Wholesale Broker Guide InterBank Mortgage Company Interbank Rates

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					                      INTERBANK WHOLESALE
                       MORTGAGE COMPANY



                              WHOLESALE
                             BROKER GUIDE
                                (Version 10/09)




InterBank Mortgage Company                        Wholesale Broker Guide
Page 1                                                  Version 7.1 10/09
                                               Table of Contents
CHAPTER 1:  BROKER ELIGIBILITY 
   Criteria 
   Broker Application Process 
   Fraud Rule 
CHAPTER 2:  REGISTRATION AND LOCK COMMITMENTS 
 REGISTRATION 
   Registering A Loan 
   Register/Float 
   Key Registration Data Fields 
   Licensing 
   Escrow Waivers 
   Policy/Loan Program Exceptions 
   Locked Loan Changes 
   Incomplete Registration (Pending Status) 
   Intra‐Day Pricing Changes 
   Error Notification 
 LOCK COMMITMENTS 
   Commitment Defined 
   Daily Pricing, and Rate Protection 
   Pending Status 
   Commitment Confirmation 
   Locked Loan Changes 
   Out of Tolerance 
   Rate Lock Extensions 
   Expirations 
   Suspended Loans 
   Withdrawing or Canceling Loans 
   Policy/Loan Program Exceptions 
   Rate Negotiations 
   Problem Resolution 
CHAPTER 3:  COMPLIANCE 
   Overview 
   Mortgage Disclosure Improvement Act (MDIA) 
   High Cost and Responsible Lending Restrictions 
   Home Valuation Code of Conduct (HVCC) 
   Broker Warranty 
CHAPTER 4:   SUBMISSION OF LOAN FILES 
 SUBMITTING LOANS 
   conventional Loans Up To FNMA Maximum 
   Obtaining an Automated Underwriting Recommendation 
   Underwriting Decisions 
 GOVERNMENT LOANS 
   Picture Identification 
   SSN Validation 
   Package Submission 
   Limitations 


InterBank Mortgage Company                                         Wholesale Broker Guide
Page 2                                                                   Version 7.1 10/09
   AppraisalS 
   Credit Reports and Verifications 
CHAPTER 5:  UNDERWRITING 
 CONVENTIONAL CONFORMING LOANS 
   General Guidelines 
 ELIGIBILITY, OCCUPANCY, AND OWNERSHIP STATUS 
   Eligible Borrowers 
   U.S. Citizens 
   PERMANENT RESIDENT ALIEN 
   Non‐Permanent Resident Alien 
   Underwriting RequiremenTs 
   Illinois Land Trust 
   Inter Vivos Revocable Trust (IVRT) 
   Ineligible Borrowers 
   Power of Attorney 
   Purchasing Co‐Borrower 
   Non‐Purchasing Spouse 
   Spousal Property Rights 
   Non‐Occupant Co‐Borrower 
   Multiple Mortgages to the Same Borrower 
   Maximum Number of Borrowers 
   Subordinate Financing 
   Home Equity Line of Credit 
   Temporary Buydown 
   Interested Party Contributions 
   Approved States 
   Underwriting Help 
   Notice of Loan Decision 
   Conditions/ Stipulation 
   Preliminary Findings 
 PRIVATE MORTGAGE INSURANCE 
   APPROVED Mortgage Insurance Companies 
   Standard MI Coverages 
 MORTGAGE INSURANCE GUIDELINES TABLES 
   PRIMARY RESIDENCE 
   SECOND HOME 
   Maximum DTI Ratio 
   Maximum Financing Concessions 
   Borrower Equity 
   Ineligible Loan Features 
   Ineligible property categories 
   Ineligible loan categories 
 DOCUMENTATION 
   Direct VOE Requirements 
   IRS 4506‐T 
   Verbal Verification of Employment 
   Verbal Verification Requirements 
 ASSETS AND LIQUIDITY 
   Overview 
   AUS Supporting Documents 
   Borrower Funds Secured by an Asset 


InterBank Mortgage Company                       Wholesale Broker Guide
Page 3                                                 Version 7.1 10/09
   Bridge Loan 
   Business Funds 
   Cash Value of Life Insurance 
   Credit Card Financing 
   Checking and Savings Accounts 
   Deposit on Sales Contract 
   Eligible Assets 
   Funds to Close 
   Gifts 
   Gift of Equity 
   Ineligible Assets 
   Large Deposit 
   Real Estate Proceeds 
   Rent Credit for Options to Purchase 
   Rent Credit for Options to Purchase (Continued) 
   Reserves 
   Retirement 
   Sale of Stocks or Bonds 
   Tax Deferred Exchange 
   Verification of Deposits 
 CREDIT 
   Overview 
   Age of Documents 
   Bankruptcy/ Foreclosure 
   Bankruptcy Underwriting 
   Collections, Charge‐offs, Judgments, Garnishments, and Outstanding Liens 
   Consumer Credit Counseling 
   Credit Report Inquiries 
   Credit Score (FICO) 
   Disputed Credit Information 
   Electronic Credit Reports 
   Mortgage History 
   Non‐Traditional Credit 
   Residential Mortgage Credit Report 
   Trade lines 
 INCOME AND EMPLOYMENT 
   Overview 
   DU 
   Alimony / Child Support / Separate Maintenance 
   Boarder Income 
   Bonus and Overtime 
   Capital Gains 
   Commission Income 
   Disability Benefits 
   Dividends and Interest 
   Foster Care Income 
   Foreign Income 
   Military Income 
   Non‐Taxable Income 
   Mortgage Credit Certificate 
   Note Receivable Income 
   Part‐Time, Second or Multiple Income 


