altqm jumbo program underwriting guidelines qm jumbo program.pdf · 3 maximumloan amount 1-unit 680...

AltQMTM Jumbo Program – Underwriting Guidelines

10/14/14 Underwriting Guidelines of 14

Underwriting Philosophy

Program Highlights Designed for high credit quality borrowers who:

� Are seeking loan amounts up to $3 million � Are seeking an Interest Only feature � Have a DTI up to 50% (55% for interest only loans, see Qualifying Rate and Ratios)� Are Foreign Nationals � Have credit scores as low as 680

Income and assets are fully documented

NOTE: Loans that are eligible for sale to a government-sponsored enterprise (GSE) – the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac) – are ineligible for any AltQMTM

Series programs.

Guideline Overview Loans meeting the parameters outlined in these guidelines are consistent with the Dodd Frank Wall Street Reform Act Ability toRepay. Documentation standards are designed so that loans are made to borrowers who have demonstrated the ability and have the capacity to repay the debt thus satisfying Ability-to-Repay standards.

Program Qualifications This program offers ARM options for borrowers with jumbo loans and conforming loans that fall just outside the parameters for Qualified Mortgages. Full documentation of income and assets is required.

All loans must reflect one or more of the following characteristics: 1. Loan contains an interest only feature2. DTI Exceeds 43%3. Loan amount exceeds conforming or high balance limits4. Loan has a foreign national borrower

Conforming and High Balance Loan Amounts (Reference)

Conforming Maximum Loan AmountsUnits Continental US Alaska & Hawaii

1 $417,000 $625,5002 $533,850 $800,7753 $645,300 $967,9504 $801,950 $1,202,925

High-Cost Area (High Balance) Loan Amounts

UnitsContinental US Alaska & Hawaii

Minimum Loan Amount Permanent High-Cost Minimum Loan Amount Permanent High Cost1 $417,001 $625,500 $625,501 $938,2502 $533,851 $800,775 $800,776 $1,201,1503 $645,301 $967,950 $967,951 $1,451,9254 $801,951 $1,202,925 $1,202,926 $1,804,375

Permanent High Cost area limits are the maximum potential loan limits for designated high-cost areas. Actual loan limits are established for each county (or equivalent) and the loan limits for specific high-cost areas may be lower. The original balance of a Mortgage must not exceed the maximum loan limit for the specific areas in which the Mortgage Premises is located. For specific loan limits for each high cost area, as released by the Federal Housing Finance Agency visit: http://www.fhfa.gov/DataTools/Downloads/Pages/Conforming-Loan-Limits.aspx

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ECOM Mortgage Inc takes a common sense approach to underwriting a borrower’s creditworthiness to determine the willingness and ability to repay the loan. Each applicant has a different situation and each loan is weighed on its own merits. Our goal is to help goodborrowers with their financing needs while mitigating risk for the company. The AltQMTM programs are high risk loans. ECOM Mortgage Inc will only approve loans for which the company has a reasonable belief that the borrower has the ability to repay the subject loan. This reasonable belief is based upon information provided by or independently verified by an independent third party. Any irregularity in borrower profile, documentation provided, or property used to support the debt may be cause for denial of the loan.

Mortgage Banker / Wholesale Lender NMLS: 315655 DBO: 4131222

w w w . e c o m m t g . c o m

ECOM MORTGAGE, INC.

http://www.nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/128231

http://www.fhfa.gov/DataTools/Downloads/Pages/Conforming-Loan-Limits.aspx



Eligibility Matrix Loan Amount & LTV Limitations

Primary Residence - Purchase and Rate & Term Refinance

Units Credit Score LTV CLTV Minimum Loan Amount3 Maximum Loan

Amount

1-unit680

1

80% 80%

$200,000

$1,500,00075% 75% $2,000,00070% 70% $3,000,000

2-4 units65% 65% $1,500,00060% 60% $2,000,000

Primary Residence Cash-Out Refinance

Units Credit Score LTV CLTV

Minimum Loan Amount

3Maximum Loan

Amount Maximum Cash-Out4

1-unit 6801

70% 70%$200,000

$1,500,000 $350,00065% 65% $1,750,000 $350,00060% 60% $2,000,000 $500,000

Second Home – Purchase and Rate & Term Refinance5

Units Credit Score LTV2

CLTV2

Minimum Loan Amount3 Maximum Loan

Amount

1-unit 6801

75% 75%$200,000

$1,500,00070% 70% $2,000,00065% 65% $3,000,000

Second Home – Cash-Out Refinance5

Units Credit Score LTV

2CLTV

2 Minimum Loan Amount

3Maximum Loan


1-unit 6801

65% 65%$200,000

$1,500,000 $350,00060% 60% $2,000,000 $350,00055% 55% $3,000,000 $350,000

Investment Property – Purchase and Rate & Term Refinance5

Units Credit Score LTV2

CLTV2

Minimum Loan Amount3 Maximum Loan

Amount

1-unit 6801

75% 75%

$200,000

Conforming or High Balance Loan Limits

70% 70% $1,000,00065% 65% $1,500,00060% 60% $2,000,000

2-4 Units 6801 65% 65% $1,000,000

60% 60% $2,000,000

Investment Property – Cash-Out Refinance5

Units Credit Score LTV

2CLTV

2 Minimum Loan Amount

3Maximum Loan


1-unit 6801

70% 70%

$200,000

Conforming or High Balance Loan Limits $200,000

65% 65% $1,000,000 $200,00060% 60% $1,500,000 $350,00055% 55% $2,000,000 $500,000

