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Wholesale Broker Guide

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					Interbank Mortgage Company

Wholesale Broker Guide
2011




       Interbank Mortgage Company I 333 Knightsbridge Parkway, Suite 210 I Lincolnshire, IL 60069
                           Tel: (847) 239-7272 I www.interbankwholesale.com
INTRODUCTION
Interbank Mortgage Company is dedicated to working closely with all of our clients to help them achieve their
business goals. A wide variety of products and programs, along with superior customer service, help assure
your complete satisfaction with our company.

Interbank Brokering Features
Our Brokering Product Menu was designed to meet the needs of you and your borrowers.

Our program and product highlights include:
    Conventional Loans
    FHA Loans
    Interest Only Products
    Adjustable Rate Mortgages
    On-line Registration and Lock

Wholesale Brokering: The Interbank Way
Interbank understands your need for a full service broker. We take the development of specific products,
programs and services seriously and make it a point to review each loan on its own merit. Flexibility is also
key to our success.

Should you have questions on any of the products, programs or services, please contact a member of your
sales team.




        Interbank Mortgage Company I 333 Knightsbridge Parkway, Suite 210 I Lincolnshire, IL 60069
                            Tel: (847) 239-7272 I www.interbankwholesale.com
BROKER ELIGIBILITY
CRITERIA
The following is the criteria and due diligence applied towards new broker applications for approval. The
purpose is to maintain a standardized, compliance driven application process.

Interbank will approve Mortgage Brokers to be eligible to participate in Interbank‟s loan programs. In order to
become approved with Interbank, the Broker must meet the following minimum requirements:
     Company has been in existence for at least two (2) years
     Principals: Minimum of five (5) years in the mortgage industry, two must be in a management / officer
       capacity.
     The Seller must adhere to prudent standards for mortgage Loan origination and have written policies
       and procedures for mortgage Loan origination and Loan document delivery requirements, and must
       have an internal audit program (including quality control).

   NOTE: In order to remain eligible to do business with Interbank, the Seller agrees to comply with the
   policies, procedures, terms, and conditions set forth in this Broker Guide, as it may be amended from time
   to time.

BROKER APPLICATION PROCESS
The broker must submit a complete Broker Application Package to Interbank for review and approval. The
Package must include:
    Interbank Broker Agreement
    Broker Application
    Branch Application, if applicable
    Marketing Consent Form
    Corporate Resolution
    Web Agreement
    W-9 Tax Form
    Articles of Incorporation / Organization, if applicable
    Resumes of each principal and key staff member
    Copies of all current state licenses

Sellers who request to be approved to submit FHA loans to Interbank must comply with the following:
     Provide a copy of their HUD Approval Letter
     Provide an Excel spreadsheet with their loan officers‟ names, license numbers, and license expiration
        dates.
     Quality Control Policies and Procedures and most recent QC Report
     Provide an executed FHA Addendum “A” to the Wholesale Broker Agreement.
     Have and maintain a Broker‟s Default / Claim compare ratio of fewer than 150%, as compared to the
        United States percentages.

Sellers are responsible for submitting all documents for annual recertification to maintain eligibility, including
current financial statements, updated licenses, and current loan officer names and license numbers. Sellers

WHOLESALE I Broker Guide (REV101211JC)                                                                          3
must notify Interbank immediately if there is a change in ownership or company structure within thirty (30) days
of such change.

FRAUD RULE
INTERBANK HAS A “ZERO” TOLERANCE FRAUD RULE.      ANY SUSPICIOUS INFORMATION IS
ADDRESSED IMMEDIATELY FOR REVIEW AND REPERCUSSIONS, NOT LIMITED TO REPORTING SAID
FRAUD TO APPLICABLE STATE. A BROKER WILL BE TERMINATED IMMEDIATELY IF THERE IS
EVIDENCE OF BROKER INVOLVEMENT IN LOAN MISREPRESENTATION OR FRAUDULENT ACTIVITIES.




WHOLESALE I Broker Guide (REV101211JC)                                                                        4
COMPLIANCE
OVERVIEW
The Broker must submit each mortgage loan in compliance with the applicable underwriting guidelines in this
Wholesale Broker Guide and all applicable governing statutes and regulations as amended including, but not
limited to, the following:
      Equal Credit Opportunity Act (ECOA / Regulation B)
      Consumer Credit Protection Act
      Fair Credit Reporting Act
      Fair and Accurate Credit Transactions (FACT) Act
      Fair Housing Act
      Truth-in-Lending Act (TIL / Regulation Z)
      Real Estate Settlement Procedures Act (RESPA / Regulation X)
      Home Mortgage Disclosure Act (HMDA / Regulation C)
      Home Ownership and Equity Protection Act (HOEPA – Section 32)
      Federal, State, and Municipal High-Cost and Anti-Predatory Laws
      The USA Patriot Act and Economic Sanctions as applied by the Office of Foreign Asset Control (OFAC)
      Gramm-Leach-Billey Act (Privacy)
      Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act
      Mortgage Disclosure Improvement Act (MDIA)

The Broker may not discriminate against applicants on the basis of race, religion, national origin, sex, marital
status, age (provided the applicant has the ability to enter into a binding contract) or because all or part of the
applicant‟s income is derived from any public assistance program.

MORTGAGE DISCLOSURE IMPROVEMENT ACT (MDIA)
In accordance with the Mortgage Disclosure Improvement Act (MDIA), effective with applications received on
July 30, 2009:
     Interbank will deliver an initial Truth-in-Lending Statement and Good Faith Estimate to the borrowers
       upon submission of a loan application from a broker.
     No fees can be collected by Interbank or anyone else, except for a credit report fee, until three (3)
       business days after Interbank provides the initial disclosures.
     The closing of the loan cannot occur until a minimum of seven business days after Interbank has
       delivered the disclosures.
     Interbank will re-disclose if it is determined that the APR is outside of tolerance due to the following:
           o The APR is understated by more than 1/8th of 1% for any reason.
           o The APR is overstated due to a change in loan amount, product, or term. If the APR is
               overstated due solely to overstated Finance Charges re-disclosure is not required.
           o The closing of the loan cannot occur until a minimum of three business days after the borrowers
               receive the revised disclosures.
     A final TIL is always provided at closing.




WHOLESALE I Broker Guide (REV101211JC)                                                                           5
HIGH COST AND RESPONSIBLE BROKERING RESTRICTIONS
Interbank high cost policy will conform to all Federal, State, County, City, and Agency requirements, including
consumer laws.

No loan funded may violate high cost regulations as set forth by the above mentioned entities.

Interbank will not fund any mortgage loan that is subject to the provisions of the Home Ownership and Equity
Protection Act of 1994 as amended or is considered a “high cost”, “covered” or “predatory” loan under any
applicable state, Federal, or local laws or ordinances.

HOME VALUATION CODE OF CONDUCT (HVCC)
Interbank adheres to the Home Valuation Code of Conduct in the ordering and processing of the appraisals on
all loans. Interbank / Broker orders all loan appraisals directly from one of its approved Appraisal Management
Companies (AMCs). The appraisal orders are placed only by Interbank personnel that are not part of the loan
production staff.     Interbank prohibits its loan production staff, including Account Executives, Sales
Management, or any person who is compensated on a commission basis upon the successful completion of a
loan or who reports to any officer of Interbank not independent of the loan production staff., from selecting,
retaining, recommending, or influencing the selection of any appraiser for a particular appraisal assignment or
for inclusion on a list or panel of appraisers approved to perform appraisals for the broker or forbidden from
performing such work; and having any substantive communications with an appraiser or appraisal
management company relating to or having an impact on valuation, including ordering or managing an
appraisal assignment.

Interbank prohibits any of its brokers from having any substantive communications with an appraiser or
appraisal management company relating to or having an impact on valuation, including ordering or managing
an appraisal assignment.

Interbank will immediately notify the Appraisal Management Company if it is determined that an appraisal
contains serious deficiencies or fraud. Interbank will no longer accept appraisals from that appraiser, and a
new appraisal will be provided by the Appraisal Management Company. Quality Control will monitor the
performance of its AMCs, and will discontinue the relationship if repeated appraisal issues are found.

Interbank shall maintain a list of appraisers on “Watch Status”, if deemed appropriate. The Watch Status shall
be based upon deficiencies in the appraisal, which are not serious in nature and do not indicate fraud or gross
negligence on the part of the appraiser.

Appraisers on Watch Status shall be based on quality control reviews of monthly originations, early payment
default loans and non-performing loans, as well as feedback from the Underwriting Manager if appropriate.

When an appraiser is on Watch Status the underwriter shall review all files with caution. If any further
deficiencies are found, the appraiser will be transferred from the Watch Status to the Unacceptable Appraiser
List, and the Appraisal Management Company will be notified in writing.

BROKER WARRANTY
By submitting a loan to Interbank, the Broker warrants that the loan is in full compliance with all regulatory
requirements.




WHOLESALE I Broker Guide (REV101211JC)                                                                       6
SUBMISSION OF LOAN FILES
SUBMITTING LOANS
A Broker should not submit loans until the Broker has been approved by Interbank Funding (Interbank).

CONVENTIONAL LOANS UP TO FNMA MAXIMUM
Interbank Brokers must submit Conventional loan files to Interbank. Loans submitted to Interbank must be
registered with Interbank prior to the submission.

When submitting a file it must be a complete file, incomplete files could be held in receiving until all documents
are received please send all missing items immediately or within twenty-four (24) hours. To ensure your loans
are processed and underwritten in a timely fashion, please follow the important information below.

OBTAINING AN AUTOMATED UNDERWRITING RECOMMENDATION
If you need to obtain an Automated Underwriting Recommendation (DU):
      Log in at: https://desktoporiginator.fanniemae.com/
      Not a user? Register at: https://www.efanniemae.com/is/brokcoresp/welcome/index.jsp and request us
        as one of your sponsors (“CMS d/b/a INTERBANK MORTGAGE COMPANY”).

UNDERWRITING DECISIONS
      The underwriter will fax the loan approval and conditions to you.
      All conditions should be faxed to your respective team.
      The underwriter, upon approval and appraisal of your loan, will order mortgage insurance.

NOTE: In order to expedite the processing and closing of loans, Brokers must send the complete loan file to
Interbank.

GOVERNMENT LOANS
Interbank Brokers must submit government loan files to Interbank for underwriting.

To ensure your government loans are processed and underwritten in a timely fashion, please follow the
important information below in regards to government loans.

FHA CASE NUMBER ASSIGNMENT
NOTE: You must be approved to do FHA loans with Interbank before we can order case numbers.

Provide:
    Fully completed 1003 (with complete address)
    Include year built of subject property
    Borrower(s) full name, Social Security Number(s) and date of birth
    Purchase or Refinance, and Property Type to be completed
         o Purchase: Provide fully executed sales contract (no HUD owned properties are acceptable.
         o Indicate if streamline refinance – with or without an appraisal.
         o Provide prior FHA Case Number, if applicable

WHOLESALE I Broker Guide (REV101211JC)                                                                          7
      Fully executed sales contract (for purchase transactions)
      Loan officer name and NMLS
      If subject is a condominium / PUD, provide the complete name of the project, which must be approved
       on FHA‟s approval list.

Interbank will order the case number and return it via email to you, please allow minimum of four (4) hours turn
time. Interbank will also order the CAIVRs numbers, and the Refinance Authorization, if applicable.
Broker will be responsible for the FHA disclosures and the LDP / GSA checks for all parties involved in the
transaction.

Send your request to: bloncki@interbankwholesale.com

PICTURE IDENTIFICATION
FHA no longer requires the picture identification to be included in the HUD case binder submitted for
endorsement. However, the identity of the borrower must be verified via an identity certification.

SOCIAL SECURITY NUMBER (SSN) VALIDATION
All borrowers involved in the mortgage transaction must provide evidence of their Social Security Number;
either a photocopy of the actual Social Security card is provided or any documentation showing the number
(e.g. pay stub, W-2, driver's license).

The only exception to this requirement is for borrowers not required to obtain a Social Security Number (e.g.
employees of the World Bank, foreign employees of embassies, etc.). Conclusive evidence of the exclusion of
Social Security is required.

PACKAGE SUBMISSION
Loans must be registered with Interbank prior to submission for underwriting. Conventional loan packages can
be emailed to: TeamName@interbankwholesale.com. The cover sheet and procedure is located in the
Exhibits section.

LIMITATIONS
The following outlines the document-age and re-certification guidelines for appraisal, credit, and other
mortgage documents. These documents are subject to age limitations because property and account values
fluctuate.

APPRAISALS
CONFORMING
Document Age Limitations
The following document age limitations apply to property appraisal documents for conforming loans:
    Ninety (90) days at date of closing

CREDIT REPORTS AND VERIFICATIONS
CONFORMING
Document Age Limitations
The following document age limitations apply to credit reports and verifications for conforming loans:
    Ninety (90) days at date of closing


WHOLESALE I Broker Guide (REV101211JC)                                                                        8
UNDERWRITING
CONVENTIONAL CONFORMING LOANS
GENERAL GUIDELINES
Adding a borrower is allowed after loan has been submitted and underwritten. However if a borrower needs to
be removed after an underwriting decision has been made, existing loan will need to be withdrawn and an
entire new loan submission is required with new co-borrower.

PRODUCTS
Interbank currently offers:
     Fixed Rate 10-, 15-, 20-, 25-, and 30-year
     5/1 & 7/1 ARMS
     5/1 & 7/1 Interest Only ARMS
     DU Refi Plus
    See the Interbank Product Matrices for specific product details.

TRANSACTIONS
ARM’S LENGTH
An arm‟s length transaction occurs when the parties involved are entirely independent of one another. All
parties deal with one another as strangers and have no reason to collude.

NON-ARM’S LENGTH
A non-arms length transaction is a transaction where there exists a personal or business relationship between
the borrower and any party involved in the transaction.

Non-arms length transactions, including gift of equity transactions, are not permitted by Interbank on
conventional loans.

Loans to borrowers, who are employed or related to family members or the broker, must provide full two (2)
years tax returns and full appraisal regardless of DU Findings.

TRANSACTION TYPES
PURCHASE
A purchase transaction is one in which the proceeds are used to finance the purchase of a home.
    Interbank will not accept any purchase transactions where HUD is the seller of subject property or non-
       arm‟s length transaction.
    Borrower cannot be on title prior to the loan closing.
    Purchase price cannot be increased once an appraisal has been received.
    Interbank will require subject properties to include all appliances (minimum fridge and stove) to deem
       property habitable. If property is being sold „as is‟ and seller will not provide appliances prior to closing,
       Interbank will accept a receipt for the appliances.
    FSBO (For sale by owner) properties will require a LOX from the borrow and seller to disclose any
       relationship.


WHOLESALE I Broker Guide (REV101211JC)                                                                             9
REFINANCE
A refinance transaction occurs when the borrower obtains a new loan on a currently owned residence.
Interbank identifies the following refinance transaction types (Seasoning and Continuity of Ownership
requirements apply to all refinance transactions):
     Rate / Term
          o Follows the same guidelines as a Fannie Mae Limited Cash-Out Refinance.
          o The borrowers receive no equity cash from the refinance transaction.
     Cash-Out Refinance
          o The borrowers receive equity cash from the refinance transaction.
          o Paying off non-purchase money second with loan proceeds.

RATE / TERM OR LIMITED CASH-OUT (LCO)                         CASH-OUT
   Mortgage Amount. The mortgage amount is limited              If there is no Continuity of Obligation (see Continuity
    to:                                                           of Ownership / Obligations) and there is an
         The sum of the unpaid balance of the                    outstanding lien on the property, the loan is eligible
            existing first mortgage, closing costs, points,       as follows:
            pre-paid items, and, if applicable, the amount              The property must have been acquired
            required to satisfy certain subordinate loans                  (owner on title) for a minimum of six (6)
            used for the original purchase of the                          months.
            property.                                                    The transaction must be completed and
         Any “cash” back to the borrower may not                         priced as a Cash-Out Refinance.
            exceed the lesser of $2,000 or 2% of the             The maximum LTV is limited to the lesser of the
            loan amount.                                          product maximum or 50.00%.
   Subordinated Second Liens: There are no                      Mortgage Amount. The mortgage amount must be
    seasoning requirements for current secondary liens            used to pay the current unpaid principal balance of
    that are being subordinated to the new loan. See              the existing first mortgage; it may be used to pay
    the Subordinate Financing section in this Wholesale           closing costs, points, pre-paid items, subordinate
    Broker Guide.                                                 mortgage liens and additional cash to the borrower.
         It is critical that the existing secondary liens       Subordinate Liens: No seasoning requirement.
            are subordinated at closing to the new
            mortgage.
   See Special Purpose Refinance section for details
    on Buyout of Spouse, Inherited Property.

NOTE: Please see “Transaction Eligibility” for details on
Rate / Term Refinance for loans where the most recent
transaction within 6 months has been a Cash-Out
Refinance.

REFINANCE CREDIT RULE
       Interbank will not purchase any loan as a refinance transaction that is currently involved in foreclosure
        proceedings.
       Interbank will not purchase any loans participating in “churning”, where the borrower is getting a new
        refinance every three to six (3-6) months.

GENERAL REFINANCE REQUIREMENTS
       A property currently listed for sale is not eligible for a refinance transaction. See Listed For Sale for
        more details.
       All borrowers on the loan must be on title (may be added at closing).

WHOLESALE I Broker Guide (REV101211JC)                                                                                 10
SEASONING REQUIREMENTS
TRANSACTION ELIGIBILITY
RATE / TERM OR LIMITED CASH-OUT (LCO)                       CASH-OUT
   There is no minimum time that the borrower has held        The current loan must be a minimum of six (6)
    the current loan.                                           months old from the Existing Note Date to the
   The same borrowers on the existing Note / Title must        Application Date.
    be on the new application, if not – Continuity of          The same borrowers on the existing Note / Title must
    Obligor Requirements must be met. See Continuity            be the new application, if not – Continuity of Obligor
    of Ownership / Obligations for details.                     Requirements must be met. See Continuity of
   If the property was subject to a cash-out refinance         Ownership / Obligations for details.
    within the past six (6) months, from Existing Note         If there is no existing lien on the property (e.g.
    Date to Application Date, the loan must be                  purchased for cash or paid-in-full):
    underwritten and priced to the more restrictive cash-             The borrower must evidence “ownership”
    out guidelines. A copy of the most previous HUD-1                    (title) for a minimum of six (6) months; the
    must be provided to document whether or not cash                     transaction must be completed and priced as
    was taken.                                                           a cash-out.
                                                                      LTV will be determined by using lesser of
                                                                         current appraised value or original purchase
                                                                         price.

CALCULATION OF VALUE “SEASONING”
Properties with existing lien
    Use the current appraised value.
    IMPORTANT: If the property has been owned less than twelve (12) months and the appraisal shows a
      substantial increase in value from the original purchase price, the Appraiser should ensure the increase
      in value is valid (e.g. appraisal indicates increasing values for the market, appraisal comparables
      support increasing values, documented home improvements).
    If the increase in value is unsupported, the lower of the original purchase price or the new appraised
      value must be used to determine LTV / CLTV / HCLTV.
    Interbank reserves the right to request additional documentation.

Property “free & clear”, no existing lien
    Property acquired within six to twelve months prior to the Application Date for new financing:
          o Base LTV on the lesser of the original sales price / acquisition cost (documented by the HUD-1
              Settlement Statement) or the current appraised value.
    Property acquired more than twelve (12) months prior to the Application Date for new financing:
          o Base LTV on the appraised value.

CONTINUITY OF OBLIGATION
       Continuity of obligation requirements must be met (one of the following must exist):
       At least one borrower on the new loan is also a borrower on existing loan being paid off
       Borrower has been on title and living in the subject twelve (12) months and has either paid the
        mortgage from own funds last twelve (12) months or can evidence relationship with current mortgagor
        on existing loan
       Borrower was recently inherited or legally awarded subject (e.g. divorce, separation)
       Loan being refinanced and title are in the name of the LLC is acceptable as long as evidence borrower
        was an owner of the LLC prior to transfer to borrowers at closing; cannot close in the name of the LLC.

WHOLESALE I Broker Guide (REV101211JC)                                                                             11
CONSTRUCTION-TO-PERMANENT FINANCING
Construction-to-Permanent Financing involves the granting of a long-term mortgage to a borrower to replace
the interim construction financing used for the construction of a new home. Interbank does not provide nor
participate in the construction financing phase of the transaction.

Construction-to-Permanent (construction-to-perm) financing may be structured as either a purchase
transaction (the borrower may not receive any cash back at time of settlement) or a refinance transaction (the
borrower may or may not receive cash back at settlement).
     Purchase transaction structure - must meet LTV / CLTV / HCLTV based on purchase parameters.
     Refinance transaction structure -must meet LTV / CLTV / HCLTV based on applicable refinance
       parameters.
CHARACTERISTICS
To be considered construction-to-perm, one of the following characteristics must be met:
     The borrower is the primary obligor on the construction financing which is obtained through a legitimate
       financial institution, or
     The borrower is the owner of the lot on which the residence is constructed.
NOTE: Interbank considers long term financing to make a single disbursement to a builder / contractor or other
party for the purchase of a completed newly constructed property to be a purchase transaction, not
construction-to-perm, and subject to purchase transaction guidelines.
REQUIREMENTS
Unless otherwise referenced in the Interbank Product Matrices, construction to permanent loans must meet the
guidelines applicable to DU.

All construction to permanent loans must adhere to these additional requirements:
      The property must be fully complete at the time of the permanent financing funding.
      A final Certificate of Occupancy (or equivalent for the jurisdiction) must be obtained
      Appraiser must provide a final “certification of completion” showing the property 100% complete (1004D
        / 442)
      Color Photographs of the completed property are required.
      Follow the more restrictive of Interbank specific product or underwriting guidelines or DU for any topic
        not addressed herein.
AGE OF DOCUMENTS
      Credit: Ninety (90) days prior to the Closing Date
      Appraisal: Ninety (90) days prior to the Closing Date
      The appraiser must provide a 1004D / 442 to document completion. If the update indicates the
       property has declined in value, a new appraisal is required.
BORROWER IN CONSTRUCTION INDUSTRY
If the borrower is acting as his/her own builder/general contractor or sub-contractor and his/her primary
occupation is in the construction industry, the following guidelines must be met:
     Property must be owner-occupied primary residence.
     Acquisition Cost Documented:
     Acquisition cost must be fully document, regardless of the transaction structure.



WHOLESALE I Broker Guide (REV101211JC)                                                                      12
      The itemized cost breakdown must be documented / supported by providing copies of receipts, bills,
       lien waivers, lot purchase agreements, etc.
      The LTV / CLTV / HCLTV will be based on the lesser of the documented acquisition cost or appraised
       value.

NOTE: The borrower cannot receive cash back at closing.

DU REQUIREMENTS
ACQUISITION COST
Acquisition cost must be documented as follows:
    Purchase contract or construction statement signed by the borrower and the builder (copy of document
       used to obtain construction financing)
    Documentation of the cost of the lot (if obtained separately):
           o Copy of the lot purchase agreement or contract for deed, and
           o Owner‟s title policy to document ownership, and
           o HUD-1 Settlement Statement

PURCHASE LTV / CLTV / HCLTV
Base LTV / CLTV / HCLTV as follows regardless of “seasoning”:
    The lesser:
          o The current appraised value of the lot plus documented construction costs, or
          o Appraised value of the subject property at the time the permanent mortgage is closed /
             modified.
    All purchase transaction guidelines must be met.
    The construction financing must be in the borrower‟s name.

REFINANCE LTV / CLTV / HCLTV
The construction financing must be in the borrower‟s name. The lot on which the improvements are built must
have been owned / purchased prior to the start of construction and/or the construction loans application.
    If the lot was owned > 12 months prior to application for the construction loan, the LTV / CLTV /
      HCLTV is based off the current appraised value.
    If the lot was owned < 12 months prior to the application for the construction loan, the LTV / CLTV /
      HCLTV is based off the lesser of the current appraised value or documented total acquisition costs.

All applicable refinance transaction guidelines must be met.

RIGHT OF RESCISSION (ROR)
If the borrowers are currently residing in the subject property (current residence on 1003 is subject property) a
ROR is required.

LISTED FOR SALE
Subject property that is currently listed for sale on or after date of application is not permitted for refinance
transactions.

Subject property listing must have been cancelled minimum one (1) day prior to date of application:




WHOLESALE I Broker Guide (REV101211JC)                                                                        13
      Borrower must provide documentation of cancelled MLS listing or similar documentation dated
       minimum one (1) day prior to date of application and disclosures to proceed with a refinance
       transaction.
      Timing will be calculated on the date the home was removed from the MLS against the application and
       credit date or based on the date provided by the appraiser on the appraisal.
      Maximum LTV for cash-out transactions is 70% LTV / CLTV / HCLTV, if listed for sale within six (6)
       months from date of application.

SPECIAL PURPOSE REFINANCE
Under certain special circumstances the Continuity of Obligor and/or the refinance requirements may be
amended as follows:

Buyout Refinance
Interbank will also treat an inheritance or divorce settlement in which one spouse is required to “buy-out” the
interests of the other spouse or any other refinancing in which an owner “buys-out” the interests of another
owner as a limited cash-out refinance – as long as the following conditions are satisfied:
     Legal Separation or Divorce Decree, or court order requiring the division of the property.
     All parties must be able to demonstrate that they occupied the security property as their principal
        residence, by providing an acceptable source of verification (e.g. driver‟s license, bank statement, credit
        card bill, utility bill, etc.) that was mailed to the individual at the address of the security property.
            o Occupancy is not required for inherited properties
     All parties must sign a written agreement that states the terms of the property transfer and the
        proposed disposition of the proceeds from the refinancing transaction.
     Borrower who acquires sole ownership of the property may not receive any of the proceeds of the
        refinance.
     Party who is “buying out” the other party‟s interest must be able to qualify for the mortgage under our
        standard underwriting guidelines.
     The Underwriter must note on the 1008 that the transaction is a “special purpose refinance”.

NOTE: If the spouse that is awarded a property in a divorce settlement has never been in title or an obligor on
the Note, that transaction must be completed as a purchase and the awarding spouse may “gift” a portion of
equity to meet gift equity guidelines.

INHERITED PROPERTY
If the subject property was inherited (date of death) less than twelve (12) months‟ prior to the application, only
a Limited Cash-Out Refinance will be permitted. Proceeds will be utilized to “buy-out” the documented equity
of other parties. The interest of others must be paid through escrow.
      Subject property must have cleared probate and be currently vested in the borrower‟s name
      LTV / CLTV / HCLTV may be based on current appraised value.

CONVERSION OF PRINCIPAL RESIDENCE
Borrowers who currently own their home typically have three (3) options when they decide to purchase
a new one:
   1. Sell the current home and pay off the outstanding mortgage.
   2. Convert the current home to a second home.
   3. Convert the current home to an investment property.



WHOLESALE I Broker Guide (REV101211JC)                                                                          14
CONVERSION OF CURRENT PROPERTY
The following outlines the requirements for borrowers that convert their current residence.

To a Second Home:
      Both the current and the proposed mortgage payments (including all Taxes, Insurance, and HOA dues)
       must be used to qualify the borrower for the new transaction.
      Reserves of six (6) months PITI for each property.

Exception:
Reduced reserves, no less than two (2) months for each property, may be considered under the following
circumstances:
     There is a documented minimum 30% equity in the existing property. The value of the current property
       must be documented by minimum appraisal Form 2055 interior and exterior.

To an Investment:
    Both the current and the proposed mortgage payments (including all Taxes, Insurance, and HOA dues)
       must be used to qualify the borrower for the new transaction.
    Reserves of six (6) months PITI for each property.

Exception:
Borrowers may use up to 75% of the rental income from the existing property to be used to offset the mortgage
payment for qualification purposes if the following guidelines are met:
    There is a documented minimum 30% equity in the existing property. The value of the current property
       must be documented by minimum appraisal Form 2055 interior and exterior.
    The rental income is documented as follows:
           o A copy of the fully executed lease agreement.
           o Documentation of the receipt of the security deposit from the tenant (deposited into the
              borrower‟s account).

If the 30% equity in the existing property cannot be documented, rental income may not be used to offset the
mortgage payment and the borrower must qualify with both payments and reserve requirements.

