for primary residence. 620 minimum credit score required for 2ndhome/NOO

Manual underwrites only. TOTAL Scorecard should NOT be run

A credit report will only be used to validate the credit score and mortgage history

No DTI applicable. Income is not stated on the 1003 nor is it verified

VVOE or alternative income verification required to confirm borrower has income source at time of application (only one source of income required). This is required for borrower’s primary employment income only and not required for retired borrowers (of retirement age) or spouse

An IRS Form 4506-T must be signed, completed, and dated at closing by all borrowers

The appraisal value from the FHA Refinance Authorization must be used for LTV/CLTV purposes

Verify borrower’s funds to close when the amount needed to close exceeds the amount of the new mortgage payment (PITIA). Obtain a VOD covering a two month period along with the most recent bank statement. When a VOD is not obtained, the two most recent, consecutive bank statements can be obtained provided the statements show the previous month’s balance. Otherwise, statements covering the most recent three-month period are required. Large deposits must be explained and sourced. Large deposits are considered any single deposit in excess of 1% of the appraised value-use value on Refi Auth

Requirements for Credit Qualifying Streamline Without Appraisal

At least one borrower from existing mortgage must remain as borrower on the new mortgage

580 minimum credit score required for primary residence. 620 minimum credit score required for 2nd home/NOO

Manual underwrites only. TOTAL Scorecard should NOT be run

A credit report is obtained to validate acceptable payment history. Manual underwriting guidelines must be applied (e.g. 3 year seasoning for foreclosure, 2 year seasoning for Chapter 7 bankruptcy, Chapter 13 bankruptcy okay if meets FHA guidelines, all mortgage payment history to meet manual underwriting guidelines)

Two year job history required

All qualifying income must be verified according to the manual guidelines.


DTI and reserves must meet requirements as defined in FHA handbook 4000.1 Manual Underwriting Approvable Ratio and Reserve Requirements

Verbal VOE required within 10 calendar days of closing

Credit report for non-borrowing spouse must be pulled in community property states with individual debts being included in the DTI

Verify borrower’s funds to close when the amount needed to close exceeds the amount of the new mortgage payment (PITIA). Obtain a VOD covering a two month period along with the most recent bank statement. When a VOD is not obtained, the two most recent, consecutive bank statements can be obtained provided the statements show the previous month’s balance. Otherwise, statements covering the most recent three-month period are required. Large deposits must be explained and sourced. Large deposits are considered any single deposit in excess of 1% of the appraised value-use value on Refi Auth

Revised: 06/15/2018




Loan Programs


203(k)

Property Type Primary Residence – SFR/PUD/Condo/2-4 Units

Transaction Type Purchase No Cash-Out Refinance Cash-Out Refinance Credit Score

Max LTV/CLTV 96.50% / 96.50% 97.75% / 97.75% N/A 620

FHA Loan Limits FHA mortgage limits for all areas: https://entp.hud.gov/idapp/html/hicostlook.cfm

Mortgage Insurance Premium (MIP) Terms > 15-Year term (base loan amount ≤ $625,500) ≤ 15-Year term (base loan amount ≤ $625,500)


> 95.00% 1.75%

0.85% > 90.00%

1.75%

0.70% ≤ 95.00% 1.75% 0.80% 78.01% -

90.00% 1.75

% 0.45

% Terms > 15-Year term (base loan amount > $625,500) ≤ 15-Year term (base loan amount > $625,500)


> 95.00% 1.75% 1.05% > 90.00%

1.75%

0.95% ≤ 95.00% 1.75% 1.00% 78.01% -

90.00% 1.75

% 0.70

% Mortgage Insurance Premium (MIP) For All Loan Amounts ≤ 15-Years LTV UFMIP Annual ≤ 78.00% 1.75% 0.45%

MIP Notes

Program eligibility is determined using the base loan amount prior to financing UFMIP UFMIP must be 100% financed into the mortgage or paid entirely by cash; partial financing is not permitted

General Loan Information

Fees

The Consultant Fee is required to be disclosed, if applicable. Note: HUD consultant typically requires payment up front by the borrower at time of services rendered.

The holdback allocation amount must be disclosed

Note: Reno Desk to ensure the above fees are properly disclosed. The following repair/improvement costs and fees may be financed:

o Cost of construction, repairs and rehabilitation o Inspection fees performed during the construction period that are

reasonable/customary for the area o Title update fees o Permits o Architectural/engineering professional fees - Standard 203(k) only o Consultant fee subject to limits in the 203(k) Consultant Fee Schedule – Standard

203(k) only o A Feasibility Study when necessary to determine if the rehabilitation is feasible –

Standard 203(k) only

Ineligible Fees and Costs that may not be financed for the Limited 203(k): o Mortgage payment reserves o Architectural/engineering professional fees o 203(k) Consultant Fee o A Feasibility Study

https://entp.hud.gov/idapp/html/hicostlook.cfm

Loan Programs


203(k)

Contractor Requirements

A borrower’s Work Plan is required on a Limited 203(k) and use one or more contractors to provide the Cost Estimate, contractor’s Bids and complete the required improvements/repairs

Contractor to provide proof that they meet all jurisdictional licensing and bonding requirements

Contractor must be licensed in the scope of work they are completing

Contractor must agree to complete the work within the allotted timeframe

Contractor must have minimum of 3 years’ experience and have proof of liability insurance

HUD Consultant

A HUD Consultant is required on a Standard 203(k) o Select from an FHA approved 203(k) Consultant roster in FHAC. LDW must not use

services of a consultant who has demonstrated previous poor performance based on reviews by Reno Desk

o Consultant must inspect subject property and prepare a Work Write-Up and Cost Estimate

A HUD Consultant is not required on a Limited 203(k) but may be used (Fee may not be financed for a Limited)

Note: LDW must review the Work Write-Up and ensure all health and safety issues are addressed before including any additional repair work items. Obtain and review all applicable architectural exhibits, if applicable. The final Work Write-Up must include all required repairs/improvements to meet HUD’s minimum property standards and MPR as applicable.

Self Help

Self Help work must be approved by the Reno Desk Borrower must sign a Rehabilitation Self-Help Loan Agreement Borrower must demonstrate ability to act as the general contractor or to perform own work

(i.e. work history, special training, licensed general contractor – not allowed in TX) Borrower must maintain complete records showing actual cost of rehab, including paid

receipts for materials and Lien Waivers for any subcontractors Ensure all applicable permits must be obtained prior to commencement of work The borrower must not be reimbursed for labor costs; only materials will be reimbursed Limited 203(k) Self Help requires a Cost Estimate from a contractor other than the borrower

provides a breakdown of the cost for labor and materials for each work item. The contractor must be licensed and bonded if required by the local jurisdiction

Standard 203(k) Self Help requires the consultant to identify on the Work Write-Up for each work item to be performed by the borrower

Loan Purpose Purchase

No Cash-out Refinance

Eligible Borrowers

US citizens Non-occupant co-borrowers

Inter vivos revocable trusts


Eligible Terms

15 Year, 30 Year Fixed and High Balance Fixed FHA 203(k) Limited & Standard loan plans

CMT 5/1 ARM and High Balance 5/1 ARM FHA 203(k) Limited loan plans (1/1/5 Caps)

Qualify at Note Rate

Occupancy Owner-occupied principal residence

Loan Programs


203(k)

Property Types

Eligible Properties:

1-Unit attached and detached SFR/PUD/Condo (must be HUD-approved)

2-4 Units

Ineligible: Homes with final certificate of occupancy (CO) issued within 12 months Incomplete homes Manufactured Home/On-frame modular construction Agricultural properties Co-op/Log homes/Geodesic dome/Berm homes

Forms

The following must be provided and/or completed in their entirety: o Borrowers Work Plan (Limited 203(k) only) o Notice to Borrower o Notice to Contractor o Notice to Consultant (Standard) o Homeowner/Contractor Agreement o Completed W-9 for contractor o Contractor Profile o Contractor Licensing information o Contractor Liability Insurance o Contractor Certification o Self-Help Agreement (if the borrower(s) are doing the work) o 203k Borrower’s Acknowledgement o Borrower’s Identity of Interest o Consultants Identity of Interest (Standard) o Consultant/Borrower Allowable Fee Agreement o Fully executed contract detailing repairs, cost of materials and required permits

signed by the borrower(s) and contractor(s) o FHA Consultant Work Write-Up (Standard) o Permits and Certifications required, if applicable o Initial Disbursement Request (Limited 203(k) only)

Forms may NOT be signed counterpart

DTI Ratios Per AUS

Condo

Condo unit must be an FHA-approved condo project and must comply with all other requirements for condos

Rehab or improvements are limited to the interior of the unit, except for the installation of firewalls in the attic for the unit

No more than 5 units per condo association, or 25% of the total number of units, whichever is less can undergo rehab/repairs at any time

After rehab is complete, the unit is located in a structure containing no more than 4 units. For townhouse style condos, each townhouse is considered as one structure; provided each unit is separated by a one and one-half hour firewall from foundation to roof

Loan Programs


203(k)

Maximum Mortgage Amounts

Purchase – is the lesser of: 1) LTV ratio times the Adjusted As-Is Value plus financeable repair/improvement costs (Standard/Limited), mortgage fees (Standard/Limited), contingency reserves (Standard/Limited) and mortgage payment reserves (Standard 203k only) or 110% of the After Improved Value (100% for condos) OR 2) the FHA Nationwide Mortgage Limits

Refinance – is the lesser of: 1) existing debt and fees with the new mortgage plus financeable repair/improvement costs (Standard/Limited), mortgage fees (Standard/Limited), contingency reserves (Standard/Limited) and mortgage payment reserves (Standard 203k only), 2) LTV ratio times the Adjusted As-Is Value plus financeable repair/improvement costs (Standard/Limited), mortgage fees (Standard/Limited), contingency reserves (Standard/Limited) and mortgage payment reserves (Standard 203k only) or 110% of the After Improved Value (100% for condos) OR 3) the FHA Nationwide Mortgage Limits

Contingency Reserve

A contingency reserve is required to cover unforeseen project costs between 10 – 20% of the rehab cost (Consultant determines for Standard 203(k); LDW requires a minimum 10% for Limited 203(k))

When the utilities are not operable: o Contingency reserve requirement as determined by the Consultant in the Work

Write-Up for a Standard 203(k) o Minimum 15% contingency reserve requirement for a Limited 203(k)

L i m i te d 20 3 ( k )

Minor remodeling and non-structural repair(s)

Minimum $5,000 repair amount and maximum $35,000 including all costs

A 203(k) fee consultant is not required but may be used

Repairs must start within 30 days and be completed within 6 months

Maximum of 2 draws (Initial and Final)

Projects cannot have more than three (3) specialized contractors without use of a General Contractor to manage the project

Projects that contain self-help must be done as a Standard with consultant. The material and labor from the Maximum Mortgage Worksheet (MMWS) will be financed. Painting and appliance purchases may be included on a Limited as self-help

Loan Programs


Limited 203(k) Repair List

Eligible Repairs/Improvements include but not limited to:

Eliminating health and safety hazards to meet HUD’s minimum property requirements (MPRs)

Repair/replacement of roof provided the structural integrity of the structure will not be impacted by the work being performed; siding; gutters and downspouts

Repair/replacement/upgrade of existing: HVAC systems, plumbing, and electrical systems

Repair/replace/add exterior decks, patios, porches (must increase As-Is Property Value equal to the dollar amount spent on the improvement)

Minor remodeling, such as kitchens, which does not involve structural repairs

Painting, exterior and interior (changes for improved functions and modernization)

Eliminating obsolescence

Purchase and installation of appliances including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens

Accessibility improvements for persons with disabilities

Lead-based paint stabilization or abatement of lead-based paint hazards if the structure was built before 1978

Septic system and/or well repair or replacement

Connecting to public water and sewage systems

Pool repairs

Installing/repairing fences, walkways and driveways

Check HUD’s website for a more complete list of allowable repairs; www.hud.gov

Note: All repairs/improvements must meet HUD’s MPR and meet or exceed local building codes.