2-4 Units 6801 60% 60% $1,000,000 $200,000

55% 55% $2,000,000 $500,000

Footnote: 1 For loan amounts up to $625,500 or high balance limits for 2-4 units with credit scores of 680-719, max DTI is 43%. 2 LTV/CLTV reduced 10% for Foreign Nationals – only allowed on 2nd homes and NOO. 3 See Cash-Out Requirements4 See Limitations on Other Real Estate Owned for multiple property restrictions

Product Description � 5/1 & 7/1 LIBOR ARM, fully amortizing � Interest Only available for fixed period on ARMs



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Product Codes Fully Amortizing Interest Only

Hybrid ARM Product Code Hybrid

ARM Product Code

5/1 ARM AQ05-J : AltQMTM Jumbo 5/1 LIBOR ARM 5/1

ARM AQ05-JIO : AltQMTM Jumbo 5/1 LIBOR ARM Interest Only

7/1 ARM AQ07-J : AltQMTM Jumbo 7/1 LIBOR ARM 7/1

ARM AQ07-JIO : AltQMTM Jumbo 7/1 LIBOR ARM Interest Only

Locking � Forward locking is not allowed � Loan approval is required prior to lock

o Cannot lock until loan is approved and appraisal has been received by ECOM Mortgage Inc.

Eligibility Requirements

Adjustable Rate Details Interest Rate

Adjustment Caps5/1, 7/1 & 10/1 ARM (2/2/5)Initial: 2% up/down; Subsequent: 2% up/down; Lifetime: 5% up

Margin 2.75% Index 1-Year LIBOR (London InterBank Offer Rate)Index Establish Date 45 days prior to the change date (aka “look back period”)Interest Rate Floor The interest rate floor is equal to the MarginConversion Option NoneAssumption ARM products are assumable to a qualified borrower after the fixed termNegative Amortization

None

Interest Only Option Available for fixed period on ARMs. Notes / Riders FNMA 3528 / 3187 (fully amortizing)

FNMA 3530 / 3187 (interest only)

Appraisal Requirements

The underwriter may require additional collateral review.

Loan Amount Appraisal Requirement

≤ $1,000,000 One Full Appraisal

> $1,000,000 Two Full Appraisals

All properties For Sale By Owner (FSBO) Two Full Appraisals

A Pro Teck Valuation Services Appraisal Risk Review (ARR) supporting the value within 10% (higher or lowerthan appraised value) will be required when the Appraisal Requirement is One Full Appraisal. If variance exceeds 10% then a field review ordered from Pro Teck Valuation Services will be required.

When two (2) appraisals are required, an ARR is not required.

Note: The ECOA Valuations Rule requires copies of appraisals and other written valuations be delivered to borrower promptly upon completion, or three (3) business days before consummation, whichever is earlier.

Assets Full Asset Documentation is required for both funds to close and reserves. For most asset types, this would include all pages of the most recent two months consecutive statements or the most recent quarterly statement.

Loan Amount Reserves Required

Up to $417,000 6 months

$417,001-$625,500 9 months

$625,501-$1,000,000 12 months

$1,000,001-$2,000,000 18 months

$2,000,001-$3,000,000 24 monthsNotes:1 LTV less than 65% reduce reserves by 50%.2 Additional 2 months PITIA reserves for each NOO property (regardless of financing); max 36 months.

PITIA is the monthly housing expense for a property and includes the following:� Principal and interest (P&I);

Minimum Rates

Rates

AQ05-J 4.250

Product Code

AQ07-J 4.750



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� Hazard, flood, and mortgage insurance premiums (as applicable);� Real estate taxes;� Ground rent;� Special assessments;�

excluding any utility charges that apply to the individual unit);� Any monthly co-op corporation fee (less the pro rate share of the master utility charges for servicing

individual units that is attributable to the borrower’s unit);� Any subordinate financing payments on mortgages secured by the subject property.

Reserves for NOO properties shall be calculated using the worst-case (e.g., properties with the highest monthly expenses are counted first) when borrower has more than 18 properties.

Reserves for Self-Employed Borrowers Self-Employed borrowers (e.g., Sole Proprietor, S Corp, Corporation, LLC) may use business funds for reserves up to 50% of account balance so long as borrower is 100% owner of business or borrower has written permission in file from other business co-owner(s) regarding use of these business funds (up to 50% of account balance) for reserves.

Gift funds are permitted subject to the following criteria:� Primary residence purchase money transactions only��

payment and closing costs� Gifts may not be used for reserves� Gifts of equity are not allowed� Signed gift letter is required� Donor must be immediate family member or domestic partner (domestic partner must live with

borrower)� Transfer of funds or evidence of receipt must be documented prior to closing

Underwriters should consider the following:� Asset Base and Reserves –Is this consistent with the occupation, cash flows and calculated income

established for qualifying purposes?