DU REFI PLUS
DU Refi Plus allows for expanded eligibility criteria that are determined by DU findings. Eligible products
include 10-, 15-, 20-, 25-, 30-year fixed rate and 5/1 & 7/1 Libor ARMS.
     Max LTV / CLTV / HCLTV 95% regardless DU findings
     Special Feature Code on DU findings should include 147 for DU Refi Plus approval
     Minimum Credit Score 660 regardless DU findings
     Max DTI as approved per DU
     Max cash back to the borrower at closing $250.00
     0 x 30 lates last twelve (12) months on all mortgages
     New subordinate financing is not permitted and any existing subordinate financing may not be paid off
       or paid down with new loan proceeds.
     DU findings cannot require MI
     There must be tangible net benefit for lower P&I payment OR more stable product (e.g. ARM to Fixed,
       shorter term – such as 30 years to 15 yrs, Interest-Only to Fixed)

WHOLESALE I Broker Guide (REV101211JC)                                                                    15
      Borrowers on existing loan must match borrowers on new loan; a new borrower may be added. If any
       of the previous borrowers are removed, the remaining borrower must evidence for twelve (12)
       consecutive months, they have been making the payments solely from their own funds and the other
       borrower is removed from the deed which can be executed at the time of closing. Only exception is if
       the borrower being removed is now deceased, then the twelve (12) month payment history is not
       required.
      Property address on DU findings must be accurate (include condo unit numbers, etc.). If existing
       broker has incorrect property address, it must be corrected by current broker and reported to FNMA for
       DU findings to reflect corrected property address to utilize DU Refi Plus
      If borrower‟s SSN is incorrect, can be corrected by contacting FNMA at: (877) 722-6757
      To utilize PIW:
           o DU Findings must state special feature code 807.
           o Affidavit of Ownership and Listing must be executed by borrower prior to closing.
           o PIW disclosures and PIW fee to be executed at closing.
           o Condos and foreclosures are not eligible for PIW.
           o If additional data warrants a reason for a full appraisal, such as natural disaster, Interbank
                reserves the right to require additional fieldwork.
      Escrows can only be waived if LTV < 80%
      Loans must close by June 30, 2012

ELIGIBILITY, OCCUPANCY, AND OWNERSHIP STATUS
Interbank is committed to funding investment quality loans that meet acceptable risk standards as defined by
the mortgage industry. All loans funded by Interbank must be underwritten according to the guidelines and
requirements of Interbank, Fannie Mae, and Interbank investors; Brokers must submit loans in accordance with
the standards and requirements stated in the Interbank Wholesale Broker Guide.

ELIGIBLE BORROWERS
      Loans are granted only to natural persons
      Title must be held in individual names only
      Tenants in common is not acceptable vesting

The following are permitted to the applicable Interbank / agency underwriting guidelines:
    U.S. Citizens
    Permanent Resident Aliens
    Non-Permanent Resident Aliens
    Illinois Land Trust
    Inter Vivos Revocable Trust

OCCUPANCY
Occupancy type cannot be changed once a loan has been submitted and reviewed by underwriting. Once a
decision has been made by underwriting, there can be no change in existing or re-submission of loan for the
borrower to change occupancy type.

Interbank reserves the right to deem the property occupancy as appropriate based on the documentation
evidenced in the file.


WHOLESALE I Broker Guide (REV101211JC)                                                                    16
For Example:
If the file was submitted as a primary residence and no documents in the file can support occupancy, Interbank
reserves the right to deny the loan due to occupancy and inconsistency of documentation.

PRIMARY RESIDENCE
The borrower must occupy the property within sixty (60) days of closing on a purchase. On a refinance, at the
time of application, the borrower must occupy the subject in order to be considered a primary residence,
evidenced by mailing address documented in the file. The borrower occupies this residence for majority of the
year and is located in a reasonable distance from employer. The subject address is the address of record for
documentation in the file such as federal income taxes, bank statements, driver‟s license, voter registration,
etc.

SECOND HOME
A second home is a 1-unit property where the borrower resides in for some portion of the year. There may not
be an occupant besides the borrower that resides in the subject and borrower cannot have rental income on
second homes.

U.S. CITIZENS
A United States Citizen is a native or naturalized person entitled to all rights and privileges of the United
States. Product requirements are based on the assumption that a borrower is a United States Citizen. The
borrower must have a valid Social Security Number.

PERMANENT RESIDENT ALIENS
A Permanent Resident Alien is a non-U.S. citizen who is legally able to maintain permanent residency in the
United States and holds a Permanent Resident Card.

NON-PERMANENT RESIDENT ALIEN
A Non-Permanent Resident Alien is an individual who seeks temporary entry to the United States for a specific
purpose.

DU messages refer to a Non-Permanent Resident Alien as “Non-U.S. Citizen”. Interbank will grant loans to
Non-Permanent Resident Aliens with acceptable Visas under the same parameters extended to a U.S. Citizen,
unless restricted in a specific product summary.

VISA CLASSIFICATIONS
One of the following valid Visa Classifications are required. Acceptance of additional classifications must be
approved by Interbank.

 TYPE                   CLASSIFICATION
 E-1 & E-2              Treaty Trader & Treaty Investor
 G-1 through G-4        Representative, officer or employee of recognized and non-recognized foreign
                        government and members of their immediate family
 H-1B & H-1C            Temporary Worker
 L-1 A & B              Intra-company transferee
 TN / NAFTA             Professionals from Canada or Mexico who enter the U.S. under the NAFTA agreements




WHOLESALE I Broker Guide (REV101211JC)                                                                      17
NOTES:
   Employment Based Immigrant as evidenced by I-766, I-688A, or I-688B with photograph is acceptable
     with copy front and back of card (EAD).
   The loan file must contain a copy of the front and back of the valid Visa. The approved application for
     one of the Visas listed above is not acceptable and a copy of the actual Visa must be obtained.
   The borrower must have a Social Security Number; a Tax Identification Number (TIN) is not acceptable.

UNDERWRITING REQUIREMENTS
The following requirements apply to Non-Permanent Resident Aliens:
    Minimum two (2) years‟ residency, credit, employment in the U.S. and must be currently residing in the
        U.S.
    Borrower must have a U.S. source of employment that is expected to continue for three (3) years.
    If tax returns are required, they must be U.S. Federal Tax Returns.
           o If any income is in foreign currency, 75% of the currency exchange value may be used to qualify
               the borrower.
    Funds for closing must be in U.S. bank accounts.
           o If funds were transferred from a foreign depository, the borrower must provide evidence that
               they owned the funds prior to the transfer.

ILLINOIS LAND TRUST
A property owner will transfer the property title to a corporation or financial institution that currently is in the
business of acting as trustee under an “Illinois Land Trust”. Concurrently, the owner (beneficiary) retains the
power to manage, sell and control the property. There are two parts to the “Illinois Land Trust”:
       1. The “Deed of Trust” that transfers the title from the beneficiary to the trustee, and
       2. The “Trust Agreement” that states the rights and power of direction.

      The borrowers must be grantors of the land trust.
      Trustee cannot be an individual – must be a corporation or financial institution as trustee
      Mixed vesting is not acceptable (trust and an individual)
      Trust must be fee simple ownership
      Subject property must be either 1 unit detached primary residence or second home.
      POA is not allowed on land trust
      The borrower must complete the “Facsimile Assignment of Beneficial Interest” prior to closing

INTER VIVOS REVOCABLE TRUST (IVRT)
Interbank will fund loans to an Inter Vivos Revocable (Living) Trust as permitted by the applicable product. An
Inter Vivos Revocable Trust is a trust that:
     An individual creates during their lifetime.
     Is effective during the creator‟s life.
     Amendable by the creator at any time.

Interbank requires an attorney opinion letter for all revocable trusts along with complete copy of trust in its
entirety. Only in California, will Interbank accept a Certification of Trust in lieu of copy of trust and attorney
opinion letter. The letter must verify the following:
     Trust was validly created and duly existing under applicable law

WHOLESALE I Broker Guide (REV101211JC)                                                                           18
      Trust is revocable
      Borrower is the settlor and the beneficiary of the trust
      Trust assets may be used for collateral of the loan
      Trustee is the borrower, the settlor, duly qualified under applicable law to serve as trustee, and fully
       authorized under the trust documents and applicable law to pledge / encumber the trust assets.

NOTE: POA is not allowed on land trust.

INELIGIBLE BORROWERS
Possession by corporations or partnerships is not acceptable, including, but not limited to, the following:
    Borrowers with diplomatic immunity
    S Corporations
    Life Estates
    Real Estate Syndication
    General Partnerships
    Foreign Nationals
    Non-profit organizations
    Land Trusts, except Illinois

POWER OF ATTORNEY
Interbank will accept a Limited (or Specific) Power of Attorney that is specific to the loan transaction and
references the property and authorizes the attorney in fact to enter into a real estate transaction and to
mortgage the property only for a co-borrower on a loan.

Interbank will not accept a POA for a single borrower on the loan or for the spouse waiving homestead on a
loan. POA also cannot be executed for property held in a trust.
     The POA can be used for closing documents only, and is not acceptable for application or credit
       verification documents.
     The initial 1003 must be signed by the borrower(s), not the attorney in fact – the final 1003 may be
       signed by the attorney in fact at closing.
     Exceptions are granted for borrowers who are physically incapacitated. For the safety of our borrower,
       a letter from the attorney or the doctor must certify that the borrower is incapacitated; copies of private
       medical records should never be provided.
     For all Property Transactions:
     An employee of the Seller must physically see the borrower at some point prior to loan closing.
     A letter of certification, signed by an employee of the Seller, certifying visual, physical contact with the
       borrower must be included in the loan file.
     Power of Attorney (POA) must meet the following requirements:
     The POA must be drafted in accordance with applicable state law and be acceptable to the recording
       agent in the local jurisdiction.
     It must be acceptable to the title insurance company issuing the title insurance (no title exception to the
       POA).
     If an attorney signed the loan documents in fact, the Power of Attorney must have been approved by
       the title company issuing the title policy.
     Indicate clearly that the mortgagor is appointing an attorney in fact.

WHOLESALE I Broker Guide (REV101211JC)                                                                         19
      Precisely identify who is being appointed.
      Be signed and dated by the borrower.
      Be notarized.
      Be recorded prior to or concurrent with the security instrument.
      Contain the full subject property address with legal description.
      The use of a General Power of Attorney will only be considered in cases where the borrower is
       currently serving on active military duty outside of the U.S.
      An “Alive and Well” certification is required.

NOTE: The typed signature line and actual signatures must match exactly on all power of attorney documents.

PURCHASING CO-BORROWER
A purchasing co-borrower is a person who has applied with the applicant for joint credit and who takes title to
the security property. A purchasing co-borrower must sign the Note.

NON-PURCHASING SPOUSE
In those states subject to community property, the credit report for the non-borrowing spouse must be pulled
and reviewed (outside the AUS) so the underwriter can determine any adverse or additional liability for the
borrowing spouse.

NOTE: In community property states, the non-borrowing spouse (not signing the mortgage Note) may need to
sign the appropriate documentation to release rights in the subject property.

SPOUSAL PROPERTY RIGHTS
When a married applicant qualifies for a mortgage based on his or her own financial capacity (without the
assets/income of their spouse), the spouse does not need to sign the Note, Mortgage or Deed of Trust.
However, they will be required to sign the security instrument or any other documentation required to evidence
that the spouse is relinquishing all rights to the property in order to perfect the lien under current governing
state law.

NON-OCCUPANT CO-BORROWER
A Non-Occupant Co-Borrower is a borrower that does not occupy the subject property, but whose income has
been used to qualify for the loan. Joint responsibility (with the primary borrower) for repaying the loan requires
that the non-occupant co-borrower sign the Note. If they are also taking an ownership position, they must
execute the Mortgage / Deed of Trust.

Additional Requirements:
    DU findings must identify that a non-occupant co-borrower was used to qualify the loan.
    Maximum 90.00% LTV
    Single Unit Only
    Primary Residence Only
    Non-Occupant Co-Borrower may not be an interested party to the sales transaction, such as the
       property seller, property builder, and real estate broker.
    Ratios: Owner occupant borrower must qualify as determined by DU findings (typically, at a max 35% /
       43%). DU findings must appropriately disclose under Declarations section that the co-borrower will not
       occupy the subject for accurate DU findings.


WHOLESALE I Broker Guide (REV101211JC)                                                                         20
      Down Payment: If the LTV is greater (<) than 80.00%, the owner-occupant(s) must make the first 5%
       down payment from their own verified funds.

MULTIPLE MORTGAGES TO THE SAME BORROWER
Interbank applies the following limitations to borrowers that hold multiple financed properties:
     If subject property is primary residence, no restriction on number of financed properties.
     If subject property is investment or second home, maximum total number of financed properties for all
       borrowers on the loan, including primary residence, is four financed residential. Refer to the reserve
       requirements in the assets section.
     Joint ownership is considered against the maximum.
     Any liability on the personal credit report will also be considered against the maximum.

MAXIMUM NUMBER OF BORROWERS
Interbank will not accept loans where there are more than five (5) borrowers on a loan. The AUS will not
accept more than five (5) borrowers and Interbank requires an AUS approval.

SUBORDINATE FINANCING
Second Trust Deeds, junior liens and subordinate liens (secondary financing) are defined as mortgages
(encumbrances on real estate) that have rights that are secondary (inferior) to that of another recorded interest
(mortgage) in the same property.

Interbank will fund / purchase loans with subordinate financing as long as the Combined Loan-to-Value (CLTV)
& HCLTV ratio of the first and second do not exceed the limits outlined by these guidelines and by the product
guidelines.

The subordinate financing must permit prepayment without penalty.

Monthly payments on the secondary financing must be included in the borrowers housing and debt ratios.

Payments may be graduated or variable, as long as:
    The annual payment adjustments of the secondary do not exceed the lesser of a 2% interest rate
     increase or an 8.50% payment increase.
    The total amount of the subordinate financing amortizes during the term of the loan.
   
New Subordinate Financing:
    May not be provided by a private party that is a real estate broker, real estate agent, builder, developer,
     etc.
    Private second mortgages may be held by the property seller (aka seller carry-back) as long as they
     meet all guidelines as outlined by Interbank / Fannie Mae as well as the following additional guidelines
     below:
    Permitted for owner-occupied principal residences only.
    Permitted only after the borrower has made a 5.00% minimum down payment (from verified personal
     funds).
    The appraiser must note that the secondary financing being provided by the seller and not any negative
     impact on value or marketability.
    The interest rate must be at current market. If it is more than 2.00% below Fannie Mae‟s posted net
     yield in effect for second mortgages at the time of closing / disbursement, the amount of the seller

WHOLESALE I Broker Guide (REV101211JC)                                                                        21
       second must be treated as a sales concession and will require a dollar-for-dollar reduction in the sales
       price.
      Unless specifically restricted by the product, employer seconds are permitted; the agreement must not
       require repayment upon termination.
      The existing subordinate lien holder may be an owner-carry second from the owner of the property, or
       an institutional broker.
      The secondary financing must meet any more restrictive current Fannie Mae guidelines as required by
       DU findings.
   
For Underwriting (to be reviewed by the Underwriter, included in the Underwriting File):
    Existing: A copy of the executed Note, Trust Deed and Subordination Agreement.
    New: A copy of the Note that will be executed at closing on the new subordinate financing.
   
For Closed Loan Delivery:
    A certified copy of the executed second Note, Trust Deed, and Subordination Agreement (if applicable)
       must be provided with the loan file delivered for funding / purchase to confirm loan amount, payment
       terms, and lien status.

HOME EQUITY LINE OF CREDIT
Home Equity Lines of Credit (HELOC) are permitted to Fannie Mae guidelines.

NOTE: Cannot have call option or maturity date within five (5) years of new Note date.

TEMPORARY BUYDOWN
Temporary Buydowns are not permitted for Conforming Loan Products.

INTERESTED PARTY CONTRIBUTIONS
Certain interested parties (seller, builder, realtor, etc.) may choose to pay a portion of the closing costs, which
are normally paid by the borrower, on the borrower‟s behalf.

Any portion of the fees and services, or any other item related to the transaction, that would normally be paid
by the borrower, but are paid by the interested party are considered contributions.
     Because excessive contributions can negatively impact the transaction, maximum contributions are
       limited, see the Maximum Seller Contributions matrix.
     The contribution amounts that exceed the limit or amount of actual closing costs / prepaids are
       considered sales concessions.

                OCCUPANCY                        LTV / CLTV / HCLTV               MAX
                                                       RANGE                  CONTRIBUTIONS
                Primary Residence                    75.01 – 90.00                    6%
                Second Home                             < 75.00                       9%
                Investment Property                       All                         2%
                NOTE: The maximum LTV / CLTV / HCLTV must be calculated based on the lesser of
                the reduced sales price (reduced by the sales concession) or appraised value,
                whichever is lower.



WHOLESALE I Broker Guide (REV101211JC)                                                                          22
Ineligible Contributions:
Generally, the cost of any contributions that are in the form of personal property or “give-aways” (such as
furniture, decorator items, automobiles, club membership, etc.) are not “eligible” contributions and must be
considered sales concessions and deducted dollar-for-dollar from the lesser of the sales price or appraised
value.

APPROVED STATES
Interbank funds loans on properties located only in specifically approved states. Currently, Interbank will fund
loans in CA, CO, IL, IN, MN, OR, TX, and WI.

UNDERWRITING HELP
Use the following email address to request underwriting assistance for scenarios only, not for any loans
currently in process: underwritinghelp@interbankwholesale.com

NOTICE OF LOAN DECISION
Notice of Loan Approval or Suspension:
    Via facsimile or email

Notice of Loan Denial:
    Documentation via facsimile or email

NOTE: Once Interbank declines a loan for funding in underwriting, the lock is automatically cancelled. The
loan is no longer locked.

CONDITIONS / STIPULATION
Interbank requires the following:
     All prior-to-close (prior-to-doc) conditions must be cleared / approved by the underwriter prior to the
       loan being sent for closing / disbursement.
     Interbank requires that all prior-to-close (prior-to-doc) conditions be sent to the underwriter at one time.

NOTE: Conditions that are sent to Interbank separately will not be reviewed until all conditions for the loan
have been received.

PRELIMINARY FINDINGS
Interbank will not accept a loan for funding with DO Preliminary Findings. The loan must be submitted to DU
under Interbank and receive a final underwriting recommendation to be considered AUS underwritten by
Interbank.

PRIVATE MORTGAGE INSURANCE
Loans Requiring Mortgage Insurance:
      Interbank will order the mortgage insurance on all loans that require Interbank underwriting.

APPROVED MORTGAGE INSURANCE COMPANIES
Interbank will obtain Mortgage Insurance (MI) from any of the following companies:
     Radian


WHOLESALE I Broker Guide (REV101211JC)                                                                         23
Coverage:
Mortgage Insurance coverage must meet the conditions on the DU findings report.
    Lower Cost or Custom MI is not permitted.
    LPMI is not permitted.
    Financed MI is not permitted.

NOTE: In all cases, when MI is required, the more restrictive MI guidelines apply.          See Underwriting,
Mortgage Insurance Requirements for details.
    Full appraisal is required for loans requiring MI.
    Escrows are required for all loans requiring MI.

STANDARD MI COVERAGES
                          LTV RANGES         < 30 YEAR TERMS         30 YEAR TERMS
                          85.01 – 90.00%            12%                     25%
                          80.01 – 85.00%             6%                     12%

NOTE: Reduced covered is not allowed.

MORTGAGE INSURANCE GUIDELINES TABLES
PRIMARY RESIDENCE
                                  PURCHASE & RATE / TERM REFINANCE
   PROPERTY TYPE                 MAX LTV    MAX LOAN AMOUNT      MIN FICO SCORE                 MAX DTI
   1 Unit Single Family             90                $ 417,000                   680**           41%
   2 Units                          70                $ 533,850                   680**           41%
   3 – 4 Units                      N/A                   N/A                     N/A             N/A
   Condominium                      75                    N/A                     N/A             N/A

SECOND HOME
                                  PURCHASE & RATE / TERM REFINANCE
   PROPERTY TYPE                 MAX LTV    MAX LOAN AMOUNT      MIN FICO SCORE                 MAX DTI
   1 Unit Single Family             85                $ 417,000                   680**           41%
   Condominium                      80                    N/A                     N/A             N/A

NOTE: Please refer to Interbank website‟s Product Matrices for specific LTV restrictions.

MAXIMUM DTI RATIO
The maximum DTI ratio is 41%** (can be increased to max DTI 45% with minimum lowest middle score of all
borrowers 720).

MAXIMUM FINANCING CONCESSIONS
The maximum Financing Concession for MI loans is 6%.

WHOLESALE I Broker Guide (REV101211JC)                                                                    24
BORROWER EQUITY
The borrower is required to have the following minimum equity or down payment from their own funds: 5%.

INELIGIBLE LOAN FEATURES
      FICO scores below 680
      Only one (1) credit score regardless DU approval
      Potential or scheduled negative amortization
      DU Refi Plus
      Any appraisal less than 1004 full appraisal
      All Loans With:
           o No Income / No Assets (NINA) loans
           o No Ratio loans
           o No Doc loans
           o Stated assets
           o Stated employment
           o Stated income
           o 2- to 4-unit properties
           o Cash-out refinance loans
           o Investment properties
      Full Doc Prime Loans With:
           o Second home loans for 2-4 units, cooperatives, or manufactured housing

INELIGIBLE PROPERTY CATEGORIES
      2-4 units
      Condotels
      Single-wide manufactured homes
      Mobile homes
      Time-share properties
      Lot loans
      Manufactured housing site condominiums
      Model home leasebacks
      Mixed-use properties as defined by Fannie / Freddie guidelines
      Condominiums, attached PUDs, and cooperatives in Nevada or in Florida‟s Miami-Dade or Broward
       counties.
      Leasehold properties
      Deed Restrictions
      Condos < 600 sq. feet
      Properties in below average conditions

INELIGIBLE LOAN CATEGORIES
      Programs / transactions for which Radian offers no published rates
      Government loans (FHA / VA / Rural Housing Service)

WHOLESALE I Broker Guide (REV101211JC)                                                                    25
      Second mortgages
      Credit upgrades
      Wraparound mortgages
      Blanket mortgages
      Interim construction loans

DOCUMENTATION
AUS “STANDARD” (FULL / ALT) DOCUMENTATION                 AUS “REDUCED” DOCUMENTATION
Income / Employment for Two (2) Years:                    Income / Employment < Twp (2) Years:
      Direct VOE(s) covering two (2) years; see Direct         Interbank will accept the reduced requirements
       VOE Requirements.                                         as note on the Findings, with the following
           o If a Direct VOE is used, Interbank always           overlays:
               requires the pay stub, W-2 and/or tax                 o Current Paystub showing year-to-date.
               return to support.                                    o One year‟s W-2 or tax returns
      Current Paystub covering one (1) month and                    o V-VOE completed at time of underwriting
       providing year-to-date income. Paystubs must                      and an additional V-VOE to be
       be computer generated and have borrower‟s                         conducted by Interbank twenty-four (24)
       name, SSN, and employer name if any is                            hours prior to closing / disbursement.
       missing we will require full written VOE.                     o 4506-T, signed at closing
      Two-years W-2‟s or signed tax returns
           o V-VOE completed at time of underwriting
               and an additional V-VOE to be
               conducted by Interbank 24 hours prior to
               closing / disbursement.
      4506-T, signed at closing.

See Income and Employment for more details.               See Income and Employment for more details.

Assets / Funds to Close and/or Reserves:                  Assets / Funds to Close and/or Reserves:
    Copies of original bank statements; OR                   Interbank will accept the AUS Findings.
    Other supporting documentation.                          If bank statements are included, they must be a
                                                                 copy of the original bank statement, showing all
                                                                 appropriate identification information.
See Assets for more details.

DIRECT VOE REQUIREMENTS
When used, a “direct” Verification of Employment (VOE) must be returned to the originating broker directly
from the source. There must be no evidence that the borrower(s) acted as intermediary.
     Copies, including facsimile copies, are acceptable provided that it is clear from the document that the
       information was taken from the original document (no corrections or alterations); if faxed, that it was
       sent directly from source.
     Interbank always requires a copy of the most recent Paystub with year-to-date information to support
       the direct VOE.
     Interbank reserves the right to require that original documents be provided.




WHOLESALE I Broker Guide (REV101211JC)                                                                          26
IRS 4506-T
In keeping with current risk trends, effective immediately Interbank will execute the signed 4506-T and obtain
the tax transcripts according to the following guidelines:
     Tax Transcripts / Record of Change must cover:
             o Salaried (W-2) Borrowers: The most current two (2) years.
             o Self Employed Borrowers: The most recent two (2) years.
             o For Jumbo loans that exceed $750,00: The most recent two (2) years
     Interbank Underwriting: For every credit qualifying loan sent to Interbank for underwriting, Interbank
        requires a copy of the signed 4506-T in the underwriting submission file.
             o Loans submitted to underwriting without the signed 4506-T will not be processed
             o Interbank still requires, for post-purchase quality control that the borrowers sign a 4506-T at
                time of loan closing. This form must be included in the closed loan delivery file.
     Important Note – Amended Tax Returns: The IRS permits tax returns to be amended up to three (3)
        years after the initial tax-filing year. If tax returns have been amended, the underwriter (and Interbank)
        must be able to document the following, via the tax transcripts obtained using the 4506-T:
             o The IRS has processed and accepted the amended tax returns; that information is contained in
                the transcripts.
             o All outstanding liabilities and/or tax penalties have been paid; the transcripts show no
                outstanding money owed to the IRS.
     Additionally, Interbank will carefully review any increased income to insure its validity, and the loan
        file should contain:
             o Documentation to support receipt of the income as well as continuation of the income
                (reasonably for at least two years in the future).
             o The underwriter in these cases must make every effort to prudently document the added income
                and the reasonable expectation of continuation.

VERBAL VERIFICATION OF EMPLOYMENT (V-VOE)
The Broker must verbally verify employment as follows:
    Self-Employed: Verify the existence of the business through an independent third party (CPA letter,
      phone book, verification from secretary of state, or copy of the business license)

NOTE: Interbank will obtain an additional V-VOE twenty-four (24) hours before closing / disbursement.

VERBAL VERIFICATION REQUIREMENTS
The Verbal Verification must be completed independently by Interbank before closing / funding. The following
information must be written and signed:
     Verify the name, address, and phone number of the company contacted.
     The company information should be obtained from a third party source like the Yellow / White Pages,
       Directory Assistance, or contacting the local licensing bureau.
     Verify the name and title of the person contacted.
     For wage earners, this should be Human Resources or the borrower‟s supervisor / manager if
       applicable to the business.
     The date of contact.
     The information that was verified.
     The name and title of the person completing the verification.


WHOLESALE I Broker Guide (REV101211JC)                                                                         27
      The signature of the person completing the verification.

NOTES:
   For salaried or commissioned borrowers it is necessary to verbally verify that the borrower is currently
     employed.
   For self-employed borrowers, it is necessary to independently verify that the business still exists (and is
     operating) through independent verification.

ASSETS AND LIQUIDITY
OVERVIEW
Liquidity or cash reserve describes cash or the ability to convert assets to cash in a short time. Net worth
without liquidity is not enough. A borrower‟s balance sheet should reflect and validate the estimates
concerning his or her prior and current income stream. Higher incomes should translate into liquidity found on
the borrower‟s balance sheet.

AUS SUPPORTING DOCUMENTS
If the broker enters assets into the AUS, the most recent supporting documentation (to standard guidelines)
must be included in the loan file, regardless whether the AUS requires supporting documentation or not.

BORROWERS FUNDS SECURED BY AN ASSET
A loan secured by an asset may be used as Assets as follows:
     May be used as a source of funds for down payment, closing costs, and financial reserves.
     Document terms of the secured loan.

BRIDGE LOAN
Bridge (or swing) loans are a form of second trust that is collateralized by the borrower‟s present home, which
is usually for sale. By using funds from a bridge loan, the borrower can close on a new house before selling
his/her existing house. A specific limitation on the term of a bridge loan is not required.

NOTE: The bridge loan amount may not exceed 90.00% of the current appraised value of the bridge property.