InterBank Mortgage Company                                                     Wholesale Broker Guide
Page 4                                                                               Version 7.1 10/09
   Pension / Retirement 
   Public Assistance 
   Rental Income 
   Rental Income (Continued) 
   Royalty Payments 
   Salaried Borrower 
   Salaried Income History 
   Salaried Documentation 
   Salaried Verification of Employment 
   Seasonal Income 
   Social Security 
   Self‐Employed Borrowers 
   Self‐Employed Documentation 
   Self‐Employed Income History 
   Tip Income 
   Trailing Borrower Income 
   Trust Income 
   Unacceptable Sources of Income 
   Unemployment Benefits 
   VA Benefits 
 QUALIFYING RATIOS AND LIABILITIES 
   Summary 
   Product Suites 
   Housing Payment Ratio 
   Debt‐To‐Income Ratio 
   Alimony 
   Automobiles 
   Revolving Debt 
   Student Loans 
 PROPERTY 
   Overview 
   Appraisal Ordering 
   RIGHTS OF INTERBANK WHOLESALE 
   Age of Appraisal 
   Appraisal Forms 
   Photograph Specifics – Subject 
   Adverse Marketing Conditions 
   Agricultural Properties 
   Comparables 
   Condominium Overview 
   Condominium Appraisal 
   Condominium Characteristics 
   Declining Markets 
   Borrower’s Insurance 
   InterBank Wholesale Acceptable Condos 
   InterBank Wholesale Ineligible Condos 
   General Condo Requirements 
   Ineligible Property Types 
   Land Contracts 
 ESCROW (COMPLETION) HOLDBACKS 
   Overview 
   Eligibility 


InterBank Mortgage Company                  Wholesale Broker Guide
Page 5                                            Version 7.1 10/09
  Eligible Mortgages 
  Marketability/Acceptability 
  Ineligible Completion Items 
  Time and Escrow Limits 
  Documentation Requirements 
  Swimming Pool Escrows 
  Leasehold Estate Overview 
  Location 
  Log Homes 
  Lot Size‐ Maximum Acreage 
  New Construction 
  Modular/ Factory Built Homes 
  Mixed Use Properties 
  Outbuildings 
  Private Road Maintenance 
  PUD Overview 
  REO/Repo Properties 
  Rural Property 
  Security Bars 
  Subject Property Size 
 CONFORMING ADJUSTABLE RATE MORTGAGE ‐ 
 CONFORM INTEREST ONLY ADJUSTABLE RATE MORTGAGE 
 NON‐CONFORMING MORTGAGES 
 GOVERNMENT LOANS 
  Products 
  TRANSACTIONS 
 FHA UNDERWRITING GUIDELINES 
  Overview 
  Underwriting Method 
  Face‐to‐Face Application 
  Loan Origination Fee 
  Identity Verification 
  Borrower‐Paid Closing Costs 
  Minimum Borrower Investment 
  Acquisition Cost 
  Seller Contributions 
  Multiple Mortgages to Same Borrower 
  Non‐Occupant Co‐Borrower 
  Secondary Financing 
  Mortgage Insurance Premiums 
 ASSETS AND LIQUIDITY 
  Overview 
  Acceptable Sources of Funds 
  Bank Accounts 
  Borrower Funds Secured by an Asset 
  Cash on Hand 
  Cash Value of Life Insurance 
  Earnest Money Deposits 
  Gifts 
  Income Tax Refund 
  Real Estate Proceeds 
  I Retirement Accounts 