Assumptions ARM products are assumable to a qualified borrower after the fixed term.

Borrower Eligibility Eligible � U.S. Citizens� Permanent Resident Aliens; provide evidence of lawful residency and must meet all the same

standards as U.S. citizens.o

documentation that evidences borrower is eligible to lawfully reside in the U.S.o Valid Green card, evidence of continuous status for at least 12 months and 12 months

remaining status.o Borrower must be employed in U.S. for the last 24 months.

� First Time Home Buyero A First Time Home Buyer is an individual that has not had a mortgage or owned a home in

the past 3 years.o First Time Home Buyer is limited to maximum loan amount of $1,200,000

� Non-Permanent Resident Aliens� Inter Vivos Revocable Trust –must meet FNMA guidelines� Foreign Nationals –2nd Homes and NOO

Non-Permanent Resident Aliens must meet the following requirements:� Must have an unexpired passport from their country of citizenship containing INS form I-94 which must

be stamped Employment Authorized� An Employment Authorization Card along with a copy of the Petition for Non-Immigrant Worker (form

I-140) in file� The borrower(s) must have a minimum of 5 years residency, with the likelihood of employment

continuance for at least 3 years� Owner Occupied only, Single Family and Condo� Only H1B and H2B Visas are accepted� Visa must have a minimum remaining duration of 2 years with a letter of intent from the employer to

renew� Borrower must have a 5 year history in the same line of work� Borrowers with diplomatic immunity or A1, A2, A3 Visas are ineligible� 70% LTV/CLTV Maximum

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A copy of the borrower’s identification is required to verify review of the acceptable

Any owners’ association dues (including utility charges that are attributable to the common areas, but

First 5% of down payment must come from borrower’s own personal fundsOnce the first 5% of the buyer’s own funds are verified, a gift can be used for the remaining down



ECOM MORTGAGE, INC.




Cash-Out Requirements

If Borrower has held title to the property less than 12 months, the LTV is based on the lessor of purchase price or appraised value.

Borrowers with > 4 financed properties are ineligible for cash-out when subject is second home or investment property.

Co-Borrowers Non-occupant co-borrowers not allowed.

Credit EXCEPTIONS will be allowed on the following items:

Borrowers must have a minimum of 5 tradelines, 3 open and active (and 2 may be closed), all rated for a minimum 24 month period on the credit reportBankruptcy, Short Sale, Deed-in-Lieu –None less than four (4) yearsForeclosure –None in the last seven (7) yearsMortgage Lates –0x30 past 24 monthsJudgment/Tax Lien/Collections/Charge-Offs –Must be paid and no new items in the past 24 months excluding medical

The monthly payment on any simultaneous loan

Underwriters should consider the following:Credit limits, usage and overall credit profile –Is this consistent with the income established for qualifying purposes?

Documentation Standard Fannie Mae full income and asset documentation is required.

independent written confirmation of self-employment is required (i.e., copy of business license reflecting ownership of company, corporate minutes, etc.).

All borrowers must have a history of renting or owning within the past 2 years. 12 months cancelled rent checks

Payment shock should not exceed 50% if the borrowers currently rent or 100% if the borrowers have prior mortgage history.

Payment shock is calculated by dividing the difference between new and existing housing payments by the existing housing payment.

Payment Shock ExampleNew Payment (PITIA) $1,500 Difference $ 500Subtract Existing Payment (Rent or PITIA) $1,000 Divided by Existing

Payment $1,000

Equals Difference $ 500 Equals Payment Shock % 50%

No Section 32 High Cost Loans will be allowed. Section 35 Higher Priced Mortgage Loans will be allowed subject to maximum 45% DTI, mandatory impound account for 5 years and no property flipping.

Ability to Repay must be documented with:

Wage Earner: 2 years W-2s, 30 days paystubs, VVOE and processed 4506T

The borrower must acknowledge their ability to repay the loan by signing a Borrower Affirmation document at closing.

Escrow Waiver Impounds are required for all Primary Residence loans. (Virtually all primary residence loans will be HPML loans.)

Impounds are optional for Second Homes and Investment Properties (except Foreign Nationals).

Financing Types Rate/Term RefinanceA rate/term refinance may include the payoff of a non-purchase money second seasoned at least 12 months. If HELOC, no draws >$2,000 in past 12 months.

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Each of the following credit components impact the borrower’s ability to repay the loan. Therefore NO

Underwriters will evaluation borrower’s liabilities to help assess Ability to Repay. These will include:

The consumer’s monthly payment for mortgage-related obligationsThe consumer’s current debt obligations, alimony, and child support

Verbal VOE to be performed by the underwriter prior to closing using lender’s VVOE form or if self-employed, an

will be required or recent mortgage history must be reflected on the borrower’s credit report.

Self-Employed: 2 years 1040’s, 1065’s, 1120’s, K-1’s as applicable, VVOE and processed 4506T



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Foreign Nationals A foreign national is defined as someone who lives in another country and visits the United States for brief periods for business or vacation. In order to be eligible, the borrower must be a legal resident of another country and live and work there.

