Jumbo FUEL Product Guidelines

Product Training January 2020 TRAINING OVERVIEW - JUMBO AUS

Welcome to Orion Lending’s Jumbo AUS product introduction.

The intention of the training is to explore the key highlights and benefits of this 30 year Fixed, Conventional, Jumbo, Automated Underwriting System (AUS) - Desktop Underwriting (DU) product.

Orion Lending's vision is to be the leading lender in this Jumbo AUS loan product, by providing the best products and best practices. Orion Lending will provide and deliver an unprecedented value to our customers. INTRODUCTION TO JUMBO AUS SECTION 1 INTRODUCTION – Jumbo AUS

This Conventional 30-year fixed jumbo loan is a mortgage that exceeds the limit set by the FHFA for a given area by $1.

In most of the U.S., the 2020 maximum conforming loan limit for one-unit is $510,400. PRODUCT ELIGIBILITY SECTION 2 PRODUCT ELIGIBILITY - Overview cont.

Overlays and Appendix - refer to the Fannie Mae Seller Guide for specific information concerning qualification requirements that are not specifically referenced in this high-level training materials.

All loans must be underwritten by Fannie Mae DU (DU) only. Manually underwritten loans and LP not permitted. PRODUCT ELIGIBILITY – AVAILABLE PRODUCTS

PURCHASE / RATE TERM REFINANCE - 30 YR FIXED

MIN CREDIT MIN OCCUPANCY NUMBER OF UNITS MAX LOAN AMOUNT LTV/CLTV MAX DTI SCORE RESERVES

1 Unit 80/80 Primary Residence $1,500,000 700 2 Unit 75/75 See Product 43% $1,000,000 80/80 720 Guidelines Second Home 1 Unit $1,500,000 80/80 740

Guam, Puerto Rico, and US Virgin Islands are not eligible for this program. PRODUCT ELIGIBILITY – AVAILABLE PRODUCTS

CASH OUT REFINANCE - 30 YR FIXED

MIN CREDIT MIN OCCUPANCY NUMBER OF UNITS MAX LOAN AMOUNT LTV/CLTV MAX DTI SCORE RESERVES

75/75 700 Primary Residence See 1 Unit $1,000,000 70/70 740 Product 38% Guidelines Second Home 65/65 720

Guam, Puerto Rico, and US Virgin Islands are not eligible for this program. BORROWER ELIGIBILITY SECTION 3 BORROWER ELIGIBILITY

BORROWER

• U.S. Citizen. • Permanent Resident Aliens (card must be included in loan file). • Non-permanent Resident Aliens (see section 5.1.2 of the product guide). • Inter-Vivos (living) Revocable Trust. • Non-Occupant Co-Borrowers allowed per AUS. • All borrowers must have a valid social security number. OCCUPANCY ELIGIBILITY SECTION 4 OCCUPANCY ELIGIBILITY

OCCUPANCY

• 1-2 units Primary • PUD Residence • Eligible Condominiums

• 1 unit • PUD • Eligible Condominiums

Property may not be a time share, subject to a rental agreement or other shared ownership Second Home arrangements.

Rental income and expenses on Schedule E of the borrower’s personal tax return(s) must not exceed 30 rental days. Rental income from a second home cannot be used to qualify the borrower. TRANSACTION ELIGIBILITY SECTION 5 TRANSACTION ELIGIBILITY

PURCHASE TRANSACTIONS

• Must adhere to Agency guidelines.

• LTV/CLTV is calculated using the lesser of the subject purchase price or the appraised value.

• Seller - must be on title to the subject property a minimum of 90 days prior to the date of sales contract.