InterBank Mortgage Company                         Wholesale Broker Guide
Page 6                                                   Version 7.1 10/09
   Sale of Stocks or Bonds 
   Sweat Equity 
   Tax Deferred Exchange 
   Trade Equity 
   Ineligible Assets 
   Reserves 
 CREDIT 
   Overview 
   Age of Documents 
   Bankruptcy/ Foreclosure 
   Bankruptcy Underwriting 
   Collections, Charge‐offs 
   Consumer Credit Counseling 
   Credit Report Inquiries 
   Credit Score (FICO) 
   Delinquent Federal Debt 
   Disputed Credit Information 
   Electronic Credit Reports 
   Judgments and Tax Liens 
   Mortgage History 
   Non‐Traditional Credit 
   Residential Mortgage Credit Report 
   Trade lines 
 INCOME AND EMPLOYMENT 
   Overview 
   Age of Documents 
   DU 
   Alimony / Child Support / Separate Maintenance 
   Auto Allowance 
   Boarder Income 
   Bonus and Overtime 
   Capital Gains 
   Commission Income 
   Disability Benefits 
   Dividends and Interest 
   Foster Care Income 
   Foreign Income 
   Military Income 
   Non‐Taxable Income 
   Mortgage Credit Certificate 
   Note Receivable Income 
   Part‐Time, Second or Multiple Income 
   Pension / Retirement 
   Public Assistance 
   Rental Income 
   Royalty Payments 
   Salaried Borrower 
   Salaried Income History 
   Salaried Documentation 
   Salaried Verification of Employment 
   Seasonal Income 
   Social Security 


InterBank Mortgage Company                           Wholesale Broker Guide
Page 7                                                     Version 7.1 10/09
  Self‐Employed Borrowers 
  Self‐Employed Documentation 
  Self‐Employed Income History 
  Tip Income 
  Trust Income 
  Unacceptable Sources of Income 
  Unemployment Benefits 
  VA Benefits 
 QUALIFYING RATIOS AND LIABILITIES 
  Summary 
  Housing Payment Ratio 
  Debt‐To‐Income Ratio 
  Alimony 
  Automobiles 
  Revolving Debt 
  Student Loans 
  Documentation Requirements 
  Home Equity Line of Credit 
 PROPERTY 
  Appraisal Standards and Requirements 
  Age of Appraisal 
  Appraisal Forms 
  Appraisal Color Photographs 
  Adverse Marketing Conditions 
  Agricultural Properties 
  Comparables 
 CONDOMINIUMS 
  Overview 
  Appraisal 
  Characteristics 
  InterBank Wholesale Acceptable Condos 
  General Condo Requirements 
 CONDO GUIDELINES 
  Completion 
  Market Acceptance 
  Units Sold 
  Multiple Ownership 
  Commercial Use 
  Right of Refusal 
  Adverse Environmental Factors 
  Litigation 
  Delinquent HOA Dues 
  Insurance 
  Degree of Development 
  Deed Restrictions 
  Ineligible Property Types 
  Land Contracts 
  Underwriting the Land Contract for Sale 
  Leasehold Estate Overview 
  Location 
  Log Homes 
  Lot Size‐ Maximum Acreage 


InterBank Mortgage Company                   Wholesale Broker Guide
Page 8                                             Version 7.1 10/09
   New Construction or Existing Construction Less Than One Year Old 
   Modular/ Factory Built Homes 
   Mixed Use Properties 
   Outbuildings 
   Private Road Maintenance 
   PUD Overview 
 PROPERTY FLIPPING 
   Overview 
   Chain of Title 
   Underwriting Requirements for Purchase Transactions 
   Red Flags 
CHAPTER 6:  RESERVED FOR FUTURE USE 
CHAPTER 7:  CLOSING 
   General Instructions 
   Rate Lock at Closing 
   Scheduling 
   Pre‐Closing Quality Control 
   Documentation Requirements 
   Compliance Requirements 
   Loans Closing in Trust 
   Illinois Land Trust 
   Inter Vivos Revocable Trust (IVRT) 
   Eligibility Requirements 
   InterBank Fees 
   Faxing Loan Documents at Closing 
   Signatures on Loan Documents 
   Corrections on Loan Documents 
   Cancellation of Closing 
   Questions 
CHAPTER 8:   FUNDING 
   Funding Conditions 
   Refinance Loans 
   Right to Cancel 
   Funding Instructions 
   Delays in Funding 
   Post Funding Adjustment 
   Requesting a Post Funding Adjustment 
   E‐mail Information 
   Post Funding Adjustment Team Members 
   Questions 




InterBank Mortgage Company                                             Wholesale Broker Guide
Page 9                                                                       Version 7.1 10/09
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 Wholesale Lending   Our Lending Product Menu was designed to meet the needs of you and your borrowers.
Features
                              Our program and product highlights include:

                                   •    Conventional Loans
                                   •    FHA Loans
                                   •    Jumbo Programs
                                   •    Interest Only Products
                                   •    On-line Registration and Lock
Wholesale Lending:            InterBank understands your need for a full service lender. We take the development of specific
The InterBank Wholesale Way   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                                                                                    Wholesale Broker Guide
Page 10                                                                                                             Version 7.1 10/09
CHAPTER 1:                   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. The minimum requirements
                                 for approval are:
                                 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 2 years
                                 •    Principals - Minimum of 5 years in the mortgage industry, 2 in a management/officer capacity
                                 •    The company has a minimum net worth of $50,000 ($63,000 for FHA approval)
                                 •    Minimum Net worth requirements of:
                                       o     $50,000 – Traditional Broker
                                       o     $63,000 – Traditional Broker with FHA Approval
                                 •    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).
                                 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 Wholesale Broker Agreement
                                 •    Broker Application
                                 •    Branch Application, if applicable
                                 •    Marketing Consent Form
                                 •    Corporate Resolution
                                 •    Web Agreement
                                 •    W-9 Tax Form
                                 •    Complete audited financial statements for the past fiscal year
                                 •    Most recent quarterly unaudited financial statements
                                 •    Articles of Incorporation/Organization
                                 •    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.
                                 •    Provide their most recent complete audited financial statements, including Balance Sheet, Income
                                      Statement, Statement of Cash Flows, Statement of Retained Earnings, footnotes, and the Auditor’s
                                      Report containing an unqualified opinion.
                                 •    Provide interim financial statements for the most recent quarter.
                                 •    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 under 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 must notify InterBank immediately if there is a change in ownership or company
                                 structure within 30 days of such change.