Eligibility:Foreign Nationals are a non-US Citizen with a valid passport AND valid visa

oWaiver Program (VWP) will not be required to provide a valid visa.See: http://travel.state.gov/visa/temp/without/without_1990.html

o Evidence that the borrower is in the U.S. legally is required, however, no defined length ofstay is required.

(attached to these guidelines) must be used to ensure compliance with eligibility requirements. Legible copy of a valid passport, including photograph, signature page and evidence of duration of stay permitted for each borrower, and if applicable, a legible copy of a valid visa (including photograph) for each borrower.For Canadian and Mexican citizens Ecom accepts the following:

o A laser visa card; it is both a border crossing card and a B1/B2 visa, oro A NAFTA treaty visa (TN, TC, E1 & E2)

An IRS form W-8BEN, Certificate of Foreign Status must be filed with the IRS (all borrowers). A copy of the Certificate must be retained in the file.

Property Eligibility:Second Homes and Investment Property only.

Escrow Accounts:Taxes and insurance must be impounded, unless prohibited by law.

Mortgage Payment - ACHDue to frequent travel outside the U.S., it is recommended that all Foreign National borrowers establish an ACH debit for mortgage payment from a U.S. bank. However, this is not a requirement for approval.

Credit Score:A credit score is not required, unless a U.S. credit report is available; see below.

Credit Criteria:If the borrower has a valid SSN or Tax ID, a traditional U.S. credit report is requiredBorrowers that have established credit in the U.S. and do not meet the 24 month 5 rated trades

with the profile listed in this section. NOTE: If a credit report is not available, a minimum of one original credit letter must be obtained from a financial institution located in the country of origin or 3 credit references.

o

least two (2) years.

o Credit reference letter must be an original on institution letterhead and reflect telephone

money amounts should be reflected in national currency.

Credit Score 680 if availableTrades 5 trades minimum, all with 24 months credit history

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requirement may not have their credit history disregarded. The borrower’s credit history must comply

Borrowers who are residents of countries which participate in the State Department’s Visa

Borrower’s visa status must be documented to determine eligibility. Alien Status ID Certification

The credit reference letter, on the financial institution’s letterhead must include contact information, borrower’s name and account number, detailing the types and lengths of theinstitution’s relationship. The account with financial institution must have been opened at

Mortgage 0 x 30 last 24 monthsBankruptcy/Foreclosure/Short Sale/Deed-In-Lieu

None.

Judgments None.Collections/Charge-offs/Past Due None within the last 24 months; all items must be paid

prior to or at closingTax Liens None within the last 24 months; all items must be paid

prior to closing



ECOM MORTGAGE, INC.


http://travel.state.gov/visa/temp/without/without_1990.html



DocumentationDocuments signed by borrowers outside of the United States must be notarized by a U.S. embassy or consular official. The certificate of acknowledgment must meet the standard notarial requirements and must include the embassy or consular seal.

Translations:All documents must be translated into English by an independent third party translator. Copies of the original document and the translation will be required.

Verification of Assets:The down payment, closing costs, and reserves must be verified with a VOD or computer bank statement as deposited in a U.S. bank prior to closing. Seasoning of funds is not required. The borrower must provide the last 3 bank statements or most current quarterly statement, together with a copy of the Wall Street Journal’s conversion table as of the same date as the bank statements,

provide a statement outlining the beginning and ending balances of all foreign bank accounts converted to U.S. dollars. Large deposits are handled per FNMA guidelines.

Income Verification:

party certified translator. If resident country does not have filing requirement, then borrower must submit:Self-employed–business in any way.

o

to date income for current year. o

telephone number and address.o

currency.o Borrower shall provide the business Internet web page address (URL). If the business does

not have a web page, borrower must provide marketing material such as brochures or catalogs.

Employee (not self-employed)– .o The letter shall indicate position/title, length of employment, gross income for prior two

years, year to date income for current year, and probability of continued employment.o

o

Verbal VOE:

Additional Restrictions –the following are not allowed on the Foreign National program:Borrowers with diplomatic immunityNon-occupant co-borrowers Gift fundsGift of equity, non-arms-length transactions, FSBO (for sale by owner) transactions

Geographical Locations/Restrictions

Eligible states are as follows:

Retail: (Ecom is licensed for retail loan origination in the following states) CA, MD, VA

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for the purpose of converting the borrower’s foreign currency to U.S. dollars. The underwriter must

Two (2) years foreign tax returns are required from borrower’s resident country, translated into English by third

A letter from an independent accountant or auditor that is not related to borrower’s

The letter shall indicate name and description of the borrower’s business, approximatemarket value of the company, borrower’s personal income for the prior two years, and year

Letter must be an original on the accountant’s letterhead and must reflect the accountant’s

Letter should be written in borrower’s native language and reflect income in national

Letter from borrower’s employer.

The letter must be an original on the employer’s company letterhead and must reflect theemployer’s telephone number, address, and website.Letter should be written in borrower’s native language and reflect income in nationalcurrency.

A Verbal VOE or a letter from the borrower’s employer, on company letterhead, is required.