Limited 203(k) Ineligible Repairs/Improvements

Major rehabilitation/remodeling, such as when any of the following exists: o Repairs/improvements requiring a work schedule longer than six months to complete o Rehab activities require more than 2 payments per specialized contractor o The required repairs arising from the appraisal requiring a HUD Consultant to develop a specification of

repairs/Work Write-Up or requiring architectural exhibits/plans

The repair prevents the borrower from occupying subject property for more than 15 days Major remodeling and structural repairs/alterations such as 1-4 structure conversion, additions, finished attics, basements, constructing a garage, changing footprint or requiring architectural plans, etc.

Site improvements and landscaping

Constructing a windstorm shelter

Additions/alterations to support commercial use or to equip/refurbish space for commercial use

Recreational or luxury improvements such as – o Swimming pools o Exterior hot tub, spa, whirlpool bath or sauna o Barbecue pits, outdoor fireplaces or hearths o Bath houses, tennis courts, satellite dishes, photo murals, gazebos, o Tree surgery (except when eliminating an endangerment to existing improvements)

http://www.hud.gov/

Loan Programs


S t an d a r d 2 0 3 (k ) Major remodeling and structural repair(s)

Minimum $5,000 repair amount; No maximum


Up to 5 draws; No initial draw is allowed. The Homeowner/Contractor Agreement and Consultant Work Write Up is signed by all parties agreeing to the draw schedule and holdback policy

Inspection and Title Update required prior to each draw

Must have HUD-accepted 203K fee consultant to ensure program compliance:

o Initial review prior to appraisal:

o Cost of Repairs/Fee: varies, contact the 203k Consultant

10% holdback is required for each draw in the Contingency Reserve


Projects that contain self-help must be done as a Standard with consultant. The material and labor from the MMWS will be financed. Painting and appliance purchases may be included on a Limited as self-help

Up to 6 months PITIA can be financed if home is deemed uninhabitable by the HUD Consultant Standard 203(k) Repair List


Major remodeling and structural repairs/alterations such as 1-4 structure conversion, additions, finished attics, basements, constructing a garage, changing footprint or requiring architectural plans, etc.


Installing or repairing wells and/or septic systems


Repairing/replacing plumbing, heating, AC and electrical systems

Making changes for improved functions, modernization, and aesthetic appeal

Installing/adding/repairing roof, gutters, downspouts, fences, walkways, and driveways

Creating accessibility for person(s) with disabilities

Repairing or removing an in-ground swimming pool

Installing appliances, built-in microwave oven, washer/dryer, and smoke detectors

Make site improvements

Installing/repairing exterior decks, patios, porches, and windstorm shelter

Cover lead-based paint stabilization costs if structure was built before 1978



http://www.hud.gov/

Loan Programs


Ineligible Repairs/Improvements of luxury item, or improvement that does not become permanent part of the subject:

Recreational or luxury improvements such as –

o Swimming pools (existing swimming pools can be repaired)

o Exterior hot tub, spa, whirlpool bath or sauna

o Barbecue pits, outdoor fireplaces or hearths

o Bath houses, tennis courts, satellite dishes, photo murals, gazebos,

o Tree surgery (except when eliminating an endangerment to existing improvements)

Additions or alterations to support commercial use or to equip/refurbish space for commercial use

Underwriting

Minimum 620 credit score required regardless of AUS decision. All borrowers must have at least one valid credit score

FHAC case # assignment requirements must be specific to FHA 203(k) as required per 4000.1 II.A.8.v Case Number Assignment Data Entry Requirements

Manual underwriting eligible without exception o Must meet all FHA compensating factor requirements for manual UW as per FHA

4000.1 handbook o Must have a minimum of 3 months reserves

All loans must be submitted through FHA TOTAL scorecard (DU/LPA permitted)

Borrower eligibility, credit, income and asset requirements are the same as a FHA 203(b) 4000.1 guidelines

Short Sale, Foreclosure, pre-foreclosure, and deed-in-lieu: 3 year seasoning required

Chapter 7 or Chapter 13 bankruptcy: 2 year seasoning from discharge

Credit report for non-borrowing spouse must be pulled in community property states with individual debts being included in the DTI. This applies if the subject property is located in a community property state or if the borrower's primary residence is in a community property state even though the subject property is not in a community property state. The non-borrowing spouse’s SSN must match with the Social Security Administration and/or must obtain non-borrowing spouse’s consent and authorization to verify the SSN with the SSA

A fully executed IRS Form 4506-T is required for each borrower on the loan. Refer to Tax Transcripts-4506-T Policy for when transcripts are required

UW must ensure the sales contract includes a provision that the borrower applied for section 203(k) financing; that the contract is contingent upon mortgage approval and the borrower’s acceptance of additional required improvements as determined by LDW

Sales transactions between family members are permitted. LDW must ensure there are no other instances of Identity of Interest or conflict of interest between parties in the 203(k) transaction

Any initial draw at closing, DE UW must document the amount and purpose of an initial draw at closing on the LT


Loan Programs


Contingency Reserve

A contingency reserve is required to cover unforeseen project costs between 10 – 20% of the rehab cost (Consultant determines for Standard 203(k); LDW requires a minimum 10% for Limited 203(k))

When the utilities are not operable: o Contingency reserve requirement as determined by the Consultant in the Work

Write-Up for a Standard 203(k) o Minimum 15% contingency reserve requirement for a Limited 203(k)



FHA Section 8 loans

FHA Secure

Hope for Homeowners



Cash Out Refinances




Property / Appraisal Requirements

All appraisals must be completed by HUD-approved appraisers Subject property must be an existing property completed for at least 1 year prior to the

case number assignment date. If unsure , LDW must request a copy of the certificate of occupancy (CO) or an equivalent

All repairs/improvements must meet HUD’s MPR and meet/exceed local building codes. Any addition of a structure unit must be attached to the existing structure

Site improvements, patios, decks and terraces must increase the “As-Is” property value equal to the dollar amount spent on the improvements or be necessary to preserve the property from erosion

An existing 203(k) mortgage is not eligible to be refinanced until all repairs are completed and the case has been electronically closed out

Flip resales are permitted after 90 days from acquisition date similar to a FHA 203(b) loan o Second appraisal must be obtained if resale price is double the price paid by seller

to acquire the property Property value must be established as follows: Adjusted As-Is Value and an After Improved

Value o Adjusted As-Is Value for purchase transaction is the lesser of 1) sales price less any

inducements to purchase or 2) the As-Is Property Value is the “as-is” value determined by an FHA Roster Appraiser

o Adjusted As-Is Value for refinance transactions: Properties acquired ≥ 12 months prior to the case assignment date

LDW must obtain an “as-is” appraisal to determine the Adjusted As-Is Value when the existing debt plus the following items exceeds the After Improved Value:

Financeable repairs/improvement costs Financeable mortgage fees Financeable contingency reserves Financeable mortgage payment reserves (Standard 203k only)

Note: When an appraisal is obtained, the Adjusted As-Is Value is the “as-is” property value.

LDW has the option of using the existing debt plus fees

Loan Programs


v. 6/15/18

associated with the new mortgage or obtain an “as-is” appraisal to determine the Adjusted As-Is Value when the existing debt on the property plus the above 4 items listed does not exceed the After Improved Value

Note: Existing debt includes 1) unpaid principal balance of the 1st mortgage as of the month prior to mortgage disbursement, 2) unpaid principal balance of any purchase money junior mortgage as of the month prior to mortgage disbursement, 3) unpaid principal balance of any junior liens > 12 months old as of the date of mortgage disbursement. If the balance or any portion of HELOC in excess of $1000 was advanced within 12 months and was for purposes other than repairs and rehab, the portion above and beyond $1000 is not eligible for inclusion in the new mortgage, 4) interest due on existing mortgage, 5) mortgage insurance premium due on existing mortgage, 6) any prepayment penalties assessed, 7) late charges & 8) escrow shortages

Properties acquired < 12 months prior to the case assignment date require an “as-is” appraisal. The Adjusted As-Is Value is the “as-is” property value

Properties acquired within 12 months of case assignment date by inheritance or through a gift from a family member, LDW may utilize the above calculation of Adjusted As-Is Value for properties acquired ≥ 12 months prior to the case assignment date

o To establish the After Improved Value, LDW must obtain an appraisal of the property subject to the repairs and improvements

Documents to be provided to the appraiser at assignment: 1) copy of the Consultant’s Work Write-Up and Cost Estimate for Standard 203(k) or 2) copy of the work plan, contractor’s proposal and Cost Estimates for a Limited 203(k)

Health/safety repairs noted by the appraiser that were not included in the consultant’s write up, borrower’s work plan or contractor’s proposal, LDW must ensure the repairs are included in the final work write up or work plan

Loan Programs


FHA – 203(h) Mortgage Insurance for Disaster Victims

Mortgage Insurance Premium (MIP)

Terms > 15-Year term (base loan amount ≤ $625,500) ≤ 15-Year term (base loan amount ≤ $625,500)

LTV UFMIP Annual Duration LTV UFMIP Annual Duration

> 95.00% 1.75% 0.85% Mortgage Term > 90.00% 1.75% 0.70% Mortgage Term

Terms > 15-Year term (base loan amount > $625,500) ≤ 15-Year term (base loan amount > $625,500)

LTV UFMIP Annual Duration LTV UFMIP Annual Duration

> 95.00% 1.75% 1.05% Mortgage Term > 90.00% 1.75% 0.95% Mortgage Term

UFMIP Notes

Program eligibility is determined using the base loan amount prior to financing UFMIP

UFMIP must be 100% financed into the mortgage or paid entirely by cash; partial financing is not permitted

General Loan Information

Application Deadline

FHA case number must be assigned within one year of the date from the Presidentially-Declared Major

Disaster Areas (PDMDA)

Only one transaction allowed per PDMDA event

Program Eligibility

The previous residence (owned or rented) must have been:

o Located in a PDMDA declared eligible for Individual Assistance. Evidence borrower lived in the impacted

area is required, AND

o The property (structure) must be destroyed or severely damaged to such an extent that the entire

property needs reconstruction or in need of a replacement. A list of the specified affected areas and

corresponding disaster declarations are provided by the Federal Emergency Management Agency (FEMA)

Purchases: The new residence is not required to be located in the area where the previous house was located

Documentation supporting the damage of the previous house must be provided with the mortgage application:

o Homeowner(s) must provide:

Insurance claim evidencing the previous residence was destroyed in a PDMDA and

Servicing Agreement for the payoff of the mortgage

o Renter(s) must provide:

Evidence of permanent residence in the affected area (i.e. valid driver’s license, utility bills, etc.)

Evidence previous residence was destroyed in a PDMDA with a report and photographs showing the

destruction or damage (i.e. insurance report, or an inspection report by an independent fee

inspector/gov’t agency)

Signed/dated LOE from landlord confirming the property was destroyed and the borrower has been

relieved of his/her monthly rent obligation

Loan Programs



Eligible Terms

FHA 203(b)(h): Purchase only

15 Year, 30 Year Fixed Conforming and High Balance Fixed FHA 203(b)(h) loan plans

CMT 5/1 ARM Conforming and High Balance FHA 203(b)(h) loan plans (1/1/5 Caps)

Qualify at Note rate

FHA 203(k)(h): Purchase and No Cash Out Refinance

15 year, 30 Year Conforming and High Balance Fixed FHA 203(k)(h) Limited and Standard loan plans

CMT 5/1 ARM Conforming and High Balance Fixed FHA 203(k)(h) Limited loan plans (1/1/5 Caps)

Qualify at Note rate

Note: HUD allows 1 FHA insured mortgage only. If borrower currently has an FHA mortgage, borrower is not eligible.