This type of financing is acceptable if:
    The purchaser has the ability to carry the payment on:
           o The new home (PITI).
           o The payment on the other obligations.
           o The payment on the current home (PITI).
           o The payment on the bridge loan.
    If the repayment schedule for the bridge loan is not monthly, it must be converted to a monthly amount
       for qualifying purposes.
    The bridge loan is not cross-collateralized against the new property.
    Exclusion of a debt for the present home and for a bridge loan is allowed if the borrower can evidence:
           o Copy of the executed sales contract for the present home.
           o Copy of the broker‟s commitment to the buyer of the present residence (if the contract contains
               a financing contingency) with no stipulations.



WHOLESALE I Broker Guide (REV101211JC)                                                                      28
           o   Evidence of six (6) months reserves covering the PITI of the previous residence in addition to
               the first mortgage reserve requirements.

BUSINESS FUNDS
In some cases, business accounts are an acceptable source of down payment or reserves; however, they are
not acceptable under all circumstances because these funds are typically required to meet current business
overhead and future capital requirements and generally are not representative of the borrower‟s savings
history.

Consideration for use of business accounts is an “exception” to policy. The exception may be considered by
the underwriter if the borrower can evidence that the withdrawal of the funds will not negatively impact the
operation of the business.

NOTE: The borrower must document a minimum 51% ownership to use business funds, as permitted.
Documentation from a disinterested third party (CPA, Tax Attorney, etc.) confirming borrower‟s full access to
the business funds and that the use of these funds will not adversely affect the business is required. If the
accountant states that there will be a negative impact, the use of the funds will not be permitted. Large
deposits not in line of business income will need to be sourced and documented.

Property must be owner occupied.

CASH VALUE OF LIFE INSURANCE
The surrender of life insurance is acceptable under the following parameters:
    Can be used as a source of funds for the down payment, closing costs, and financial reserves.
    The amount available for liquidation should be calculated using 60% of the current value.
    Document by providing a copy of the check from the insurer or a copy of the payout statement issued
       by the insurer, identify the policy owner, evidence the period covered and the current cash value, and
       identify any outstanding loans.

CREDIT CARD FINANCING
Charges to a personal credit card may be used as follows:
    The total borrowed may not exceed 2% o0f the loan amount, which may only include the following costs
      incurred in the loan process:
          o Actual cost of appraisal may be charged on a credit card.
          o May be used for application fee process charges (i.e. lock-in fees, credit report, appraisal, and
              etc.).

CHECKING AND SAVINGS ACCOUNTS
Borrower‟s bank statements for the most recent month:
    The bank statement must be a copy of the original bank statement showing the borrower‟s name,
      institution name, and account number, the period covered by the statement and all deposits and
      withdrawals made during the period covered.
    Full access letter is required for any other account holder not on loan unless states “or”
    Must be dated no earlier than forty-five (45) days of application
    Underwriters reserve the right to request additional supporting documentation

If a direct Verification of Deposits (VOD) is provided, it must be accompanied by a copy of the original bank
statements. VOD‟s are not accepted on its own.

WHOLESALE I Broker Guide (REV101211JC)                                                                    29
NOTE: Large deposits, single or cumulative must be documented and explained.

DEPOSIT ON SALES CONTRACT
The deposit on the sales contract is an acceptable source for down payment and/or closing costs. When the
deposit is used to make any portion of the borrower‟s down payment it must come from his/her own funds.
When the deposit is 2% over the sales price the money must be sourced as follows:
    Verification that the deposit has cleared the bank must be documented if it is less than or equal to (>)
       2% of the sales price.
    Bank statements for most recent month (if check has cleared account, the statement should cover the
       period up to and including the date the check cleared).
    Copy of cancelled check
    Large earnest money deposits and deposits that exceed the amount customary for the area should be
       closely evaluated.

ELIGIBLE ASSETS
The following types of accounts will be considered eligible liquid assets for closing costs and reserves:
    Stocks / Bonds (70% current value)
    Bridge Loan (See Bridge Loan for details)
    Certificate of Deposit
    Checking Account
    Gifts (Personal Gift – See Gifts for details)
    Gift of Equity (See Gift of Equity for Details)
    Money Market Fund
    Mutual Fund (70% current value)
    Rent Credit in Options to Purchase (See Rent Credit for Options to Purchase for details)
    Retirement Fund (60% current value)
    Savings Account
    Trust Funds

Verification Requirements:
    As determined by AUS and, if not required by AUS and assets were entered and submitted for AUS
       review, Interbank requires supporting documentation (see AUS Supporting Documents).
    One month‟s complete bank statement dated within forty-five (45) days of application date
    Satisfactory explanation and documentation should be provided for large deposits in excess of one
       month‟s salary or if deposits exceed $10,000 single or cumulative regardless if funds are needed
       (cannot “back out” deposits from the statement).

FUNDS TO CLOSE
Sources of Funds for Closing: The borrower must have sufficient cash deposits and other assets to close
the loan and to confirm the level of reserves needed after closing. Generally the borrower must have enough
assets to cover the minimum required down payment that must come from his or her personal funds.
However, funds received from other acceptable sources can be used to accompany the minimum down
payment from the borrower‟s funds to pay the borrower‟s share of the closing costs and prepaid items and to
satisfy the reserve requirement.


WHOLESALE I Broker Guide (REV101211JC)                                                                      30
Acceptable sources of down payment:
    Gift from family member, as permitted by the product.
    Trade Equity – funds from their existing home in trade as part of the down payment.
    Rent Credit – lease purchase funds.
    Funds held in a checking or savings account.
    Stocks
         o A photocopy of the stock certificate, accompanied by a current dated newspaper stock list.
    Government Bonds
         o The value of government bonds should be based on their purchase price unless the redemption
             value can be documented.
    Mutual Funds
    Trust Accounts
         o Funds disbursed from a borrower‟s trust account are an acceptable source of the down payment
             and reserve requirements if the borrower has immediate access to them.
         o Confirmation from the trust manager or trustee is to verify the value of the trust account and
             prove the conditions under which the borrower has access to funds.
    Retirement Accounts (IRAs / Keogh accounts, 401Ks); see Retirement for requirements and limitations.

GIFTS
Gifts are an eligible source of down payment and/or closing costs for primary residences only, provided they
are donated by a related person (see below) and do not require repayment by the borrower.
     Gifts must be from relatives, domestic partners, or fiancé / fiancée.
     No portion of the down payment may be donated by interested parties to the transaction including
        sellers, realtors, brokers, or sales associates.

The following conditions apply when a gift is being used for down payment, closing costs, or prepaid
items:
     Generally, the borrower must invest at least 5% of his/her own funds toward the down payment unless
       the gift is 20% of the lesser of the sales price or appraised value of the property.
           o If the gift towards down payment is 20% or more, the borrower is not required to make an
                investment from his or her own funds.
     The gift donor must be a relative or someone who can demonstrate a history of shared financial
       relationship with the borrower.
     A relative is any person related by blood, legal proceedings, marriage, or adoption (e.g. parent or step-
       parent, sibling, aunt / uncle, child – adoptive or natural, etc.)

NOTE: Gifts are not permitted for Investment properties.

The gift must be verified and documented as follows:
    Donor‟s gift letter stating: relationship to borrower, property address, amount of the gift, date the gift
       was / will be given, the donor‟s name, phone number, and address, and that the gift does not need to
       be repaid.
           o The gift letter must be executed by the donor.
    Verification of transfer of gift funds: via cancelled check, deposit slip and a copy of the check, copy of
       the check and bank statement reflecting deposit, or copy of the cashier‟s check at closing evidencing
       donor as the remitter and borrower as payee / settlement agent.

WHOLESALE I Broker Guide (REV101211JC)                                                                      31
NOTE: Specific product, program, or agency minimum investment standards may differ; review product
guidelines for specific products. Gifts may not be used to meet reserve requirements; review product
summaries.

GIFT OF EQUITY
A Gift of Equity is treated as a liquid asset and must be documented with an executed gift letter. A gift of
equity is considered a Non-Arm‟s length transaction and not an eligible transaction with Interbank.

INELIGIBLE ASSETS
The following assets are ineligible for loans funded by Interbank:
    Cash on hand
    Sweat Equity
    Cash-Out proceeds from subject property
    Stock options
    Realtor‟s Commission received from subject property financial transaction
    Pooled Funds
    Restricted Retirement Funds – those with prohibitive withdrawal penalties or those that are not
        permitted to be withdrawn.
    Unsecured funds
    HELOC funds from subject property
    Borrower funds from signature loans, lines of credit on credit cards, overdraft protection on checking
        accounts.
    Stock options and non-vested restricted stock options
    Pledged stocks and/or bonds used as loan security or to offset a margin account are not considered
        liquid assets.

RESERVES
Determined by DU findings. All recommendations must be followed. Acceptable DU scenarios may follow the
reserve requirements recommended within the findings.

Additional reserve requirements for subject investment and second homes regardless DU findings:
      Investment properties: Six (6) months subject PITI + two (2) months all other financed REO PITI
      Second Home: Two (2) months subject PITI + two (2) months all other financed REO PITI

Departure residence – borrower must explain intent of current primary residence of one of the
following:
     Pending Sale that will not close prior to purchase new subject purchase transaction or departure
       residence being converted to second home:
           o Borrower must include full PITI departure residence
           o Six (6) months reserves PITI both subject and departure residence (Interest Only requires
              minimum twenty-four months subject PITI)
           o Reduced reserve requirements two (2) months PITI with documented 30% equity departure
              residence as evidenced by appraisal 2055 or better dated within sixty (60) days Note date and
              ordered through Interbank‟s appraisal management company


WHOLESALE I Broker Guide (REV101211JC)                                                                   32
           o In order for departure residence to be considered second home – must meet general second
             home requirements (located in reasonable distance from primary residence or located in resort
             area).
      Departure residence converting to investment property:
          o If not using any rental income on departure residence
                   Six (6) months PITI both subject and departure residence (Interest Only requires twenty-
                     four months subject PITI)
                   Reduced reserve requirements two (2) months PITI with documented 30% equity
                     departure residence as evidenced by appraisal 2055 or better dated within sixty (60)
                     days Note date and ordered through Interbank‟s appraisal management company
          o If using rental income on departure residence, all of the following is required:
                   Borrower does not have to meet minimum two (2) year rental history
                   30% equity departure residence as evidenced by appraisal 2055 or better dated within
                     sixty (60) days Note date and ordered through Interbank‟s appraisal management
                     company
                   Copy fully executed lease agreement on departure residence
                   Cancelled security deposit check from tenant deposited into borrower‟s account
                   75% of the rental income can be used to offset departure residence PITI.

Acceptable Funds for Reserves:
    Assets on hand in excess of funds to close and documented by the bank statements.
    Net proceeds from the sale of a previous asset that is not for closing the subject property.
    Retirement Accounts – may need to document that the account funds can be liquidated if required.
      This condition may be added at the underwriter‟s discretion; see Retirement.
    Annuities
    Borrowed funds-secured
    Bridge loan proceeds
    Business funds
    Life insurance Net Cash Value
    Sale of assets

NOTE: Gift funds are never acceptable as reserves.

LARGE DEPOSITS
The following must be explained and documented into the loan file:
    Any deposit (singularly or cumulative) must be sourced and documented whether or not the funds are
        needed for closing
    If source large deposit is from another asset account – documentation for the other asset must be
        provided.
    Any deposit larger than one month‟s salary; and
    Cumulative monthly deposits larger than one month‟s salary.
    “Backing-out” the funds from the account balance is not acceptable in lieu of source and documentation
        of large deposits.




WHOLESALE I Broker Guide (REV101211JC)                                                                   33
REAL ESTATE PROCEEDS
To use proceeds from the sale of a currently owned other-real-estate property for closing-fund requirements
post-closing liquidity / cash reserve ratio calculations, use the following guidelines:
    The closing of the other real estate transaction must take place prior to or simultaneous with the subject
        closing; and
    The net proceeds to the borrower must be verified via either a:
            o HUD-1 statement, or
            o Closing statement, or
            o Equity statement from the closing agent.

RENT CREDIT FOR OPTION TO PURCHASE
Option to Buy (also known as “Lease Option to Purchase”)
The property seller may give the purchaser / borrower credit toward the down payment for a portion of previous
rent payments made by the purchaser under a documented rental purchase (Lease Option) agreement that
had a minimum original term of at least twelve (12) months.

The purchaser / borrower is not required to make a minimum cash down payment from personal funds for the
rent credit to be applied toward the down payment.

Documentation Requirements:
    A copy of the rental / purchase agreement must be provided to verify the monthly payments and the
     specific terms of the lease with option to buy.
    The appraiser must determine the “market” rent in the area
        o The amount of the rent applied toward the down payment is the difference between the market
             rent and the actual rent paid.
    Copies of the cancelled checks or money order receipts are required to verify payments made.

RETIREMENT
Retirement accounts (IRAs, Keogh accounts, 401K accounts, etc.) are subject to withdrawal penalties and tax
surcharges if withdrawn prior to normal distributions.

Because of these restrictions, the following guidelines apply to the use of retirement accounts for closing-
funding requirements:
    60% of current value of IRAs, Keogh accounts, 401K accounts, and the cash value of annuities can be
       used to determine funds available for withdrawal / reserves.
    Most recent month(s) statement dated within forty-five (45) days of application date, as per DU
       reflecting the vested balance or percentage of vesting, any outstanding loans, the ending balance of the
       account and terms of withdrawals / loans.
    Proof of liquidation is required if funds will be needed for funds to close and 100% of the liquidated
       value can be used.

SALE OF STOCKS OR BONDS / MUTUAL FUNDS
Funds from the sale of stocks or bonds are acceptable as long as the following apply:
    70% of the current value must be used for funds to close / reserves
    The existence and value of the stock or bonds is verified.
    The stock value is verified with a current statement from the stockbroker.


WHOLESALE I Broker Guide (REV101211JC)                                                                      34
      Stocks / Securities statements must identify the following:
           o The institution or administrator, the account owner, the account number, all transactions, the
               period covered, and any outstanding loans and the ending balance
           o For security accounts – identify the stocks / securities
           o If the assets are needed for closing – proof of liquidation is required
      A copy of the stock certificate and dated newspaper stock price list must verify the value and existence
       of stock not held by a financial institution.

NOTE: Verification of sale is required only if the specific funds are needed for closing.

TAX DEFERRED EXCHANGE
A 1031 Tax Deferred Exchange is permitted as a source of funds for Investment properties under the following
guidelines:
     Permitted only when the property sold (exchanged) and the subject property are both investment
        properties.
     The sales contracts from the sale of the previous property (from which the 1031 assets are required)
        and the purchase of the subject property must state that a 1031 Deferred Tax Exchange is being
        utilized.
     The loan closing for the property sold and the subject property purchased through the exchange must
        be handled by a qualified intermediary.
             o The intermediary must be an independent third party such as a title company, escrow agent, or
                 exchange company and not a real estate agent, broker, attorney, accountant, banker, or
                 investment advisor.
     Reverse exchanges are not allowed because the borrower is not on title to the property at the time of
        closing.
     Subordinate financing is not permitted.
     The following documentation is required in the loan file:
             o Copy of the sales contract from both the sale of the previous property and the purchase of the
                 subject property.
             o 1031 Exchange Agreement and title transfer.
             o HUD-1 from the sale of the previous property and the purchase of the subject property.
             o Verification of receipt of funds from the intermediary.

VERIFICATION OF DEPOSITS
To substantiate a borrower has sufficient cash deposits and other assets available to complete the mortgage
transaction and retain adequate reserves after closing; the loan file must verify the amount in the borrower's
depository accounts (checking accounts, savings accounts and retirement accounts) for the two-month period
that precedes the date of the loan application.
     When there is a recently opened account, a recently received large deposit, or an account balance
        considerably greater than the average balance – the source of funds must be documented.
     The loan file must also verify the value of the borrower‟s other financial investments (stocks, bonds,
        mutual funds, etc.) as of the date of the loan application.

See Acceptable Funds for Reserves.

Bank Statements:
Bank statements are required even if a VOD is received from each depository.

WHOLESALE I Broker Guide (REV101211JC)                                                                      35
      Verify available funds for closing by obtaining from the borrower a copy of the applicable bank or
       investment portfolio statements that cover activity in the accounts for the most recent two-month period
       (or, if account information is reported on a quarterly basis, for the most recent quarter).
      The statements must be a copy of the original bank statements:
           o “Faxed” or statements / print-outs downloaded from the internet must clearly identify the name
                of the depository or investment institution and the borrower‟s name and the source of the
                information (e.g. the information is contained in the banner that is at the top of the document).
           o Bank or investment portfolio statements must clearly identify the borrower as the account holder
                and include:
                     The account number;
                     The time period covered by the statement (must include minimum thirty days transaction
                        history);
                     All deposits and withdrawal transactions (for a depository account) or all purchase and
                        sale transactions (for a financial portfolio account); and
                     The ending account balance.

CREDIT
OVERVIEW
Interbank requires that a borrower‟s current and past credit history be analyzed through the review of a credit
bureau report prepared by an independent licensed credit reporting agency or credit reporting repository.

Interbank accepts the following types of credit reports, depending on the circumstances of the mortgage
request.
     Residential Mortgage Credit Report (RMCR)
     AUS Credit Report – Three (3) file merged report pulled into the AUS

NOTES:
   Non-Traditional Credit Reports are not permitted under any circumstances.
   Interbank will not accept a new credit report with new credit scores unless original credit report that was
     used at time of underwriting has expired.
   DU will determine the number of acceptable minimum trade lines required.

AGE OF DOCUMENTS
All standard credit documentation used to determine the borrower‟s eligibility must be no more than:
      Ninety (90) days old for standard credit documents at the time of loan closing.
      Paystubs must be within thirty (30) days of application.
      Bank Statements must be within forty-five (45) days of application.

NOTE: Interbank reserves the right to request updated credit at our discretion.

BANKRUPTCY / FORECLOSURE
Interbank will fund / purchase loans where the borrower has a previous bankruptcy or foreclosure as long as
they meet the following guidelines:
     Applicable to the specific product, loans must receive a DU / Approve / Eligible, and meet the
       guidelines in this section.

WHOLESALE I Broker Guide (REV101211JC)                                                                        36
       Interbank will not fund / purchase a loan where the borrower is currently involved in a foreclosure or
        deed-in-lieu situation.

TOPIC                            DU AND LP – REGARDLESS OF THE FINDINGS:
Re-established Credit –          4-Years
Bankruptcy All but Chapter 13        Require a minimum four (4) year period of re-established credit from the
                                        bankruptcy discharge or dismissal date.
Re-established Credit –          2-Years from Discharge
Chapter 13                           Discharge is the successful completion of the Chapter 13 repayment plan
                                        (debts were repaid), OR
                                 4-Years from Dismissal
                                     Dismissal is the “forgiving” of an unsuccessful Chapter 13 plan (debts
                                        were not repaid and the failed Chapter 13 is dismissed).
Re-established Credit –          2-Years from Discharge / 4-Years from Dismissal
Chapter 13
Extenuating Circumstances –      Minimum two (2) years from discharge or dismissal. For all bankruptcy actions.
All Bankruptcy & Foreclosure
Multiple Bankruptcy Filings      Minimum five (5) years re-established credit for borrowers with more than one (1)
                                 bankruptcy filing in the past seven (7) years.
Foreclosure                      Seven (7) Years following completion of foreclosure proceedings.

                                 NOTES:
                                    Interbank will not refinance properties currently in foreclosure
                                      proceedings.
                                    Interbank will not make a loan to a borrower involved in a “short-sale”
                                      situation within four (4) years of the new application date.
                                          o See Foreclosure Underwriting and/or Short Sale Guidelines for
                                              details.

                                 See credit requirements in Bankruptcy Underwriting.

BANKRUPTCY UNDERWRITING
Extenuating Circumstances:
Extenuating circumstances are life events that result in a sudden, significant or prolonged reduction in income
or a catastrophic increase in financial obligation. Extenuating circumstances should not be judged solely by
the event, they must take into consideration the actual event, the severity of the resulting hardship and the
extent of the applicant‟s effort to resolve the situation.

For Example:
    A job layoff (the event) in itself should not automatically be considered an extenuating circumstance
       (even if it is supported by documentation from a third party). If, however the unemployment that results
       from a job layoff was prolonged and the loss of income was significant in relation to the applicant’s
       obligations and available assets at the time of the layoff, then the layoff can be considered as an
       extenuating circumstance.




WHOLESALE I Broker Guide (REV101211JC)                                                                         37
      A divorce (the event) should not be considered as extenuating circumstances unless, as the result of
       the divorce, the applicant had no reasonable options other than to default on his or her obligations and
       to file for bankruptcy protection.
      Illness or death of a primary wage earner.

Re-established Credit Considerations:
When reviewing loans with bankruptcies, Interbank will consider the following:
    Regardless of the reason for the bankruptcy, the underwriter must determine if the applicant has an
      acceptable payment record under the re-established history.
    The re-established history must reveal a payment record that illustrates the borrower now has the
      willingness and the ability to manage their finances.
    When the applicant‟s previous credit history includes a bankruptcy or foreclosure, their credit report
      must be current as of the date of the mortgage application. Additionally, the credit report under the re-
      established credit must include:
           o A minimum of five (5) credit references, active within the past twenty-four (24) months, with at
              least one (1) of the references being “traditional” (credit card, installment loan for a car, etc.) and
              one (1) being housing related.
           o If the housing item is not listed, copies of cancelled checks are required.
           o Housing: No payments past due since the discharge or completion of the bankruptcy.
           o Installment and revolving: No more than two (2) that were thirty (30) days past due in the most
              recent twenty-four (24) months, and non sixty (60) or more days past due since the discharge or
              completion of the bankruptcy.
           o No new public records for bankruptcies, foreclosures, deeds-in-lieu, unpaid judgments or
              collections, garnishments, tax liens, and so forth since the discharge or completion of the
              bankruptcy.

Documentation Requirements:
The following supporting documentation must be included in the loan file:
    Copies of the bankruptcy petition, schedule of debts and the discharge papers indicating which debts
        were discharged.
    Evidence that all debts not satisfied by the bankruptcy have been paid or are being paid in a
        satisfactory manner.
            o Only those payments or delinquencies that occurred during the bankruptcy are to be omitted
                from credit reporting. Those payments since discharge on reaffirmed debts must be verified
                and paid on time.
    A written statement from the applicant satisfactorily explaining the causes of the bankruptcy.

NOTE: Interbank reserves the right to request any additional documentation it may deem necessary to ensure
the re-establishment and maintenance of satisfactory credit for the borrower.

Foreclosure / Deed-in-Lieu Underwriting
If the borrower has filed a deed-in-lieu of foreclosure or sold a property that was a pre-foreclosure and the AUS
has not considered in the findings, the following overlays apply:
      Valid documentation must be provided to determine whether such an action has been completed in the
        past four (4) years
      A minimum two (2) year seasoning for the re-established credit following the sale of the property must
        be documented.


WHOLESALE I Broker Guide (REV101211JC)                                                                            38
      Additionally the following requirements must be applied if the incident is between four (4) and seven (7)
       years:
          o Purchase Transactions: The borrower must contribute the greater of 10% or the minimum
              required for the product. Gifts are not permitted.
          o Refinance Transactions: The minimum time elapsed must be seven (7) years to be eligible.

Short Sale Guidelines
    Refinance Transaction: A refinance on a write-down is ineligible.
    Purchase Transaction: For borrowers purchasing a short sale, non-arms length transactions are not
       eligible; see Non-Arms Length Transaction.
    Borrower with any property in a short sale situation makes that borrower ineligible for a transaction with
       Interbank.

COLLECTIONS, CHARGE-OFFS, JUDGMENTS, GARNISHMENTS, AND OUTSTANDING LIENS
Interbank will require collections or past due accounts to be paid off at or before closing, if DU findings require
payoff or if the collection exceeds $5000 for single or cumulative. Proceeds from the mortgage cannot be used
to pay-off collections / judgments unless transaction is cash out. Further documentation may be required, such
as a letter of explanation from the borrower and the creditor.

Interbank requires that all outstanding judgments and tax liens must be paid (satisfied) regardless of AUS
findings.

NOTE: Final decision to require pay-off of debts lies with the underwriter.

CONSUMER CREDIT COUNSELING (CCC)
The borrower cannot currently be in CCC and must have been out of CCC for a minimum twelve (12) months.

NOTE: Underwriters must carefully review borrowers with CCC to determine overall credit worthiness.
Interbank reserves the right to deny borrowers they deem, in their sole determination of risk, do not have a
good credit profile.

CREDIT REPORT INQUIRIES
Recent Attempts to Obtain New Credit
The presence of unrelated credit inquiries represents a higher credit risk.

All inquiries within one-hundred and twenty (120) days from date of credit report will require an LOX from the
borrower with the exception of the inquiry of the actual credit report. Additional documentation may also be
required once the LOX has been received.
      When the credit report indicates that recent inquiries took place, the Interbank must confirm that the
        borrower has not obtained any additional credit that is not reflected in the credit report or on the
        mortgage application for consideration in the AUS.
      If, in Interbank‟s determination, inquiries on the credit report are not adequately addressed in the loan
        file, Interbank reserves the right to pull a new credit report during our pre-purchase / funding audit to
        authenticate that no new significant debt has been added that will affect the overall qualifying of the
        loan.
      Any credit inquiry relating to recent mortgage application from other broker will require evidence
        cancellation / approval letter from the broker in addition to the LOX from borrower on the inquiry.



WHOLESALE I Broker Guide (REV101211JC)                                                                          39
CREDIT SCORE (FICO)
Minimum Credit Score (FICO) must be met for each loan, regardless of AUS approval/acceptance; see the
product matrices within the Product Suites for details.

Credit scores are required on the credit reports for all borrowers and co-borrowers. To arrive at an individual
borrower‟s useable score:
     If three (3) scores are provided for the borrower, the middle score is used to underwrite.
     If two (2) scores are provided for the borrower, the lower score is used.
     If only one (1) score is provided, the borrower is not eligible for loans requiring MI.
     To arrive at the score used to validate the salability of the loan to Interbank – use the lowest of all of the
        borrower‟s individual useable score.
     It is the broker‟s responsibility to ensure that the credit score for the loan is less than or equal to (>) the
        Interbank minimum required FICO for the product.

DISPUTED CREDIT INFORMATION
Should a borrower indicate that any significant information in the credit file is inaccurate a request should be
made to the credit reporting company to confirm accuracy. If the credit reporting agency and/or agencies
indicate the information in the loan file is correct, the underwriting decision will be upheld. If the credit reporting
agency and/or agencies indicate the information is incorrect:
     The borrower should be encouraged to contact the credit report agency / agencies to have the
        information corrected.
     If there is not enough time to get the information corrected and an updated credit report, the Seller
        should contact Interbank underwriting for assistance.
     Credit report must have disputed accounts removed from credit and DU must be rerun tied to new
        credit no longer reflecting warnings for the disputed accounts.
            o Can be waived if all of the following apply to the disputed account:
                     Is the only disputed account on DU findings
                     Has $0 balance or “paid in full” / “resolved”
                     More than twenty-four (24) months old, based on date of dispute
                     Minimum Credit Score 700

ELECTRONIC CREDIT REPORTS
Electronically obtained credit bureau reports are permitted from an automated underwriting system (AUS) as
follows:
      Must be ordered from one of the three credit agencies:
           o Equifax Information Svc. LLC
           o Experian Credit Data
           o Trans Union
      Must be a Three Bureau In-file Merged Report
      Credit risk scores are made available to the AUS
      The report must contain
           o OFAC alerts
           o Social Security Number alerts




WHOLESALE I Broker Guide (REV101211JC)                                                                              40
MORTGAGE HISTORY
Follow DU requirements for mortgage / rental history.

At the time of application, borrower must be current on their 1st and 2nd mortgage payments on subject
property. In addition, no more than 2 x 30 lates in the past twelve (12) months for both 1st and 2nd mortgages
(0 x 30 for DU Refi Plus).

NON-TRADITIONAL CREDIT
Interbank does not permit the use of non-traditional credit (not presented by the credit reporting agency).