Branch/LO is responsible for meeting state license requirements for origination in a particular state.



ECOM MORTGAGE, INC.




Wholesale: CA, MD, VA

Additional restrictions as follows:

State specific regulatory requirements supersede all underwriting guidelines set forth by ECOM Mortgage Inc.

*Interest-only loans in Illinois are ineligible for all channels

Income Full Income Documentation is required. For most income types, this would include:

Employed Borrowers: Most recent paystub including year-to-date earnings (covering minimum of 30 days) and two years W-2s; or Traditional Written Verification of Employment with 30 days of paystubs and 2 years W-2s. Must have 2 years continuous employment in the same line of work. Gaps of 60 days or less may be accommodated with adequate explanation.

Self-Employed Borrowers: Two years personal returns (along with all schedules) and business tax returns (for businesses where borrower has 25% or more ownership interest and the income from the businesses is being used for qualification). 12 months P&L and current Balance Sheet are also required.

Rental Income - Subject Property and Other Investment Real Estate Owned (not departure residence)Rental Income used for qualification requires both Schedule E and lease documentation per Appendix Q.

Rental Income on a Departure Residence (Follow FNMA B3-6-06)If the borrower is converting a current principal residence to a second home, both the current and proposed mortgage payments (PITIA) must be used to qualify the borrower for the new transaction.

If the borrower is converting a current principal residence to an investment property, the borrower must have sufficient equity (≥ 30%) in order to use a portion of gross rental income for qualifying. If less than 30% equity then no rental income will be allowed. (See FNMA B3-6-06 for documenting 2-4 unit properties)

To confirm leasing of the newly converted property or unit (for a two-to four-unit property), the lender must obtain a copy of the following documentation:

Fully executed lease agreement,Security deposit from the tenant, andBank statement showing the deposited security funds.

Asset Based Income (Asset Amortization) Requirements

assets. It can be combined with other income such as Social Security, Pension or other investment income.There is no age restriction.

Eligibility Requirements (Asset Amortization) Maximum 70% LTV for Primary Residence and Second Homes OnlyBorrower and Co-Borrower must be individual or co-owners of all asset accounts with no other account holders listed on the documentation100% of eligible assets must be verified and will be amortized over a 360 month period All assets must be in a U.S. financial institution—No Foreign AssetsThe sum of eligible assets as defined are net of any discounts and minus any funds used for closing and/or minimum reserves required for the program.Other reported earnings from Capital Gains or Interest/Dividend already considered and averaged as

Eligible Asset Types (Asset Amortization)Considered assets must be comprised of the following readily marketable assets which must be available to the borrower with no penalty and are limited as follows:

Bank Deposits –Checking, Saving, Money Market accounts = 100%Publicly traded stocks and bonds = 65% (stock options not allowed)Mutual Funds = 65%Retirement Accounts

o 401(K) plans or IRA, SEP or KEOUGH accounts = 65%(These can only be used if distribution is not already set up)

Asset Amortization Calculation Policy:

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“effective income” cannot be included or double counted.

Asset amortization is a calculation used to generate a monthly income stream from a borrower’s personal



ECOM MORTGAGE, INC.



Eligible asset amount to be amortized over a 360 month period (30 years)

Borrower may use documented regular (monthly) payments from IRA or other retirement account where there is a two year history of receipt and a three year continuance so long as it is less than 50% of qualifying income.

IRS Form 4506T is required to be signed and executed during the origination process, and transcript documentation for the most recent two years must be provided in the closed loan file. For self-employed borrowers, this applies to both personal returns and business returns for businesses where borrower has 25% or more ownership and the income from the businesses is being used for qualification).

Form 4506T must also be signed at closing.

Example of Asset Amortization:

Savings Account Balance $100,000 ($100,000 Usable toward calculation)Stock Fund Balance $100,000 ($65,000 Usable toward calculation)Mutual Fund Balance $10,000 ($6,500 Usable toward calculation)

Total Usable toward calculation = $171,500/360 = $476.39 monthly income

Limitations on Other Real Estate Owned

Loan/Property restrictions per borrower are as follows:Borrowers limited to eight (8) loans with Ecom not to exceed $2,000,000.Foreign Nationals limited to two (2) loans with Ecom not to exceed $2,000,000 total.If borrower only has one (1) loan with Ecom, including the subject property, that loan may exceed $2 million (up to the guideline maximum herein).Borrowers with > 4 financed properties are ineligible for cash-out when subject is second home or investment property.Borrowers with 5 –10 financed properties are eligible for purchase and rate/term transactions on 2nd

home or investment property with 720 minimum score.Borrowers with > 10 financed properties are not eligible for any 2nd home or investment property transactions (purchase, rate/term, or cash-out)

Loan Amount Minimum loan amount = $100,000

Occupancy Eligible:Primary Residence –1-4 unitsSecond Homes –1 unit onlyInvestment or Non-Owner Occupied –1-4 Units

Points and Fees Maximum 3% Limit

Prepayment Penalty None

Property Types Eligible 1-unit single family residences (attached and detached) and PUDs (attached and detached)2-4 unit properties (within matrix parameters) Condominiums - FNMA Eligible

Both FNMA Condo Project Manager (CPM) and FNMA Limited Review are allowedN/O/O Condo (attached or detached)–CPM is requiredDetached Condo units that are Principal Residence or Second Home may be processed with Limited Review (see B4-2.2-03, Limited Review Process for Detached Condo Units)

Limited Review (see B4-2.2-02, Limited Review Process for Attached Condo Units)Limited Review eligibility criteria for attached units differ depending upon the occupancy type and LTV/CLTV/HCLTV ratios, and are as follows:

Occupancy Type Maximum LTV/CLTV/HCLTV

Principal residence ≤ 80%

Second home ≤ 75%

Investment property Not allowedNote: Mortgages secured by attached units in new condo projects are not eligible for Limited Review.