InterBank Mortgage Company                                                                                            Wholesale Broker Guide
Page 11                                                                                                                     Version 7.1 10/09
FRAUD RULE
                             NOTE: 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. 




InterBank Mortgage Company                                                          Wholesale Broker Guide
Page 12                                                                                   Version 7.1 10/09
CHAPTER 2:                   REGISTRATION AND LOCK COMMITMENTS
 REGISTRATION                    The Interbank Lock Desk ensures timely and accurate registration of Individual loan locks.

 REGISTERING A LOAN              Client may register and lock loans with Interbank Wholesale through the following three methods:

                                 •    Internet: Visit us at InterbankWholesale.com.
                                 In the event, and ONLY if the on-line lock facility is off-line and not due to a pricing change.

                                 •    Telephone: Call the Lock Desk at 847-239-7272 (the desk is staffed from 8:30 AM to 5:00 PM CT).
                                 •    Fax: Fax a Registration Sheet to 847-574-8149.

 REGISTER/FLOAT                  Individual loans can be registered in one of two ways: a float status (no price or delivery timeframe is set
                                 or given); or lock status. A Client may register a loan into float status in order to obtain a Loan number
                                 prior to submission for underwriting. If requested, pricing will be quoted from the current day's Ratesheet
                                 for the loan attributes and delivery timeframe requested.

 KEY REGISTRATION DATA FIELDS    Following are the key data fields required to register a loan:

                                 •    Client's company name and assigned ID number
                                 •    Web User Name
                                 •    Client Loan Number, if applicable
                                 •    Primary Borrower first and last name
                                 •    Primary Borrower Social Security Number
                                 •    Primary Borrower Credit Score
                                 •    All Co-Borrowers' first and last names
                                 •    All Co-Borrowers' Social Security Numbers
                                 •    All Co-Borrowers' Credit Scores
                                            o    If Credit Score is not available at time of registration, pricing may be denied or the Loan
                                                 may be placed in a pending status if product requires Credit Scores to be locked
                                 •    Primary wage earner
                                 •    Loan Program code number and product name
                                 •    Property address, city, state and zip code1
                                 •    Property type
                                 •    Note rate (optional for floating Loans)
                                 •    Term/Amortized Term - (in months)
                                 •    Buydown type, if applicable
                                 •    Occupancy
                                 •    Loan purpose
                                 •    Documentation Type
                                 •    Escrows
                                 •    Sales price, appraised value, or LTV
                                 •    Ratio (DTI)
                                 •    Units
                                 •    Condominium type, if applicable
                                 •    CLTV – required if there is another lien
                                 •    Other Lien Balance (required for CLTV)
                                 •    Locking the Loan—Indicate lock window and delivery option
                                 •    Any other Loan Program specific field, as required
                                 1
                                   Property Address Clarification - On a purchase transaction, Client may request a credit pre-qualification
                                 for the Borrower prior to a property being located. In this instance, the street address may be input as
                                 “To Be Determined”. A Loan with a “To Be Determined” property address cannot be locked, and is only
                                 eligible for registration as a float for underwriting purposes. A full and complete property address is
                                 required at the time of a rate lock request. Any lock requests with incomplete or incorrect addresses will
                                 be classified as invalid and subject to worst-case pricing.




InterBank Mortgage Company                                                                                          Wholesale Broker Guide
Page 13                                                                                                                   Version 7.1 10/09
 LICENSING                   Interbank Wholesale will not accept Loans in states where Clients are not properly licensed to conduct
                             business. In the event that Interbank Wholesale does not have a Client's current license or exemption on
                             record, we cannot accept loan registrations or locks. If any Client license issues are under review, the
                             Client's Loans will be placed in a pending status. To remove the loans from pending status the Client
                             must take the following steps:
                             Client must update all state licensing information by emailing state licensing and exemption information
                             directly to Interbank Wholesale at Credit.Risk@InterbankWholesale.com.
                             Once this information is received and our system has been updated to reflect the appropriate approval,
                             the Client must submit a new lock request to the Lock Desk at the prevailing loan rate. Rates effective on
                             the original request date will not be honored.