RESIDENTIAL MORTGAGE CREDIT REPORT
Residential Mortgage Credit Report (RMCR) provides current, verified, and detailed borrower information. The
report agency verifies:
    Most recent two (2) year employment history
    Residence history
    All debts, including terms, balances, and ratings.
    Past due payments
    Available legal information through public records, such as judgments, foreclosures, garnishments, and
        bankruptcies.
    Joint or combined report for a married couple must contain all debts of both parties or separate reports
        must be provided.
    Individual separate reports must be run for un-married borrowers
    OFAC alerts
    Social Security Number alerts

RESTRUCTURED / WORKOUT LOANS
Restructured loans are not eligible transactions. The following are examples of restructured loans:
    Forgiveness of any portion of original terms of principal and interest.
    Restructure of original mortgage due to borrower‟s inability to repay on original terms of loan.
    Converting any portion of the original mortgage from secured to unsecured.

INCOME AND EMPLOYMENT
OVERVIEW
The underwriter must carefully evaluate the borrower‟s employment and income history, stability and likelihood
of continuance and must document the most current last two (2) years of employment income history, using
Verification of Employment (VOE) forms and pay-stubs evidencing most current year-to-date paystub, must be
within thirty (30) days at the time of underwriting and W-2 forms for the past one (1) year.

DU
Loans receiving an Approve through DU may follow the AUS findings for acceptable documentation of income
in lieu of the documentation stated within.
      Interbank will average out income that substantially increased in most recent year if it is greater than
         20% from prior year or use most recent year if income is declining.



WHOLESALE I Broker Guide (REV101211JC)                                                                        41
           o   For Example: If borrower was previously self-employed and now salaried, borrower’s income
               history must be taken into consideration and be compared with most recent year’s tax returns to
               determine income if significantly increases.
      Interbank always requires paystubs, W-2‟s and/or tax returns.
      A Verbal Verification of Employment (V-VOE) at time of underwriting and twenty-four (24) hours prior to
       funding; see Verbal Verification Requirements for details.
      A fully executed 4506-T, regardless of the AUS findings must be in the loan file for the most recent two
       (2) years; see IRS 4506 for details.
      Identity of Interest where the borrower works for a family owned business or for the broker, Interbank
       will require two (2) years tax returns, paystubs, and a full VOE.

ALIMONY / CHILD SUPPORT / SEPARATE MAINTENANCE
In order for alimony or child support to be considered as acceptable stable income, the borrower must have
received income for at least three (3) consecutive months as stated in DU findings and it must continue for at
least three (3) years after the date of the original mortgage loan application.

Interbank will accept as verification of the award of alimony and/or child support one of the following
documents:
     Copy of the divorce decree, or
     Formal separation agreement recorded and signed by judge, or
     Court records, and
           o Any other legal agreement or court decree that describes the payment terms, or a copy of any
               applicable state law that requires alimony, child support or maintenance payments and specifies
               the conditions under which the payments must be made.
           o The document must specify the amount of the award and the period of time over which it will be
               received. The borrowers must provide evidence that the funds have been received for the last
               three (3) months.
     Three most recent consecutive months‟ evidence of receipt of income: cancelled checks, bank
       statements (cannot be joint account with payor) or Federal income tax returns.

NOTE: If full or partial payments have been made on an inconsistent basis, income cannot be considered.
Documentation for alimony, child support income is not required if the borrower does not use the income to
qualify.

ANNUITY
Copy of the most recent annuity statement showing amount, date, frequency, and duration of benefits
evidencing continuance for minimum three (3) years.

AUTO ALLOWANCE
Auto allowance can be used as qualifying income if borrower has two (2) year history of receipt from employer
as evidenced on their paystubs and two (2) years W-2s and can be expected to continue for three (3) years.
Two years tax returns required. Any losses shown on Form 2106 or Schedule C from their tax returns must be
deducted from this income.

BOARDER INCOME
Rental income from boarders in a single-family primary residence or second home may not be considered as
income. However, may be considered acceptable if received from a live-in aide for a disabled borrower. The
Aide must present documentation to demonstrate shared residency and payment of rent.

WHOLESALE I Broker Guide (REV101211JC)                                                                      42
BONUS AND OVERTIME
Bonus and Overtime may be included if the income has been:
    Consistently received for the most recent two (2) years
    Employer confirms its likelihood of continuance
    Stable
    Must be averaged, unless declining and then most recent year-to-date will be used.
    Full VOE will be required to break down base and bonus / overtime for year-to-date and past two (2)
      years history.

CAPITAL GAINS
Capital gain income is generally a one-time transaction (sale of stocks or other one-time sale of assets);
therefore, it is generally not considered stable monthly income.

However, it may be utilized as a compensating factor if:
    Normal and recurring portion of the borrower‟s income.
    When using capital gains as steady income from your profession, the following requirements must be
     met:
           o Two years tax returns – showing a consistent history of capital gains being the borrower‟s
              “salary”.
           o If income is declining, most recent year will be used; otherwise an average of the tax returns will
              be used to determine qualifying income. Three (3) years returns required if income is
              inconsistent and greater / lower than 20% than prior year.
    Most recent asset statements must be provided to support sufficient funds for three (3) years
     continuance.

COMMISSION INCOME
Expenses reported on Form 2106 of the borrowers tax returns:
    Must be deducted from the income to arrive at the net commission income and the net income must be
      averaged over the most recent two (2) years.
    Full VOE is required to break down base and commission income for year-to-date and past two (2)
      years.
    Two years tax returns (if commission income is more than 25% of their income)
    Two years W-2s

NOTE: Declining income sources should not be averaged, and an explanation for the decline should be
obtained. The most recent lower income would be used for qualification purposes.

DISABILITY BENEFITS
Disability benefit payments should be treated as acceptable stable income unless the terms of the disability
policy specifically limits the stability or continuity of the benefit payments.
     Must have a remaining term of three (3) years
     Benefits that will decrease to a lesser amount within the next three (3) years because of long-term
        conversion, the lesser amount should be utilized in qualifying the borrower.
     Copy of disability policy or statement is required
     Statement from benefits‟ payer (e.g. insurance company, employer, etc.) is required.


WHOLESALE I Broker Guide (REV101211JC)                                                                       43
DIVIDENDS AND INTEREST
Income from bank accounts, bonds, savings bonds, money market funds, and cash dividends from stocks are
acceptable if verified.

Such income should be adjusted if the assets are liquidated. The previous two (2) year tax returns, including
applicable schedules, are required to verify the amount and stability of the income as well as develop a two (2)
year average of the income, unless declining which then the most recent year will be used.

Most recent asset statements must be provided to support sufficient funds available for three (3) years
continuance.

FAMILY MEDICAL LEAVE OF ABSENCE (FMLA)
If borrower is currently on FMLA and not expected to return to work prior to loan closing, borrower can only use
current amount of income receiving on FMLA. If borrower will return to work prior to loan closing, full-time /
regular pay may be used for qualifying if evidenced on paystub and full verification of employment from
employer stating borrower is back on full-time basis.

FOSTER CARE INCOME
Foster income received from a state or country sponsored organization may be considered acceptable with a
two (2) year history and the likelihood of continuation.

NOTE: A twenty-four (24) month history is required for qualifying income does not represent more than 30% of
the total gross income that is utilized in qualifying the borrower.

Documentation Requirements:
    Letters from the state agency providing the income
    Copies of deposit slips or bank statements confirming the regular deposits consistently for three (3)
     months.

FOREIGN INCOME
Interbank will not accept foreign income unless it is reported on U.S. Tax Returns.

MILITARY INCOME
Base military pay, in addition to the following, are permitted:
    Flight or hazard pay
    Rations
    Clothing allowance
    Quarters‟ allowance
    Proficiency pay

NOTE: Income paid to military reservists while they are fulfilling their reserve obligations is also acceptable if it
satisfies the same stability and continuity tests applied to second-job income.

MINISTER / CLERGY INCOME
Ministers / Clergy members can often receiving housing allowances that can be used as qualifying income if
evidenced on their paystubs and W-2s and a letter from their employer addressing continuance of housing
allowance.


WHOLESALE I Broker Guide (REV101211JC)                                                                            44
NON-TAXABLE INCOME
Interbank must verify that the particular source of income is nontaxable and both the income and its tax-
exempt status are likely to continue for the next three years.
     If the income is nontaxable and the income and its tax-exempt status are likely to continue, the
       underwriter may develop an “adjusted gross income” for the borrower by adding an amount equal to
       25% of the nontaxable income to the borrower‟s income.
     If the actual amount of federal and state taxes that would generally be paid by a wage earner in a
       similar tax bracket is more than 25% of the borrower‟s nontaxable income, the underwriter may use that
       amount to develop the “adjusted gross income”.
     This adjusted gross income should be used in calculating the borrower‟s qualifying ratio.

MORTGAGE CREDIT CERTIFICATE (MCC)
Not permitted as an acceptable source of income.

Loans with an MCC are not eligible for funding / purchase.

NOTE RECEIVABLE INCOME
To be considered as an acceptable source of income the following applies:
    Must evidence continuance for at least three (3) years
    Copy of the note to establish the amount and length of payment
    Must have been received for the last twelve (12) months
    Acceptable evidence includes:
          o Deposit slips
          o Copies of signed Federal income tax returns filed with IRS
          o Copies of bank statements reflecting deposit of funds

NOTE: Payments on a newly executed Note that specifies a minimum duration of three (3) years may not be
used as stable income.

PART-TIME, SECOND, OR MULTIPLE INCOME
All types of supplemental income must be received, uninterrupted, for the most recent two (2) years and
supported by IRS W-2 forms:
     Two years W-2s
     Full VOE‟s both jobs

PENSION / RETIREMENT
Income from retirement accounts must be verified by the employer‟s statement or benefit letter, tax returns or
IRS W-2 forms or 1099s.
     If bank statements are used as the primary verification source, they must confirm regular deposits.
     Two years tax returns to evidence two (2) years‟ history of IRA distribution
     Most recent IRA statement evidence sufficient assets for continuance three (3) years income (60%
      value must be used) and YEAR-TO-DATE distribution should be in line with qualifying income.

PUBLIC ASSISTANCE
Public Assistance may be considered as an acceptable income source if the following apply:


WHOLESALE I Broker Guide (REV101211JC)                                                                     45
      Received for the past two (2) years
      Likely to continue for the next three (3) years
      Documented by letters or exhibits from the paying agency stating the amount, frequency, and duration
       of the benefit payments.

RENTAL INCOME
When the subject property is a primary residence 2-4 unit:
If the underwriter uses rental income from the subject property in qualifying the borrower, Interbank requires
the following:
      Operating Income Statement, and the following:
             o Current Lease (if subject was acquired subsequent to filing previous year‟s tax return),
             o Most recent Federal income tax return (if subject was acquired prior to filing previous year‟s tax
                 return).
      Net rental income will be obtained from Form 216 (if the transaction is a purchase or if the subject was
         acquired subsequent to filing previous year‟s tax return).
      Net rental income will be obtained from Schedule E (if the subject was acquired prior to filing previous
         year‟s tax return) from the Line 3: Gross Rents.
      Subject net rental income will be determined by using 75% of the lower of the three (lease, tax returns,
         or appraisal Form 216) minus proposed PITI for Net Rental Income.

When rental income applies to properties owned by the borrower other than the subject property:
If the underwriter uses rental income to qualify the borrower, the following apply:
      Interbank will require the following:
            o Most recent year Federal tax returns with all schedules (for properties acquired prior to filing
                previous year‟s tax return)
      Reduced documentation scenarios utilizing positive cash flow require a two (2) year history of receipt of
        specific stated earnings
      Net rental income / loss will equal 75% of the gross rent per the lease (for properties acquired
        subsequent to filing previous year‟s tax return) minus PITI, or
      Net rental income / loss will be obtained from Schedule E (for properties acquired prior to filing previous
        year‟s tax return) Line 3: Gross Rents minus Line 19: Total Deductions (Total Deductions should
        include taxes, insurance, and HOA).

When the subject is an investment property:
If the underwriter must use rental income from the subject property to qualify the borrower, Interbank will
require the following:
      Minimum two (2) years landlord experience, and
      Evidence of six (6) month rental loss insurance, and
      Current Lease (if subject was acquired subsequent to filing previous year‟s tax return), or
      Most recent year federal tax return with all schedules (if subject was acquired prior to filing previous
        year‟s tax return).
      Net rental income / loss will be obtained from Form 216 (if the transaction is a purchase).
      Net rental income / loss will be obtained from Form 216 (for properties acquired subsequent to filing
        previous year‟s tax return).
      Net rental income / loss will be obtained from Schedule E (for properties acquired prior to filing previous
        year‟s tax return) Line 3: Gross Rents.

WHOLESALE I Broker Guide (REV101211JC)                                                                         46
      Subject net rental income will be determined by using 75% of the lower of the three (lease, tax returns,
       or appraisal Form 216) minus proposed PITI for Net Rental Income.

NOTE: Appraisal must include both rent schedule (1007-1 unit or 1025-multi-family unit) and operating income
216, regardless using rental income to qualify or not on subject investment property.

ROYALTY PAYMENTS
To be considered as an acceptable income source, the following apply:
    Most recent two year tax returns, including Schedule E.
    Document minimum twelve (12) month receipt of income
    Income to continue for the next three (3) years

SALARIED BORROWER
A salaried borrower is defined as a wage earner that derives income through employment at a business where
there is little or no ownership interest (<25%). Compensation may be based on an hourly, weekly, monthly, or
semi-monthly basis.

Wage earners employed by a family member or working at a family business must provide the last two (2)
years tax returns with all schedules and two (2) years W-2s.

Less than two (2) years employment history may be considered at the underwriter‟s discretion for recent
college graduates or military personnel.

SALARIED INCOME HISTORY
Interbank requires salaried borrowers to exhibit the following employment standards:
     A minimum of two (2) years employment history
     Prior to closing, Interbank requires that the Seller independently verify borrower is still employed via a
       V-VOE; see Verbal Verification Requirements for details.
     Borrowers who are salaried, but also claim self-employment losses, such as Schedule C must also
       deduct the self-employment losses.

SALARIED DOCUMENTATION
Standard sources of proof of employment for a salary / wage-earning borrower are:
    W-2 for the past one (1) year
    Current paystub evidencing thirty (30) day earnings and/or showing year-to-date (YTD) income – must
      have employer‟s and borrower‟s name on paystub and be computer-generated.

NOTE: Handwritten paystubs will not be accepted unless supported by a written VOE and tax returns.
Interbank also requires two (2) years tax returns and two (2) years W-2s to support handwritten paystubs.

SALARIED VERIFICATION OF EMPLOYMENT
“Stand alone” Verifications of Employment are not permitted for verification of employment or income.

VOE‟s must always be supported by a copy of the most recent paystub validating the current “salary” and the
current year-to-date and:
     W-2‟s for most recent year
     Sellers must verbally verify the Borrower(s) employment prior to closing.



WHOLESALE I Broker Guide (REV101211JC)                                                                       47
See Verbal Verification Requirements for details.

SEASONAL INCOME
Seasonal income can be considered as stable income if the borrower has worked in the same line of seasonal
work for the past two years and the borrower‟s employer indicates that there is a reasonable expectation that
the borrower will be rehired for the next season.

Requirements are as follows:
    Two years tax returns
    Two years W-2s and 1099s
    Income must be calculated over the most recent twenty-four (24) months.
    If income is declining, use the most recent year‟s income under close underwriter review.

SOCIAL SECURITY
Benefits that have a defined expiration date must have a remaining term of at least three (3) years to be
considered.

Acceptable verification for Social Security benefits includes one of the following or as stated by DU:
    A copy of the Social Security Administration‟s award letter.
    Copies of the borrower‟s two most recent bank statements to confirm regular deposit of the payment.
    Signed tax return or W-2s / 1099s for the most recent one (1) year.
    Nontaxable portion of Social Security income from tax returns Line 20a minus Line 20b can be grossed
      up 25%.

SELF-EMPLOYED BORROWERS
Self-employed borrowers add an additional layer of risk, since the main source of income for self-employed
borrowers is their private business.

Self-employed borrowers income depends on the continuity of the business.                 Therefore, specific
documentation relating to the business is required for the borrowers who are self-employed.

The following are considered to be “self-employed”:
   1. Individuals who own at least 25% of a business
   2. Individuals whose combined business interest comprise 25% or more of the total

SELF-EMPLOYED DOCUMENTATION
Handwritten paystubs are not acceptable unless supported by computer generated W-2‟s and/or signed 1040‟s
and Form 4506-T from the IRS covering the appropriate period.

Declining income cannot be averaged; most recent years‟ income will be used. If income has significantly
increased past two (2) years, income will be averaged. In general, DU‟s findings will determine documentation
requirement of number years tax returns, unless otherwise warranted by the underwriter (such as change of
ownership in business-going from self-employed to salaried, or vice versa).

Standard sources of proof of employment for a self-employed borrower are:
    Sole Proprietorship
          o Last one (1) year‟s personal 1040s


WHOLESALE I Broker Guide (REV101211JC)                                                                    48
          o Schedule “C”
      General and Limited Partnership, Limited Liability Corporations, and “S” Corporations
          o Last two (2) years‟ personal 1040s
          o Last one (1) year‟s K-1s
          o All associated schedules
      Corporations
          o Last one (1) year‟s personal 1040s
          o Two years‟ W-2s

SELF-EMPLOYED INCOME HISTORY
Self-employed borrowers must have a history of stable and durable income for the previous two (2) years. A
written income analysis should be prepared and included in the loan file. If income is declining, the most recent
tax returns will be used to determine income. If income has drastically increased (more than 20%) from the
most recent returns filed, Interbank will take a two (2) year average of the tax returns and require two (2) years
returns regardless DU findings.

Prior to Closing:
Interbank requires that the Broker independently verify the existence of the business via a V-VOE through the
CPA, business license or telephone listing; this verbal verification should be included in the loan file. See
Verbal Verification Requirements.

TIP INCOME
Acceptable if properly documented:
    Received for the past two (2) years
    Likely to continue for the next two (2) years
    Copies of the past two (2) year tax returns
    Full VOE breaking down base and tip income

TRAILING BORROWER INCOME
Trailing Borrower Income cannot be included as it is based on projected income.

TRUST INCOME
      A copy of the Trust Agreement or the trustee‟s statement confirming the amount, frequency, and
       duration of the payments should be provided.
      The income must continue at least three (3) years to be considered as income.
      Validation of the asset and continuation of the trust income must be documented.
      Borrowers completely relying upon trust income for the mortgage repayment must provide copies of the
       trust agreement and the most recent two (2) years signed and dated Federal tax returns, with
       supporting schedules; the borrowers should have personal access to the trust assets.

UNACCEPTABLE SOURCES OF INCOME
Income derived from any of the following may not be used in qualifying income:
     Income based on Future Earnings
     Draw Income
     Capital withdrawals



WHOLESALE I Broker Guide (REV101211JC)                                                                        49
      Capital Gains (unless the borrower is in a business that generates capital gains income, see Capital
       Gains)
      Expense / Auto Reimbursement
      VA Education Benefits
      Income not listed on tax returns
      Illegal income
      Any income that cannot be documented and verified

UNEMPLOYMENT BENEFITS
Acceptable if properly documented:
    Received for the past two (2) years
    Likely to continue for the next two (2) years
    Copies of the past two (2) year tax returns
    Typical in field of borrower‟s employment position

VA BENEFITS
To be considered as an acceptable source of income, the following apply to VA Benefits:
    Must be documented by a letter or distribution form from the Department of Veterans Affairs
    Must continue for the next three (3) years

NOTE: Education benefits are not acceptable.

QUALIFYING RATIOS AND LIABILITIES
OVERVIEW
Each product has specific qualifying ratio requirements published in the product summary.

PRODUCT SUITES
Each product subset within the product suite notes the maximum qualifying ratios for that particular product. If
a ratio restriction is noted in a specific product subset, those ratios must be met regardless of the AUS findings.

HOUSING PAYMENT RATIO
The monthly housing expense is the sum of the following charges on the primary residence (or new loan on a
primary residence) divided by the borrower‟s stable monthly income:
     Monthly principal and interest payment on the Borrower‟s primary home and
     1/12th of the annual hazard insurance premium
     1/12th of the annual real estate taxes
     1/12th of the annual flood insurance premium, when applicable
     Monthly leasehold payments, when applicable
     Monthly HOA dues, condominium maintenance fees, monthly assessments, when applicable
     Monthly payment for other financing, when applicable
     For equity lines of credit the payment made on the outstanding balance should be used for qualification.




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DEBT-TO-INCOME RATIO
The Debt-to-Income (DTI) ratio compares the borrower‟s total monthly obligations with their qualified monthly
gross earnings. A favorable comparison validates the ability of the Borrower to repay the loan based on his
financial strength.

The DTI is calculated by the sum of the following divided by the Borrower‟s stable monthly income:
    Monthly housing expense on the Primary as calculated above
    All installment debt
    All revolving debt
    Alimony, child support or maintenance payments with more than ten (10) payments remaining
    Real estate net rental losses from all investment properties owned
    Second Home total housing debt, if applicable
    Any other obligation where a monthly payment is required

NOTE: Interbank does not allow any debt, revolving o installment, to be paid down to ten (10) months to
exclude.

ALIMONY
If a borrower is paying alimony, the payment must be considered a debt.

AUTOMOBILES
Payments on all automobile installment loans and automobile leases, regardless of the remaining number of
payments, must be included in the calculation of recurring monthly expenses.

Car allowances may be used to “off-set” car payments, but the car payments may not be “ignored”.

REVOLVING DEBT
Monthly Payments (or 5% of the outstanding balance or $10, whichever is greater, if a monthly payment is not
provided) on revolving accounts, regardless of the balance, must be included in the total debt to income
calculation.

OPEN 30-DAY CHARGE ACCOUNTS
Thirty (30-) Day Charge Accounts (also known as open accounts), typically AMEX credit cards, the payment is
not included in the debt ratios. However, the borrower must have enough sufficient assets to cover the unpaid
balance.

STUDENT LOANS
Student loans must be included in debt ratio calculation regardless of deferred status. If a payment is not
indicated on the credit report, a copy of the borrower‟s payment letter or forbearance agreement is required to
determine the payment amount to use in calculating the borrower‟s total monthly obligations. If not available,
the payment will be calculated at 1.5% of the balance.

PROPERTY
OVERVIEW
Interbank‟s appraisal process fully complies with the Home Valuation Code of Conduct (HVCC). Interbank
orders appraisals through its approved Appraisal Management Companies (AMCs) which are independent and
have no affiliation with Interbank, or its principals or officers.


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See Interbank’s HVCC Policies and Procedures for complete information.

APPRAISAL ORDERING
All appraisals are ordered through its Interbank‟s approved AMCs. Orders are placed by Interbank employees
that are not in a sales or loan production function. The AMC selected is based on a rotational or geographic
basis.

RIGHTS OF INTERBANK
Interbank reserves the right to:
     Question the appraiser‟s findings or request additional information from the appraiser if deemed
       necessary in Interbank‟s sole judgment.
     Choose to accept, or not, appraisals completed by appraisers that do not meet its guidelines and
       standards.
     Take disciplinary action (up to and including legal action) against any appraiser or other third party
       vendor with the appropriate governing entities.
     Request new or additional appraisals at our sole discretion of risk.
LIMITATIONS
Interbank does not permit provisional appraisers or appraiser trainees to solely complete appraisals for loans
sold to Interbank due to the limited education, experience, and training of these appraiser classifications.

A supervisory appraiser must countersign the report and perform an interior inspection of the subject property
for each appraisal completed by a provisional or appraiser trainee.
MARKET CONDITIONS ADDENDUM
Effective for appraisals dated on / after April 1, 2009, Interbank will require the Fannie Mae Market Conditions
Addendum (Form 1004MC) to be completed in full compliance with requirements as outlined in Fannie Mae
Announcement 08-30.

AGE OF APPRAISAL
Ninety (90) days old at time of closing.

APPRAISAL FORMS
The following is a listing of appraisal forms to be utilized for all property types eligible for financing:
    The most recent revision of the listed appraisal form must be used.
    Full appraisals are required regardless DU findings for:
           o Cash-out transactions
           o Loans requiring MI
           o Subject investment properties (unless PIW being utilized)
           o Subject condo
           o Foreclosures
           o Interest-Only loans
           o Non-Arms Length transaction
    Investment subject properties must include both rent schedule (Form 1007-1 unit or 1025-multi-family)
        and operating income (Form 216) on appraisal regardless of rental income being used.




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FORMS
FORM                            DESCRIPTION / USAGE
FNMA 1004                       Used for single-family properties, both attached and detached including PUD and
                                site-detached condominiums.
FNMA 1004D                      Used for appraisal updates and/or completion reports for all 1-4 unit appraisal
                                reports; not accepted by Interbank for recerts / updates. New appraisal must be
                                ordered once original appraisal is expired.
FNMA 1004MC                     Used to provide market condition information. Required on all appraisals.
FNMA 2055                       Streamlined version of the 1004 / 70. May be used as instructed by an automated
                                underwriting system and as permitted by the product summary.
FNMA 1075                       Used for an exterior only inspection of a condominium; not accepted by Interbank
                                regardless DU findings.
FNMA 1073                       Used for condominium properties; required for all condominiums regardless DU
                                findings.
FNMA 1025                       Used in the appraisal of 2- to 4-unit properties (a duplex, triplex, or fourplex).

INVESTMENT APPRAISAL FORMS
FORM                            DESCRIPTION / USAGE
FNMA 216: 1-4 Unit              Form required for 1-4 unit owner occupied and non-owner occupied rental
Investment Property             properties where the borrower is using rental income to qualify; required by
Operating Income Statement      Interbank regardless of borrower using rental income to qualify and AUS findings.
FNMA 1007: Single Family        Form required for single-family properties (1-unit investment only) regardless of
Comparable Rent Schedule        borrower using rental income to qualify and AUS finding; 2-4 unit rent schedule is
                                included on Form 1025.
NOTE: Evidence of the marketable rent is always required.

STREAMLINE APPRAISAL FORMS
Permitted as applicable to the AUS and the Product Summary
FORM                            DESCRIPTION
Form 2055: FNMA / FHLMC            Quantitative Analysis Appraisal Report is for use in both an “interior /
                                      exterior” and “exterior only” inspection.
                                   For an “exterior only” inspection, the appraiser must be able to obtain
                                      sufficient information or reconcile discrepancies between the data sources
                                      utilized.
                                   If the appraiser is unable to do this, the report must be upgraded to include
                                      an “interior” inspection.
Exterior Only Requirements              A street map that shows the location of the subject property and the
                                         location of the comparable sales.
                                        A photograph of the front of the subject property. The appraiser is not
                                         required to photograph the street scene or the comparables, but is required
                                         to physically inspect the subject neighborhood and the comparable sales.
Form 2075: DU Property                  Form 2075 exterior only inspection may be acceptable to Interbank as
Inspection Report                        approved per DU and loan program type.

                                See above loan programs where full appraisal is required regardless DU findings.


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FORM                            DESCRIPTION
Photograph Specifics:           Photographs must be originals that are produced either by photography or
Subject                         electronic imaging. We do not require photographs of comparable rentals and
                                rental listings.

ADVERSE MARKETING CONDITIONS
The level of collateral risk associated with housing trends indicating values are unstable or declining combined
with the risk of special loan products, purposes and/or occupancy, may require a reduction in the LTV / CLTV /
HCLTV for a given loan.

Special Appraisal Requirements for Adverse Market Conditions:
Properties with adverse marketing conditions (i.e. declining values, over supply, or marketing times in excess
of 6-months) require careful review and the following specific required support documentation:
     The maximum LTV / CLTV / HCLTV of any property located in a soft or declining market is 90.00%.
     At least two of the three comparables must be dated within ninety (90) days‟ of the appraisal date:
           1. If the appraiser is unable to provide two (2) comparables within ninety (90) days and/or current
               listing(s), the appraiser must provide a detailed explanation and identify whether value
               adjustments resulted.
           2. The explanation from the appraiser must be consistent with other tools utilized to review the
               appraisal.
           3. When the appraiser is unable to provide this (or other) information, second level reviews
               through Interbank escalation processes may be required on loans underwritten by Interbank.
     A minimum of two (2) listing or pending sale is required as a supporting document.
     The appraiser must address the impact on marketability and value of both favorable and unfavorable
       factors.
           o The appraiser must avoid using subjective, racial or stereotypical terms, phrases or comments
               within the appraisal report.
     Days on the market must be reported for the subject property and each comparable sale and must
       support the Average Marketing Time listed on page 1 of the Appraisal Report.