IneligibleAcreage greater than 20 acres (appraisal must include total acreage)



ECOM MORTGAGE, INC.




(Acreage exceptions available on a case by case basis)� Agricultural zoned property� Condo hotel� Co-ops� Hobby Farms� Income producing properties with acreage� Leaseholds� Log Homes� Manufactured housing� Mixed use properties� Modular homes� Properties subject to oil and/or gas leases� Title may not be held in a business name� Unique properties� Working farms, ranches or orchards

Qualifying Rate and Ratios

Qualifying Rate � 5/1, 7/1, 10/1 ARM –Qualify at the greater of the fully-indexed rate or Note rate� ARM qualifying ratios are based on a fully amortizing principal and interest payment.� Interest Only loans qualify at the greater of the fully-indexed rate or note rate based on the scheduled

remaining loan term at the time of recast after the interest only period has expired.

Interest Only loan qualifying payment example:Loan Amount = $100,000ARM Type = 5/1 ARM1-Year LIBOR Index = 0.685%Margin = 2.75%Start Rate/Note Rate = 5%

Start Rate/Note Rate of 5% is greater than Index plus Margin (0.685 + 2.75 = 3.435%)

Term = 25 years (scheduled fully amortizing term after interest only period expires, 30 –5 = 25)

$100,000 @ 5% interest, 25 year amortization = $584.59 monthly qualifying payment

DTI Ratio � Maximum DTI is 50% (55% for interest only loans)�

residual income after total debt payments. Follow VA requirements. Maximum increase of six (6) months reserves. Additional reserves are not required if the residual income exceeds the table amount by over 20%.

� Interest Only Loans –Maximum DTI for Interest only loans is 55%� For DTI > 50% the residual income must be ≥120% of the VA Residual Income Table Amount

(see attached table)� If the residual income (Form 26-6393, Line 43 Balance Available For Family Support is < 120% of

the table amount, the loan is ineligible.� Section 35 Higher Priced Mortgage Loans (HPMLs) will be allowed subject to maximum 45% DTI,

mandatory impound account for 5 years and no property flipping.

Secondary Financing

Temporary Buydown Not allowed

Underwriting ALL LOANS:

Loans must be manually underwritten and fully documented. All loans must be underwritten in compliance with the Ability to Repay standards set forth. For additional topics not specifically or fully addressed by Fannie Mae underwriting guidelines should be followed

Underwriter may request a copy of any inspection where repairs or remediation (monetary or other) are specified in a purchase contract, regardless of whether repairs have been completed.

The underwriter must be comfortable that the borrower is able to repay the loan and that belief must be supported by information from independent third parties. All factors in the loan file must be viewed in totality to reach this conclusion.

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For conforming loans with DTI > 43% underwriter may require additional reserves based on borrower’s

Allowed for arm’s-length transactions in accordance with FNMA guidelines and program CLTV limits



ECOM MORTGAGE, INC.




Underwriters should:Analyze payment shock by comparing the existing housing payment to the anticipated housing payment, and Make a sound risk assessment of the resources of the applicant before finalizing the loan. An underwriter has the discretion to require any additional documentation they feel is appropriate and reasonable to support that assessment, up to and including personal and business tax returns.

Ecom Underwriting Manager review and signature is required for loan amounts > $1,000,000.Ecom Senior Credit Committee member must review and sign for loan amounts > $2,000,000.

Loans must be manually underwritten. Defer to FNMA Selling Guide for underwriting issues not addressed in this matrix.

File must include title commitment with 24 months title history.

VA Residual Income Calculation

Use VA Form 26-6393 Loan Analysis to calculate residual income.http://www.vba.va.gov/pubs/forms/VBA-26-6393-ARE.pdf

1. Calculate the total gross monthly income of all occupying borrowers.(Note: Do not gross up non-taxable income for the residual income calculation)

2. Deduct from gross monthly income:a. State income taxb. Federal income taxc. Municipal or other income taxd. Retirement or Social Security taxe. Proposed total monthly fixed payment (total mortgage payment + all recurring monthly

obligations)f. Estimated maintenance and utilities (use $0.14 per square foot of gross living area)g. Job related expenses (if applicable –Employee Business Expense from IRS Form 2106)

3. Subtract the sum of the deductions above from the total gross monthly income of all occupying borrowers.The balance is residual income.