 ESCROW WAIVERS              When the Client elects to waive escrows for property tax and/or homeowner's insurance on a Loan,
                             certain restrictions and price adjustments will apply. To be eligible to waive the property tax and/or
                             homeowner's insurance escrow, the Loan must meet program eligibility guidelines and qualifications (see
                             our Product Matrices for more complete information).
                             The Ratesheet includes state specific zone information and adjustments. Property tax exemptions will be
                             subject to all applicable price adjustments for non-escrowed Loans.

 POLICY/LOAN PROGRAM         Exceptions will be considered for registered loans on a case-by-case basis. Clients can initiate the
 EXCEPTIONS                  exception review process by submitting a Loan Exception Request (located in the Forms Library). To
                             Register a loan before submitting an Exception Request, Client may contact the Lock Desk via telephone
                             or fax and request a loan to be registered into a Pending Status to obtain a loan number. Loans in a
                             pending status will be reviewed but not locked until the pending status is cleared. No Loan under
                             consideration for an exception can be locked until the exception is approved by Interbank Wholesale.
                             Interbank Wholesale will communicate the decision to Client. If the exception is approved, Client may fax
                             the approved exception along with a completed Loan Registration Sheet to the Lock Desk to request a
                             lock. The Lock Desk will then confirm the loan registration with the Client.
                             In general, policy and Loan Program exceptions will be subject to an additional price adjustment. You
                             should be aware that Interbank Wholesale, at its discretion, may charge a cancellation fee if the decline
                             of an exception request results in cancellation of a locked Commitment.

 LOCKED LOAN CHANGES         The Lock Desk will determine if a request to change Loan information requires that a Loan be re-priced.
                             Changes to loan information are not automatic, nor recommended. The Lock Desk may require
                             additional information to facilitate the change. Interbank Wholesale routinely runs audit checks against
                             the changed fields to protect against fraud and to fulfill banking and regulatory requirements.
                             Any incorrect Borrower information, such as Borrower name or social security number, will require
                             additional documentation and may result in worst-case re-pricing.
                             Regardless of Loan status, the following fields cannot be changed:

                                  •     Client ID
                                  •     Borrower's and Co-Borrower's names
                                  •     Borrower's and Co-Borrower's Social Security Numbers
                                  •     Property address1
                                  •     Property state
                                  •     Property zip code
                             On a Locked Loan, in addition to the fields above, revisions to the following fields will not be permitted:

                                  •     Delivery Method
                                  •     Lock Window
                             For locked loans, changes to the following fields may result in re-pricing the Loan:

                                  •     Loan amount
                                  •     Loan purpose
                                  •     LTV
                                  •     CLTV
                                  •     Occupancy
                                  •     Credit Scores
                                  •     Sales price
                                  •     Appraised value
                                  •     Other liens or Secondary Financing
                                  •     DTI
                                  •     Interest rate
                                  •     Term
                                  •     Program Code
                                  •     Documentation type
                                  •     Property type


InterBank Mortgage Company                                                                                       Wholesale Broker Guide
Page 14                                                                                                                Version 7.1 10/09
                                  •     Escrows
                                  •     Buydown
                             For more complete information regarding Loan changes resulting in re-pricing, see the Locked Loan
                             Changes section.
                             1
                               Changes to property address: The only time the property address may change is on a purchase
                             transaction in which the initial agreement of sale is cancelled and a new property is located. Under that
                             scenario, the original Loan will be cancelled and a new Loan with the updated information will be
                             registered subject to current market pricing conditions. In order to process this request, the Lock Desk
                             may request additional documentation. See Lock commitments of this Wholesale Broker Guide for
                             potential pricing implications.

                             Other circumstances necessitating a change to the property address will result in worst-case
                             pricing and may require additional documentation for review.

 INCOMPLETE REGISTRATION     In some cases, the Lock Desk may attempt to register and / or lock a loan, but cannot complete the
 (PENDING STATUS)            registration, perhaps due to one or more of the following issues:

                             •    Missing/incomplete/incorrect social security numbers
                             •    Missing/incomplete/incorrect property address
                             •    Missing/incomplete/incorrect Borrower's and/or Co-Borrower's names
                             •    No Credit Score is provided, and product requires it
                             •    No DTI is provided, and product requires it
                             •    Loan does not fit product guidelines
                             •    Product code not provided
                             •    Rate is not selected
                             •    Rate lock window is not selected
                             •    Requested rate is not available
                             •    Client is not licensed in the state where property is located
                                  (see the Licensing section in this chapter for more information)
                             •    Other reasons not listed here
                             In these cases, the Loan will be placed into Pending Status. Placing a Loan in a Pending Status will save
                             some of the Loan information, but the Loan cannot be locked until all open issues have been resolved.
                             Interbank Wholesale will fax information to Client at the number they provided, outlining the deficiency
                             that requires correction. It is the Client's responsibility to contact the Lock Desk to rectify any outstanding
                             issues. Once the correction is received and reviewed by Interbank Wholesale, the Client may submit an
                             updated lock request based on the prevailing loan rates at the time the lock request is submitted.
                             Interbank Wholesale will not assume responsibility for unlocked or unregistered loans that have been
                             sent on improper forms, to incorrect fax numbers, or incorrectly filled out.
                             See the Pending Status section in, Lock commitments of this Wholesale Broker Guide for more
                             information