AGRICULTURAL PROPERTIES
Agricultural properties such as working farms, ranches, orchards, other income-producing farm-type properties
and undeveloped land or land-development type properties are not eligible.

See Outbuildings for additional details.

COMPARABLES
All current Fannie Mae / Freddie Mac appraisal guidelines must be followed when choosing comparables to
support the value of any property. New projects (condos, condo conversions, new subdivisions, and PUD
projects) all require extra diligence to ensure the value is supported.

New Projects and/or New Subdivisions Comparable Requirements:
   One comparable from inside the subject development / project.
   A minimum of one (1) comparable from outside the development / project and/or from outside the
      influence of the developer.
   Additionally, if possible a minimum of two (2) re-sale comparables to verify that current transactions
      have been exposed to the open market.



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           o   If re-sales cannot be obtained, the appraiser must address and adequately support the final
               valuation of the property.

CONDOMINIUM OVERVIEW
Unless excluded by specific product guidelines, Interbank will fund / purchase loans that are secured by
properties located in a condominium project (condos) as long as they meet the requirements outlined in this
section.

See the product guidelines for specific details on property type eligibility.

CONDOMINIUM APPRAISAL
A full condo appraisal (Form 1073) is required on each condo, regardless of AUS; the appraisal facilitates the
condo review.

CONDOMINIUM CHARACTERISTICS
A condominium is a real estate project formed according to state condominium statutes, a recorded
declaration, and other constituent documents.
    The structure is generally of two (2) or more units.
    The interior space of the units is individually owned.
    There is no individual land ownership.
    The balance of the property (both land and building) is owned in common by the owners of the
       individual units.
    The common areas are administered and maintained by an owners‟ association that levies monthly
       maintenance charges against each unit owner.

NOTE: If the broker submits a loan locked/priced as a single family dwelling and the property is subsequently
determined to be a condominium, the loan is subject to re-lock and/or re-pricing as a condominium property.

DECLINING MARKETS
Definition:
    DU reports market as declining, or
    Property appraisal indicates declining market, or
    A quarter-over-quarter decline in the Office of Federal Housing Enterprise Oversight (OFHEO) MSA-
        level house price index occurs in the MSA for the property.

BORROWER’S INSURANCE
Borrowers are required to obtain HO-6 “walls in” coverage in an amount not less than 20% of the condominium
unit‟s appraised value.

INTERBANK ACCEPTABLE CONDOS
Interbank will fund / purchase condominium properties for certain products as long as they meet Interbank
specific requirements; full appraisal is required on all condo subject properties regardless DU findings on all
loan programs.

See the specific product subsections in the Product Suites for eligibility for products.

PROJECT TYPE               TYPE OF ANALYSIS REQUIRED
Site Condo                 Site condo projects consist of single family detached homes and follow standard
                           property guidelines.

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PROJECT TYPE             TYPE OF ANALYSIS REQUIRED
Single Family            Project analysis is not required, however the project type must be identified on the
Detached Units           Fannie Mae 1008 as Condo in Section I, and the underwriter must state: Site Condo in
                         Section III, Underwriter Comments.
DU Limited Review –      The projects require minimal analysis:
P for New                    The loan must be submitted to Fannie Mae DU and the property identified as a
Q for Established               condo.
                                The loan must be Approve / Eligible, and
                                    o The findings must state that the property is a condo subject to Limited
                                        Review.
                                The Interbank Form, Interbank Questionnaire Limited Review, must be
                                 completed and included in the underwriting package.
                                The appraisal must support all information provided in the completion of the
                                 Limited Condo Questionnaire.
                                The project must be properly identified on the Fannie Mae 1008 to Fannie Mae
                                 requirements.
                                Projects must be 100% complete, including common areas.

                         Fannie Mae Clarification (Excerpted from Fannie Mae Announcement 08-34 - 01/01/09):
                             The Limited Review process is intended to be used on a “spot loan” basis,
                                meaning that brokers may originate loans that arise through the ordinary course
                                of business.
                                A broker may originate more than one loan in a particular project under the
                                 Limited Review process provided that the project is an established project and
                                 meets the requirements for Limited Review set form in Announcement 07-18.
                                However, if the broker has targeted the project with specific marketing efforts or
                                 is named as a preferred broker by either the developer or the project’s home
                                 owner’s association, the project is ineligible for Limited Review and the broker
                                 must use one of the other project review processes.
Seller Warranty –        The projects require a full analysis by the Seller – any subject investment or second
Broker-Delegated         home.
Review:                      The loan must be submitted to DU, and the property identified as a condo
P for New                    The loan must receive an approve / eligible; the DU findings do not state “Limited
Q for Established               Review”.

                         NOTE: Freddie Mac Streamline condo warranties are not eligible for sale to Interbank.

                                The Interbank Form, Interbank Condo Questionnaire, must be completed;
                                 meeting the requirements outlined in this Broker Guide (or the Answer Key) and
                                 included in the underwriting package.
                                The appraisal must support all information provided in the completion of the
                                 Interbank Condo Questionnaire.
                                The project must be properly identified on the Fannie Mae 1008 to Fannie Mae
                                 requirements.
                                Project must meet minimum 90% pre-sale requirements.
                                51% of total units in project must be owner-occupied or second homes.
Fannie Mae Approved      The project does not require analysis, however:


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PROJECT TYPE              TYPE OF ANALYSIS REQUIRED
Project                       The loan must be submitted to DU, and the property identified as a condo.
                              The loan must receive an approve / eligible.
                              A copy of the recent Fannie Mae issued 1028
                              The project must be properly identified on the Fannie Mae 1008 to Fannie Mae
                                requirements.
Non-Warrantable           If the project is unable to be warranted to one of the types listed in this matrix, the project
Condos                    is considered “unwarrantable” and is not eligible for sale to Interbank.

SELLER WARRANTY
Sellers that have Delegated Underwriting Authority, using Contract Underwriting (whether with Delegated
Underwriting Authority or not) are fully responsible for warranting condos to Interbank.

Interbank relies on the Seller‟s condo warranty to sell the loan on the Secondary Market and reserves the right
to request supporting documentation from the Seller for post-purchasing / funding audit.

Seller‟s for which Interbank underwrites the loan are fully responsible for completing applicable Condo
Questionnaire‟s and providing required information to Interbank.

INTERBANK INELIGIBLE CONDOS
Ineligible condo projects are defined by Fannie Mae and Freddie Mac, Seller should refer to those published
guidelines for complete details.

In general, the following characteristics may be used to identify projects that are ineligible:
     FHA approved projects
     Any project rejected by Fannie Mae or Freddie Mac
     Voluntary or Mandatory revenue sharing agreements
     Mandatory rental pool agreements
     Occupancy restrictions mandated by the zoning
     Timeshare, live / work or segmented ownership projects
     Transactions under which the borrower will own more than one unit in the project
     The unit is less than 600 sq. ft.
     The project name includes “hotel”, “motel”, “inn”, “resort”, or “lodge”
     The project shares facilities with a hotel or motel
     The project is in an area zoned primarily for transient accommodations
     The unit is in a building that functions like a traditional condominium, yet the project contains additional
       resort type amenities or other buildings with resort type amenities
            o The unit is fully furnished
            o The unit does not have a full kitchen
     The project provides any of the following services:
            o Management desk
            o Bellman
            o Daily maid service
            o Food service
            o Telephone service

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           o   Centralized utilities (e.g. central telephone)
           o   Centralized key system not in negotiated terms
           o   Any non-incidental business operation, including those owned or operated by HOA (e.g.
               restaurant, spa, health club, etc.)

GENERAL CONDO REQUIREMENTS
The following Interbank overlays apply to condominium properties. Always validate eligibility with specific
product parameters in the applicable product suites:
    The project is not an ineligible condo to Interbank or Fannie Mae guidelines.
    Project has demonstrated market acceptance.
    When applicable, validate with the mortgage insurer that the project is acceptable for coverage.

NOTE: The Condo Questionnaire and Answer Key (found on www.InterbankWholesale.com) provide more
detailed assistance and requirements for warranting the project.
GUIDELINE MATRIX
The following matrix provides general guidelines for warranting a new or established project.

NOTE: The Condo Questionnaire must be fully completed prior to making a warranty.

TOPIC                   CONDO GUIDELINES
Completion                     All units, common areas, and any recreational facilities are 100% complete for
                                legal phase.
                               If completion is in question, obtain a Final Certification of Substantial Completion
                                (FNMA 1081)
                               If incomplete, provide evidence that developer has posted a surety bond or other
                                financial guaranty of completion. The HOA must be able to support the cost of
                                these amenities.
                               90% total units must have been sold and project turned over to HOA.
                               Legal phase of conversion must be complete.
                               Additional phasing and add-ons allowed.
                               Developer or unit owners may be in control.
Market Acceptance       The date when first units made available is used to determine if the project is selling at an
                        acceptable rate.

                        Any project indicating sales may be lagging must have an Interbank Condo Questionnaire
                        fully completed and the documentation must include copies of the operating budgets
                        evidencing that the sales lag is due to market conditions and not to project fiduciary
                        concerns.
Multiple Ownership      A maximum of 10% of the total unit may be sold to one party, including the developer, or
                        more than one (1) unit if project is ten (10) or less units.
Number of Units         Maximum 49% (of total number of units in project) may be rental.
Rented
                        Fannie Mae Clarification (Excerpted from Fannie Mae Announcement – 08-34):
                            Fannie Mae permits the inclusion of financial institutions owned (REO) properties
                               that are for sale (not rented) as owner-occupied units for the purpose of calculating
                               the owner-occupancy ratio.
                               Projects where the borrower is an investor must be counted as non-owner

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TOPIC                   CONDO GUIDELINES
                             occupied for the purposes of determining the owner-occupancy ratio.
Commercial Use          Commercial use within the project may not exceed 20% of the total square footage for the
                        project and should be compatible with residential use.
Right of Refusal        Any right of first refusal in the project‟s constituent documents will not impair the rights of a
                        first mortgagee to:
                              Foreclose or take title to a condominium unit pursuant to the remedies in the
                                mortgage.
                              Accept a deed in lieu of foreclosure in the event of default by a mortgagor.
                               Sell or lease a unit acquired by the mortgagee.
                               Age restriction that does not meet the requirements within the Fair Housing Act for
                                age discrimination.
Adverse                        Any adverse environmental factors affecting the condominium project must be
Environmental                   addressed by the appraiser.
Factors                        Any factors affecting safety, habitability, or marketability of the unit or project will
                                render the project ineligible.
Litigation              If the HOA is involved in any litigation, arbitration, mediation, or other dispute resolution
                        process, obtain the details from the HOA. This information should be verified with an
                        attorney‟s letter, insurance information, structural report, and/or other documentation.
                        Interbank will review the documentation and determine whether an exception can be
                        granted to proceed with the loan with subject project involved in litigation.

                        The following types of litigation generally pose little or no risk to the project and are
                        acceptable:
                            HOA is suing individual unit owner for unpaid dues.
                               HOA is being sued for a “slip and fall” liability issue and project has adequate
                                liability insurance to cover the damages being sought by the plaintiff.

                        The following types of litigation may impact the project‟s marketability and are generally
                        not acceptable:
                             HOA is suing the developer for structural defects or other property deficiencies that
                                impact health and safety. The project may be acceptable if the defects have been
                                corrected and the project is financially sound and marketable.
                             Suits filed against the HOA in which the damages exceed or are not covered by
                                the HOA‟s insurance.
Delinquent HOA          If more than 15% of the units are delinquent over thirty (30) days on their HOA dues, the
Dues                    HOA must explain the reason(s) for the delinquency and the steps being taken to cure the
                        delinquency.

                        The overall financial risk of the delinquent dues must be considered before approving the
                        project.
Special                 If there are pending assessments, consider the impact on all the units and the
Assessments             marketability.

                        NOTE: Many new projects generally have pending assessments.
Insurance               Interbank requires $1 million liability insurance with acceptable building coverage and a
                        deductible that is the lesser of $1,000 or 1% the insured amount is required for the HOA on
                        all condos.

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TOPIC                     CONDO GUIDELINES

                          Minimum requirements for hazard, general liability, employee dishonesty, and flood
                          insurance are as established by Fannie Mae and Sellers should refer to those Agencies‟
                          published guidelines for details; see www.eFannieMae.com for details.

                          Fannie Mae Clarification (Excerpted from Fannie Mae Announcement – 08-34):
                          Brokers must review the entire condominium project insurance policy to ensure that the
                          owners’ association maintains a master or blanket type of insurance policy for only the
                          project in which the individual condominium unit will be financed.

                          The following are not permitted:
                              A blanket policy that covers multiple unaffiliated condominium associations or
                                  projects, or
                              A self insurance arrangement whereby the owners’ association is self insured or
                                  has banded together with other unaffiliated associations to self insure all of the
                                  general and limited common elements of the various associations.

                          As a reminder, condominium association project insurance must cover 100% of the
                          insurable replacement cost of the project improvements, including the individual units in
                          the condominium project.

                                 Coverage does not need to include land, foundations, excavations, or other items
                                  that are usually excluded from insurance coverage.
                                 Fannie Mae expects brokers to verify hazard insurance (including wind and flood
                                  insurance, if applicable) coverage at the project level as part of their review of a
                                  project.
                                 Brokers must verify that each condominium association is covered by an individual
                                  policy before it delivers a mortgage loan on an individual unit in a condominium
                                  project.

DEED RESTRICTIONS / RE-SALE RESTRICTIONS
Deed restrictions / re-sale restrictions are not accepted by Interbank Mortgage. These include restrictions
based on age, income limitations, occupancy, homebuyer status, employment, and re-sale price.

INELIGIBLE PROPERTY TYPES
The following property types are ineligible:
    Manufactured Housing (all mobile homes)
    Dome Homes
    Earth Berm
    Store Front properties
    Unique (one-of-a-kind) properties
    Properties in “fair” condition
    Properties sold at auction1
    Properties without a clear title
    Properties with less than 600 sq. ft.
1
 Properties sold at auction by a builder, developer or other related entity, condominiums or attached PUD projects are not
eligible for purchase.

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Any property reflecting an inconsistency with sellers, purchase, price, any assignment of contract, “flips” or
chain of title discrepancies, marketability issues or any other guideline violation is not eligible for purchase by
Interbank. This does not include standard purchase transactions where the seller is a financial institution
disposing of their REO properties.

See Property Flipping and REO / Repo Properties for additional details.

LAND CONTRACTS
A land contract (also known as an installment land contract or a contract for deed) is a real estate agreement
between a buyer and seller, whereby the buyer makes installment payments to the seller and the buyer may
then use and occupy the property:
     The deed from the property seller to the buyer may not be recorded until all or a specified part of the
       sales price has been paid.
     The buyer does not obtain the transfer of title until the land contract is paid, however, if the land
       contract is recorded it should be reflected in the chain of title in the title report.

UNDERWRITING THE LAND CONTRACT FOR SALE
If the buyer is obtaining mortgage financing to pay-off the land contract, it may be underwritten as either a
purchase or a refinance, under the following conditions:

IF THE LAND CONTRACT WAS EXECUTED…                        THEN…
Within twelve (12) months of the older of the             Treat the transaction as a purchase:
application date / or the oldest credit documented in         Underwrite and price the loan as a purchase
file…
                                                                Base the LTV on the lower of current appraised
                                                                 value or acquisition cost
                                                                Acquisition Cost is equal to the sum of:
                                                                    o Original purchase price, and
                                                                    o Documented cost of renovations or
                                                                         improvements.
Greater than twelve (12) months of the older of the       Treat the transaction as a refinance:
application date / or the oldest credit document in the       Underwrite and price the loan as a Rate / Term
file…                                                             (Limited Cash-Out) refinance
                                                              Base the LTV on current appraised value.

Additional Requirements:
    Regardless how the transaction is structured, if the borrower has occupied the property as a primary
       residence, the Right of Rescission rules apply.
    The loan must meet all applicable guidelines for the type of transaction for which it is treated.
    A copy of the Land Contract must be included in the loan delivery file (or underwriting file, if submitted
       to Interbank for underwriting).
    The borrower must document a payment history for the Contract of Deed; copies of cancelled checks
       will be required.




WHOLESALE I Broker Guide (REV101211JC)                                                                            61
ESCROW (COMPLETION) HOLDBACKS
OVERVIEW
Escrow (Completion) Holdbacks may not be permitted for any reason.

ELIGIBILITY
N/A

LEASEHOLD ESTATE OVERVIEW
Interbank will not fund / purchase conventional loans secured by property held in a leasehold estate for certain
specific products.

LOCATION
Interbank will fund / purchase properties in urban, suburban and rural areas to Interbank / Fannie Mae
guidelines.

Interbank reserves the right deem a property to be rural in nature (and apply those restrictions) if the lot size
exceeds typical urban or suburban lot size or if the location is remote from a metropolitan area. Any time the
appraiser extends the distance range or timing for comparables, full documentation and justification must be
included in the appraisal.

See Lot Size- Maximum Acreage and Degree of Development for more details.

LOG HOMES
Interbank will accept “true” Log Homes under the following additional restrictions:
     Contact Interbank pricing for special pricing for Log Homes.
     The log home must demonstrate market acceptance.
     The appraiser must provide a minimum of two (2) true log homes as comparable within six (6) months‟
       marketing time.

NOTE: Homes with “log siding” are not considered “true” log homes and are not subject to these restrictions.

LOT SIZE MAXIMUM ACREAGE
Interbank will accept properties that are residential in nature up to ten (10) acres as long as they are common
and customary to the area. The appraiser and the underwriter must address the acreage issue and the
residential nature must be the highest and best use of the subject.

NOTE:
   Properties zoned agricultural are limited to ten (10) acres; no exceptions.
   Value based on a lesser amount of acreage than the actual lot size is not acceptable on any loan.
   Any properties exceeding ten (10) acres may be acceptable, contact underwriting; pricing adjustments
      may apply.

NEW CONSTRUCTION
Regardless of market conditions, appraisals for properties located in a new construction subdivision or
development must include at least one (1) current sale from the subject development / builder and either:
    One closed sale from a competing development / builder, or

WHOLESALE I Broker Guide (REV101211JC)                                                                        62
      One closed sale from the subject development that has closed within ninety (90) days‟ from the date of
       the subject property appraisal.

MODULAR / FACTORY BUILD HOMES
Factory-built housing must assume the characteristics of site-built housing and be legally classified as real
property.

The purchase, conveyance, and financing (or refinancing) of the property, which must be evidenced by a valid
and enforceable first lien mortgage or deed of trust that is recorded in the land records, must represent a single
real estate transaction under applicable state law.
     Prefabricated, panelized, or sectional housing units must conform to all local building codes in the
        jurisdiction in which they are permanently located.
     Modular homes must be built to the state building code requirements of the state in which they are to
        be installed.
     The modular home must conform to all building codes, local zoning requirements and International
        Code Council (ICC) building codes.
     Modular homes are not the same as “manufactured homes” or “mobile homes”.

   NOTE: Modular homes are neither built nor transported on a steel chassis (frame) with a “trailer hitch”.
   Modular homes are constructed in large sections (modules) which are then transported to the building site
   where they are constructed with a seal plate (just like “stick built”) on a basement, slab, or footer (just like
   “stick built”). They do not display a “HUD Data Plate / Compliance Certificate”; Interbank will not fund /
   purchase Modular / Factory Built homes that are part of a PUD or condominium.

Interbank Appraisal Requirements:
     Marketing time must not exceed six (6) months
     Appraiser must provide a minimum of two (2) similar factory-build comparables

MIXED USE PROPERTIES
Interbank will accept mixed use properties (unless specifically restricted in a product suite). To be acceptable,
it must be determined that the nature, intent, and primary purpose of the property is residential in use. The
following should be considered in making this determination:
      The subject must be a single family dwelling.
      The room layout must be reasonable for a residential home.
      The property must be appraised as residential real estate; with commercial value not included in the
        appraiser‟s market value.
      The appraiser must comment on any affect the commercial use has on marketability and compatibility
        with the subject‟s neighborhood.
      The commercial use must be allowed by zoning and the subject must conform to zoning.
      Agricultural usage is not permitted.
      Commercial use should not result in significant alteration to the property or one that could not be easily
        converted back to residential.
            o In general, the commercial use should not exceed 20% of total gross living area of the property.
            o The commercial use should generate a minimal amount of traffic noise.

OUTBUILDINGS
Underwriters must give properties with outbuildings special consideration in the appraisal review.

WHOLESALE I Broker Guide (REV101211JC)                                                                          63
Minimal Outbuildings:
    Properties with minimal outbuildings (e.g. small barn or stable) that are relatively insignificant in value in
      relation to the total appraised value of the subject property are acceptable if they are typical to the
      subject area.
          o For Example: A property that has a small barn or stable is acceptable if the appraiser
              demonstrates they are typical for the area through the use of comparables with similar
              improvements.
    If the appraiser cannot demonstrate that the outbuildings are typical for the area, it demonstrates they
      are atypical for the area and the market would assign little or no contributory value for them.
    If the outbuildings are atypical for the area, they may still be eligible for funding / purchase as long as
      the appraiser‟s analysis reflects little (or no) value for the outbuildings.

Significant Outbuildings:
    Properties with the presence of significant outbuildings (e.g. large barn, storage areas for equipment or
       farm-type animals, or a silo) indicate that the property is agricultural in nature.

NOTE: Regardless whether the outbuildings are assigned value or not, Interbank does not make residential
property loans on agricultural property.

PRIVATE ROAD MAINTENANCE
If the property is on a community-owned or privately-owned and maintained street, there should be an
adequate, legally enforceable agreement for maintenance of the street, or must be referenced on the title.

Requirements:
    The privately owned and maintained street should be common and customary to the area.
    The appraiser must comment on the effect of that location on the marketability of the subject property.

PUD OVERVIEW
Unless excluded by specific product guidelines, Interbank will fund / purchase loans that are secured by
properties located in a Planned Unit Development project (PUD) as long as they meet the requirements
outlined in this section.
     A PUD is a project that consists of common property and improvements that are owned and maintained
        by the HOA for the benefit and use of the individual PUD units.
     A PUD owner received title to a lot that includes the dwelling.

SUBJECT PROPERTY IN PUD                REQUIREMENTS
Detached Single Unit                   Type E:
                                           The property is treated the same as any other single family property.
                                           There are no special “PUD” requirements.
Attached PUD                           Type E:
                                           The control of the owner‟s association has been turned over to the
                                             unit purchasers.
                                           If the project is part of a larger development (even though it is a sub-
                                             association of the master owner‟s association for the overall
                                             development), the seller may classify the project as Type E once the
                                             control of the project‟s sub-owner‟s association for the subject


WHOLESALE I Broker Guide (REV101211JC)                                                                           64
SUBJECT PROPERTY IN PUD               REQUIREMENTS
                                           property has been turned over to the unit owners.
                                         Once this criterion has been met, there are no other special “PUD”
                                           requirements.

                                      Type F: DU Approve – Limited Delegated stated in DU Finding
                                          If the control of the owner‟s association is still with the developer,
                                             the seller must perform a Broker-delegated Review of the PUD
                                             project.
                                          If the loan receives a DU Approve, the Limited Review consist only
                                             of the following warranties:
                                                  o The project is not an ineligible project; see Interbank
                                                      Acceptable Condos.
                                                  o The units, common areas, and facilities within the subject
                                                      project (or legal phase) are complete.
                                                  o The project is covered by the insurance required by Fannie
                                                      Mae in the most recent Broker Guide.

                                      See www.eFannieMae.com.

NOTE: If the attached PUD is not a Type E, HOA in unit owner‟s control, and it does not receive the “Limited
Review” findings in DU, the property is not eligible for purchase by Interbank.

REO / REPO PROPERTIES
Interbank will not fund / purchase any “REO” or “Repo” properties that requires repairs regardless whether the
appraiser is valued “as is” or not.

Loans secured by “repo” properties will be subject to the following:
    The property must be habitable.
    All local jurisdictional requirements must be met.
    All utilities must be operational at the time of the appraiser‟s property inspection.
    All deferred maintenance or repairs must be completed prior to, or by, time of closing.
    Escrow holdbacks are not allowed.

NOTE: If the original appraisal notes deferred maintenance or no operation utilities, a Final Inspection Report
must be completed showing all utilities are satisfactorily operational and there are not deferred maintenance
items that affect the safety or habitability of the subject property.

RURAL PROPERTY
Rural properties may be acceptable for funding / purchase unless otherwise limited by the parameters of the
particular loan product.

Rural properties must meet the following requirements:
    Owner occupied primary residence or second home.
    Marketing time must be six (6) months or less and values must be stable or appreciating.
    The area must generally be a minimum of 25% developed.
    All comparable sales must generally be located within five (5) miles of the subject property.


WHOLESALE I Broker Guide (REV101211JC)                                                                          65
      Be accessible by roads that meet local standards.
      Have adequate sewage, water, and utilities available and in service.
      Land value generally may not exceed 35%.
      Property may not be agricultural.
      Maximum acreage ten (10) acres.

SECURITY BARS
The appraisal must comment and follow state and local requirements with respect to properties using security
or “burglar” bars:
     There must be an emergency release latch for at least one window in each room where the security
        bars are located, unless local or municipal codes states otherwise.

SUBJECT PROPERTY SIZE
Properties less than 600 sq. ft. are not eligible for funding / purchase.

CONFORMING ADJUSTABLE RATE MORTGAGE
Borrowers must qualify at greater of Note rate or fully-indexed rate + 2% for 5/1 ARMs and Note rate or fully-
indexed rate for 7/1 ARMs.

See Conforming ARMs product matrices for details.

CONFORMING INTEREST ONLY ADJUSTABLE RATE MORTGAGE
Borrowers must qualify at greater of Note rate or fully-indexed rate with minimum Credit Scores 720, maximum
LTV / CLTV / HCLTV 70%, and full appraisal regardless DU findings; only available on primary residences and
second homes.

See Interest Only product matrix for details.

CONFORMING AGENCY JUMBO MORTGAGES
This is a full documentation program to be used for the origination of Agency Jumbo loans as available as a
result of the Home Economic Recovery Act (HERA) of 2009 for Desktop Underwriter (DU) underwritten loans.
The new loan amounts are applicable to the high cost areas only. The loan amounts are applicable to high
cost areas only as determined by the Federal Housing Finance Agency (FHFA). The loan amounts must be
greater than the current maximum Conventional Conforming Loan Limits and may not exceed the High Cost
Loan Limit established by FHFA.

See Agency Jumbo matrices for details.

GOVERNMENT LOANS
PRODUCTS
FHA FIXED RATE MORTGAGES
Interbank currently offers the 15- and 30-year FHA Fixed Rate Loan Products.



WHOLESALE I Broker Guide (REV101211JC)                                                                     66
See the Interbank FHA product summary for specific product details.

FHA ADJUSTABLE RATE MORTGAGES
Not currently offered at this time.

TRANSACTIONS
PURCHASE TRANSACTIONS
A purchase transaction is one in which the proceeds are used to finance the purchase of a home.
    Interbank will not accept any purchase transaction where HUD is the seller of subject property.
    Seller must have owned subject property minimum ninety (90) days, otherwise, subject is not eligible
       transaction with Interbank. In addition, second FHA appraisal is also required by Interbank if seller has
       owned subject less than twelve (12) months (does not include foreclosures or if seller is bank,
       relocation agency, government agency, FNMA / FHMLC).

REFINANCE
A refinance transaction occurs when the borrower obtains a new loan on a currently owned residence.
Interbank identifies the following refinance transaction types:
     Streamline Refinance without Appraisal
     Streamline Refinance with Appraisal
     Rate / Term Refinance
     Cash-Out Refinance

Cash back to borrowers for Streamline and Rate / Term refinances is limited to a maximum of $500.

REFINANCE CREDIT RULE
Interbank will not purchase any loan as a refinance transaction that is currently involved in foreclosure
proceedings.

Interbank will not purchase any loans participating in “churning”, where the borrower is getting a new refinance
every three to six months.