LTV Max 100% LTV for FHA 203(b)(h)

Max 203(k) LTV applies for FHA 203(k)(h)

Occupancy Owner-occupied principal residence

Property Types

Eligible

The purchase or reconstructed property must be a 1-unit single family residence or a unit in a HUD-approved

condo project

Ineligible

Only a portion of the property needs to be replaced or repaired

2-4 Units

Incomplete homes

Manufactured Home/On-frame modular construction

Agricultural properties

Co-op/Condotels/Geodesic dome/Log/Berm homes

Eligible Borrowers

US Citizens

Non-occupant co-borrowers

Inter Vivos revocable trusts


DTI Ratios Per AUS or follow manual underwrite guidelines

Loan Programs




Appraisals must be completed by HUD-approved appraiser eligible to appraise for 203(h) transactions

Health and safety standards must be met prior to close for all disaster repair/reconstruction loans



FHA Section 8 loans

FHA Secure

Hope for Homeowners



Cash Out Refinances




NDC

Underwriting

FHA 203(h) mortgages must be processed and underwritten in accordance with the regulations and requirements

applicable to the FHA 203(b) program. Any 203(b) program guidance that conflicts with the specific requirements of

203(h) mortgage section, the 203(h) specific guidance must be followed

All loans must be submitted through FHA TOTAL Scorecard (DU/LPA permitted). Note: On a 203(b)(h) purchase

transaction, If the LTV > 96.50% (max 100% LTV) TOTAL Scorecard may issue an Approve/Ineligible or Accept/Ineligible

recommendation. The only reason for “Ineligible” recommendation is due to the LTV.

Manual approvals must follow manual underwriting guidelines

Traditional documentation is required for credit/employment/income/asset information, and must document

attempts accordingly. If traditional documentation is unavailable, HUD allows the use of alternative documentation as

noted below. Where specific requirements are not provided, may use alternative documentation that is reasonable

and prudent to rely upon in underwriting a mortgage

Credit: Minimum 520 credit score up to $453,100; all others 580

o All borrowers must have at least one valid credit score

o Any derogatory credit that occurred since the disaster date was due to the effect of the disaster may be

considered an acceptable credit risk if the credit report indicates borrower had satisfactory credit prior to

disaster event

o Mortgage history: May disregard any late payments on a property that was destroyed or severely damaged

in a disaster where the mortgage late payments were a result of the disaster and the borrower was not

three or more months delinquent on the mortgage at the time of the disaster.

Note: If the borrower was ≥ 3 months delinquent, may justify approval only if extenuating circumstances are

documented.

o Liabilities: If the borrower is purchasing a new home to replace the destroyed residence located in a

PDMDA, the existing mortgage payment can be excluded from borrower’s liabilities/DTI with the following:

Obtain documentation that the borrower is working with the servicing lender to appropriately address

his/her current mortgage obligation, AND

Apply any property insurance proceeds to the current mortgage of the destroyed residence

Credit report for non-borrowing spouse must be pulled in community property states with individual debts being

included in the DTI. This applies if the subject property is located in a community property state or if the borrower's

primary residence is in a community property state even though the subject property is not in a community property

Loan Programs



Underwriting

Liabilities: If the borrower is purchasing a new home to replace the destroyed residence located in a

PDMDA, the existing mortgage payment can be excluded from borrower’s liabilities/DTI with the following:

Obtain documentation that the borrower is working with the servicing lender to appropriately address

his/her current mortgage obligation, AND

Apply any property insurance proceeds to the current mortgage of the destroyed residence

Credit report for non-borrowing spouse must be pulled in community property states with individual debts being

included in the DTI. This applies if the subject property is located in a community property state or if the borrower's

primary residence is in a community property state even though the subject property is not in a community property

state. The non-borrowing spouse’s SSN must match with the Social Security Administration and/or must obtain non-

borrowing spouse’s consent and authorization to verify the SSN with the SSA

Employment/Income: If prior employment cannot be verified due to records were destroyed by the disaster and the

borrower is in the same or similar field, then HUD will accept W-2’s and tax returns from the IRS to confirm prior

employment and income. Income earned from short-term employment obtained following the disaster may be

included in the effective income calculation


Assets: If traditional asset documentation is not available, statement(s) from financial institution website to confirm

the borrower has sufficient assets to close may be used. FHA 203(b)(h) purchase transaction, borrower is not

required to make the minimum required investment (MRI). Note: MRI is required for FHA 203(k)(h) purchase

transaction.

Escrow holdbacks allowed

L i m i te d 20 3 ( k )(h)

Minor remodeling and non-structural repair(s)

Minimum $5,000 repair amount and maximum $35,000 including all costs

A 203(k) fee consultant is not required but may be used


Maximum of 2 draws (Initial and Final)


Projects that contain self-help must be done as a Standard with consultant. The material and labor from the Maximum Mortgage Worksheet

(MMWS) will be financed. Painting and appliance purchases may be included on a Limited as self-help

http://yoda/ldw%20knowledge%20depot/Tax_Transcripts_4506T_External.htm

Loan Programs


Limited 203(k)(h) Repair List



Repair/replacement of roof provided the structural integrity of the structure will not be impacted by the work being performed; siding; gutters and downspouts

Repair/replacement/upgrade of existing: HVAC systems, plumbing, and electrical systems

Repair/replace/add exterior decks, patios, porches (must increase As-Is Property Value equal to the dollar amount spent on the improvement)

Minor remodeling, such as kitchens, which does not involve structural repairs

Painting, exterior and interior (changes for improved functions and modernization)

Eliminating obsolescence

Purchase and installation of appliances including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens

Accessibility improvements for persons with disabilities

Lead-based paint stabilization or abatement of lead-based paint hazards if the structure was built before 1978

Septic system and/or well repair or replacement


Pool repairs

Installing/repairing fences, walkways and driveways



Ineligible Repairs/Improvements

Major rehabilitation/remodeling, such as when any of the following exists: o Repairs/improvements requiring a work schedule longer than six months to complete o Rehab activities require more than 2 payments per specialized contractor o The required repairs arising from the appraisal requiring a HUD Consultant to develop a specification of repairs/Work Write-Up

or requiring architectural exhibits/plans o The repair prevents the borrower from occupying subject property for more than 15 days during the rehabilitation period


Site improvements and landscaping

Constructing a windstorm shelter

Additions/alterations to support commercial use or to equip/refurbish space for commercial use

Recreational or luxury improvements such as – o Swimming pools o Exterior hot tub, spa, whirlpool bath or sauna o Barbecue pits, outdoor fireplaces or hearths o Bath houses, tennis courts, satellite dishes, photo murals, gazebos, o Tree surgery (except when eliminating an endangerment to existing improvements)

S t an d a r d 2 0 3 (k )(h)

Major remodeling and structural repair(s)

Minimum $5,000 repair amount; No maximum


Up to 5 draws; No initial draw is allowed. The Homeowner/Contractor Agreement and Consultant Work Write Up is signed by all parties agreeing to the draw schedule and holdback policy

Inspection and Title Update required prior to each draw

Must have HUD-accepted 203K fee consultant to ensure program compliance: o Initial review prior to appraisal:





Up to 6 months PITIA can be financed if home is deemed uninhabitable by the HUD Consultant

http://www.hud.gov/

Loan Programs






Up to 6 months PITIA can be financed if home is deemed uninhabitable by the HUD Consultant

Standard 203(k)(h) Repair List




Installing or repairing wells and/or septic systems


Repairing/replacing plumbing, heating, AC and electrical systems

Making changes for improved functions, modernization, and aesthetic appeal

Installing/adding/repairing roof, gutters, downspouts, fences, walkways, and driveways

Creating accessibility for person(s) with disabilities

Repairing or removing an in-ground swimming pool

Installing appliances, built-in microwave oven, washer/dryer, and smoke detectors

Make site improvements

Installing/repairing exterior decks, patios, porches, and windstorm shelter

Cover lead-based paint stabilization costs if structure was built before 1978



Ineligible Repairs/Improvements of luxury item, or improvement that does not become permanent part of the subject:

Recreational or luxury improvements such as –

o Swimming pools (existing swimming pools can be repaired)

o Exterior hot tub, spa, whirlpool bath or sauna

o Barbecue pits, outdoor fireplaces or hearths

o Bath houses, tennis courts, satellite dishes, photo murals, gazebos,

o Tree surgery (except when eliminating an endangerment to existing improvements)

Additions or alterations to support commercial use or to equip/refurbish space for commercial use

http://www.hud.gov/

Loan Programs


v. 6/15/18

Fees

The Consultant Fee is required to be disclosed, if applicable. Note: HUD consultant typically requires payment

up front by the borrower at time of services rendered.

The holdback allocation amount must be disclosed

Note: Reno Desk to ensure the above fees are properly disclosed.

The following repair/improvement costs and fees may be financed:

o Cost of construction, repairs and rehabilitation

o Inspection fees performed during the construction period that are reasonable/customary for the area

o Title update fees

o Permits

o Architectural/engineering professional fees - Standard only

o Consultant fee subject to limits in the 203(k) Consultant Fee Schedule – Standard only

o A Feasibility Study when necessary to determine if the rehabilitation is feasible – Standard only

Ineligible Fees and Costs that may not be financed for the Limited:

o Mortgage payment reserves

o Architectural/engineering professional fees

o 203(k) Consultant Fee

o A Feasibility Study

Forms

The following must be provided and/or completed in their entirety: o Borrowers Work Plan (Limited only)

o Notice to Borrower o Notice to Contractor o Notice to Consultant (Standard) o Homeowner/Contractor Agreement o Completed W-9 for contractor o Contractor Profile o Contractor Licensing information o Contractor Liability Insurance o Contractor Certification o Self-Help Agreement (if the borrower(s) are doing the work) o 203(h) Borrower’s Acknowledgement o Borrower’s Identity of Interest o Consultants Identity of Interest (Standard) o Consultant/Borrower Allowable Fee Agreement o Fully executed contract detailing repairs, cost of materials and required permits signed by the

borrower(s) and contractor(s) o FHA Consultant Work Write-Up (Standard) o Permits and Certifications required, if applicable o Initial Disbursement Request (Limited only)

Forms may NOT be signed in counterpart

Contractor Requirements

A borrower’s Work Plan is required on a Limited and use one or more contractors to provide the Cost Estimate, contractor’s Bids and complete the required improvements/repairs

Contractor to provide proof that they meet all jurisdictional licensing and bonding requirements

Contractor must be licensed in the scope of work they are completing

Contractor must agree to complete the work within the allotted timeframe

Contractor must have minimum of 3 years’ experience and have proof of liability insurance

Other 203(k) Requirements

Damaged residences located in PDMDA are eligible for FHA 203(k) mortgage insurance regardless of the age of the property. The residence only needs to have been completed and ready for occupancy for eligibility under 203(k).