• Personal property may not be included in the purchase agreement/sales contract. TRANSACTION ELIGIBILITY

RATE AND TERM REFINANCE

• A minimum of 6 months, must have elapsed if the previous refinance transaction combined a first and a non-purchase money subordinate lien into a new first lien. • Properties listed for sale must have the listing withdrawn (or expired) prior to the date of . • Second lien being paid off must be a purchase money second lien. • The Jumbo Mortgage amount may include the: • Pay off the existing liens. • Pay off a co-owner pursuant to a written agreement. • Financing of the payment of prepaid items and . • Pay off subordinate financing only to the extent that such financing was used to acquire the property. • Cash back to the borrower is limited to the lesser of $2,000 or 2% of the new loan. • Subordinate Financing is allowed up to maximum CLTV per Matrix. Must conform to Agency requirements. TRANSACTION ELIGIBILITY

CASH OUT REFINANCE

• Borrower must have held title for a minimum of 6 months from disbursement date.

• Properties listed for sale are ineligible for refinance unless the listing was withdrawn (or expired) prior to the date of closing. CREDIT ELIGIBILITY SECTION 6 CREDIT ELIGIBILITY BORROWER

• A tri-merged, 120-day credit report from all three repositories is required. Credit Report Detail • All inquiries within 120 days of the credit report date require a letter of explanation.

• Credit scores - all three repositories must be requested (Equifax, Experian and TransUnion). • Multiple borrowers - the lowest score of all representative credit scores, is used. Credit Scores • If only one credit score or no credit score is reported, the borrower is not eligible. A minimum of two credit scores is required.

• Minimum credit requirements as determined by AUS. Credit Report • Nontraditional credit now allowed. Requirements • Collections/Charge offs - Determined by AUS. , - In-Lieu of • At least 7 years must have elapsed since bankruptcy discharge or dismissal, foreclosure, Foreclosure, notice of default (NOD), short sale or deed in-lieu measured from the date of completion Bankruptcy and to the date of brokers application. Short Sales INCOME REQUIREMENTS SECTION 7 INCOME REQUIREMENTS

BORROWER

Income Analysis form detailing income calculations is required. • Non-taxable income: Social Security income, VA benefits, Pensions and Annuity Source and income may be grossed-up 25%. Calculations • Foreign income - most recent 2 Years U.S. tax returns. • Unreimbursed business expenses - must be deducted from income.

Minimum 2 years employment and income history. Employment • Gaps - 30 days during a 2-year period require a letter of explanation. Stability • All income must be a minimum of 6 months to qualify, if there is a gap of employment.

Verbal VOE dated within 5 business days prior to closing documented in writing. Verbal • Must cover 24 months of employment. Verification of • If the borrower changed jobs within 2 years, start and end dates for each job, is required. Employment • Any employment gaps exceeding 30 days must be addressed, require a letter of explanation. INCOME ELIGIBILITY

BORROWER Income Analysis form detailing income calculations is required. • Completed, signed and dated final Uniform Residential Mortgage Application. • W-2’s from all employers for the past 2 years. • If the borrower was in school a copy of the school transcript is required. • Most recent paystubs, covering a 30-day period with YTD earnings. Salaried • Tax returns are not required for salaried borrowers. • Unreimbursed business expenses - must be deducted from income. • Employed by a family business - must provide a CPA letter proving no ownership, business and personal tax returns required. • Signed IRS Form 4506T. • 2 years tax transcripts are required. Salaried with Self Employed Income, • Use the Jumbo AUS product guide for specific requirements. Commissions, Bonus INCOME ELIGIBILITY

BORROWER

• Rental income - most recent signed federal income tax return, include Schedule E. • are required for all properties where rental income is being used to qualify. • Proposed rental income from the comparable rent schedule may be used for qualifying. • Properties with expired leases - convert to month to month, bank statements are required Rental Income for the lesser of 12 months or the time period after the expired. • A 25% vacancy factor must be applied to the gross rent. Multiply the gross rent by 75% and subtract the PITI. • Commercial properties owned - Schedule E must be documented with evidence that the primary use and of the property is commercial. • Copy of the Social Security Administrations award letter. • Copies of last 2 months bank statements to document deposit of payments. Social Security • Benefits must have a minimum continuance of 3 years from the date of the application to be considered as qualifying income.