Compensating FactorResidual income may be cited as a compensating factor provided it can be documented and it is at least equal to the applicable amounts for household size and geographic region found on the Table of Residual Incomes by Region.

To use residual income as a compensating factor, count all members of the household of the occupying borrowers without regard to the nature of their relationship and without regard to whether they are joining on title or the note.

From the table, select the applicable loan amount, region and household size. If residual income equals or exceeds the corresponding amount on the table, it may be cited as a compensating factor.

Exception:

which is not included in effective income in the loan analysis. These individuals must voluntarily provide sufficient documentation to verify their income to qualify for this exception.

VA Residual Income Tables (VA Lender Manual Chapter 4.9)

Table of Residual Incomes by Region for Loan Amounts of $79,999 and belowFamily Size Northeast Midwest South West1 $390 $382 $382 $4252 $654 $641 $641 $7133 $788 $772 $772 $8594 $888 $868 $868 $9675 $921 $902 $902 $1,004Over 5 Add $75 for each additional member up to a family of seven.

Table of Residual Incomes by Region for Loan Amounts of $80,000 and aboveFamily Size Northeast Midwest South West1 $450 $441 $441 $491

©

s

w

The lender may omit any individuals from “family size” who are fully supported from a source of verified income



ECOM MORTGAGE, INC.


http://www.vba.va.gov/pubs/forms/VBA-26-6393-ARE.pdf



2 $755 $738 $738 $8233 $909 $889 $889 $9904 $1,025 $1,003 $1,003 $1,1175 $1,062 $1,039 $1,039 $1,158Over 5 Add $80 for each additional member up to a family of seven.

Key to Geographic Regions Used in the Preceding Tables

NortheastConnecticut New Hampshire PennsylvaniaMaine New Jersey Rhode IslandMassachusetts New York Vermont

Midwest

Illinois Michigan North DakotaIndiana Minnesota OhioIowa Missouri South DakotaKansas Nebraska Wisconsin

South

Alabama Kentucky Puerto RicoArkansas Louisiana South CarolinaDelaware Maryland TennesseeDistrict of Columbia Mississippi TexasFlorida North Carolina VirginiaGeorgia Oklahoma West Virginia

West

Alaska Hawaii New MexicoArizona Idaho OregonCalifornia Montana UtahColorado Nevada Washington

Wyoming



ECOM MORTGAGE, INC.




Borrower Affirmation

Date:

Loan No

Borrower Name:

1. My average monthly income is $

2. I understand that my monthly payment on this loan will be as follows:For years My monthly payment is $ If this period is less than 30 years, then I understand my payment may adjust (more than once) after the first years.

3. I understand that my property taxes, insurance and mortgage insurance (if applicable) on thisproperty will be approximately this amount per month $ (system generated)These be impounded. If not, I am responsible to pay them directly.

4. I believe I can afford to make the monthly payment on the loan.

5. I am not aware of anything in the future that will affect my ability to make this loan payment.

6. If my loan program did not require that I submit my prior tax returns, I understand that if I hadprovided additional verifiable documentation of my income, such as my tax returns or W-2 wagestatements or other documentation deemed necessary to support my income, I may have beenable to qualify for a loan with different loan terms or conditions such as a lower interest rate.

NOTE: If there is a discrepancy between the terms in this document and the actual loan documents, the terms of the loan documents prevail.

I certify that the above information and the information on the final Uniform Residential Loan Application (Form 1003) is true and correct as of this day and that it represents an accurate picture of my financial status.

_____________________________________ _______________________________ Borrower name Borrower name

_____________________________________ _______________________________ Borrower name Borrower name

(Borrower Affirmation Document v7b - Rev 7/25/14)



ECOM MORTGAGE, INC.




Alien Status ID Certification

Attach legible enlarged copies of identification.

I hereby certify that I have seen and reviewed the following original document(s):

Form of Identification: Passport _______ Alien ID Card _______

Name as shown on ID: ________________________________________________

INS/Registration #: ___________________________________________________

Type/Card #: ________________________________________________________ (Lower left corner of card: e.g., B1/B2, E1 & E2, I-151, I-551, I-94, I-688, I-688B, TC, TN)

Expiration Date? NO _______ YES _______ DATE _________________

Visa Status ___________________________________________________________ (Required for E-1, G-4, H-1, L-1, NATO-5, and NATO-6 status)

Recent Arrival: YES ______ NO ______ Date of Arrival __________.

I hereby certify that this information is true and correct.

Borrower’s Signature: __________________________________ Date: ___________

Originating Company Representative: _______________________________________ Date: ___________

Rev 7/10/14

# # #



ECOM MORTGAGE, INC.


36.

32.

33.

34.

35.

37.

38.

39.