All other 203(k) policies must be followed, refer to FHA 203(k) matrix for complete details

http://yoda/ldw%20knowledge%20depot/FHA_203k.pdf

Loan Programs


VA Fixed/ARM

Loan Limits for Purchase and Refinance- Primary Residence

Units Loan Amount Max LTV/CLTV Credit Score Min Reserves

1 – 4 Units

Standard (non HI): ≤ Conforming Loan Limits

Standard (HI): ≤ Conforming Loan Limits 100% 580 Per AUS

High Balance (non HI): $1 > Conforming Loan Limits - $1,000,000

High Balance (HI): $1 > Conforming Loan Limits - $1,000,000

100% 620 Per AUS

1 Unit Super Max: $1,000,001 - $2,000,000 100% 660 Per AUS

To determine the maximum loan amount (and guaranty) for a particular property/county, use the following link: VA COUNTY MAXIMUM LOAN LIMIT

The maximum loan amount (including financed funding fee) cannot exceed $2,000,000 (refer to the VA maximum loan amount tables for actual limits)

The maximum guaranty for loan amounts greater than Conforming Loan Limit varies depending upon the location of the property

Use the VA Entitlement Worksheet to calculate maximum loan amount and guaranty

Calculating Minimum Loan Amount

Loan amounts up to $2,000,000 are allowed as long as the VA guaranty or a combination of the VA guaranty plus borrower's down payment and/or equity equal to at least 25% of the lesser of the sales price or the subject properties reasonable value as documented in the NOV. The maximum guaranty on a VA loan is the lesser of the veterans available entitlement or the maximum potential guaranty amount indicated in the chart below:

Entitlement/Guaranty

Loan Amount Maximum Potential Guaranty

Less than $45,000 50% of the loan amount

$45,001 - $56,250 $22,500

$56,251 - $144,000 40% of the loan amount or maximum $36,000


$417,001 - $2,000,000 25% of the loan amount or maximum $273,656 **In cases where a surviving spouse is also a veteran, entitlement for the surviving spouse must be used (not the

entitlement for the deceased veteran/spouse)

http://www.benefits.va.gov/homeloans/purchaseco_loan_limits.asp

Loan Programs


VA Fixed/ARM

Funding Fee Table

Purchase Transactions

Type of Veteran Down payment % for First Time Use % for Subsequent Use

Regular Military

< 5 % 2.15% 3.3%*

5%- 10% 1.50% 1.50%

10% or more 1.25% 1.25%

Reserves/National Guard

< 5 % 2.40% 3.3%*

5%- 10% 1.75% 1.75%

10% or more 1.50% 1.50%

Cash Out Refinances

Regular Military N/A 2.15% 3.3%*

Reserves/National Guard N/A 2.40% 3.3%*

All VA loans require a VA funding fee. Exceptions may be made to veterans with service-connected disabilities and to surviving spouses of veterans who die in service or from service-connected disabilities. Exceptions are made by VA when we send in for the certificate of eligibility

All or part of the fee may be paid in cash at loan closing or may be included in the loan without regard to the reasonable value of the property or the computed maximum loan amount, as appropriate

*The higher subsequent use fee does not apply to these types of loans if the veteran’s only prior use of entitlement was for a manufactured home loan

**The funding fee for subsequent use on a Refinance includes changes from a conventional/FHA loan into a VA loan

Fixed Loan Terms

Program Term

Standard Fixed Rate 10, 15, 20, 25 and 30 Year Fixed

High Balance Fixed Rate 10, 15, 20, 25 and 30 Year Fixed

Super Max Fixed Rate 10, 15, 20, 25 and 30 Year Fixed

ARM Terms

Program Option

Standard ARM 3/1 and 5/1 ARMs, amortizing over 30 years

High Balance ARM

Loan Programs


VA Fixed/ARM

Super Max ARM

For additional VA loan program information, access the VA Lender Handbook - aka Web Automated Reference Material System (WARMS) by clicking here


Subordinate financing allowed. CLTV cannot exceed the LTV limits for purchases or cash-out refinances (includes "rate/term" and "cash-out")

Guidelines

Eligible Borrowers

An eligible veteran is a person who served on active duty in the Army, Navy, Air Force, Marines, or Coast Guard, and who, (except for a service member on active duty) was discharged or released from active duty under conditions other than dishonorable; or

Members of the Reserves and National Guard are eligible upon completion of 6 years of service; or

Unmarried surviving spouses of veterans who died as a result of service or service-connected causes

Documentation

All borrowers must have a valid social security number All borrowers must have at least one valid credit score Borrowers using non-traditional credit are not allowed


DTI Ratios

AUS Approve/Accept: Per AUS provided VA Residual Income requirements are also met. AUS Refer: Manual approvals are allowed with a general max DTI of 41%. This DTI maximum

may be exceeded whenever the loan exhibits sufficient compensating factors as detailed in the VA Manual Underwrite Policy

ARM Qualifying and ARM Caps

3/1 and 5/1 ARM qualify at the note rate

CAPS: 1/1/5

http://www.benefits.va.gov/warms/pam26_7.asp

http://yoda/ldw%20knowledge%20depot/Tax_Transcripts_4506T_External.htm

Loan Programs


VA Fixed/ARM

Underwriting

Minimum credit score required for all borrowers, regardless of AUS decision Minimum loan amount $60,000 All loans must be submitted through DU or LPA All 3/1 and 5/1 Fixed period ARMs must be ran through DU or LPA CH7 & CH13 Bankruptcy requires 24 months seasoning from discharge date CH13 bankruptcy acceptable if not discharged 24 months if all of the following are met:

1) All payments have been made satisfactorily, 2) Minimum 12 months’ worth of payments have been made, and 3) The Trustee or Bankruptcy Judge approves the new credit

Foreclosure requires 24 months seasoning from completion Any credit derogatories will require additional UW review and has the potential to receive a

downgraded policy 2-4 unit properties require 6 months PITIA in reserves if rental income is used to qualify Mortgage rating must be 0x30 in the last 12 months Credit report for non-borrowing spouse must be pulled in community property states with

individual debts being included in the DTI. This applies if the subject property is located in a community property state or if the borrower’s primary residence is in a community property state even though the subject property is not in a community property state

Cash Out Refinance

VA/GNMA requirement applies when current loan that is being paid off is FHA, VA or USDA. The Note date of the refinance loan must be on or the later of:

o The date that is 210 days after the date on which the 1st payment is made on the loan being refinanced, and;

o The date on which the 6 full monthly payment is made on the loan being refinanced

Note: The date on which “the 1st payment is made on” must be verified.

Maximum 100% LTV/CLTV for cash out: Based on the property value indicated on the NOV plus VA funding fee. There must be a lien of record and the veteran must occupy the property

Cash-out refinance transactions must pay off a lien secured by the subject property (i.e., mortgages, tax liens, judgment liens, etc.). Cash out refinance of a free and clear property is not allowed

Refinance of the following loan types have additional requirements: construction loans, installment land sale contracts, and loans assumed by veterans where the interest rate was higher than the proposed refinance o These loans are not limited to 90% LTV/CLTV o No cash back to the borrower

Mortgage rating must be 0X30 in the last 12 months Texas A6 loans not allowed

Purchase

Max. loan amount at 100% LTV/CLTV with full entitlement. Use the VA Entitlement Worksheet to calculate maximum loan amount and guaranty

Termite inspection completed and signed by veteran on HUD Form MPMA-33 (or if required by the state, a state specific form). The following states require the use of their state specific form: AL, AZ, CA, FL, GA, HI, LA, OK, MD, MS, NV, NC, SC & TX

Loan Programs


VA Fixed/ARM

No minimum down payment required unless the purchase price exceeds the value of the property

New Construction properties must be covered by either: 1) 1-year VA builder’s warranty (“Not Inspected Acknowledgment” and “Construction Warranty” required), or 2) 10-year insurance–backed protection plan (“Not Inspected Acknowledgment”, and “Ten Year Insured Protection Plan” required). For exceptions, see Lender’s Handbook, Chapter 10.08

VA Amendatory/Escape Clause required

Manual Underwrite

AUS “Refer/Eligible” finding allowed on an exception basis subject to manual underwriting requirements (i.e. loan cannot have layered risk, compensating factors are required)

Subject to manual underwriting downgrade if additional information is identified in the loan file that was not considered in the AUS “Approve/Eligible” findings

Reserve Requirements

Per AUS


1-unit attached and detached SFR, PUD, condominium (VA-approved) homes 2-4 Units- Standard and High Balance loan amounts up to $1,000,000 Owner Occupied Primary Residence only MCC now approved in Hawaii- coming soon- contact AE for additional details

Ineligible Transactions/ Geographic Restrictions

Second Homes and investment properties Down payment assistance options Texas 50(a)(6) loans 2-4 Units with a loan amount over $1,000,000 Manufactured Homes Co-ops Properties located in Hawaii Lava Zones 1 & 2 Hawaiian Home Land Transactions Condominiums in projects that are not approved by VA


VA required appraisal only (all loan amounts) SAR may request an appraisal review product (e.g. desk or field review) at their discretion The NOV is valid for 6 months and FNMA form 1004MC is required for all appraisals. Appraisers may require a termite report at their discretion

Seller Contributions / Concessions

Seller concessions may not exceed 4% of the value of the property as indicated on the NOV. Concessions include, but are not limited to the following: payment of the buyer’s VA funding fee, prepayment of the buyer’s property taxes and insurance, gifts such as a TV or microwave oven, payment of extra points to provide permanent interest rate buydowns, provision of escrowed funds to provide temporary interest rate buydowns, and payoff of credit balances or judgments on behalf of the buyer. Concessions do not include payment of the buyer’s closing costs or payment of points as appropriate to the market

The seller, lender or any other party may pay fees and charges, including discount point, on behalf of the borrower. There is no limit on the amount of fees and charges that can be paid on behalf of the buyer by other parties


Loan Programs


VA Fixed/ARM




Business Assets



Employment History

Accessory Units








Retirement Income



Temporary Leave





Non U.S Citizens


See Also:

VA Lenders Handbook

Revised: 06/14/2018



























































Loan Programs


VA IRRRL

Interest Rate Reduction Refinance (IRRRL) - Primary Residence

Units Loan Amount Credit Score Max LTV/CLTV

1 – 4 Units


Standard (HI): ≤ Conforming Loan Limits 580 No Max

High Balance:(non HI): $1 > Conforming Loan Limits - $1,000,000

High Balance:(HI): $1 > Conforming Loan Limits -$1,000,000

580 No Max

1 Unit Super Max: $1,000,001 - $2,000,000 680 115/125/125%

Second Home and Investment Property

Units Loan Amount Credit Score Max LTV/CLTV

1 – 4 Units


Standard (HI): ≤ Conforming Loan Limits 580 No Max

High Balance:(non HI): $1 > Conforming Loan Limits - $1,000,000

High Balance:(HI): $1 > Conforming Loan Limits -$1,000,000

660 90/125/125%

1 Unit Super Max: $1,000,001 - $2,000,000 700 90/125/125%

VA County loan limits do not apply to IRRRLs. VA will guarantee 25 percent of the principal balance on an IRRRL, regardless of whether the loan exceeds the limits for the particular county

The maximum loan amount for IRRRLs is determined by completing the IRRRL Worksheet (VA Form 26-8923)

Refer to Net Tangible Benefit section for max LTV when discount points are charged

Entitlement/Guaranty

Loan Amount Maximum Potential Guaranty

Less than $45,000 50% of the loan amount

$45,001 - $56,250 $22,500



$424,101 - $2,000,000 25% of the loan amount or maximum $273,656

http://www.vba.va.gov/pubs/forms/VBA-26-8923-ARE.pdf

Loan Programs


VA IRRRL

***In cases where a surviving spouse is also a veteran, entitlement for the surviving spouse must be used (not the entitlement for the deceased veteran/spouse)

Funding Fee Table

IRRRL

Type of Veteran Downpayment % for First Time Use % for Subsequent Use

All Types N/A .50% .50%

All VA loans require a VA funding fee. Exceptions may be made to veterans with service-connected disabilities and to surviving spouses of veterans who die in service or from service-connected disabilities. Exceptions are made by VA when we send in for the certificate of eligibility

All or part of the fee may be paid in cash at loan closing or may be included in the loan without regard to the reasonable value of the property or the computed maximum loan amount, as appropriate

Fixed Loan Terms

Program Term

Standard Fixed Rate IRRRL 10, 15, 20, 25 and 30 Year Fixed

High Balance Fixed Rate IRRRL 10, 15, 20, 25 and 30 Year Fixed

Super Max Fixed Rate IRRRL 10, 15, 20, 25 and 30 Year Fixed

ARM Terms

Program Option

Standard ARM IRRRL

3/1 and 5/1 ARMs, amortizing over 30 years High Balance ARM IRRRL

Super Max ARM IRRRL

For additional VA loan program information, access the VA Lender Handbook - aka Web Automated Reference Material System (WARMS) by clicking here

Subordinate Financing Subordinate financing allowed. Max CLTV/HCLTV is 125%


Loan Programs


VA IRRRL

Guidelines

Eligible Borrowers

An eligible veteran is a person who served on active duty in the Army, Navy, Air Force, Marines, or Coast Guard, and who, (except for a service member on active duty) was discharged or released from active duty under conditions other than dishonorable; or

Members of the Reserves and National Guard are eligible upon completion of 6 years of service; or

Unmarried surviving spouses of veterans who died as a result of service or service-connected causes

ARM Qualifying and ARM Caps

3/1 and 5/1 ARM qualify at the note rate

CAPS: 1/1/5

Underwriting

Credit report used to validate FICO and subject property mortgage payment history.