RATE / TERM REFINANCE
Mortgage Amount – The mortgage amount is limited to:
   The sum of the unpaid balance of the existing first mortgage, closing costs, points, pre-paid items, and,
      if applicable, the amount required to satisfy certain subordinate loans used for the original purchase of
      the property.
   Any “cash back” to the borrower may not exceed $500.
   Subordinated Second Liens: One year seasoning from funding on all junior liens unless lien was used
      as part of acquisition or for home improvements on the subject property.
   Maximum CLTV of 100%
   Streamline Refinance:
          o At least six (6) months have passed (before FHA Case Number can be assigned) since 1st
               payment‟s due date and two-hundred and ten (210) days have elapsed from closing date of
               mortgage being refinanced.
          o Must include tangible benefit: 5% reduction P&I and MIP from fixed rate to fixed rate; OR
               amount payoff minus UFMIP Refund + closing costs and pre-paids new loan.



WHOLESALE I Broker Guide (REV101211JC)                                                                       67
CASH-OUT REFINANCE
Mortgage Amount – The mortgage amount is limited to:
   The mortgage amount must be used to pay the current unpaid principal balance of the existing first
      mortgage; it may be used to pay closing costs, points, pre-paid items, subordinate mortgage liens and
      additional cash to the borrower.
   Maximum LTV of 85%
   Subordinate Liens: No seasoning requirement.

FHA UNDERWRITING GUIDELINES
OVERVIEW
If an item is not specifically addressed in the product guidelines or in this Underwriting section, then use the
current FHA guidelines. FHA guidelines are accessible on the internet from: www.hud.gov.

UNDERWRITING METHOD
AUS Required: Loans must be submitted through Fannie Mae DU and receive an Approve / Eligible to be
eligible for funding by Interbank.

Manual Underwriting: Streamline refinances only.

FACE-TO-FACE APPLICATION
The borrower must be given the option to complete the application face-to-face. If the applicant declines this
option, the file must be documented to verify that this option was provided.

IDENTITY VERIFICATION
At the time of closing, the borrower is required to provide two pieces of acceptable documentation to the
closing agent as evidence of his or her identity.

BORROWER-PAID CLOSING COSTS
Borrowers may be charged any customary and reasonable costs necessary to close the loan, with the
following restrictions:
      All costs must be disclosed on the Good Faith Estimate.
      Tax Service Fees may not be charged to the borrower.
      The loan Origination Fee cannot exceed 1%.
      Closing costs are not considered part of the borrower‟s minimum investment.
      The borrower must agree in writing to the charge of courier service / express mail fee prior to
        settlement.
      State specific requirements regarding the collection of fees must be complied with.

MINIMUM BORROWER INVESTMENT
The minimum Borrower cash investment required for purchase loans is 3.5% of the lesser of the sales price or
the appraised value.

See FHA Product Summary for eligible programs allowing a lower required cash investment.




WHOLESALE I Broker Guide (REV101211JC)                                                                       68
ACQUISITION COST
The acquisition cost is the sales price plus the cost of any repairs paid by the borrower plus all borrower-paid
closing costs. The difference between the total cost to acquire the property and the mortgage amount can be
provided from any of the following sources:
     Borrower‟s own funds
     Secondary financing
     Seller assistance

SELLER CONTRIBUTIONS
Any costs that are normally the responsibility of the borrower but paid by another individual are considered
contributions. Contributions may be provided by direct participants such as the seller, builder, developer, or
real estate agent.

Contributions are limited to a maximum of 6%. Contributions may include but are not limited to the following:
    Buydown Funds
    Discount Points
    Pre-paid Expenses
    Seller-paid Closing Costs
    Up-Front MIP

MULTIPLE MORTGAGES TO SAME BORROWER
      A borrower may have no more than four financed properties, including the subject property.
      A borrower may have no more than one FHA loan with maximum financing. Exceptions can include
       any of the following:
       o Borrower is relocating
       o Borrower is increasing family size
       o Borrower is vacating a jointly-owned property (such as divorce)
       o Borrower is non-occupant co-borrower on existing FHA loan (cannot be current primary borrower on
          the existing FHA loan)

NON-OCCUPANT CO-BORROWER
Non-Occupant Co-Borrowers are permitted with the following restrictions:
    One unit property if the LTV exceeds 75%
    Maximum LTV of 75% if co-borrower is unrelated
    If a parent is selling to a child, the parent cannot also be the co-borrower unless the new mortgage LTV
      is 75% or less.
    Income, assets and debts from all borrowers are used in qualifying
    Co-borrower must have a principal residence in the U.S.
    Co-borrower must take title to the property and sign the Note and Mortgage
    Non-occupant co-borrower may not be an interested party to the sales transaction, such as the property
      seller, property builder, and real estate broker.




WHOLESALE I Broker Guide (REV101211JC)                                                                          69
SECONDARY FINANCING
The borrower may receive secondary financing to cover the entire cash investment requirement from the
following sources:
      Federal, state, and local government agencies
      FHA Approved Non-Profit agencies that are considered instrumentalities of government
      FHA Approved Non-Profit agencies not considered instrumentalities provided the borrower makes a
        cash down payment of at least 3.5% of the sales price.
      Family member (e.g. parent, grandparent, or child)

MORTGAGE INSURANCE PREMIUMS
FHA Mortgage Insurance provides protection against losses as a result of mortgage default. All FHA loans
require Up-Front MIP and/or Monthly MIP, depending on the loan characteristics.
    Up-Front MIP must be financed into the loan amount or paid at closing.
           o On a purchase transaction the total Up-Front MIP cost must be paid entirely by either the
              borrower or the seller.
    Up-Front MIP is calculated by multiplying the base loan amount by the applicable premium factor.
    Monthly MIP is paid in the monthly mortgage payment.
    Monthly MIP is calculated by multiplying the base loan amount by the applicable premium factor.
    Partial Up-Front MIP is not allowed.

Mortgage Insurance Premiums for FHA Case Numbers assigned on or after April 18, 2011:

                          Purchases and Rate / Term and Cash-Out Refinances
                                         Streamline Refinances
                           LTV / Loan Term           UFMIP           Monthly
                             LTV > 95%                 1%             1.15%
                           Term > 15 Years
                             LTV < 95%                 1%             1.1%
                           Term > 15 Years
                             LTV > 90%                 1%             0.50%
                           Term < 15 Years
                             LTV < 90%                 1%             0.25%
                           Term < 15 Years

Mortgage Insurance Premiums for FHA Case Numbers assigned on or after October 4, 2010:

                          Purchases and Rate / Term and Cash-Out Refinances
                                         Streamline Refinances
                          LTV / Loan Term            UFMIP           Monthly
                             LTV > 95%                 1%             0.90%
                           Term > 15 Years
                             LTV < 95%                 1%             0.85%
                           Term > 15 Years
                             LTV > 90%                 1%             0.25%
                           Term < 15 Years
                             LTV < 90%                 1%             None
                           Term < 15 Years

WHOLESALE I Broker Guide (REV101211JC)                                                               70
ASSETS AND LIQUIDITY
OVERVIEW
Liquidity or cash reserves describe cash or the ability to convert assets to cash in a short time. Net worth
without liquidity is not enough. A borrower‟s balance sheet should reflect and validate the estimates
concerning his or her prior and current income stream. Higher incomes should translate into liquidity found on
the borrower‟s balance sheet.

ACCEPTABLE SOURCES OF FUNDS
The Source of Funds Statement should be completed by every Borrower. The following is a list of acceptable
sources of funds (refer to HUD 4155.1 for complete information):
    Bank Accounts
           o Individual Accounts
           o Joint Accounts
           o Trust Accounts
    Borrower Funds Secured by an Asset
    Cash-on-Hand
    Earnest Money Deposits
    Gifts
    Equity from Other Assets
           o Loans Secured by Other Assets
           o Proceeds from 1031 Tax deferred Exchange
           o Sale of Other Assets
           o Sale of Real Estate
    Income Tax Refund
    Life Insurance
    Premium Pricing
    Real Estate Commissions
    Rent Credits
    Retirement Accounts (60% current value)
    Stocks / Bonds / Mutual Funds (70% current value)
    Secondary Financing
    Secured Loans
    Sweat Equity
    Systematic Savings
    Trade Equity

BANK ACCOUNTS
Borrower‟s bank statements for the most recent consecutive two (2) months are required for verified funds to
close.

Bank accounts include funds on deposit in savings accounts, checking accounts, certificates of deposit, money
market accounts, and individual retirement accounts (IRA‟s). The following is required even if a VOD is
received from each depository:

WHOLESALE I Broker Guide (REV101211JC)                                                                     71
      Verify available funds for closing by obtaining from the borrower a copy of the applicable bank or
       investment portfolio statements that cover activity in the accounts for the most recent two-month period
       (or, if account information is reported on a quarterly basis, for the most recent quarter).
      If the latest bank statement is more than forty-five (45) days earlier than the date of the loan application,
       a more recent supplemental bank-generated form that shows the account number, balance, and date is
       required.
      The statement must be a copy of the original bank statements:
            o “FAXED” or statements / print-outs downloaded from the internet must clearly identify the name
                of the depository or investment institution, the borrower and the source of the information (e.g.
                the information is contained in the banner that is at the top of the document).
            o Bank or investment portfolio statements must clearly identify the borrower as the account holder
                and include:
                     The account number;
                     The time period covered by the statement (must include minimum of 30 days transaction
                        history);
                     All deposits and withdrawal transactions (for a depository account) or all purchase and
                        sale transactions (for a financial portfolio account); and
                     The ending account balance.
      Full access letter is required for any other account holder not on loan unless states “or”.

BORROWER FUNDS SECURED BY AN ASSET
A loan secured by an asset may be used as assets as follows:
     May be used as a source of funds for down payment, closing costs, and financial reserves.
     Document terms of the secured loan.
     Document that the asset is owned by the borrower.
     Independently document value of the asset.
     Calculate monthly payments and consider in debt ratio.

CASH-ON-HAND
Cash-on-Hand is not an acceptable source of funds.

CASH VALUE OF LIFE INSURANCE
The surrender of life insurance is acceptable under the following parameters:
    Can be used as a source of funds for the down payment, closing costs, and financial reserves.
    Document by providing a copy of the check from the insurer or a copy of the payout statement issued
       by the insurer.

EARNEST MONEY DEPOSITS
The deposit on the sales contract is an acceptable source for down payment and/or closing costs. When the
deposit is used to make any portion of the borrower‟s down payment it must come from his/her own funds.
    Verification that the deposit has cleared the bank must be documented if it is > 2% of the sales price.
    When the deposit is 2% over the sales price the money must be sourced as follows:
            o Bank statements for most recent two months (if check has cleared account, the statement
               should cover the period up to and including the date the check cleared).
            o Copy of the cancelled check.


WHOLESALE I Broker Guide (REV101211JC)                                                                           72
GIFTS
The Borrower may use funds obtained as a gift from an individual with whom they have an established
relationship to satisfy the borrower‟s required investment.

AUTOMATED UNDERWRITING
Regardless of the automated underwriting message for reduced documentation, the loan must comply with the
following guidelines for gift documentation.

A Gift Letter providing the following must be included in the Loan file, regardless of automated underwriting
findings waiving a gift letter:
     The amount of the gift
     The donor‟s name, address and telephone number
     The donor‟s relationship to the borrower
     Signature of all parties

For loans underwritten by automated underwriting, the balance of documented gift funds remaining in the
borrower‟s account after closing may be considered as cash reserves. Cash gifts are never acceptable.

ACCEPTABLE DONORS
       Relatives of the borrower
       Borrower‟s employer, or labor union
       Charitable organization
       Government agency
       Close friend with a clearly defined interest in the Borrower

UNACCEPTABLE DONORS
Any person with a financial interest in the transaction:
    The seller
    Realtor
    Builder
    Loan officer

These parties may never provide a gift, directly or indirectly. A gift from any of these sources would be
considered an inducement to purchase and would require a reduction to the sales price.

TRANSFER OF GIFT FUNDS
Gift funds may be transferred and deposited into the borrower‟s account prior to underwriting or after
underwriting but prior to closing. Gift funds may be transferred at closing with either: (a) copy of cashier‟s
check; or (b) evidence wire transfer from donor to borrower / title company.
GIFT FUNDS TRANSFERRED AND DEPOSITED PRIOR TO UNDERWRITING
Document the transfer of the funds from the donor to the borrower with the following:
    A copy of the donor‟s cancelled check; OR
    Other withdrawal documentation from the donor‟s account, including donor name and account number.




WHOLESALE I Broker Guide (REV101211JC)                                                                     73
In addition to one of the above, a copy of the borrower‟s deposit slip verifying the deposit and the updated
balance information or a bank statement showing the gift deposit is required. ATM receipts are never
acceptable documentation to show transfer of the gift funds from the donor.

The documentation evidencing the withdrawal of funds from the donor‟s account must coincide with the
information disclosed on the gift letter (e.g. amount of gift, bank, account number, etc.).

If the donor borrowed the gift funds, documentation must be provided by the bank verifying the source of were
financed with a bank loan. If the bank cannot provide verification of the loan, other evidence must be provided
that the funds were borrowed from an acceptable source.

Unacceptable sources of donor’s borrowed funds:
    Any party to the transaction, including the broker
    Cash received from any source
    A loan in which the borrower is a co-obligor with the donor for the borrowed gift funds
GIFT FUNDS NOT IN BORROWER’S ACCOUNT AT TIME OF UNDERWRITING PRIOR TO CLOSING
If the gift funds were deposited into the borrower‟s account after the bank statement closing date, document
the transfer of the funds from the donor to the borrower with the following:
      Copy of the donor‟s cancelled check or other withdrawal documentation showing the withdrawal from
        the donor‟s account.
      Copy of the borrower‟s updated bank statement showing the matching gift deposit.

If the funds were just deposited to the borrower‟s account and it is just prior closing, document the transfer of
funds from the donor to the borrower with the following:
      Copy of donor‟s withdrawal slip and either a bank statement or a letter from the banking institution
         verifying the withdrawal of the funds from the donor‟s account.
      Copy of the borrower‟s deposit slip (with the deposit and updated balance information verified on the
         slip); OR an updated bank statement showing the matching gift deposit.
GIFTS OR GRANTS FROM NON-PROFITS OR MUNICIPALITIES
The client is responsible for assuring that the gift to the homebuyer from the charitable organization meet FHA
requirements and the transfer of funds are properly documented. Interbank does not allow non-profit entities to
provide gifts to homebuyers for the purpose of paying off installment loans, credit cards, collections, judgments
and other similar debts.

A gift or grant from a church, municipality, or non-profit organization must be evidenced by either a copy of the
letter awarding the gift or grant or a copy of the legal agreement that specifies the terms and conditions of the
gift or grant. This supporting document must include language indicating that no repayment of the gift or grant
is expected and an indication of how the funds will be transferred. Evidence of the transfer of the funds (such
as a copy of the donor‟s cancelled check or a settlement statement showing receipt of the check) must be
provided.

If the borrower has sufficient funds to close the loan without inclusion of the gift or grant, the gift funds should
be removed from the borrower‟s assets and the automated system should be re-run without them.
Documentation of transfer of funds is not required.

Interbank must review and approve the non-profit or municipality gift or grant documentation.




WHOLESALE I Broker Guide (REV101211JC)                                                                           74
GIFT OF EQUITY
Borrowers may receive a gift of equity from the seller of the mortgaged premises, provided the seller is an
immediate family member (e.g. parent, grandparent, brother or sister). The gift will be reflected as a credit on
the HUD-1 Uniform Settlement Statement and must be clearly labeled as a Gift of Equity. A gift of equity is not
considered a seller contribution.

The donor must have sufficient equity in the property to cover the gift and a gift letter must be signed. The
sales agreement should refer to the gift of equity as part of the transaction. The HUD-1 Uniform Settlement
Statement will satisfy the donor‟s ability and receipt of gift verification.
WEDDING GIFTS
When funds are obtained from wedding gifts, the following must be provided:
   Recent marriage certificate not more than six months old
   Verification of receipt of the funds via bank statement / deposit slip(s).
   The date of the deposit slip and the date on the marriage certificate must be within a reasonable
      timeframe.

INCOME TAX REFUND
Any income tax refund not yet received may be used as funds for down payment or closing costs. The
following requirements apply:
      The borrower must provide a copy of the actual signed tax return to verify the anticipated refund.
      Verification of receipt of the refund is required and must be documented by a copy of the refund check
        or electronic deposit.

RETIREMENT ACCOUNTS
Retirement accounts (e.g. IRAs, Keogh accounts, 401K accounts, etc.) are subject to withdrawal penalties and
tax surcharges if withdrawn prior to normal distributions.

Due to these restrictions, the following guidelines apply to the use of retirement accounts for closing-fund
requirements:
    Unless specified by an automated underwriting system, 60% of IRAs, Keogh accounts, 401K accounts,
       and the cash value of annuities can be used to determine funds available for withdrawal.
    Borrower must provide evidence of the receipt of the retirement withdrawal to provide the sufficient
       funds for closing, which then 100% of value of liquidated assets can be used.

SALE OF STOCKS OR BONDS
Funds from the sale of stocks or bonds are acceptable as long as the following apply:
    70% of the current value must be used
    The existence and value of the stock or bonds is verified.
    The value of stocks is verified with a current statement from the stockholder.
    A copy of the stock certificate and dated newspaper stock price list must verify the value and existence
       of stock not held by a financial institution.

NOTE: Verification of sale is required only if the specific funds are needed for closing, which then 100% of
liquidated assets can be used.




WHOLESALE I Broker Guide (REV101211JC)                                                                       75
SWEAT EQUITY
Sweat Equity is labor performed or materials furnished by the borrower before closing takes place for the
property being purchased. Sweat equity may be considered the equivalent of a cash investment to the extent
of the estimated cost of the work or materials and as long as all FHA requirements are met.

Sweat Equity may also be “gifted” and is subject to all FHA gift requirements. A gift letter is required and all
Interbank guidelines regarding sweat equity must still be met.

For complete details on using sweat equity as part of the borrower’s acceptable assets, refer to HUD 4155.1.

TRADE EQUITY
The property seller may take a property owned by the borrower as part of the down payment on the property
being sold to borrower. The borrower‟s equity contribution must be a true value consideration supported by a
current appraisal.

The following documentation must be provided:
    Copy of the current appraisal on the property being traded
    A copy of the trade-in contract
    Title search proving that the borrower owns the real estate and verifying any liens associated with the
        property

INELIGIBLE ASSETS
The following assets are ineligible for loans funded by Interbank:
    Donated funds in any form (e.g. cash or bonds donated by the seller, builder, or selling agent)
    Proceeds of a personal or unsecured loan unless provided by a family member
    Cash advances on a revolving charge account or unsecured line of credit
    A gift that must be repaid in full or in part
    Materials furnished by the borrower that are not part of a pre-closing agreement with a builder
    The proceeds from an IRS Tax Code 1031 Exchange on an owner occupied transaction
    Salary advances
    Cash for which the source cannot be verified (e.g. garage sales)
    Funds in a Custodial or “In Trust For” Account

RESERVES
Reserve requirements are characterized as follows:
    Assets on hand; documented by the bank statements.
    Net proceeds from the sale of a previous asset that is not for closing the subject property.
    Retirement Accounts – may need to document that the account funds can be liquidated if required.
      This condition may be added at the underwriter‟s discretion. See Retirement section for more
      information.
    Gift funds are never acceptable as reserves.
    Cash reserves are not required on 1-2 unit property transactions.
    A minimum of 3 months PITI cash reserves are required for all 3-4 unit properties.




WHOLESALE I Broker Guide (REV101211JC)                                                                       76
CREDIT
OVERVIEW
Interbank requires that a borrower‟s current and past credit history be analyzed through the review of a credit
bureau report prepared by an independent licensed credit reporting agency or credit reporting repository.

Interbank accepts the following types of credit reports, depending on the circumstances of the mortgage
request:
     Residential Mortgage Credit Report (RMCR)
     AUS Credit Report – three (3) file merged report pulled into the AUS
     Non-traditional credit is not permitted.
     Minimum Credit Score is 660 for all FHA loans (including non-borrowing spouse)
     No more than 0 x 30 day or greater mortgage lates allowed in most recent twelve (12) months.
     Community property states (TX and WI) require credit report from non-borrowing spouse. Obligations
       to be included in DTI for qualifying and middle credit score from non-borrowing spouse must meet
       minimum 600 Credit Score.

Interbank will not accept a new credit report with new credit scores unless original credit report that was used
at time of underwriting has expired.

NOTE: All Credit Reports must include FACT Act messages and fraud alerts.

BANKRUPTCY / FORECLOSURE
Interbank will fund / purchase loans where the borrower has a previous bankruptcy or foreclosure as long as
they meet the following guidelines:

TOPIC                           DU – REGARDLESS OF THE FINDINGS:
Re-established Credit –                 Require a minimum two-year period of re-established credit from the
Chapter 7                                bankruptcy discharge date.
Extenuating Circumstances –             Require a minimum of twelve (12) months from the bankruptcy discharge
Chapter 7                                date.
                                        Require supporting documentation to verify the extenuating
                                         circumstances.
                                        Require supporting documentation that all debts have been paid.
Re-established Credit –                 Require a minimum of twelve (12) months of the payout period has
Chapter 13                               elapsed under the bankruptcy and the payout performance has been
                                         satisfactory with required payments made on time; payment history from
                                         the courts showing all payments have been made on time is required.
                                        Borrowers must receive written permission from the counseling agency to
                                         enter into the mortgage transaction.
Foreclosure or Deed-in-Lieu             Require a minimum of three (3) years since the date of the foreclosure
                                         completion.

                                NOTE: Interbank will not refinance properties currently in foreclosure
                                proceedings.




WHOLESALE I Broker Guide (REV101211JC)                                                                            77
BANKRUPTCY UNDERWRITING
EXTENUATING CIRCUMSTANCES
Extenuating Circumstances are life events that result in a sudden, significant and prolonged reduction in
income or a catastrophic increase in financial obligation. Extenuating circumstances should not be judged
solely by the event; they must take into consideration the actual event, the severity of the resulting hardship
and the extent of the applicant‟s effort to resolve the situation.

For Example:
    A job layoff (the event) in itself should not automatically be considered an extenuating circumstance,
       even if it is supported by documentation from a third party. If, however, the unemployment that results
       from a job layoff was prolonged and the loss of income was significant in relation to the applicant’s
       obligations and available assets at the time of the layoff, then the layoff can be considered an
       extenuating circumstance.
    A divorce (the event) should not be considered an extenuating circumstance unless, as the result of the
       divorce, the applicant had no reasonable options other than to default on his or her obligations and to
       file for bankruptcy protection.
    Illness or death of a primary wage earner.

RE-ESTABLISHED CREDIT CONSIDERATIONS
When reviewing loans with bankruptcies, Interbank will consider the following:
   Regardless of the reason for the bankruptcy, the underwriter must determine if the applicant has an
      acceptable payment record under the re-established history.
   The re-established history must reveal a payment record that illustrates the borrower now has the
      willingness and the ability to manage their finances.
   When the applicant‟s previous credit history includes a bankruptcy or foreclosure, their credit report
      must be current as of the date of the mortgage application. Additionally, the credit report under the re-
      established credit must include (required by Interbank):
           o A minimum of five (5) credit references, active within the past twenty-four (24) months, with at
              least 1 of the references being “traditional” (e.g. credit card, installment loan for a car, etc.) and
              1 being housing related.
           o If the housing item is not listed, copies of cancelled checks are required.
           o Housing: No payments past due since the discharge or completion of the bankruptcy.
           o Installment and Revolving: No more than 2 x 30 days past due in the most recent twenty-four
              (24) months, and non sixty (60) or more days past due since the discharge or completion of the
              bankruptcy.
           o No new public records for bankruptcies, foreclosures, deeds-in-lieu, unpaid judgments or
              collections, garnishments, tax liens, and so forth since the discharge or completion of the
              bankruptcy.

DOCUMENTATION REQUIREMENTS:
The following supporting documentation must be included in the loan file:
    Copies of the bankruptcy petition, schedule of debts and the discharge papers indicating which debts
        were discharged.
    Evidence that all debts not satisfied by the bankruptcy have been paid or are being paid in a
        satisfactory manner.
            o Only those payments or delinquencies that occurred during the bankruptcy are to be omitted
                from credit reporting.

WHOLESALE I Broker Guide (REV101211JC)                                                                           78
          o Those payments since discharge on reaffirmed debs must be verified and paid on time.
      A written statement from the applicant satisfactorily explaining the causes of the bankruptcy.

NOTE: Interbank reserves the right to request any additional documentation it may deem necessary to ensure
the re-establishment and maintenance of satisfactory credit for the borrower.

FORECLOSURE / DEED-IN-LIEU UNDERWRITING
If the borrower has filed a deed-in-lieu of foreclosure or sold a property that was a pre-foreclosure and the AUS
has not considered in the findings, the following overlays apply:
      Valid documentation must be provided to determine whether such an action has been completed in the
        past four (4) years.
      A minimum two (2) year seasoning for the re-established credit following the sale of the property must
        be documented. Additionally, the following requirements must be applied if the incidence is between
        four and seven years:
SHORT SALE GUIDELINES
      Refinance Transaction: A refinance on a write-down is permitted for rate / term refinances provided:
           o The loan is current at the time of application.
           o There have been no late payments in the last twelve (12) months, unless the Total Mortgage
                Scorecard decision is Approve / Eligible.
      Purchase Transaction: For borrowers purchasing a short sale, non-arms length transactions are not
       eligible. See Non-Arms Length Transaction.
      Borrowers with any property in a short sale situation make that borrower ineligible for a transaction with
       Interbank.

COLLECTIONS, CHARGE-OFFS
Any collections individually over $250 or cumulatively over $1,000, or required by DU must be paid in full.

CONSUMER CREDIT COUNSELING (CCC)
The borrower cannot currently be in CCC and must have been out of CCC for a minimum of twelve (12)
months.

NOTE: Underwriters must carefully review borrowers with CCC to determine over-all credit worthiness.
Interbank reserves the rights to deny borrowers they deem, in their sole determination of risk, do not have a
good credit profile.

CREDIT REPORT INQUIRIES
Recent Attempts to Obtain New Credit
The presence of unrelated credit inquiries represents a higher credit risk.

All inquiries within one-hundred and twenty (120) days from date of credit report will require an LOX from the
borrower with the exception of the inquiry of the actual credit report. Additional documentation may also be
required once the LOX has been received.

When the credit report indicates that recent inquiries took place, the Interbank must confirm that the borrower
has not obtained any additional credit that is not reflected in the credit report or on the mortgage application for
consideration in the AUS.




WHOLESALE I Broker Guide (REV101211JC)                                                                           79
If Interbank‟s determines inquiries on the credit report are not adequately addressed in the loan file, Interbank
reserves the right to pull a new credit report during our pre-purchase / funding audit to authenticate that no new
significant debt has been added that will affect the over-all qualifying of the loan.

CREDIT SCORE (FICO)
Minimum Credit Score (FICO) of 660 must be met for each loan, regardless of AUS approval / acceptance; see
the product matrices within the Product Suites for details.

Credit scores are required on the credit reports for all borrowers and co-borrowers. To arrive at an individual
borrower‟s useable score:
     If three (3) scores are provided for the borrower, the middle score is used to underwrite.
     If two (2) scores are provided for the borrower, the lower score is used.
     If only one (1) score is provided, the borrower is not eligible for loans requiring mortgage insurance.
     To arrive at the score used to validate the salability of the loan to Interbank– use the lowest of all of the
        borrower‟s individual useable score(s).
     It is the broker‟s responsibility to ensure that the credit score for the loan is less than or equal to (>) the
        Interbank minimum required FICO for the product.

DELINQUENT FEDERAL DEBT
Regardless of the Total Mortgage Scorecard recommendation, if a borrower is currently delinquent on any
Federal debt one of the following must be met:
    The account must be brought current; OR
    The account has been paid off; OR
    A satisfactory repayment plan is made between the borrower and the Federal agency.