 INTRA-DAY PRICING CHANGES   Due to the sometimes volatile nature of the secondary market, all pricing is subject to change at any time
                             and without notice. Interbank Wholesale reserves the right to determine the standard used to establish
                             the cutoff time for intra-day pricing changes.
                             A. Internet
                             When Interbank Wholesale is re-pricing or preparing new Ratesheets, website transactions will be
                             disabled.
                             B. Phone (only applicable if web was down due to technical issues)
                             Clients that are in the Interbank Wholesale phone queue at the time of a re-price will be able to complete
                             their registration, lock, or change requests as of the pricing in effect at the time they entered the phone
                             queue. Clients contacting the desk once re-pricing is in process will receive a message that we are
                             currently going through a rate change and they will be asked to call back after the new prices are posted.
                             C. Fax (only applicable if web was down due to technical issues)
                             Interbank Wholesale time stamps all inbound and outbound facsimile transmissions. All registrations,
                             changes, and other time-sensitive requests will be honored if they are received by Interbank Wholesale
                             before the established rate change and are deemed complete. Pricing for loan registrations, changes or
                             locks received after the price change has started will be subject to pricing as of the next available
                             Ratesheet.

 Error Notification          Interbank Wholesale will not be held responsible for incorrect registrations and/or loan lock errors. Errors,
                             omissions, or mistakes that are reported to the Correspondent Lock Desk within 24 hours after the
                             incident occurs will be considered on a case by case basis for correction without penalty. It is the Client's
                             responsibility to contact the Interbank Wholesale Lock Desk to report registration or lock-in issues or
                             missing lock-in requests within 24 hours of the initial request. Any correction of errors or supplemental



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                             information for omissions after the 24-hour period will require that the loan be repriced based on
                             prevailing rates.
                             See the Problem Resolution section in Lock Commitments of this Guide for more information.


 LOCK COMMITMENTS            In order to close loans wth Interbank Wholesale, Client must obtain a Rate Lock Commitment. A variety
                             of pricing options are available to meet the needs of our Clients. For related information, see Registration
                             of this Wholesale Broker Guide.

 COMMITMENT DEFINED          A Rate Lock Commitment is an agreement whereby Client commits to deliver a Loan, as described in the
                             Commitment Confirmation that is eligible for purchase under the terms of this Wholesale Broker Guide.
                             Client must enter into a Commitment for each Loan prior to the scheduled closing with Interbank
                             Wholesale.
                             Once the Loan has been locked, the Client is considered to have entered into a Best Effort Delivery
                             Commitment with Interbank Wholesale.
                             A. Best Efforts Delivery Commitment

                             •    A Best Efforts Delivery Commitment is a lock for a specific Borrower with a specific property.
                             •    Under a Best Efforts Delivery Commitment, Client commits to the following:
                             •    Best efforts will be made to close the Loan as described in the Commitment
                             Although there is no penalty charged on an individual loan if it does not close, Interbank Wholesale
                             closely monitors pull-thru ratios of locked pipeline. Unacceptable levels may impact Client's ability to
                             maintain normal business relationships with InterBank Wholesale.
                             B. Additional Rules Applicable to Commitments

                             •    Each lien position of a property may have no more than one Commitment outstanding at any one
                                  time with Interbank Wholesale.
                             •    Client may not assign or transfer a Commitment, in whole or in part, without the prior express
                                  written consent of Interbank Wholesale.
                             Please note that the term Commitment is not to be confused with other agreements or terminology that
                             may be in effect between Client and Interbank Wholesale (such as a master commitment or a forward
                             commitment).

 DAILY PRICING, AND RATE     Daily Prices & Rate Sheets
 PROTECTION
                             Daily prices are established at approximately 10:00 AM CT and are available at
                             www.InterBankWholesale.com. Rate sheets may be available to Client contacts through email on a
                             limited basis. For more information, please contact Interbank Wholesale Client Services at 847-239-7272
                             Interbank Wholesale will have periods when no pricing is available. These “blackout periods” are
                             generally from 11:45 PM through 10:00 AM CT daily when Interbank Wholesale updates the daily
                             Ratesheet. There may also be periods during the day when market conditions will necessitate a general
                             Ratesheet price update. During these periods, when new Ratesheets are being generated, Clients will
                             not be able to obtain rate locks on Loans on the Interbank Wholesale website or through telephone
                             queues. Any faxes received during these blackout periods will be applied to next available Ratesheet.
                             Rate Protection
                             Interbank Wholesale may provide, at its discretion, Rate Protection (RP) for its Clients. RP enables
                             Clients to lock in new originations after the close of normal business hours, and applies only to Best
                             Efforts Delivery Commitments. RP is based upon the time zone in which Client's main office is located,
                             and begins at 5:00 PM local time to 11:45 PM CT, on the same Business Day.
                             If a Client locks a Loan on the website or faxes the request in after 5:00 PM local time, the system locks
                             the dollar amount up to the RP limit. If Client exceeds the limit, the system will notify the Client of the
                             amount by which they exceeded the limit. Locks received via fax are generally processed after requests
                             sent via the website as these are completed in real time. Client then has the option to either fax in the
                             rate lock request (in which case Client will receive the following day's pricing), or to lock the Loans at a
                             future date. Interbank Wholesale is not responsible for lock requests that are rejected due to RP limits. In
                             the event that a Client faxes lock requests that are in excess of RP limits, Interbank Wholesale will
                             assume that the Client wants rate protection, and their Loans will be locked against the next available
                             Ratesheet.