All borrowers must have a valid social security number and at least one valid credit score

Non- traditional credit not allowed

Minimum loan amount $75,000

Standard bankruptcy and foreclosure seasoning requirements do not apply. If the VA mortgage being refinanced was included in a bankruptcy, it must have been reaffirmed with a minimum 12 month payment history as measured from loan closing

For all VA IRRRL loans , the following requirements must be met:

Minimum Seasoning Requirements

VA/GNMA requirement applies when current loan that is being paid off is FHA, VA or USDA. The Note date of the refinance loan must be on or the later of: The date that is 210 days after the date on which the 1st payment is made on

the loan being refinanced, and; The date on which the 6 full monthly payment is made on the loan being

refinanced

Note: The date on which “the 1st payment is made on” must be verified.

No advance or prepaid payment(s) allowed to meet the 6 full payments requirement

Loan must not be in forbearance

Note: The Note date is the date on which legal obligations are established between borrower and lender. Therefore, the date of the Note that is being refinanced must be used to calculate the seasoning period.

Mortgage rating of 0x30 is required on the existing VA loan

VA requires the mortgage must be current and due for the month closing

Reserves/Funds to Close

Reserves not required Funds to close do not have to be documented

Income/DTI Ratios Income documentation is not required and DTI is not calculated for Non- Credit Qualifying IRRRL’s

Loan Programs


VA IRRRL

VVOE or alternative income verification required to confirm borrower has income source. This is required for primary employment income only and not required for retired borrowers

AUS Requirements All IRRRLs must be manually underwritten and not submitted to DU or LPA

Interest Rate/Payment Requirements

Interest Rate Decrease Requirement: An IRRRL (which can be a fixed rate, hybrid Adjustable Rate Mortgage (ARM) or traditional ARM) must bear a lower interest rate than the loan it is refinancing unless the loan it is refinancing is an ARM

Payment Decrease/Increase Requirements: The principal and interest payment on an IRRRL must be less than the principal and interest payment on the loan being refinanced unless one of the following exceptions applies:

o The IRRRL is refinancing an ARM o Term of the IRRRL is shorter than the term of the loan being refinanced

Note: If the monthly payment (P&I) increases by 20 percent or more the loan must qualify as a Credit Qualifying IRRRL without appraisal.

Veteran’s Comparison Statement

The statement must show the interest rate and monthly payments for the new loan vs old loan. The statement must also indicate how long it would take to recoup closing costs (pre-paids and initial escrow not included):

Certify that all fees and costs incurred on IRRRLs have a recoupment of no more than 36 months, as determined by the date of the note

In the case of an increased principal and interest payment due to lower term, or changing from ARM to Fixed rate, it is not necessary to show the recoupment in months; however all other fields must be completed

Net Tangible Benefit

IRRRL loans must meet the following NTB requirements:

Fixed Rate to Fixed Rate: the new loan must have an interest rate that is not less than 50 basis points (.50 less in interest rate) less than the previous loan

Fixed Rate to ARM: the new loan must have an interest rate that is not less than 200 basis points (2.00 less in interest rate) less than the previous loan AND

The lower rate is not produced solely from discount points unless; Such points are paid at closing; and If discount points are less than or equal to 1 discount point, the LTV ≤ 100% If discount points are greater than 1 discount point, the LTV ≤ 90%

Note: When discount points are charged, an appraisal is required.

Maximum Loan Term The maximum loan term is the original term of the VA loan being refinanced plus 10 years,

but not to exceed 30 years and 32 days. For example, if the old loan was made with a 15 year term, the term of the new loan cannot exceed 25 years

Eligible Property Types 1-unit attached and detached SFR, PUD, condominium (VA-approved) 2-4 Units- Standard and High Balance loan amounts up to $1,000,000

Loan Programs


VA IRRRL


An appraisal is required when one or more of the following apply:

Discount points are charged,

Loan amount exceeds $1,000,000, and/or

Occupancy is second home or investment property and loan amount exceeds Conforming limits

Acceptable appraisal reports:

Loan amounts > $1,000,000: Full (exterior/interior) appraisal

Loan amounts ≤ $1,000,000: Exterior-only appraisal Note: These appraisals are not ordered through WebLGY or the VA Fee Panel.

If the veteran is required to pay for the cost of the appraisal, the cost must be included as part of the recoupment cost. The veteran may only be charged a reasonable and customary amount, and only charged for one appraisal


Texas 50(a)(6) loans 2-4 Units with loan amounts greater than $1,000,000 Manufactured Homes Co-ops Condominiums in projects that are not approved by VA Properties located in Hawaii Lava Zones 1 & 2 Hawaiian Home Land Transactions Energy Efficient Improvements

Borrower Addition/Removal

Generally, the party or parties obligated on the original loan must be the same on the new loan. The lender should contact VA regarding a proposed IRRRL involving a change in obligors unless the acceptability of the IRRRL is clear. Below are examples where acceptability is made clear:

Parties Obligated on Old VA Loan

Parties Obligated on new IRRRL Is IRRRL Possible?

Unmarried Veteran Veteran and new spouse Yes

Veteran and spouse Divorced Veteran alone Yes

Veteran and spouse Veteran and different spouse Yes

Veteran alone Different veteran who has substituted

entitlement Yes

Veteran and spouse Spouse alone (Veteran died) Yes

Veteran and nonveteran joint loan obligors

Veteran alone Yes

Veteran and spouse Divorced spouse alone No

Veteran and spouse Veteran alone No

Unmarried Veteran Spouse alone (Veteran died) No

Veteran and spouse Different spouse alone (veteran died) No

Veteran and non-veteran joint loan obligors

Non Veteran alone No


Loan Programs


VA IRRRL






Employment History

Accessory Units Delayed Financing




Hobby Farms Departure Primary Residence



Retirement Income

Leasehold Non Borrowing Spouse

Large Deposits Student Loans Non Occupant Co- Borrower

Temporary Leave


Power of Attorney

Non U.S Citizens Tax Transcripts Property Flips Transferred Appraisals

See Also:

VA Lenders Handbook Revised: 6/14/2018




















































Loan Programs


Texas A6 Conforming Fixed

Finance Type No Cash-Out and Cash-Out Refinances



SFR/PUD/Condo 80% 620 N/A N/A N/A N/A

2 - 4 Units N/A N/A N/A N/A N/A N/A

Eligible Terms

Conventional fully amortizing Fixed. 10-Year, 15-Year, 20-Year, 25-Year & 30-Year fixed rate programs

ARM's not allowed


Detached and attached SFR, PUD, and condo only

No 2-4 units

Eligible Borrowers U.S. Citizens, permanent and non-permanent resident aliens

All borrowers must occupy property (non-occupying co-borrowers not allowed)

Occupancy 1-unit primary residence only

Evidence of homestead required

Maximum Fees Max allowable fees are 2% of the loan amount not including prepaids

AUS

DU or LPA - Approve/Eligible or Accept/Eligible decision required.

The payoff of a Texas 50(a)(6) loan means that the new refinance is subject to Texas 50(a)(6) restrictions regardless of whether the new transaction is considered a No Cash-Out or Cash-Out refinance. The "Purpose of Refinance" in LPA must indicate whether or not the new refinance is considered No Cash-Out or Cash-Out for pricing/delivery purposes. For No Cash-Out, the borrower can receive $0 cash back.

DTI

Per AUS

For loan applications dated on or after 4/1/15 where DU is the AUS type, income calculations for self-employed borrowers and other income types where a cash flow analysis is required must adhere to the requirements of FNMA's Form 1084 dated 12.16.14

Reserves Per AUS

https://www.fanniemae.com/content/guide_form/1084.pdf

Loan Programs



Subordinate Financing Not allowed

Listing History and Cash Out Restrictions



Full appraisal required

Vesting in a Trust Not allowed

Power of Attorney Not allowed

Survey Generally required on all Texas A6 loans

No-Cash-Out Transactions (i.e., Rate/Term)

The following are considered rate/term refinance transactions:

A loan is a rate/term refinance if the first mortgage being paid off is a Texas 50(a)(6) loan and the borrower is not getting any cash back from the refinance transaction (not including reimbursement of POC’s). A second mortgage that is not a Texas 50(a)(6) loan that was used in whole to purchase the subject may be paid off

May include closing costs and prepaids

HUD-1 Settlement Statement or Closing Disclosure required from any transaction within the past 6 months. If previous transaction was a cash-out or if it combined a first and non-purchase money subordinate into a new first, loan must be designated as cash out. If new transaction combines a first and non-purchase money subordinate into a new first loan, it is considered cash out

Cash-Out Transactions

The following are considered cash out refinance transactions:

Borrower is paying off a first and/or second mortgage that is not a Texas Section 50(a)(6) loan AND getting any cash-out from the refinance

Borrower is paying off a first mortgage that is a Texas Section 50(a)(6) loan but is not getting any cash-out AND paying off a second lien that is not a Texas Section 50(a)(6) loan which was not used entirely to purchase the subject property

Paying off a first mortgage that is not a Texas Section 50(a)(6) loan AND is paying off a second lien that is a Texas Section 50(a)(6) loan and:

o The borrower is getting cash back from the refinance transaction, OR

o The borrower is not getting cash-out but is paying off a Texas Section 50(a)(6) second mortgage that was not used in whole to purchase the subject property

Loan Programs




Continuity of Obligation is required

6 month title seasoning is required for all cash out refinances (measured from previous note date to application date). LTV is based on appraised value unless property is owned free & clear and was purchased within 6-12 months prior to the application date

12 month title seasoning is required if existing loan (1st or 2nd) is a Texas 50(a)(6) loan (measured from "recording date to note date"). Okay to take application prior to 12 month mark

There can be only one outstanding 50(a)(6) loan at any given time. If the borrower has an existing 50(a)(6) second lien, the existing second lien must be paid off

The loan cannot close until 12 days after the borrower has received and executed the Notice Concerning Extension of Credit. If a borrower is added, the Notice Concerning Extension of Credit must be disclosed to that borrower, and the 12 day waiting period starts over. In order for the 12-day waiting period to start over, the borrower being added to the loan must execute a warranty deed adding them to title. Once the warranty deed has been executed, they must then be sent a 12-day Notice Disclosure. The waiting period starts over once the added borrower(s) receives and executes the document

The borrower(s) must be provided a complete and accurate copy of the final HUD-1 or Closing Disclosure and closing cannot occur less than 1 business day thereafter

All spouses must execute the mortgage however they are not required to be on the Promissory Note. All individuals on title and their spouse must sign all Texas cash-out documents. Only homestead owners can be on title at closing