MAINTENANCE & UTILITIES

SECTION D - DEBTS AND OBLIGATIONS (Itemize and indicate by ( ) which debts considered in Section E, Line 40) (If additional space is needed please use reverse or attach a separate sheet)

( )

MORTGAGE PAYMENT (Principal and Interest) @

RATIO (Sum of Items 15, 16, 17, 18, 20 and 40

LOAN ANALYSIS LOAN NUMBER

PRIVACY ACT INFORMATION: The VA will not disclose information collected on this form to any source other than what has been authorized under the Privacy Act of 1974 or Title 5, Code of Federal Regulations 1.526 for routine uses as (i.e., the record of an individual who is covered by this system may be disclosed to a member of Congress or staff person acting for the member when the request is made on behalf of the individual) identified in the VA system of records, 55VA26, Loan Guaranty Home, Condominium and Manufactured Home Loan Applicant Records, Specially Adapted Housing Applicant Records, and Vendee Loan Applicant Records - VA, published in the Federal Register. Your obligation to respond is required in order to determine the veteran's qualifications for the loan.

SECTION A - LOAN DATA

OMB Control No. 2900-0523 Respondent Burden: 30 minutes

VA FORM NOV 2012 26-6393 EXISTING STOCKS OF VA FORM 26-6393, SEP 2006,

WILL BE USED.

1. NAME OF BORROWER 2. AMOUNT OF LOAN

NOTE: ROUND ALL DOLLAR AMOUNTS BELOW TO NEAREST WHOLE DOLLAR

3. CASH DOWN PAYMENT ON PURCHASE PRICE

SECTION B - BORROWER'S PERSONAL AND FINANCIAL STATUS4. APPLICANT'S AGE

9. UTILITIES INCLUDED

5. OCCUPATION OF APPLICANT

10. SPOUSE'S AGE 11. OCCUPATION OF SPOUSE 12. NUMBER OF YEARS AT PRESENT EMPLOYMENT

6. NUMBER OF YEARS AT PRESENT EMPLOYMENT

7. LIQUID ASSETS (Cash,savings, bonds, etc.)

$

8. CURRENT MONTHLYHOUSING EXPENSE

13. AGE OF DEPENDENTS

$

14.

$

SECTION C- ESTIMATED MONTHLY SHELTER EXPENSES (This Property)

NO

49. DATE 50. SIGNATURE OF EXAMINER/UNDERWRITER

51. FINAL ACTION 52. DATE 53. SIGNATURE AND TITLE OF APPROVING OFFICIAL

The undersigned underwriter certifies that he/she personally reviewed and approved this loan. (Loan was closed on the automatic basis.)

SECTION F - DISPOSITION OF APPLICATION AND UNDERWRITER CERTIFICATION

Recommend that the application be disapproved for the reasons stated under "Remarks" above.

Recommend that the application be approved since it meets all requirements of Chapter 37, Title 38, U.S. Code and applicable VA Regulations and directives.

45. PAST CREDIT RECORD

48B. EXPIRATION DATE 48A. VALUE

47. REMARKS (Use reverse or attach a separate sheet, if necessary)

48C. ECONOMIC LIFE

YRS.

CRV DATA (VA USE)

46. DOES LOAN MEET VA CREDIT STANDARDS? (Give reasons for decision under "Remarks," if necessary, e.g., borderline case)

SATISFACTORY UNSATISFACTORY YES

ITEMSAMOUNT

TERM OF LOAN:

23.15.

16. REALTY TAXES

17. HAZARD INSURANCE

18.

19.

20.

21.

22.

SPECIAL ASSESSMENTS

OTHER (HOA, Condo fees, etc.)

$

24.

25.

26.

27.

28.

29.

30.

ITEMS MO. PAYMENT UNPAID BAL.

JOB RELATED EXPENSE (e.g., child care)

$

$

TOTAL

$

$

BALANCE AVAILABLE FOR FAMILY SUPPORT

SECTION E - MONTHLY INCOME AND DEDUCTIONS

44.

ITEMS

31.

40.

41.

42.

SPOUSE BORROWER

43.

TOTAL

APPROVE APPLICATION

REJECT APPLICATION

$

$ $

GROSS SALARY OR EARNINGS FROM EMPLOYMENT

DEDUCTIONS

PENSION, COMPENSATION OR OTHER NET INCOME (Specify)

TOTAL (Sum of lines 37 and 38)

NET TAKE-HOME PAY

LESS THOSE OBLIGATIONS LISTED IN SECTION D WHICH SHOULD BE DEDUCTED FROM INCOME

TOTAL NET EFFECTIVE INCOME

LESS ESTIMATED MONTHLY SHELTER EXPENSE (Line 21)

$

FEDERAL INCOME TAX

STATE INCOME TAX

RETIREMENT OR SOCIAL SECURITY

OTHER (Specify)

TOTAL DEDUCTIONS $

$

$

$

$

$

$

GUIDELINE

$

%

$

$

NOYES

TOTAL

RESPONDENT BURDEN: This information is needed to help determine a veteran's qualifications for a VA guaranteed loan. Title 38, USC, section 3710 authorizes collection of this information. We estimate that you will need an average of 30 minutes to review the instructions, find the information, and complete this form. VA cannot conduct or sponsor a collection of information unless a valid OMB control number is displayed. You are not required to respond to a collection of information if this number is not displayed. Valid OMB control numbers can be located on the OMB Internet Page at: www.reginfo.gov/public/do/PRASearch. If desired, you can call 1-800-827-1000 to get information on where to send comments or suggestions about this form.

YRS.

%

sum of Items 31 and 38). .

___