 PENDING STATUS              Interbank Wholesale activates a rate lock only when Client provides complete Loan data and which
                             meets Interbank Wholesale's program guidelines. Loans with incomplete Loan data will be placed in
                             Pending Status and will not be priced. Once the cause of the pending condition is removed or corrected,
                             Interbank Wholesale will allow Loans to receive a rate lock at the current market. It is Client's
                             responsibility to contact the Lock Desk to rectify any problems and to request to lock the Loan.
                             See the Incomplete Registration (Pending Status) section of this Guide for more information.




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 COMMITMENT CONFIRMATION     A Commitment Confirmation is Interbank Wholesale's written communication to the Client confirming that
                             Interbank Wholesale has accepted the Client's Commitment and the additional terms and conditions
                             applicable to Interbank Wholesale's potential purchase of the Loan.
                             If Client delivers an eligible Loan within the Commitment Period, and the Loan conforms to Interbank
                             Wholesale's Guidelines, Interbank Wholesale will review the Loan for potential purchase under the
                             pricing and terms described in this Commitment Confirmation section.
                             After Client has communicated its request to enter into a Commitment, the request is non-revocable by
                             Client. Once accepted or rejected, Interbank Wholesale will communicate its response and, if applicable,
                             the terms of the Commitment including the price and the Commitment Period. Interbank Wholesale is not
                             deemed to have accepted a request to enter into a Commitment until Interbank Wholesale has sent its
                             written Commitment Confirmation to Client.
                             Although Interbank Wholesale will use commercially reasonable means to receive requests and send its
                             responses for Commitments, Interbank Wholesale is not responsible for any failures of Client to deliver
                             or receive any such communications, and Client acknowledges that Interbank Wholesale will act in
                             reliance of a Commitment that it has accepted even if Client does not receive the Commitment
                             Confirmation. Clients that wish to mitigate the risk of market shifting should use time-sensitive means of
                             communication (such as InterBankWholesale.com, the Registration or NT Desk) rather than means
                             without immediate feedback (such as fax).
                             Client also acknowledges that if Interbank Wholesale accepts a Commitment by voice (such as by
                             telephone), the Commitment will remain subject to all terms and conditions shown in a subsequently
                             delivered Commitment Confirmation.
                             Each Commitment Confirmation will provide Interbank Wholesale's applicable Commitment number
                             and/or Interbank Wholesale Loan number, which Client must include in all future correspondence
                             regarding such Commitment.
                             Further, Client acknowledges that prices in a Commitment Confirmation will be those applicable at the
                             time Interbank Wholesale acknowledges they received a completed/acceptable request for a
                             Commitment, and that Interbank Wholesale is not responsible for market changes or other Re-Pricing
                             events that may have occurred between the time of Client's request and Interbank Wholesale's receipt.
                             InterBank reserves the right to determine the standard used to ascertain the time such request is
                             considered to be received.
                             The pricing provided on the Commitment Confirmation is subject to change. Changes, including but not
                             limited to changes in loan characteristics, program eligibility, commitment terms and late fees will affect
                             the final loan price. InterBank Wholesale and its Affiliates reserve the right to modify and/or revise its
                             Commitment Confirmation should any of the information submitted in the final loan package differ from
                             the information provided during the Pricing Functions service or if the loan does not meet InterBank
                             Wholesale's or its Affiliates' guidelines. A Commitment Confirmation does not constitute a loan
                             decision/approval or a commitment to purchase a loan.

 LOCKED LOAN CHANGES         Most changes to a locked Commitment would constitute a relock and would be subject to worst case re-
                             pricing. The following list includes examples of changes that would be subject to re-pricing.

                             •    Rate lock expired prior to loan closing and disbursing on a Best Efforts Delivery Commitment
                             •    Commitment cancelled/denied and new Commitment requested
                             •    Address changes
                             •    Most product changes1
                             For more information regarding Locked Loan changes, see the Locked Loan Changes section of this
                             Wholesale Broker Guide.
                             1
                               All product changes completed without re-price are at the total discretion of the Lock Desk and may be
                             approved or denied based upon existing market conditions.