Date: 12/28/17

Loan Programs


Texas A6 FHLMC Relief Refinance/Open Access



LTV/TLTV/FICO Max LTV/TLTV Min FICO Max LTV/TLTV Min FICO Max LTV/TLTV Min FICO

SFR/PUD/Condo 80% Per AUS N/A N/A N/A N/A

2 - 4 Units N/A N/A N/A N/A N/A N/A

Eligible Terms Conventional fully amortizing Fixed. 15-Year & 30-Year fixed rate programs. ARM's not allowed

Eligible Property Types Detached and attached SFR, PUD, condo only No manufactured housing or 2-4 units

Eligible Borrowers U.S. Citizens, permanent and non-permanent resident aliens All borrowers must occupy property (non-occupying co-borrowers not allowed)

Occupancy Primary residence only Evidence of homestead required

Maximum Fees Max allowable fees are 2% of the loan amount not including prepaids

AUS

LPA Accept/Eligible is required on all loans

The payoff of a Texas 50(a)(6) loan means that the new refinance is subject to Texas 50(a)(6) restrictions regardless of whether the new transaction is considered a No Cash-Out or Cash-Out refinance. However, all Open Access transactions must be run through LPA with the purpose of the refinance being No Cash-out. Further, the borrower cannot receive any cash back (not even the incidental $250 allowed on Open Access loans in other states)

DTI and Reserves Per LPA

Subordinate Financing Not allowed

Appraisal Requirements Full appraisal required

Listing History and Cash Out Restrictions

No restrictions

Trust/Power of Attorney Not allowed

Loan Programs


Texas A6 FHLMC Relief Refinance/Open Access

Survey Generally required on all Texas A6 loans. For acceptable exceptions, refer to loanDepot’s Texas Survey Policy

No Cash-Out/Limited Cash-Out Transactions (i.e., Rate/Term

The following are considered rate/term refinance transactions:

A loan is a rate/term refinance if the first mortgage being paid off is a Texas 50(a)(6) loan and the borrower is not getting any cash back from the refinance transaction (not including reimbursement of POC’s). A second mortgage cannot be paid off as part of a Relief Refinance/Open Access transaction

May include closing costs and prepaids

Cash-Out Transactions

The following are considered cash out refinance transactions and are not eligible for Relief Refinance/Open Access: Borrower is paying off a first and/or second mortgage that is not a Texas Section

50(a)(6) loan AND getting any cash-out from the refinance Borrower is paying off a first mortgage that is a Texas Section 50(a)(6) loan but is

not getting any cash-out AND paying off a second lien that is not a Texas Section 50(a)(6) loan which was not used entirely to purchase the subject property

Paying off a first mortgage that is not a Texas Section 50(a)(6) loan AND is paying off a second lien that is a Texas Section 50(a)(6) loan and: o The borrower is getting cash back from the refinance transaction, OR o The borrower is not getting cash-out but is paying off the Texas Section 50(a)(6)

second mortgage that was not used in whole to purchase the subject property


Continuity of Obligation is required 6 month title seasoning is required for all cash out refinances (measured note

date to application date). LTV is based on appraised value unless property is free & clear and was purchased within 6-12 months prior to the application date

12 month title seasoning is required if existing loan (1st or 2nd) is a Texas 50(a)(6) loan (measured from "recording date to note date")

There can be only one outstanding 50(a)(6) loan at any given time. If the borrower has an existing 50(a)(6) second lien, the existing second lien must be paid off

The loan cannot close until 12 days after the borrower has received and executed the Notice Concerning Extension of Credit. If a borrower is added, the Notice Concerning Extension of Credit must be disclosed to that borrower & the 12 day waiting period starts over when that borrower receives and executes the notice.

All spouses must execute the mortgage however they are not required to be on the Promissory Note. All individuals on title and their spouse must sign all Texas cash-out documents. Only homestead owners can be on title at closing

Date: 12/28/17

Loan Programs


Freddie Mac Co-op Conforming Fixed Rate & ARM




1 Unit 95% 620 85% 620 N/A N/A




1 Unit 80% 620 75% 620 N/A N/A

Eligible Terms

Fixed Rate and ARM loans

The fixed rate term options: 10-year, 15-year, 20-year, 25-year or 30-year, fixed fully-amortized

The ARM term options: 5/1 ARM, 7/1 ARM, 10/1 ARM, fully amortized over 30 year period

Geographic Eligibility

The following counties in NY are eligible:

5 Boroughs of NYC Nassau County Suffolk County Westchester County Rockland County Orange County

Restrictions

No subordinate financing allowed

No Investment properties allowed

Maximum pro-rata share of the underlying mortgage is 35%

Maximum concentration within any complex is 20%


▪ Principal Residence and Second Homes: LTV/TLTV >90%: 3%; LTV/TLTV 75.01% - 90%: 6%; LTV/TLTV ≤ 75%: 9%

Reserves Per LPA

Ratios Per LPA

Qualifying Rate and ARM Caps

▪ Higher of note rate + 2% or fully indexed rate for 5/1 ARM's- 2/2/5 Caps ▪ Higher of note rate or fully indexed rate for 7/1 and 10/1 ARMs – 5/2/5 Caps

Loan Programs


Freddie Mac Co-op Conforming Fixed Rate & ARM




If property was purchased in the past 6 months, borrower is ineligible for a cash-out refinance unless following delayed financing guidelines

Continuity of obligation must be demonstrated unless there is no existing mortgage on the subject property as a result of the borrower(s) having purchased the subject property with cash or paid off any prior mortgage for which the borrower was an obligor

Credit Mortgage lates – 0x60 is past 12 months Chapter 7 bankruptcy – 48 months since discharge/dismissal Chapter 13 bankruptcy – 24 months since discharge / 48 months since dismissal Short sale/deed-in-lieu/pre-foreclosure. Per LPA Foreclosure 84 months since completion Borrowers with multiple BK filings – 60 months since most recent discharge/dismissal

Mortgage Insurance

Loans > 80% LTV will require mortgage insurance and are subject to MI guidelines BPMI (monthly and single premium) Acceptable renewal types are Level/Constant and Non-refundable Approved MI companies are Arch, Genworth, MGIC, NMI, and Radian. Max DTI 45% for




Loans must receive an LPA Approval



Loan Programs


Freddie Mac Co-op Super Conforming Fixed Rate




1 Unit 90% 620 80% 620 N/A N/A




1 Unit 75% 620 65% 620 N/A N/A

Eligible Terms ▪ Fixed Rate only ▪ For ARM matrices see the High Balance ARM program matrix

▪ The term options are 15-year, 25-year or 30-year fixed fully-amortized




Restrictions






▪ Principal Residence and Second Homes: LTV/TLTV > 90%: 3%. LTV/TLTV 75.01-90%: 6%; LTV/TLTV ≤ 75%: 9%

Reserves Per LPA

Ratios ▪ Per LPA

Listing History Refianance Transactions: Property must be taken off the market on or before the



At least 2 comps must be outside the complex

Loan Programs


Freddie Mac Co-op Super Conforming Fixed Rate


If property was purchased in the past 6 months, borrower is ineligible for a cash-out refinance unless following delayed financing guidelines.

Continuity of obligation must be demonstrated unless thre there is no existing mortgage on the subject property as a result of the borrower(s) having purchased the subject property with cash or paid off any prior mortgage for which the borrower was an obligor

Ratios ▪ Per AUS feedback

Credit

Mortgage lates – 0x60 is past 12 months Chapter 7 bankruptcy – 48 months since discharge/dismissal Chapter 13 bankruptcy – 24 months since discharge / 48 months since dismissal Short sale/deed-in-lieu/pre-foreclosure. Per LPA Foreclosure 84 months since completion Borrowers with multiple BK filings – 60 months since most recent discharge/dismissal

Mortgage Insurance

Loans > 80% LTV will require mortgage insurance and are subject to MI guidelines BPMI (monthly and single premium) Acceptable renewal types are Level/Constant and Non-refundable Approved MI companies are Arch, Genworth, MGIC, NMI, and Radian. Max DTI 45% for




Loans must receive an LPA Approval



Loan Programs


Freddie Mac Co-op Super Conforming ARM




1 Unit 90% 620 80% 620 N/A N/A




1 Unit 75% 620 65% 620 N/A N/A

Eligible Terms ▪ ARM's Only ▪ For Fixed Rate, see the HB Fixed Program matrix

▪ The term options are 5/1 ARM, 7/1 ARM, 10/1 ARM. Fully-amortized over 30 year term




Restrictions





Reserves Per LPA

Ratios ▪ Per LPA


▪ Higher of note rate + 2% or fully indexed rate for 5/1 ARM's ▪ Higher of note rate or fully indexed rate for 7/1 and 10/1 ARMs ▪ CAPS: 5/1 ARMS- 2/2/5 All Other Loan Programs- 5/2/5

Listing History

Refinance Transactions: Property must be taken off the market on or before the


Appraisal Guidelines

At least 2 comps must be outside the complex

Loan Programs



Credit

Mortgage lates – 0x60 is past 12 months Chapter 7 bankruptcy – 48 months since discharge/dismissal Chapter 13 bankruptcy – 24 months since discharge / 48 months since dismissal Short sale/deed-in-lieu/pre-foreclosure. Per LPA Foreclosure 84 months since completion Borrowers with multiple BK filings – 60 months since most recent discharge/dismissal

Mortgage Insurance

Loans > 80% LTV will require mortgage insurance and are subject to MI guidelines BPMI (monthly and single premium) Acceptable renewal types are Level/Constant and Non-refundable Approved MI companies are Arch, Genworth, MGIC, NMI and Radian. Max DTI 45% for



Minimum credit score is required regardless of AUS decision Loans must receive an LPA Approval

Loan Programs


SelectPay 30 Year Fixed 1/1 Temp Buydown

Conforming/High Balance - Purchase/Rate and Term Refinance


LTV/CLTV/FICO Max LTV/CLTV/HCLTV Min FICO Max LTV/CLTV/HCLTV Min FICO

SFR/PUD/ Condo 95-97% (Conforming) *

620 90% 620 95% (Hi-Balance)

2 Units 85% 620 N/A N/A

3-4 Units 75% 620 N/A N/A

LTV/CLTV/ HCLTV > 95%*

Purchase Transactions: At least one borrower must be a first-time home buyer. See Documenting First Time Homebuyers for more detail

Limited Cash Out Transactions: Existing mortgage must be a Fannie Mae loan. Refer to Documenting Fannie Mae Serviced Loans for more detail

MI coverage of 35% is required. See the Mortgage Insurance Section for additional detail

Conforming Loan Limits and 1 Unit Primary Residence only

Non-occupant co-borrower ineligible

Subordinate financing ineligible

Eligible Terms

SelectPay 30 Year Conforming Fixed 1/1 Temp Buydown

SelectPay 30 Year High Balance Fixed 1/1 Temp Buydown

Qualify at the Note rate, fully-amortized; not qualify on the Buydown rate

Temporary Buydown Requirements

Temporary 1/1 interest rate buydown: rate reduction does not exceed 1% per year Buydown plan written agreement required: all terms of buydown must be disclosed to

the MI company and the property appraiser o Buydown period cannot exceed 12 months, and o Increases of not more than 1% in the portion of the interest rate paid by the

borrower in each 12-month interval

Mortgage instruments must reflect permanent payment terms rather than terms of the buydown plan. In no event may the buydown plan change the terms of the note

Buydown funds requirements: o Buydown accounts must be established and fully funded by the time loan funds o The borrower’s only interest in buydown funds is to have them applied toward

payments as they come due under the Note o Buydown funds are not refundable unless the mortgage is paid off before all the

funds have been applied o Buydown funds cannot be used to pay past-due payments o Buydown funds cannot be used to reduce the mortgage amount or LTV ratio

https://ldwholesale.com/portaldocs/yoda/wholesale/First_Time.htm

https://ldwholesale.com/portaldocs/yoda/wholesale/Documenting_Fannie_Mae.htm

Loan Programs



Eligible Property Types SFR & PUDs (attached and detached)

Condos (Low and High Rise) 2-4 units



Manufactured Homes

Investment properties

ARMs

Cash-out refinance transactions

Texas 50(a)(6)

Second Mortgages Properties on more than 10 acres are typically ineligible but will be considered as an

exception




Principal Residence and Second Homes:

LTV/CLTV >90%: 3% max; LTV/CLTV 75.01 - 90%: 6% max; LTV/CLTV ≤75%: 9% max

Reserves

Reserves are determined by DU approval

Additional reserve requirements may apply if the borrower owns multiple properties or is departing primary residence. Refer to Minimum Reserve Requirements policy for additional details



Ratios Per DU approval. Loans with MI may have more restrictive requirements

Credit




If a mortgage debt has been discharged through bankruptcy, even if a foreclosure action is subsequently completed to reclaim the property in satisfaction of the debt, the borrower is held to the bankruptcy waiting periods and not the foreclosure waiting period. Documentation must be obtained to verify that the mortgage debt in question was in fact discharged as part of the bankruptcy.