DISPUTED CREDIT INFORMATION
Should a borrower indicate that any significant information in the credit file is inaccurate a request should be
made to the credit reporting company to confirm accuracy:
    If the credit reporting agency and/or agencies indicate the information in the loan file is correct, the
      underwriting decision will be upheld.
    If the credit reporting agency and/or agencies indicate the information is incorrect:
          o The borrower should be encouraged to contact the credit report agency / agencies to have the
              information corrected.
          o If there is not enough time to get the information corrected and an updated credit report, the
              Seller should contact Interbank underwriting for assistance.
          o Credit report must have disputed accounts removed from credit and DU must be rerun tied to
              new credit no longer reflecting warnings for the disputed accounts. This can be waived if all of
              the following apply to the disputed account:
                    Is the only disputed account on DU findings
                    Has $0 balance or “paid in full” / “resolved”
                    More than twenty-four (24) months old, based on date of dispute

ELECTRONIC CREDIT REPORTS
Electronically obtained credit bureau reports are permitted from an automated underwriting system (AUS) as
follows:
      Must be ordered from one of the three credit agencies:

WHOLESALE I Broker Guide (REV101211JC)                                                                            80
          1. Equifax Information Svc. LLC
          2. Experian Credit Data
          3. Trans Union
      Must be a Three Bureau In-file Merged Report
      Credit risk scores are made available to the AUS
      The report must contain:
          o FACT Act alerts
          o OFAC alerts
          o Social Security Number alerts

JUDGMENTS AND TAX LIENS
Regardless of the Total Mortgage Scorecard recommendation, all tax liens and court-ordered judgments must
be paid off prior to closing.

MORTGAGE HISTORY
Follow AUS requirements for mortgage / rental history.

NON-TRADITIONAL CREDIT
Non-Traditional Credit is not permitted.

RESIDENTIAL MORTGAGE CREDIT REPORT
Residential Mortgage Credit Report (RMCR) provides current, verified and detailed borrower information. The
report agency verifies:
    Most recent two (2) years‟ employment history
    Residence history
    All debts, including terms, balances, and ratings
    Past due payments
    Available legal information through public records, such as judgments, foreclosures, garnishments and
        bankruptcies.
    Joint or combined report for a married couple must contain all debts of both parties or separate reports
        must be provided.
    Individual separate reports must be run for un-married borrowers.
    OFAC alerts
    Social Security Number alerts

TRADE LINES
A Trade Line reflects a history of open or paid credit obligations detailing borrower‟s credit reputation. Trade
line requirements are as follows:
     Credit score should be obtained from four trade lines with a twenty-four (24) months satisfactory history
        to ensure a representative score.
     Must include opening date, current balance and payment history.
     One trade line must be currently open for less than twenty-four (>24) months and cannot be a collection
        or charge-off.



WHOLESALE I Broker Guide (REV101211JC)                                                                       81
        If borrower has less than four trade lines, borrower must provide at least three (3) credit references for
         most recent twelve (12) months from:
             o Utility company (e.g. gas)
             o Electricity
             o Water
             o Land line telephone or cable

INCOME AND EMPLOYMENT
OVERVIEW
The underwriter must carefully evaluate the borrower‟s employment and income history, stability, and likelihood
of continuance and must document the most current last two (2) years of employment income history; using
Verification of Employment (VOE) forms and pay-stubs evidencing most current year-to-date paystub, must be
within thirty (30) days at the time of underwriting and W-2 forms for the past two years.

AGE OF DOCUMENTS
        Existing Construction: No more than ninety (90) days old prior to the Note date.
        New Construction: No more than ninety (90) days old prior to the Note date.
        Pay-stubs must be within thirty (30) days of application.

DU
Loans receiving an Approve through DU may follow the AUS findings for acceptable documentation of income
in lieu of the documentation stated within.

DU requirements are as follows:
    Interbank always requires paystubs, W-2s and/or tax returns.
    A Verbal Verification of Employment (VVOE) twenty-four (24) hours prior to funding
    A fully executed 4506-T, regardless of the AUS findings must be in the loan file. See IRS 4506 for
      details.

ALIMONY / CHILD SUPPORT / SEPARATE MAINTENANCE
If not specifically addressed in the AUS findings, the following guidelines apply:
     In order for alimony or child support to be considered as acceptable stable income, the borrower must
        have received income for at least twelve (12) months and it must continue for at least three years after
        the date of the original mortgage loan application.
     Interbank will accept as verification of the award of alimony and/or child support one of the following
        documents:
            o Copy of the final divorce decree fully executed and recorded or signed by a judge
            o Formal separation agreement fully executed
            o Court records
                      Any other legal agreement or court decree that describes the payment terms, or a copy
                        of ay applicable state law that requires alimony, child support or maintenance payments
                        and specifies the conditions under which the payments must be made.
                      The document must specify the amount of the award and the period of time over which it
                        will be received. The borrowers must provide evidence that the funds have been
                        received for the last twelve (12) months.

WHOLESALE I Broker Guide (REV101211JC)                                                                          82
                      Acceptable evidence would be deposit slips, canceled checks, bank statements, or
                       Federal income tax returns.
      If income is received less than twelve (12) months, income may only be used as a compensating factor.
      Alimony is taxable and therefore should not be grossed up; however, child support is eligible to be
       grossed-up.
      Documentation for alimony, child support income is not required if the borrower does not use the
       income to qualify.

AUTO ALLOWANCE
Auto allowance income may be included if:
    The income has been consistently received for the most recent two (2) years.
    The employer indicates these payments will continue.
    Income must be averaged over the two (2) year period.
    The borrower‟s car payment cannot be offset by the auto allowance.

BOARDER INCOME
Rental income from boarders may not be considered as income.

BONUS AND OVERTIME
Bonus and Overtime may be included if the income has been:
    Consistently received for the most recent two (2) years
    Employer confirms its likelihood of continuance
    Stable
    Must be averaged:
         o Any year-to-date overtime or bonus amounts may be included in the average if the year-to-date
             amount is consistent with the amounts received over the last two (2) years.
    Full VOE will be required to break down base and bonus / overtime for year-to-date and past two (2)
      years history.

CAPITAL GAINS
Capital Gain income is generally a one-time transaction (sale of stocks or other one-time sale of assets);
therefore, it is generally not considered stable monthly income. However, it may be utilized as a compensating
factor if it is normal and recurring portion of the borrower‟s income. When using capital gains as steady
income from your profession, the following requirements must be met:
     Two years tax returns; required to evaluate an earnings trend.
             o If income is declining, most recent year will be used; otherwise an average of the tax returns will
                 be used to determine qualifying income.
             o Three years tax returns are required if income is inconsistent and greater / lower than 20% than
                 prior year.
     Broker must document anticipated continuation of income through verified assets.
     A gain may be added as effective income or a loss must be deducted from income.

COMMISSION INCOME
Expenses reported on Form 2106 of the borrower‟s tax returns:



WHOLESALE I Broker Guide (REV101211JC)                                                                         83
      Must be deducted from the income to arrive at the net commission income and the net income must be
       averaged over the most recent two (2) years.
      Full VOE is required to break down base and commission income for year-to-date and past two (2)
       years.
      Two years tax returns (if commission income is more than 25% of their income).
      Two years W-2s

NOTE: Declining income sources should not be averaged and an explanation for the decline should be
obtained. The most recent lower income would be used for qualification purposes.

DISABILITY BENEFITS
Disability Benefit payments should be treated as acceptable stable income unless the terms of the disability
policy specifically limits the stability or continuity of the benefits payments and:
     Must have a remaining term of three (3) years
     Benefits that will decrease to a lesser amount within the next three (3) years because of long-term
        conversion, the lesser amount should be utilized in qualifying the borrower.
     Copy of disability policy or statement is required.
     Statement from benefits‟ payer (e.g. insurance company, employer, etc.) is required.

DIVIDENDS AND INTERESTS
Income from bank accounts, bonds, savings bonds, money market funds, and cash dividends from stocks are
acceptable if verified:
     Such income should be adjusted if the assets are liquidated. The previous two (2) year tax returns,
       including applicable schedules, are required to verify the amount and stability of the income as well as
       develop a two (2) year average of the income; unless declining which then the most recent year will be
       used.
     Most recent asset statements must be provided to support sufficient funds available for three (3) years
       continuance.

FOSTER CARE INCOME
Foster Income received from a state or county sponsored organization may be considered acceptable with a
two-year history and the likelihood of continuation.

NOTE: A twenty-four (24) month history is required for qualifying income does not represent more than 30% of
the total gross income that is utilized in qualifying the borrower.

Documentation Requirements
    Letters from the state agency providing the income
    Copies of deposit slips or bank statements confirming the regular deposits consistently for three (3)
     months

FOREIGN INCOME
Interbank will not accept foreign income unless it is reported on minimum two (2) years U.S. Tax Returns to
use income. In addition, subject property cannot be considered primary or second home if borrower at time of
application is currently living and working abroad.




WHOLESALE I Broker Guide (REV101211JC)                                                                      84
MILITARY INCOME
Base military pay, in addition to the following are permitted:
    Flight or hazard pay
    Rations
    Clothing allowance
    Quarters‟ allowance
    Proficiency pay

NOTE: Income paid to military reservists while they are fulfilling their reserve obligations is also acceptable if it
satisfies the same stability and continuity tests applied to second-job income.

MINISTER / CLERGY INCOME
Ministers / Clergy members can often receiving housing allowances that can be used as qualifying income if
evidenced on their pay-stubs and W-2s and a letter from their employer addressing continuance of housing
allowance.

NON-TAXABLE INCOME
Interbank must verify that the particular source of income is nontaxable and both the income and its tax-
exempt status are likely to continue for the next three (3) years.
     If the income is nontaxable and the income and its tax-exempt status are likely to continue, the
       underwriter may develop an “adjusted gross income” for the borrower by adding an amount equal to
       25% of the nontaxable income to the borrower‟s income.
           o For Example: Social security income - if any portion is showing taxable on the tax returns, it may
               not be grossed up.
     Additional allowances for dependents are not acceptable to gross up.
     The percentage of non-taxable income that may be added cannot exceed the appropriate tax rate for
       the income amount.

MORTGAGE CREDIT CERTIFICATE
Mortgage Credit Certificates (MCC) is not permitted as an acceptable source of income.

Loans with an MCC are not eligible for funding / purchase.

NOTE RECEIVABLE INCOME
To be considered as an acceptable source of income, the following applies:
    Must evidence continuance for at least three (3) years
    Copy of the Note to establish the amount and length of payment
    Must have been received for the last twelve (12) months
    Acceptable evidence includes:
          o Deposit slips
          o Copies of signed Federal income tax returns filed with IRS
          o Copies of bank statements reflecting deposit of funds

NOTE: Payments on a newly executed Note that specifies a minimum duration of three (3) years may not be
used as stable income.


WHOLESALE I Broker Guide (REV101211JC)                                                                            85
PART-TIME, SECOND, OR MULTIPLE INCOME
All types of supplemental income must be received, uninterrupted, for the most recent two (2) years and
supported by IRS W-2 forms, including:
     Two years W-2s
     Full VOEs both jobs

PENSION / RETIREMENT
Income from retirement accounts must be verified by the employer‟s statement or benefit letter, tax returns, or
IRS W-2 forms with the following requirements:
     If bank statements are used as the primary verification source, they must confirm regular deposits.
     If the income is received monthly, it must be determined that the income is expected to continue for at
      least three years to be considered as qualifying income.
     Two years tax returns to evidence two (2) years history of IRA distribution.
     Most recent IRA statement evidence sufficient assets for continuance three (3) years income (60%
      value must be used) and year-to-date distribution should be in line with qualifying income.

PUBLIC ASSISTANCE
Public Assistance may be considered as an acceptable income source if the following apply:
    Received for the past two (2) years
    Likely to continue for the next three (3) years
    Documented by letters or exhibits from the paying agency stating the amount, frequency and duration
       of the benefits payments.

RENTAL INCOME
When the subject property is a primary residence 2-4 unit…
If the underwriter uses rental income from the subject property in qualifying the borrower, Interbank requires
the following:
      Operating Income Statement, and the following:
             o Current Lease (if subject was acquired subsequent to filing previous year‟s tax return); or
             o Most recent two (2) years Federal income tax return (if subject was acquired prior to filing
                 previous year‟s tax return for refinances).
      Net rental income will be obtained from Form 216 (if the transaction is a purchase or if the subject was
         acquired subsequent to filing previous year‟s tax return).
      Net rental income will be obtained from Schedule E (if the subject was acquired prior to filing previous
         year‟s tax return) from Line 3: Gross Rents.
      Subject net rental income will be determined by using 75% of the lower of the three (lease, tax returns,
         or appraisal Form 216) minus proposed PITI for Net Rental Income.

When rental income applies to properties owned by the borrower other than the subject property…
If the underwriter uses rental income to qualify the borrower, the following apply:
      Interbank will require the most recent year Federal tax returns with all schedules (for properties
        acquired prior to filing previous year‟s tax return).
      Reduced documentation scenarios utilizing positive cash flow require a two (2) years‟ history of receipt
        of specific stated earnings.



WHOLESALE I Broker Guide (REV101211JC)                                                                      86
      Net rental income / loss will equal 75% of the gross rent per the lease (for properties acquired
       subsequent to filing previous year‟s tax return) minus PITI; OR
          o Net rental income / loss will be obtained from Schedule E (for properties acquired prior to filing
              previous year‟s tax return) Line 3: Gross Rents minus Line 19: Total Deductions (total
              deductions should include taxes, insurance, and HOA).

When the subject is an investment property…
If the underwriter must use rental income from the subject property to qualify the borrower, Interbank will
require the following:
      Most recent year Federal tax returns with all schedules (if subject was acquired prior to filing previous
        year‟s tax return); OR
           o Minimum two (2) years landlord experience, and
           o Evidence of six (6) months‟ rental loss insurance, and
           o Current Lease (if subject was acquired subsequent to filing previous year‟s tax return).

Net rental income / loss will be obtained from:
    Form 216:
            o If the transaction is a purchase; OR
            o For properties acquired subsequent to filing previous year‟s tax return.
    Schedule E (for properties acquired prior to filing previous year‟s tax return) Line 3: Gross Rents.

Subject net rental income will be determined by using 75% of the lower of the three (lease tax returns, or
appraisal Form 216) minus proposed PITI for Net Rental Income.

NOTE: Appraisal must include both rent schedule (Form 1007 for 1-unit or Form 1025 for multi-family unit)
and operating income 216 regardless using rental income to qualify or not on subject investment property.

ROYALTY PAYMENTS
To be considered as an acceptable income source, the following apply:
    Most recent two year tax return (including Schedule E).
    Income to continue for the next three years.

SALARIED BORROWER
A Salaried Borrower is defined as a wage earner that derives income through employment at a business where
there is little or no ownership interest (less than 25%). Compensation may be based on an hourly, weekly,
monthly, or semi-monthly basis.

Wage earners employed by a family member or working at a family business must provide the last two (2)
years tax returns with all schedules and two (2) years‟ W-2s and a CPA letter verifying whether or not the
borrower has any ownership interest in the company.

Wage earners with less than two (2) years‟ employment history may be considered at the underwriter‟s
discretion for recent college graduates or military personnel.

SALARIED INCOME HISTORY
Interbank requires salaried borrowers to exhibit the following employment standards:
     A minimum of two years employment history


WHOLESALE I Broker Guide (REV101211JC)                                                                       87
      Prior to closing Interbank will verify if borrower is still employed via a verbal VOE. See Verbal
       Verification Requirements for details.
      Borrowers who are salaried but also claim self-employment losses, such as Schedule C, must also
       deduct the self-employment losses.

SALARIED DOCUMENTATION
Standard sources of proof of employment for a salary / wage-earning borrower are:
    W-2 for the past two (2) years
    Current paystub evidencing thirty (30) days‟ earnings and/or showing year-to-date income

NOTE: Handwritten paystubs will not be accepted unless supported by a written VOE and two (2) years tax
returns and two (2) years W-2s to support handwritten paystubs.

SALARIED VERIFICATION OF EMPLOYMENT
“Stand alone” Verifications of Employment (VOE) are not permitted for VOE or income.

VOE‟s must always be supported by a copy of the most recent paystub validating the current “salary” and the
current year-to-date, and must include either:
     W-2s for two (2) years; OR
     Sellers must verbally verify the Borrower(s) employment prior to closing.

See Verbal Verification Requirements for details.

SEASONAL INCOME
Seasonal Income can be considered as stable income if the borrower has worked in the same line of seasonal
work for the past two (2) years and the borrower‟s employer indicates that there is a reasonable expectation
that the borrower will be rehired for the next season.

The following requirements apply:
    Two years tax returns
    Two years W-2s and 1099s
    Income must be calculated over the most recent twenty-four (24) months.
    If income is declining – use the most recent year‟s income under close underwriter review.

SOCIAL SECURITY
Benefits that have a defined expiration date must have a remaining term of at least three (3) years to be
considered. Acceptable verification for Social Security benefits includes one of the following, or as stated by
DU:
    A copy of the Social Security Administration‟s award letter
    Copies of the borrower‟s two (2) most recent bank statements to confirm regular deposits of the
       payment.
    Signed tax returns or W-2s / 1099s for the most recent one (1) year.
    Non-taxable portion of Social Security income from tax return‟s Line 20a minus Line 20b; can be
       grossed up to 25%.




WHOLESALE I Broker Guide (REV101211JC)                                                                      88
SELF-EMPLOYED BORROWERS
Self-Employed Borrowers add an additional layer of risk, since the main source of income for self-employed
borrowers is their private business.

Self-Employed Borrowers‟ income depends on the continuity of the business.            Therefore, specific
documentation relating to the business (such as P&L statements and Federal business returns if required by
DU) is required for borrowers who are self-employed.

The following are considered to be “Self-Employed”:
    Individuals who own at least 25% of a business;
    Individuals whose combined business interest comprise of 25% or more of the total.

SELF-EMPLOYED DOCUMENTATION
Handwritten paystubs are not acceptable unless supported by computer generated W-2s and/or signed 1040s
and Form 4506-T from the IRS covering the appropriate period.

Declining income cannot be averaged; most recent years‟ income will be used. If income has significantly
increased over the past two (2) years, then the income will be averaged. In general, DU findings will determine
documentation requirements of number years‟ tax returns, unless otherwise warranted by the underwriter; such
as change of ownership in business, going from self-employed to salaried, or vice versa.

Standard sources of proof of employment for a self-employed borrower are:
    On all self-employed borrowers, an unaudited Profit and Loss Statement (P&L), signed by the self-
      employed borrower is required, if required by DU.
    Sole Proprietorship
          o Last two (2) years personal 1040s
          o Last two (2) years 1065s (if required by DU)
          o Last two (2) years K-1s
          o All associated schedules
    Corporations
          o Last two (2) years personal 1040s
          o Last two (2) years 1120s (if required by DU)
          o All associated schedules

SELF-EMPLOYED INCOME HISTORY
Self-employed borrowers must have a history of stable and durable income for the previous two years. A
written income analysis should be prepared and included in the loan file. If income is declining, the most
recent tax returns will be used to determine income. If income has drastically increased (more than 20%) from
the most recent returns filed – Interbank will take a two (2) year average of the tax returns.

Prior to closing, Interbank requires that the Broker independently verify the existence of the business via a V-
VOE through the CPA, business license, or telephone listing; this verbal verification should be included in the
loan file. See Verbal Verification Requirements for details.

TIP INCOME
Tip Income is acceptable if properly documented as follows:
     Received for the past two (2) years


WHOLESALE I Broker Guide (REV101211JC)                                                                       89
      Likely to continue for the next two (2) years
      Copies of the past two (2) year tax returns
      Full VOE breaking down base and tip income

TRUST INCOME
A copy of the Trust Agreement or the trustee‟s statement confirming the amount, frequency, and duration of
the payments should be provided. The income must continue at least three (3) years to be considered as
income and validation of the asset and continuation of the trust income must be documented.

Borrowers completely relying upon trust income for the mortgage repayment must provide copies of the Trust
Agreement and the most recent two (2) years signed and dated Federal tax returns, with supporting schedules.
The borrower(s) should have personal access to the trust assets.

UNACCEPTABLE SOURCES OF INCOME
Income derived from any of the following may not be used in qualifying income:
     Income based on future earnings
     Draw Income
     Capital withdrawals
     Capital Gains, unless the borrower is in a business that generates Capital Gains Income; see Capital
      Gains.
     VA Education Benefits
     Income not listed on Tax Returns
     Illegal Income
     Any income that cannot be documented and verified.

UNEMPLOYMENT BENEFITS
Unemployment Benefits is acceptable if properly documented as follows:
    Received for the past two (2) years
    Likely to continue for the next two (2) years
    Copies of the past two (2) years tax returns
    Typical in field of borrower‟s employment position

VA BENEFITS
To be considered as acceptable source of income, the following apply to VA Benefits:
    Must be documented by a letter or distribution form from the Department of Veterans Affairs
    Must continue for the next three (3) years

NOTE: Education benefits are not acceptable.

VERBAL VERIFICATION OF EMPLOYMENT (V-VOE)
The Broker must verbally verify employment as follows:
    For Self-Employed: Verify the existence of the business through an independent third party (e.g. CPA
      letter, phone book, verification from secretary of state, or copy of the business license).




WHOLESALE I Broker Guide (REV101211JC)                                                                   90
Interbank will obtain an additional V-VOE twenty-four (24) hours before closing / disbursement. The Verbal
Verification must be completed independently by Interbank before closing / funding. The following information
must be written and signed:
     Verify the name, address, and phone number of the company contacted.
     The company information should be obtained from a third party source (e.g. Yellow / White Pages,
        Directory Assistance, or contacting the local licensing bureau).
     Verify the name and title of the person contacted.
            o For Wage Earners – this should be Human Resources or the borrower‟s supervisor / manager, if
               applicable to the business.
     The date of contact.
     The information that was verified.
     The name and title of the person completing the verification.
     The signature of the person completing the verification.

NOTE: For Salaried or Commissioned borrowers, it is necessary to verbally verify that the borrower is
currently employed. For Self-Employed borrowers, it is necessary to independently verify that the business still
exists (and is operating) through independent verification.

QUALIFYING RATIOS AND LIABILITIES
OVERVIEW
Each product has specific qualifying ratio requirements published in the product summary.

HOUSING PAYMENT RATIO
The monthly housing expense is the sum of the following charges on the primary residence (or new loan on a
primary residence) divided by the borrower‟s stable monthly income:
     Monthly principal and interest payment on the borrower‟s primary home, and
     1/12th of the annual hazard insurance premium
     1/12th of the annual real estate taxes
     1/12th of the annual flood insurance premium, when applicable
     Monthly leasehold payments, when applicable
     Monthly HOA dues, condominium maintenance fees, monthly assessments, when applicable
     1/12th of the annual private mortgage insurance premium, when applicable
     Monthly payment for other financing, when applicable
     For equity lines of credit – the payment made on the outstanding balance should be used for
       qualification.

DEBT-TO-INCOME RATIO
The Debt-To-Income (DTI) ratio compares the borrower‟s total monthly obligations with their qualified monthly
gross earnings.

Interbank does not allow any debt, revolving or installment, to be paid down to ten (10) months to exclude a
favorable comparison validates the ability of the borrower to repay the loan based on his/her financial strength.

The DTI is calculated by the sum of the following divided by the borrower‟s stable monthly income:


WHOLESALE I Broker Guide (REV101211JC)                                                                        91
      Monthly housing expense on the Primary as calculated above
      All installment debt
      All revolving debt
      Alimony, child support or maintenance payments with more than ten (10) payments remaining
      Real estate net rental losses from all investment properties owned
      Second Home total housing debt, if applicable
      Any other obligation where a monthly payment is required

ALIMONY
If a borrower is paying Alimony, the payment must be considered a debt.

AUTOMOBILES
Payments on all Automobile leases, regardless of the remaining number of payments, must be included in the
calculation of recurring monthly expenses.

Car allowances may not be used to “off-set” car payments.

REVOLVING DEBT
Monthly payments (or 5% of the outstanding balance over $10, whichever is greater if a monthly payment is
not provided) on revolving accounts, regardless of the balance, must be included in the total DTI calculation.

STUDENT LOANS
Student loans must be included in debt ratio calculation regardless of deferred status.

If a payment is not indicated on the credit report – a copy of the borrower‟s payment letter or forbearance
agreement is required to determine the payment amount to use in calculating the borrower‟s total monthly
obligations. If no payment is permitted, the payment will be calculated at 1.5% of the loan balance.

DOCUMENTATION REQUIREMENTS
For Underwriting:
To be reviewed by the underwriter, included in the Underwriting File:
    Existing: A copy of the executed Note, Trust Deed, and Subordination Agreement
    New: A copy of the Note that will be executed at closing on the new subordinate financing.

For Closed Loan Delivery:
A certified copy of the executed second Note, Trust Deed, and Subordination Agreement (if applicable) must
be provided with the loan file delivered for funding / purchase to confirm: loan amount, payment terms, and lien
status.

HOME EQUITY LINE OF CREDIT (HELOC)
Home Equity Lines of Credit (HELOC) are permitted to FHA guidelines; maximum CLTV of 100%.

Borrower‟s housing-expense to income ratio is based on the minimum required payment for the entire credit-
line amount, regardless of the outstanding balance of the HELOC.

The Delivery File must include the appropriate documentation to confirm the HELOC loan terms (e.g. Note,
etc.).


WHOLESALE I Broker Guide (REV101211JC)                                                                       92
PROPERTY
APPRAISAL STANDARDS AND REQUIREMENTS
Each appraisal report must be ordered in compliance with HVCC standards, as outlined earlier in this Broker
Guide.

The following standards and requirements also apply:
    If appraisal has been transferred from other broker – Interbank requires HVCC transfer letter from other
        broker to evidence appraisal was ordered compliant to HVCC standards.
    Second FHA appraisal is also required by Interbank if seller has owned subject less than twelve
        months; does not include foreclosures or if seller is bank, relocation agency, government agency,
        FNMA / FHMLC. Borrower cannot pay for second appraisal and FHA Appraisal logging will be
        completed with lower of the two (2) appraisals received.
    Be provided by independent, disinterested appraisers that are on FHA‟s Roster of Approved
        Appraisers.
            o Appraisers must be licensed or certified in accordance with Title XI of the Financial Institutions
                 Reform, Recovery and Enforcement Act (FIRREA) of 1989.
            o Any party having an interest in the transaction is prohibited from applying pressure or influence
                 on the appraiser to encourage providing specific results or findings.
    Develop the value of the property independently, without regard to race, color, religion, sex, handicap,
        familial status, or national origin.
    Meet applicable appraisal requirements for FHA and Interbank.
    Be computer generated (Adobe Format, .pdf) on the current form applicable to the product and property
        type.
    Have all information complete without any blanks, alterations, or omissions.
    Include the appropriate attachments and addenda.
            o Color pictures of subject and comparables are required.
    Present a complete and accurate evaluation of the property that supports the appraised value.
    Be signed and dated by the appraiser that inspected the property; if the completing appraiser is
        provisional or a trainee, the licensed / certified appraiser must countersign.
    All appraisals must conform to and recognize the USPAP as the minimum appraisal standards
            o Appraiser must be state-licensed and strictly adhere to USPAP guidelines.
    Copy of Appraiser‟s unexpired license or state mandated on-line verification is required; and
    Must include, on the report, the appraiser‟s license or certification number.
    Must provide photos of all sides of the property.

AGE OF APPRAISAL
Age of Appraisal must be 90 days prior to Note date for existing / new construction; updated appraisals are not
permitted.

NOTE: An appraisal cannot be used for any transaction other than for the current mortgage transaction.

APPRAISAL FORMS
The following is a listing of Appraisal Forms to be utilized for all property types eligible for financing; the most
recent version of the listed appraisal form must be used:



WHOLESALE I Broker Guide (REV101211JC)                                                                           93
NOTE: Investment subject properties must include both rent schedule (Form 1007: 1-Unit, or 1025: Multi-
Family) and operating income (Form 216) on appraisal regardless rental income being used.

FORM                               DESCRIPTION / USAGE
FNMA 1004                          Used for single-family properties, both attached and detached including PUD
                                   and site-detached condominiums.
FNMA 1004D                         Used for appraisal updates and/or completion reports for all 1-4 unit appraisal
                                   reports; not accepted by Interbank for recerts / updates. New appraisal must be
                                   ordered once original appraisal is expired.
FNMA 1004MC                        Used to provide market condition information. Required on all appraisals.
FNMA 1073                          Used for condominium properties; required for all condominiums regardless DU
                                   findings.
FNMA 1025                          Used in the appraisal of 2- to 4-unit properties (a duplex, triplex, or fourplex).

INVESTMENT APPRAISAL FORMS
In addition to the appraisal forms specified, the following forms are required for all 2-4 owner-occupied and all
investment properties, regardless of AUS findings.