Alimony and • Allowed as a sources of income with proof of a minimum of 3-year continuance. Child Support DEBTS AND LIABILITIES SECTION 8 DEBTS AND LIABILITIES BORROWER

• Installment debt - must include car lease payments. • Installment debt - paid by another entity such as the borrower’s business must be included Installment Debt unless the business entity (not the borrower) is the primary obligor. • Co-signed debt - may be excluded with proof timely payments for the last 12 months were made by the primary obligor.

Revolving Debt • Follow AUS requirements. If the current primary residence is pending sale the following applies: • The current PITI of the property pending sale and the proposed PITI payment of the subject loan must be included in the debt ratio used to qualify. If the current primary residence is being converted to an investment property: Departing • Rental income - may be used if, LTV is 75% or less, evidenced by either. Residence • An Exterior Only appraisal (2055) - less than 6 months old from application date or • An automated valuation model (AVM), listing sales price minus outstanding liens as evidenced by a mortgage statement or credit report reference. • A 25% expense /vacancy deduction must be applied to all rental income. • Reserves of 6 months of PITI must be documented. ASSETS AND SOURCE OF FUNDS SECTION 9 ASSETS AND SOURCE OF FUNDS

BORROWER

Source of Funds • Follow AUS requirements.

• AUS reserve requirements or the reserve requirements in the Product Matrix are required. • Reserves must be verified and comprised of liquid assets that borrower can readily access. • Equity lines of credit, gift funds, and cash out from the subject property on a refinance transactions are not acceptable sources to meet the reserve requirement. Cash Reserves • If loan amount ≤ $1,000,000 - 6 months PITI reserves. • If loan amount > $1,000,000 - 9 months PITI reserves. • Second homes - 12 months PITI reserves. PROPERTY REQUIREMENTS SECTION 10 PROPERTY REQUIREMENTS BORROWER • All appraisals must be completed on the most current Agency appraisal forms. • Property Inspection Waiver (PIW) not allowed. • Properties must be appraised within 12 months that precede the Note and Mortgage. Appraisal • Appraisals must not be over 120 days old from the date of the Note. If appraisal is over 120 days old a recertification of value needs to be performed. • Transferred Appraisals Allowed - Must be AIR compliant. • SSR’s are required for values over 2.5 mil • 1-2 units Primary Residence properties. • 1 unit Second home properties. • Low/mid/high-rise warrantable condominiums. Condominiums with HOA in litigation are Eligible Properties ineligible unless it meets FNMA guidelines for acceptable litigation. • Planned Unit Development (PUD). • Maximum lot size 20 acres. Properties > 10 acres need 3 comparable with similar acreage. • Properties located in a FEMA declared disaster area. • A re-inspection is required, by the original appraiser. Properties in a • A written certification is required from the appraiser to no impacted by the disaster. Disaster Area • FEMA declared natural disasters; the inspections must be dated after the disaster end date is declared by FEMA. https://inciweb.nwcg.gov MISCELLANOUS GUIDELINE REQUIRMENTS SECTION 11 MISCELLANOUS GUIDELINE REQUIREMENTS BORROWER • All transactions require a minimum 12-month . Chain of Title • For purchase transactions - seller must have taken title to the subject property a minimum of 90 days prior to the date of sales contract. Balloon Mortgage, Recasting, Re Amortizing, Temporary • Not permitted. Buydowns and Prepayment Penalties

• Interested party contributions may only be used for closing costs and prepaid expenses. • LTV between 75.01% - 80% max 6% contribution allowed. • LTV ≤ 75% max 9% contribution allowed. Interested Party or Seller • Seller contributions in excess of the interested party contribution limits or Contributions contributions not being used for prepaid expenses or closing costs are considered seller concessions. The amount of the seller concession must be deducted from the purchase price and appraised value to determine the LTV. INTRODUCTION TO JUMBO AUS QUESTIONS?

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