Short sale/deed-in-lieu/pre-foreclosure, 48 months since completion is required. This waiting period also applies to the charge-off of a mortgage account




Loan Programs



Mortgage Insurance

Loans >80% LTV will require Mortgage Insurance (MI) and are subject to MI guidelines

BPMI (monthly and single premium)

LPMI is not available




Loan Term LTV

80.01-85% 85.01-90% 90.01-95% 95.01-97%

30 Year 12% 25% 30% 35%


PIW eligible per DU: Purchase transactions and 2-4 units are ineligible o Must comply with MI provider appraisal requirements



DU Approve/Eligible: Special Feature Code 009 (Moderate Interest Rate Buydown)

Minimum Loan Amount $60,000




Business Assets



Employment History

Accessory Units

Appraisal Policy

Gift Funds Deferred Installment Debt






Retirement Income


Large Deposits Payoff and Paydown of Debt


Temporary Leave


Power of Attorney

Non U.S Citizens


v.06.15.18






















































Loan Programs


Equity Access

Primary Residence - Purchase and Refinance

Property Type SFR / PUD / Condos / Townhomes / 2 Units

Max Combined Liens* Max CLTV Minimum FICO Max HELOC Prime** +

$750,000

89.99%

700

$500,000

1.74%

80.00% 1.24%

70.00% .74%

$1,500,000

89.99%

730

1.74%

80.00% 1.24%

70.00% .74%

Second Home – Purchase and Refinance

Property Type SFR / PUD / Condos / Townhomes

Max Combined Liens* Max CLTV Minimum FICO Max HELOC Prime** +

$1,275,000

85.00%

730 $250,000

1.74%

80.00% 1.24%

70.00% .74%

Additional Considerations:

* Maximum combined liens: total combined 1st mortgage and 2nd HELOC exposure against subject property

** Start rate = current Prime rate (4.75%) + margin percentage listed in the above Prime+ column

Equity Access HELOC program must close simultaneously with a loanDepot Wholesale (LDW) 1st mortgage (see specific 1st mortgage guidelines for acceptability)

Investor allows 1 Equity Access program per borrower only

Note: Must use the most restrictive of LDW 1st TD guidelines

Eligible HELOC Amounts

Minimum: $5,000

Maximum: o Primary $350,000 max 89.99% CLTV; $350,001 - $500,000 max 85% CLTV o Second Home $250,000

Loan Programs


Equity Access

Geographic Restrictions The following states are not eligible: Alabama, Alaska, Hawaii, Louisiana, Mississippi,

Oklahoma, Texas and West Virginia

Age of Documentation Credit and Income: 90 days from application to closing

Appraisal: 120 days

Eligible Terms

30 Year HELOC Term: 18% Life cap o Draw Period – Interest only payments over 10 year draw period (Years 1-10) o Repayment Period – Payments amortized over remaining term (Years 11-30)

Annual Fee: $75 annual maintenance fee collected with first statement

No Early Termination fee or prepayment penalty

Borrower can choose a full, partial, or zero draw

Origination/Settlement charge: $295 investor origination charge and any applicable third party settlement charges from net wire

Eligible / Ineligible Property Types

SFR / PUD

Condos

Townhomes

2 Units

Ineligible:

3-4 Units

Leasehold

Dome/Earth-Berm/Log

Co-ops

Agricultural zoned

Rentals/Investment

Vacant land

Deed Restricted


U.S. Citizens Permanent Resident Alien Non-Permanent Residents

o Must live and work in U.S., o Provide machine readable Immigrant Visa, o Copy of unexpired foreign passport, and o I-94 or I-797A form

Ineligible: Foreign National


Loan Programs


Equity Access

Qualifying Ratios

Max 38% (front-end) / 45% DTI ratios – no exceptions Qualifying Rates/payments:

Fully amortized over 30 year term (P&I) HELOC payment using start rate, plus Payment shock factor (HELOC line amount x .0018)

Note: Start rate is calculated using current Prime rate (4.75%) + margin percentage in the above Prime+ column based on CLTV. Investor HELOC worksheet must be completed.

Assets

No bank or asset statements required, unless documenting income. No documentation required for source of down payment Gift of equity allowed Gifts allowed – full gift with no borrower contribution; no documentations required List all assets on 1003 No reserve requirements

Credit

The primary wage earner (borrower with most income) must meet minimum score requirement. Note: If the 1st mortgage excluded the lower wage earner’s income from qualifying due to score, that individual’s income can be added into qualifying for the HELOC as long as that he/she is on title for the first.

Minimum 2 FICO scores are required. Note: Investor re-pulls credit on every file submission (see Notice & Authorization Concerning Your Loan Application disclosure). Investor uses their credit report and Broker/LDW credit report for analysis/new debts. There is a 40 point threshold for the FICO requirement (i.e. minimum requirement 700, new credit pulled 660 – ok to proceed; if FICO drops > 40 point, loan is ineligible).

Minimum Credit Trade Lines: o Minimum 3 trade lines combined between all borrower(s) with one trade line

seasoned 3 years o Accounts can be open or closed o No installment debt or VOR required o No trade line activity rule o Authorized user account(s) do not qualify as a trade line

Housing payment history/VOM: LOE required for mortgage lates in recent 12 months o Must verify and qualify with fully amortized (PITIA) payments

Interest only non-subject 1st mortgages must be qualified P&I the balance at current rate over 30 years

Mortgage statement or Note required to disclose the balance and rate

Waiting periods for the following delinquency events as follows: o BK: No bankruptcy filing in the past 7 years – all BK chapters o Foreclosure, deed-in-lieu, short sale or any real estate transaction settled for

less than full balance ≥ 5 years o Loan modification with any principal forgiven > 5 years – need LOE and a

copy of the modification agreement

Disputed accounts requires proof of resolution

Collections, judgment and tax liens must be paid off: o Smaller collections or medical collections requires LOE from borrower

Loan Programs


Equity Access

addressing why not want them to be paid o Larger collections requires to be paid off unless there is some extenuating

circumstance

IRS unpaid taxes due (not a lien) in a IRS payment plan acceptable with supporting documentation and include payment into DTI ratio

Pay off debts with the HELOC proceeds at closing – not required to close accounts

30 day revolving accounts (no payment on credit report) – calculate 4% of balance

Installment debt (non-real estate) excluded with 6 or less payments remaining

Student loans in deferment and no payment listed on the credit report, use 1% of the balance for each loan or provide an estimated payment from the creditor’s calculator Payment from an Income Based Repayment Plan allowed

401K loans exclude from DTI. Provide a 401K Statement to show account balance exceeds 401K loan

Co-signed debt: o Non-mortgage - if credit bureau specifically labels as “co-signer”, can exclude

debt as long as no lates in the previous 24 months. If it is not labeled as cosigned, need supporting documentation from creditor to validate borrower is a cosigner

o Mortgage – can only exclude if the borrower is not on title (can do quit claim prior to final approval) and document another makes payments with 12 months cancelled checks; must include co-signed mortgage into DTI if any late payments in the past 24 months

Real estate owned by a business: borrower owns < 25% business, will not include in DTI; borrower owns ≥ 25% business, use rental income to offset PITIA (positive cash flow use as income); provide mortgage/tax/insurance statement(s) or Sched E of tax returns to document real estate taxes and property insurance for each property

Business debts can only exclude if truly used for business purposes. Need 6 months proof business pays and if ownership > 50%, requires LOE how the debts are used for business purposes

A filed marriage separation agreement or divorce decree must be provided to document and exclude debt that has been assigned to an ex-spouse

Departing Residence

Departing residence converting to rental requirements: o Provide a 12 month lease and proof a security check has been deposited, o Apply 75% of gross rent to offset PITIA (positive rents can use as income), o No departing property equity requirement, and o No prior landlord experience required

Housing debt when departing residence is under contract: o Include PITIA if departing transaction is not closed or closing simultaneously

Departing properties can be excluded if sold by closing with the following: o A listing showing pending sale, o Executed purchase contract or estimated settlement statement, o Final approval will require the settlement statement/selling disclosure for the

departing property with a closing date listed

Maximum Properties Maximum of 10 properties either financed or free and clear properties

Loan Programs


Equity Access

Title Requirements

Uses title from LDW 1st mortgage

Junior title insurance or Flag policy needed if the HELOC is greater than $250,000

Title insurance required if there will be a 3rd lien to ensure this Equity Access program/investor is in 2nd lien position

Income

Wage earners: Tax returns and transcripts are not required for W-2 employees o Most recent paystubs with YTD income within 90 days of closing o Prior year W-2 or year-end paystub

Borrower(s) working only 9 – 11 month of the year, income must be annualized

Declining Income: Income declining by more than 20%, use lower income

Average all variable income (shift differentials, overtime, auto allowance, housing allowance, or commission income) over 2 years. However, if current period/YTD is declining by more than 20% use the lower income

Bonus Income: WVOE required to verify when bonuses are paid and income likely to continue; average over 24 months unless there is YTD bonus in which case average prior year + YTD based on frequency of bonus payout (ex: Quarterly, semi-annually, annually)

Two years tax returns required for seasonal/temp workers and wages from Tips

Borrower on leave: o If borrower will return to work prior to the HELOC 1st payment is due

(23rd of month following funding), can use the final prior to leave paystub to calculate full-time base income,

o If borrower will not return to work prior to the HELOC 1st payment is due, qualify using income received prior to temporary leave and any income received to date, including leave pay,

o Borrower must provide written confirmation of intent to return to work, and

o Employer must provide documentation evidencing date of return to work

Self-Employed Borrowers: o 2 year self-employment history required, o Document with recent two years tax returns (personal and corporate, if

applicable). Investor will follow first mortgage DU/LPA approval for one year tax returns, if applicable,

o A stamped or E Filed return is acceptable, o No transcripts required, o If S/E borrower pays his/herself wages, average wages over recent 2 years.