FORM                               DESCRIPTION / USAGE
FNMA 216 – One-to-Four Unit        Form required for one-to-four unit owner occupied and non-owner occupied
Investment Property Operating      rental properties where the borrower is using rental income to qualify. Required
Income Statement                   by Interbank regardless of borrower using rental income to qualify and AUS
                                   findings.
FNMA 1007 – Single Family          Form required for single-family properties (1-unit investment only) regardless of
Comparable Rent Schedule           borrower using rental income to qualify and AUS findings. Two-to-four unit rent
                                   schedule is included on Form 1025.
NOTE: Evidence of the marketable rent is always required.

APPRAISAL COLOR PHOTOGRAPHS
Color photos of the subject and comparables are always required as applicable.

ADVERSE MARKETING CONDITIONS
The level of collateral risk associated with housing trends indicating values are unstable or declining combined
with the risk of special loan products, purposes and/or occupancy, may require a reduction in the LTV / CLTV
for a given loan.

Special Appraisal Requirements for Adverse Market Conditions
Properties with adverse marketing conditions (e.g. declining values, over supply, or marketing times in excess
of six months) require careful review and the following specific required support documentation:
     At least two of the three comparables must be dated within ninety (90) days of the appraisal date.
           o If the appraiser is unable to provide two comparables within ninety (90) days and/or current
               listing(s), the appraiser must provide a detailed explanation and identify whether value
               adjustments resulted.
           o The explanation from the appraiser must be consistent with other tools utilized to review the
               appraisal.



WHOLESALE I Broker Guide (REV101211JC)                                                                                  94
           o   When the appraiser is unable to provide this (or other) information, second level reviews
               through Interbank escalation processes may be required on loans underwritten by Interbank.
      A minimum of two (2) listing or pending sales is required as a supporting document.
      The appraiser must address the impact on marketability and value of both favorable and unfavorable
       factors.
           o The appraiser must avoid using subjective, racial, or stereotypical terms, phrases or comments
               within the appraisal report.
      Days on the market must be reported for the subject property and each comparable sale and must
       support the Average Marketing Time listed on page 1 of the Appraisal Report.

NOTE: Interbank will require 2nd FHA appraisal when seller has acquired subject less than twelve (12) months
unless current seller is bank, relocation agency, government agency, FNMA / FHMLC.

AGRICULTURAL PROPERTIES
Agricultural properties such as working farm, ranches, orchards, other income-producing farm-type properties
and undeveloped land or land-development type properties are not eligible.

See Outbuildings for additional details.

COMPARABLES
All current FHA appraisal guidelines must be followed when choosing comparables to support the value of any
property.

New projects (e.g. condos, condo conversions, new subdivisions, and PUD projects all require extra diligence
to ensure the value is supported).

New Projects and/or New Subdivisions Comparable Requirements:
   One comparable from inside the subject development / project.
   A minimum of one comparable from outside the development / project and/or from outside the influence
      of the developer.
   Additionally, if possible, a minimum of two (2) re-sale comps to verify that current transactions have
      been exposed to the open market.
   If re-sales cannot be obtained, the appraiser must address and adequately support the final valuation of
      the property.

CONDOMINIUMS
OVERVIEW
Unless excluded by specific product guidelines, Interbank will fund / purchase the loans that are secured by
properties located in a condominium project (condos) as long as they meet the requirements outlined in this
section.

APPRAISAL
A full condo appraisal (Form 1073) is required on each condo, regardless of AUS; the appraisal facilitates the
condo review.




WHOLESALE I Broker Guide (REV101211JC)                                                                     95
CHARACTERISTICS
A condominium is a real estate project formed according to state condominium statues, a recorded declaration,
and other constituent documents.
    The structure is generally comprised of two (2) or more units. The interior space of the units is
       individually owned. There is no individual land ownership.
    The balance of the property (both land and building) is owned in common by the owners of the
       individual units. The common areas are administered and maintained by an owners‟ association that
       levies monthly maintenance charges against each unit owner.
    If a broker submits a loan locked/priced as a single family dwelling and the property is subsequently
       determined to be a condominium, the loan is subject to re-lock and/or re-pricing as a condo.
   
Only existing condo projects completed more than one (1) year that have been approved by FHA at time of
FHA Case Number Assignment date are eligible. Project approval is not required for FHA to FHA Streamline
Refinance transactions.

GENERAL CONDO REQUIREMENTS
The following Interbank overlays apply to condominium properties:
    The project is not an ineligible condo to Interbank or FHA guidelines
    Project has demonstrated market acceptance
    Project must be 51% owner occupied
    Condo questionnaire is not required on FHA condos
   
Please refer to FHA Guidelines for complete list condo requirements.

TOPIC                           CONDO GUIDELINES
Completion                              All units, common areas, and any recreational facilities are 100%
                                         complete for legal phase.
                                        If completion is in question, obtain a Final Certification of Substantial
                                         Completion (FNMA 1081)
                                        If incomplete, provide evidence that developer has posted a surety bond
                                         or other financial guaranty of completion. The HOA must be able to
                                         support the cost of these amenities.
                                        90% total units must have been sold and project turned over to HOA.
                                        Legal phase of conversion must be complete.
                                        Additional phasing and add-ons allowed.
                                        Developer or unit owners may be in control.
Market Acceptance               The date when first units made available is used to determine if the project is
                                selling at an acceptable rate.

                                Any project indicating sales may be lagging must have an Interbank Condo
                                Questionnaire fully completed and the documentation must include copies of the
                                operating budgets evidencing that the sales lag is due to market conditions and
                                not to project fiduciary concerns.
Multiple Ownership              A maximum of 10% of the total unit may be sold to one party, including the
                                developer, or more than one (1) unit – if project is ten (10) or less units.



WHOLESALE I Broker Guide (REV101211JC)                                                                            96
TOPIC                           CONDO GUIDELINES
Number of Units Rented          Maximum 49% (of total number of units in project) may be rental.

                                Fannie Mae Clarification (Excerpted from Fannie Mae Announcement – 08-34):
                                    Fannie Mae permits the inclusion of financial institutions owned (REO)
                                       properties that are for sale (not rented) as owner-occupied units for the
                                       purpose of calculating the owner-occupancy ratio.
                                        Projects where the borrower is an investor must be counted as non-owner
                                         occupied for the purposes of determining the owner-occupancy ratio.
Commercial Use                  Commercial use within the project may not exceed 20% of the total square
                                footage for the project and should be compatible with residential use.
Right of Refusal                Any right of first refusal in the project‟s constituent documents will not impair the
                                rights of a first mortgagee to:
                                     Foreclose or take title to a condominium unit pursuant to the remedies in
                                         the mortgage.
                                     Accept a deed in lieu of foreclosure in the event of default by a mortgagor.
                                     Sell or lease a unit acquired by the mortgagee.
                                     Age restriction that does not meet the requirements within the Fair
                                         Housing Act for age discrimination.
Adverse Environmental                   Any adverse environmental factors affecting the condominium project
Factors                                  must be addressed by the appraiser.
                                        Any factors affecting safety, habitability, or marketability of the unit or
                                         project will render the project ineligible.
Litigation                      If the HOA is involved in any litigation, arbitration, mediation, or other dispute
                                resolution process, obtain the details from the HOA. This information should be
                                verified with an attorney‟s letter, insurance information, structural report, and/or
                                other documentation. Interbank will review the documentation and determine
                                whether an exception can be granted to proceed with the loan with subject project
                                involved in litigation.

                                The following types of litigation generally pose little or no risk to the project and
                                are acceptable:
                                     HOA is suing individual unit owner for unpaid dues.
                                     HOA is being sued for a “slip and fall” liability issue and project has
                                        adequate liability insurance to cover the damages being sought by the
                                        plaintiff.

                                The following types of litigation may impact the project‟s marketability and are
                                generally not acceptable:
                                    HOA is suing the developer for structural defects or other property
                                        deficiencies that impact health and safety. The project may be acceptable
                                        if the defects have been corrected and the project is financially sound and
                                        marketable.
                                    Suits filed against the HOA in which the damages exceed or are not
                                        covered by the HOA‟s insurance.


Delinquent HOA Dues             If more than 15% of the units are delinquent over 30 days on their HOA dues, the
                                HOA must explain the reason(s) for the delinquency and the steps being taken to

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TOPIC                           CONDO GUIDELINES
                                cure the delinquency.

                                The overall financial risk of the delinquent dues must be considered before
                                approving the project.
Special Assessments             If there are pending assessments, consider the impact on all the units and the
                                marketability.

                                NOTE: Many new projects generally have pending assessments.
Insurance                       Interbank requires $1 million liability insurance with acceptable building coverage
                                and a deductible that is the lesser of $1,000 or 1% the insured amount is required
                                for the HOA on all condos.

                                Minimum requirements for hazard, general liability, employee dishonesty, and
                                flood insurance are as established by Fannie Mae and Sellers should refer to
                                those Agencies‟ published guidelines for details; see www.eFannieMae.com for
                                details.

                                Fannie Mae Clarification (Excerpted from Fannie Mae Announcement – 08-34):
                                Brokers must review the entire condominium project insurance policy to ensure
                                that the owners’ association maintains a master or blanket type of insurance
                                policy for only the project in which the individual condominium unit will be
                                financed.

                                The following are not permitted:
                                        A blanket policy that covers multiple unaffiliated condominium
                                         associations or projects, or
                                        A self insurance arrangement whereby the owners’ association is self
                                         insured or has banded together with other unaffiliated associations to self
                                         insure all of the general and limited common elements of the various
                                         associations.

                                As a reminder, condominium association project insurance must cover 100% of
                                the insurable replacement cost of the project improvements, including the
                                individual units in the condominium project.
                                     Coverage does not need to include land, foundations, excavations, or
                                        other items that are usually excluded from insurance coverage.
                                     Fannie Mae expects brokers to verify hazard insurance (including wind
                                        and flood insurance, if applicable) coverage at the project level as part of
                                        their review of a project.
                                     Brokers must verify that each condominium association is covered by an
                                        individual policy before it delivers a mortgage loan on an individual unit in
                                        a condominium project.


INELIGIBLE PROPERTY TYPES
The following property types are ineligible:
    Manufactured Housing (all mobile homes)
    Dome Homes
    Earth Berm

WHOLESALE I Broker Guide (REV101211JC)                                                                            98
       Store Front properties
       Unique (one-of-a-kind) properties
       Properties in “fair” condition
       Properties sold at auction1
       Properties without a clear title
       Properties with less than 600 sq. ft.
1
 Properties sold at auction by a builder, developer or other related entity, condominiums or attached PUD projects are not
eligible for purchase.

Any property reflecting an inconsistency with sellers, purchase, price, any assignment of contract, “flips” or
chain of title discrepancies, marketability issues or any other guideline violation is not eligible for purchase by
Interbank. This does not include standard purchase transactions where the seller is a financial institution
disposing of their REO properties.

PROPERTY FLIPPING
A “Flip” or “Property Flipping” is generally defined as a purchase transaction for a property that has recently
been acquired by the property seller and is being sold for a quick profit.
    Interbank will not accept an FHA purchase transaction where seller has owned subject less than ninety
        (90) days from date of application.
    A flip transaction is evident if the title reveals several changes in ownership in the course of a few
        months.
    If seller has owned subject three (3) months or less at time of application, then Interbank deems
        transaction ineligible unless seller is relocation company, inherited property, bank-owned, or
        government-owned.
    If seller has owned subject less than twelve (12) months, then Interbank will require explanation for the
        property turn-over and a 2nd appraisal will be required and borrower cannot pay for 2nd appraisal. The
        lower value of the two (2) appraisals will be used.

RED FLAGS
       Subject property is being re-sold at large increase after being recently renovated.
       Property seller is LLC (Limited Liability Company).
       Check preliminary HUD-1 to verify seller on sales contract is listed as seller on HUD-1.
       Inconsistencies exist between the owner as listed on the appraisal, the vested owner as listed in the
        title commitment, and the seller as listed in the sales contract.
       Comparables in the appraisal report do not appear to be the best available comps, comps have
        transferred multiple times within twelve (12) months, or the appraisal reflects excessive adjustments.
       Title commitment reflects multiple deeds necessary to effect transfer of title.
       Title commitment, sales contract, or appraisal lists the owner as "owner of record."
       Seller held seconds.

NOTE: Interbank is an EOE and states that a Broker may not discriminate against applicants on the basis of
race, religion, national origin, sex, marital status, age (provided the applicant has the ability to enter into a
binding contract) or because all or part of the applicant‟s income is derived from any public assistance



WHOLESALE I Broker Guide (REV101211JC)                                                                                 99
program. By submitting a loan to Interbank, the Broker warrants that the loan is in full compliance with all
regulatory requirements.




WHOLESALE I Broker Guide (REV101211JC)                                                                  100
PRE-PURCHASE REVIEW
The broker represents and warrants that all documents used to process, underwrite and close a loan are
included in the closing package and/or credit package delivered to Interbank. Files with missing required
documentation may be suspended during the Pre-Purchase Review process.

All documentation that the broker uses to verify identity, employment, income, deposits and mortgage payment
histories that the borrowers provide must be legible and do not contain any alterations, erasures or white-outs.
The broker submits photocopies of the original documents to Interbank, the broker represents and warrants to
Interbank that they are true and exact copies of the original documents, based on actual personal knowledge
of the individual who has examined the originals and has provided the photocopies.

Interbank‟s guidelines basically follow Fannie Mae, and FHA standard investor guidelines with minimum
overlays. We will review the loan to ensure that it meets all the requirements of our guidelines.

Interbank requires that the broker uses the most current version of Fannie Mae multi state Note. Any
corrections that are required to the note and are non-financial in nature will require a copy of the signed letter
of notification to the borrower and corrected first page of the Note if a non-financial change was needed.

An original Allonge to the note must be provided and should include the following:
    Borrowers Name and Loan #
    Property address
    Loan amount

INITIAL REVIEW
Critical documents required for Initial Review:
     Conventional Loans:
            o Note – copy acceptable initially
            o Final 1003 Application
            o AUS findings (if applicable)
            o 1008
            o Appraisal
            o Final HUD-1 / HUD-1A (Preliminary HUD-1 / HUD-1A for Escrow States)
            o Credit Report
     FHA Loans:
            o Note – copy acceptable initially
            o Final 1003 Application
            o AUS findings (if applicable)
            o 92900LT
            o Appraisal (except Streamline Refinance without Appraisal)
            o Final HUD-1 / HUD-1A (Preliminary HUD-1 / HUD-1 A for Escrow States)
            o Credit Report (except Streamline Refinance)
            o Conditional Commitment




WHOLESALE I Broker Guide (REV101211JC)                                                                        101
RESPA REVIEW
All such loan packages must include:
      Initial GFE on the RESPA Rule‟s new form and, if applicable, any subsequent re-issued GFEs due to
        “Changed Circumstances”. To assist with our review, above, please mark the Final GFE with the word
        “Final”
      ALL documentation relating to any “Changed Circumstances” as defined in the RESPA regulation
        (including without limitation and depending upon each broker‟s process, loan origination system screen
        prints, borrower correspondence, loan processor notes, and the like).
      The final HUD-1 Settlement Statement on HUD‟s new form
      The Final Itemization of Amount Financed (or comparable document which gives a detail breakdown of
        the fees that are on the Final HUD-1) for possible TILA and other compliance testing; and
      Vendor Provider List provided to the borrower, where applicable; this would apply only if you permit
        your borrowers to select the vendor for settlement services or title services and required title insurance
        and owner‟s title insurance.

Interbank will compare the fees and terms on the Final GFE to the fees and terms on page 3 (the comparison
tables) of the Final HUD-1. The fees in the Good Faith Estimate column on the HUD-1 and the fees disclosed
on the Final GFE must match exactly. The terms of the loan contained in the “Summary of your loan” section
of the Final GFE and the “Loan Terms” section of the HUD-1 must match exactly – unless the loan amount,
interest rate, or monthly payment amount has decreased. If there are any inconsistencies, the loan purchase
will be suspended for the broker to arrange for and provide the corrected HUD-1.

APPRAISAL
Any appraisal and all appraisal practices used in originating the Loan must conform to the requirements of the
appropriate investor, including Fannie Mae, Freddie Mac, FHA, and comply with appraiser independence
requirements; and meet minimum standards established under FIRREA. All appraisals submitted must include
the appraiser's name (clearly typed) and signature. The appraiser must provide their typed certification or
license number. Brokers are responsible for monitoring the quality of their appraisals. The appraiser must not
appear on our ineligible list.

An AVM will be ordered to validate the appraisal on all files if not already present in the file from the broker.

FRAUD MITIGATION
All loan files submitted for purchase must include a commercially available current, automated, composite
fraud report covering six basic elements (“Fraud Report”):

   ALERT TYPE                        REQUIRED ELEMENTS IN ALERT TYPE:
   Social Security Number            Verify borrower / co-borrower‟s SSN including, but not limited to, database
   (“SSN”)                           checks to identify:
                                          Deceased
                                          Never been issued
                                          Invalid
                                          SSN not associated with name
                                          Date of birth date range inconsistent with SSN issue date
                                          Additional names associated with the SSN


WHOLESALE I Broker Guide (REV101211JC)                                                                              102
   ALERT TYPE                        REQUIRED ELEMENTS IN ALERT TYPE:
   Address                           Verify borrower / co-borrower‟s current address
   Phone Number                      Verify borrower / co-borrower‟s current phone number
   Employment                        Verify borrower / co-borrower‟s current employer‟s address
   Liabilities                       Must run a MERS report on borrower / co-borrower and confirm no undisclosed
                                     real estate liability obtained before closing subject loan.
   Property Alerts                   Subject property address verification

Documents that are missing and/or incorrect are identified during the Pre-Purchase Review process. Interbank
sends a Suspense Report to advise brokers of the outcome and are notified via the website. If a broker has
any questions or does not receive a Suspense Report within seventy-two (72) hours of delivering the closed
loan to Interbank, he/she should check Interbank‟s web site.

Interbank lists all conditions, including documents that are missing, incomplete, or in need of correction, on the
Suspense Report. Any unsatisfied underwriting conditions are listed as well. All conditions must be satisfied
before Interbank will purchase the loan. The broker has five (5) business days to cure the suspense
deficiencies.

Once the deficiencies have been satisfied a Purchase Advice will go out to the broker and a wire will be sent.

Interbank is a participating member of MERS System with ID# 1005116. Loans must be registered with MERS
System with twenty-four (24) hours of our purchase notification. The broker must initiate the transfer of
servicing and beneficial rights on the MERS system within ten (10) days.

PROPERTY INSURANCE REQUIREMENTS
The following guidelines apply to both Hazard Insurance and Flood Insurance.

INSURANCE CARRIERS
The insurance company must have one of the following:
    From Best‟s “Insurance Reports”:
          o General Policy Holder‟s Rating of “B” or better; OR
          o Financial Performance Index Rating of “6” or better; OR
    From Demotech‟s “Hazard Insurance Financial Stability Ratings” of “A” or better; OR
    From Standard and Poor‟s “Insurer Solvency Review”:
          o Qualified Solvency Ratio Rating of “BBBq”; OR
          o Claims-Paying Ability Rating of “BBB” or better.

EFFECTIVE DATE
All policy inception “effective” dates are required to be no later than the date of closing.

On refinance transactions and condominiums, the effective date is usually prior to the closing date. Interbank
does not require the borrower, on a refinance, to purchase new policy as long as the expiration date is no less
than sixty (60) days from date of settlement.




WHOLESALE I Broker Guide (REV101211JC)                                                                        103
Sufficient escrows are required to be collected to enable payment of the full year‟s premium. If the hazard
insurance policy is to expire in sixty (60) days or less, a new policy is required. Interbank will accept the
existing policy provided it meets our requirements outlined in these policies and procedures.

POLICY TERM
The policy must cover a minimum of 6 months in advance; policies with terms of three (3) years are
acceptable.

COVERAGE ON CONDOMINIUM UNITS
When the property is a condominium and the property insurance is included in the association fee, Interbank
does not require an individual hazard policy. In rare cases, a PUD dwelling will also be covered by a “blanket”
or “umbrella” policy provided by the association; these procedures apply in those circumstances.

However, Interbank does require a Certificate of Insurance covering the condominium development. Coverage
must cover 100% of the insurable replacement cost of the project improvements including the individual units
in the project.

Interbank does not require insurance on the contents and will not escrow for contents insurance. If the
association has not secured flood insurance, the individual borrower must obtain insurance on their unit; HO6
is 20% of appraised value.

HAZARD INSURANCE
The Broker must provide proof of hazard insurance policy (or, where required by state law, binder) covering a
term of one (1) year at the time the loan is scheduled to close.

COVERAGE
The amount of coverage must equal at least:
    100% of the insurable value of the improvements; OR
    The original loan amount, as long as it equals at least 80% of the insured value of the improvements;
      OR
    “100% replacement cost” coverage (where required by state law); AND
    Condo HO6 20% of appraised value.
COVERAGE ON 2-4 FAMILY UNITS
If required, “Rent Loss” insurance is required on all conventional loans secured by 2-4 family dwellings when
the borrower does not intend to occupy one of the units.

Rent loss insurance coverage rental losses incurred while the property is being rehabilitated following a
casualty such as a fire. The coverage must cover a minimum of 6 month‟s rent.

Rent loss coverage is part of the hazard insurance policy and is in addition to the dwelling coverage.

DEDUCTIBLE
Deductible limits vary by investor. The following are general guidelines:
    On conforming loans – the maximum deductible is the greater of $1,000 or 1% of the dwelling
      coverage.
    On non-conforming loans – the maximum deductible is the lesser of $1,000 or 1% of the dwelling
      coverage.
    Condo deductable – lesser of $10,000 or 1% of policy face amount.

WHOLESALE I Broker Guide (REV101211JC)                                                                     104
EVIDENCE OF INSURANCE
When permitted by state law, Interbank will require the policy with a paid receipt for the first year‟s premium
prior to or at closing. Otherwise, Interbank requires a binder with a paid receipt prior to or at closing.

Evidence of insurance must include:
    Correct full name(s) of the borrower(s) are required to be shown.
    Correct address of the mortgage property (including zip code) is required to be shown.
    If investor or second / vacation property – the borrower(s) correct mailing address is required to be
      reflected on the policy.

While Interbank may accept the original documentation at closing, Interbank must receive a copy of the policy
or binder prior to preparing the closing documents. It is necessary to ensure that Interbank has:
     A policy that is in effect
     Sufficient coverage
     A correct mortgagee clause
     The correct premium to calculate escrows

FLOOD INSURANCE
The Broker must provide a paid flood insurance policy, if applicable; covering a term of one year at the time the
loan is scheduled for close.

STANDARD FLOOD HAZARD DETERMINATION
Flood insurance is required for any property when the improvements are located in a designated flood hazard
area. Flood zone designations and their respective flood insurance requirements are as follows:
    Flood insurance is mandatory and evidence of such insurance must be provided if any of the property
       improvements lie in any of the Flood Zones: A, AI-A30, AE, AH, AO, A-99, V, V-30, VE, VO, M, E.
    Flood insurance is not required if the subject property is in any of the following Flood Zones: B, C, D, X,
       or is part of the property in a designated flood area, but the property improvements are not.
    The minimum amount of flood insurance coverage is the lesser of:
           o The loan amount; OR
           o The maximum amount available under the appropriate National Flood Insurance Administration
               (NFIA) programs.
    Flood insurance cannot be waived under any circumstances if the Standard Flood Hazard
       Determination identifies the property as being in flood zone: A, or V.
    The flood hazard area designated is determined through Interbank‟s Standard Flood Hazard
       Determination vendor. Interbank notifies the broker when flood insurance is required on a loan as a
       condition of approval.

DEDUCTIBLE
The maximum deductible under the program is:
    The higher of $1,000 or 1% of the policy face amount (dwelling coverage) for properties not covered by
      a blanket policy.
    The lesser of $5,000 or 1% of the policy face amount (dwelling coverage) for properties covered by a
      blanket policy (e.g. condominiums, cooperatives, some PUDs).




WHOLESALE I Broker Guide (REV101211JC)                                                                       105
OBTAINING FLOOD INSURANCE
The application must be submitted to FEMA in sufficient time for FEMA to receive it prior to or on the day of
closing.

EVIDENCE OF INSURANCE
Interbank requires a copy of the application with a paid receipt prior to or at closing. Federal regulations
prohibit us from requiring the actual policy or binder since the application processing time for flood insurance
can take up to two (2) months. The original policy is required to be forwarded to Interbank when issued.

MORTGAGE INSURANCE (MI)
Broker to provide Mortgage Insurance (MI) coverage for loans with LTVs in excess of 80% (or as required by
product parameters). Coverage may be standard with renewal based on declining or level premiums.

Refer to Product Matrix or AUS decision for coverage requirements.

TAX RECORD INFORMATION SHEET
The tax record information sheet is to be completed by the closing agent / attorney. This form will supply the
closer with the tax information needed to complete the closing documents. This form is required even if the
borrower is waiving escrows, as the Closing Department will still need to determine if any taxes are due at the
time of closing.

NOTE: Interbank will use established tax due dates as determined by our servicing department. Tax escrows
will be collected in sufficient amounts to enable full payment of the next tax installment.

TITLE INSURANCE COVERAGE
The Broker is responsible for ordering title insurance. The title commitment cannot be over ninety (90) days
old. Broker and the borrowers are to be the proposed insured. The property address / legal description must
be the same as the loan. Interbank requires all standard ALTA / CLTV endorsements. Coverage amounts for
first liens must be equal to the loan amount.

POWER OF ATTORNEY
A Power of Attorney is acceptable for the signing of loan documents, as long as the following conditions are
met:
    Must be a specific power of attorney, which references the transaction and the property address.
    Must be executed prior to signing the loan documents.
    Signature of Power of Attorney must be complete and on each document.

LOANS CLOSING IN TRUST ACCOUNT
SIGNATURE REQUIREMENTS
Each trustee of the living trust must sign the Note, Security Instrument, and all applicable addendums / riders
to the Note and Security Instrument.

NOTE AND APPLICABLE ADDENDUM
Each trustee of the trust who is not a grantor / trustor / settlor and a borrower must sign the Note and any
applicable addendums, using a signature similar to the following:
    “Name of Trustee, Trustee of the Name of Trust under trust instrument dated Date of Trust, for the
       benefit of Name of Beneficiary Borrower.”


WHOLESALE I Broker Guide (REV101211JC)                                                                      106
Each trustee of the trust who is a grantor / trustor / settler and a borrower (which is typically the case) must
sign the Note and all addendums similar to the following:
     “Name of Trustee/Individual”, individually and as Trustee of the Name of Trust under trust instrument
        dated Date of Trust, for the benefit of Name of Beneficiary Borrower.”

SECURITY INSTRUMENT AND RIDER:
Each trustee of the trust must sign the Security Instrument and Riders similar to the following:
    “Name of Trustee, Trustee of the Name of the Trust under trust instrument dated Date of Trust, for the
       benefit of Name of Beneficiary Borrower.”

Security instrument and riders should include the following acknowledgement after the signature lines and
signed by each grantor / trustor / settlor:
     “By signing below, the undersigned, grantor/trustor/settlor of the Name of Trust Trust under trust
       instrument dated Date of Trust, for the benefit of Name of Beneficiary, acknowledges all terms and
       covenants contained in this Security Instrument and any rider(s) thereto and agrees to be bound
       thereby.

                                                                           ________________________(Seal)
                                                                                Trust Grantor/Trustor/Settlor.”

NOTE: The borrower must sign with only his/her name as it is typed below the signature line and cannot add
the words “trustee” or “individual”, or any other verbiage besides his/her name.

For Example: the signature line will read Jane Doe, Individually and as Trustee of the Jane Doe Trust dated
1/1/2010 should have signature of “Jane Doe” and not “Jane Doe, Individual” or “Jane Doe, Trustee”.

SIGNATURES ON LOAN DOCUMENTS
All loan documents must be signed exactly as the borrower(s) name(s) appear below the signature lines. If
loan documents are not signed as stated, the borrower(s) may be required to re-sign the documents.

QUESTIONS
For questions or concerns, please contact Interbank at: (847) 239-7272, or visit our website at:
www.InterbankWholesale.com.




WHOLESALE I Broker Guide (REV101211JC)                                                                      107

				
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