Also require recent YTD paystub; if no YTD wages yet, provide LOE explaining reason on why no W-2 wages taken yet

K-1 Income: o If borrower is 100% owner of business or 100% owner with the co-borrower

(spouse), can use ordinary business income adding back depreciation, distributions, items affecting shareholder basis, guaranteed payments and W-2 wages through the business

o If borrower < 100% owner, cannot use the ordinary business income and cannot add back depreciation (generally box 1 of K1s that carries over to

Loan Programs


Equity Access

Income cont’d

Sched E). This also applies to S Corp and C Corp. The distributions, items affecting shareholder basis, guaranteed payments and W-2 wages are allowed

Miscellaneous: o Only child support, foster care, and social security non-taxable income(s) can

gross up by 25%; requires most recent tax returns to determine tax/non-tax portion; 3 year’s continuance required

o Do not deduct 2106 expenses from income

Rental income: o Positive cash flow can be used as income. Subtract net rental income (75% of

12-month lease or Sched. E with standard add-backs) from the rental PITIA, Negative cash flow must include in DTI Using a lease requires proof of minimum 1 month rent received in

past 60 days (cancelled check, property management statement, etc.) o If a rental or second home has an I/O first mortgage, document and qualify

using fully amortized PITIA payment, o Use 1040s schedule E or 12 month lease, and o If rental is owned free and clear, rental income must be on a schedule E o Rental properties owned through a business must provide mortgage

statements on all applicable properties. If properties through an S Corp: Ownership < 25%, ignore business properties including business loss Ownership ≥ 25%, need mortgage/tax/HOI statements to validate and

offset mortgage debt same way as personal property through Sched E

Employment history and gap: o One year job history required for W-2 employees; can include education o Work history does not have to be continuous, o Signed and dated LOE is required for employment gap(s) > 30 days

IRA Depletion: 70% of account balance with 3 years continuance; provide letter from Financial Institution stating amount of monthly distribution and date of first distribution if newly established or recently changed

Retirement Account Distribution: o Borrower can establish a monthly distribution or increase an existing

distribution; o Provide written document from Financial Institution or proof distribution was

received from a bank or brokerage account statement; o 70% of account(s) must support distribution for a minimum of 3 years

A filed marriage separation agreement or divorce decree must be provided to document alimony or child support income:

o Proof of recent 3 months of receiving income (bank statements, cancelled checks), and

o Document 3 years continuance required

Loan Programs


Equity Access


Uses full appraisal from LDW 1st mortgage – PIWs/AVMs/Drive-bys are not allowed o Must be < 120 days when submitted to investor and o Must be < 150 days old at closing o Re-certification of value not allowed

Desk Review – orders by the investor to validate the original appraisal (will not accept rebuttal for higher value). If desk review supports value:

o No seasoning requirement to use current market value, including flips o No restriction on unpermitted improvements

Ineligible condition C-5 properties. Properties needing significant work not eligible

Property “off the market one day” allowed – remove from MLS

Legal Non-Conforming zoning allowed

Rural properties acceptable

Transferred appraisal is allowed; requires a transfer letter and an A.I.R. letter

Condo Requirement None

Maximum Acreage Max 10 acres in all states

Transaction Types

Investor Prior Approval is required

Non-arm’s length transactions allowed

Escrow Holdbacks (investor case by case) Ineligible:

Interest Only 1st mortgage

Sweat Equity


Mobile/Manufactured Homes


No MCC

No Temporary Buydowns

NDC

Miscellaneous

HELOCs are not subject to TRID: No LE/CD

Investor requires the Notice Right to Cancel (NRTC) on all transactions (Purchase money funds not applicable to the 3 day rescission but the form is still required to be signed

Investor sends the HELOC disclosure to the borrower(s) upon receipt of LDW submission

Investor requires LOE’s to be signed, docu-signed or an email from the borrower in lieu of a signed LOE. The LOE cannot be signed at the closing table

5.11.18

Loan Programs


Fannie Mae HomeReady Mortgage

Finance Type Purchase / Limited Cash-Out Refinance


LTV / CLTV / FICO Fixed Rate ARM

Max LTV/CLTV Min FICO Max LTV/CLTV Min FICO

SFR / PUD / CONDO 97% / 97% * 620 95% / 95% 620

2 Units 85% / 85% 620 85% / 85% 620

3-4 Units 75% / 75% 620 75%/75% 620

Max LTV Requirements*

> 95% - 97% LTV Requirements: Purchase & Limited Cash-out Transaction Fixed Rate only. Note: Limited Cash-Out

refinance loans must be owned or securitized by FNMA. 1 Unit SFR, PUD and Condo All borrower(s) must occupy the subject property; non-occupant borrower

ineligible High Balance Loan Limits ineligible

Max 95% LTV Requirements: Purchase & Limited Cash-Out Refinance Transaction (Fixed Rate &ARM) 1 Unit SFR, PUD and Condo High Balance Loan Limits eligible

Eligible Loan Amounts Subject to FNMA Conforming Loan Limits Subject to FNMA High Balance Loan Limits

Credit Score Minimum FICO 620

Eligible Terms Fixed Rate: 10, 15, 20, 25 or 30 years, fixed fully-amortized ARMs: 5/1 ARM, (LIBOR), Caps 2/2/5. 7/1 ARM &10/1 ARM (LIBOR), Caps 5/2/5.

Fully-amortized over 30 year term.


Owner Occupied Principal Residence 1-4 Unit Condos PUDs

Borrower Eligibility U.S. Citizens Non-Permanent and Permanent Residents Foreign National not eligible

Loan Programs



Non-occupant Borrowers Non-occupant borrower(s), such as a parent, permitted to maximum 95% LTV Income considered as part of qualifying income and subject to income limits


Down payment assistance options Community Seconds Sweat Equity Texas 50(a)(6) loans Manufactured Homes HomeStyle Renovation loans Properties on more than 10 acres are typically ineligible but will be considered as

exception Properties located in Hawaii Lava Zones 1 & 2

Desktop Underwriter

(DU)

DU Approve/Eligible required (No manual underwrites allowed) Based on census tract and borrower income, DU will notify when a loan casefile appears

to be eligible for HomeReady but the initial casefile was not underwritten as HomeReady. The Additional Data screen field will allow entering census tract information if DU is unable to geocode the property address Note: DU findings message must include “This case is eligible for delivery as a “HomeReady” Mortgage Loan.”

Eligible in DU with at least one borrower has traditional credit and contributes more than 50% of qualifying income

Standard FNMA underwriting and property guidelines apply unless specifically referenced within this matrix

Pre-Purchase Homeownership Education

Homeownership Education required prior to note date for at least one borrower on all transactions (Purchase Only):

o Complete through Framework, an online program approved by Fannie Mae. A $75 fee paid by the borrower to Framework for a simple online education; Framework certificate of course completion is required

o Receive pre-purchase housing advising from a HUD-approved nonprofit housing counseling agency; a Certificate of Completion of Pre-purchase Housing Counseling (Form 1017) signed by both the counseling recipient and the HUD counselor

Homeownership education certificate must be retained in the mortgage file Although one-on-one counseling is optional for HomeReady, Framework will offer

borrowers a referral to a HUD-approved counseling agency for additional assistance if online education may be not appropriate for homebuyers (i.e. lack of internet access). Borrower(s) also have the option to consult a counselor of their choice. More Info

The completion of a HUD-approved one-on-one housing counseling as an alternative to homeownership education can be used as a comp factor in DU to allow DTI ratio > 45%


https://homeready.frameworkhomeownership.org/

https://www.fanniemae.com/content/guide/selling/b2/2/06.html

Loan Programs




Income Limit Search: FNMA Area Median Income (AMI) Census Tract Eligibility

No Income Limit: Properties in Low-Income Census Tracts

100% Of AMI: All Other Properties

To determine whether a mortgage is eligible under the borrower income limits, count the income used to qualify the loan as reflected on the 1008 and in DU Income Eligibility Lookup Tool

Non-Borrower

Household Income

Non-borrower household income is permitted as a compensating factor only to allow DTI ratio > 45% up to a maximum of 50% (Non-borrower income is not considered qualifying income and is not applied to income limits). The following additional requirements apply: The income must be reflected in DU as an Other Income type of “Non-Borrower

Household Income”. This income will not be included as qualifying income, and would not impact the DTI ratio used in the risk assessment or displayed on the DU Underwriting Findings Report

Non-borrower household members may be relatives or non-relatives The non-borrower household members must sign a statement of intent to

occupy subject property with the borrower for a minimum of 12 months (Refer to Fannie Mae Form 1019)

The non-borrower’s household income must be documented in accordance with FNMA’s standard income policy based on the income type

The non-borrower’s household income must be at least 30% of the total monthly qualifying income being used by the borrower. (Note: Income from more than one non-borrower household member may be considered.)

Note: An individual who is already the source of rental income from an accessory unit or a 2-4 unit property may not also be considered a non-borrower household income member.

Income

Follow standard FNMA income guideline requirements

Rental income from an accessory dwelling unit (1 unit property) and/or 2 – 4 Unit property may be used as qualifying income as per FNMA rental income guidelines

Boarder income is eligible (relative or non-relatives) for 1-unit property up to 30 % of qualifying income if: 1) Individual(s) lives with and pays rent to the borrower for the last 12 months, 2) Boarder documents history of shared residency (ie: driver’s lic., bill or bank statement with address same as borrower’s address), and 3) Boarder documents via cancelled checks of rental payments to the borrower for last 12 months or at least 9 of most recent 12 months (rental income must be averaged over 12 month period). Note: Boarder rent payment(s) directly to a third party is not

acceptable.

Qualifying Ratios

As determined by DU Income from a non-borrower household member can be used as a compensating

factor in DU to allow for a debt-to-income (DTI) ratio > 45% to 50% The completion of a HUD-approved one-on-one housing counseling as an

alternative to homeownership education can be used as a compensating factor in DU to allow DTI ratio > 45% to 50%

Loans with Mortgage Insurance may have more restrictive requirements Qualifying Rate

https://homeready-eligibility.fanniemae.com/homeready/

https://www.fanniemae.com/content/guide_form/1019.pdf

Loan Programs


Note rate for Fixed-rate Higher of note rate + 2% or fully indexed rate for 5/1 ARMs Higher of note rate or fully indexed rate for 7/1 ARMs

Assets

Minimum down payment requirement:

Number of Units Minimum Borrower

Contribution Minimum Down Payment

Requirement

One None 3%

Two 3% 15%

Three or Four 3% 25%

No minimum contribution required for limited cash-out refinance transaction Acceptable source of funds for down payment and closing costs:

Refer to FNMA verification of deposits and assets guidelines Gifts Cash-on-hand permitted as a source of funds for down payment (1-unit property

only; Refer to FNMA Selling Guide B5-6-03 for requirements). Refer to MI company guidelines that would allow cash-on-hand for HomeReady loans Note: Cash-on-hand may not be used to fund the borrower’s reserve requirement, if applicable.

Reserves As determined by DU

Mortgage Insurance

Financed MI is not available

LPMI (single premium) is eligible based on program LTV eligibility. LPMI is not available for: 1) 10 year fixed term or 2) 5/1 ARM & 10/1 ARM




Loan Term LTV

80.01-85% 85.01-90% 90.01-95%

95.01 – 97%

Fixed Rate ≤ 20 Years 6% 12% 25% 25%

Fixed / ARMs > 20 Years

12% 25% 25% 25%

Subordinate Financing Subordinate financing must comply with FNMA B2-1.1-04 Subordinate Financing Subordinate financing of a seller-held mortgage is ineligible with HomeReady mortgage


Owner Occupied Principal Residence: LTV/CLTV of 90% or greater: 3% LTV/CLTV of 75.01 - 90%: 6% LTV/CLTV of 75% or less: 9%

https://www.fanniemae.com/content/guide/selling/b2/1.1/04.html

Loan Programs


v. 06.15.18

First Time Homebuyer No requirement for the borrower(s) to be a First Time Homebuyer

Property Ownership Occupant borrower(s) may have an ownership interest in any other residential dwelling

at the time of loan closing Non-occupant borrower(s) has no limitation on ownership of other residential property

Additional Restrictions Minimum credit score is required regardless of DU Approve/Eligible decision Special Feature Code: SFC 900 required for all HomeReady loans

HPML and HPCT Loans

Higher-priced mortgage loan (HPML) underwriting requirements are applicable to all occupancy types (not just primary residences)

5/1 ARM not eligible as HPML or higher-priced covered transactions (HPCT)




Business Assets



Employment History

Accessory Units

Appraisal Policy

Gift Funds Deferred Installment Debt






Retirement Income


Large Deposits Payoff and Paydown of Debt


Temporary Leave


Power of Attorney

Non U.S Citizens





















