 OUT OF TOLERANCE            Unless otherwise specified, when fulfilling a Commitment, Interbank Wholesale allows a tolerance of plus
                             or minus 5% on individual Best Efforts Delivery Commitment. Loan amount changes outside of these
                             tolerances are subject to Out of Tolerance (OOT) pricing adjustments. These pricing adjustments help to
                             compensate for the negative effects of market movement on the marginal dollar amount change of the
                             Loan.
                             The OOT amount is subject to re-pricing and fees per the grid below:

                                       If Loan amount           If market price       Best Efforts Delivery Commitments
                                       Increases                Increases             No OOT fee
                                       Decreases                Decreases             No OOT fee
                                       Increases                Decreases             OOT fee applies
                                       Decreases                Increases             OOT fee applies




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                             The OOT fee may be calculated by the Lock Desk, or on the website for Best Effort Commitments. The
                             OOT Fee is applied to the Loan pricing, and once the Loan has been recalculated for OOT, the new
                             recalculated Loan balance is the new starting point for any future Loan amount changes.
                             Example:
                             If the initial locked Loan amount is $100,000 and the Commitment is Best Efforts Delivery Commitment,
                             the Loan amount tolerance limit is $95,000 to $105,000. A change in Loan amount to $80,000 calculates
                             to an out of tolerance amount of $15,000 ($95k – $80k). This $15,000 variance in delivery amount would
                             be subject to the OOT calculation. If the original price of the Loan was 100.00 and the current market
                             price for the same delivery is 101.00, then an OOT fee or pricing adjustment would apply based on the
                             grid above (Loan amount down and market price up). The fee is calculated on the $15k OOT balance at
                             a 100 basis point loss (price move from 100.00 to 101.00) and would equal ($150.00). A ($150.00)
                             change in value on an $80,000 Loan would equate to a price adjustment of -18.8 basis points. Therefore,
                             18.8 basis points would be deducted from the final Loan price.

 RATE LOCK EXTENSIONS        Client may request Rate Lock Extensions via website, fax, or telephone.
                             Interbank Wholesale may grant Individual Best Efforts Lockextensions of up to 30 days on or before the
                             Lock Expiration date. Extension terms and fees are posted daily on the Ratesheet. The fees on the
                             Ratesheet in effect at the time Client requests the extension apply. Client must request any extension
                             beyond 30 days through the Interbank Wholesale Lock Desk. Extension Requests beyond 30 days from
                             the original lock expiration will only be considered on a case by case basis and must be requested
                             directly with the Interbank Wholesale Lock Desk. At no time shall extensions exceed an aggregate of 60
                             days. Extension requests beyond 60 days would be considered extraordinary and would need to be
                             approved contact your Senior Relationship Manager for details. Upfront fees or higher extension fee
                             charges may be required for any exceptions to our standard extension policy.
                             Automated extensions on the website may be disabled from time to time due to market conditions. In
                             these circumstances please contact the Lock Desk for extension options.
                             All rate lock extensions are calculated in calendar days and must be continuous. Extensions are
                             calculated from the actual expiration date of the original lock. (i.e. Weekend or Holiday expirations are
                             calculated from the actual calendar expiration date that falls on the weekend of holiday). Extension fees
                             and policies are at the discretion of Interbank Wholesale and are subject to change without notice.
                             Interbank Wholesale has the right to refuse to permit extensions on individual loans or products at any
                             time for a variety of reasons including but not limited to current market conditions or changes in product
                             eligibility/guidelines.
                             Clients must advise Interbank Wholesale of any erroneous extension requests prior to 5:00 PM CT on
                             the same day as the request. Requests for changes after this time will not be permitted.

 EXPIRATIONS                 A. Lock Expiration
                             The Rate Lock Expiration is the expiration of Interbank Wholesale's Commitment to honor a locked Loan
                             at a particular interest rate. All Loans must be closed and funded by the Lock Expiration Date. If Client
                             requires additional time, all extension requests must be made on or before the Rate Lock Expiration
                             Date. Any requests received after this date would be subject to relock at worse case pricing instead.
                             Interbank Wholesale encourages all Clients to monitor lock expiration dates very carefully. Failure to
                             extend locks prior to its expiration date in order to meet Funding Dates may result in costly re-pricing.
                             B. Expired Commitments
                             Client may request to relock expired Rate Lock Commitments into the following:

                             •    The same lock window with rate extension fees with appropriate roll cost.
                             •    A shorter lock window than originally locked, but all applicable extension costs from the prior lock
                                  are added to the cost of the Loan and the base price is capped to the original locked base price.
                             •    Current market rate 30 days after the original Lock Expiration, but any extension fees stay with the
                                  Loan for up to 120 days after the original Delivery Expiration date.
                             •    A re-lock request may be subject to an additional risk of secondary market illiquidity, and Interbank
                                  Wholesale may not accept the original locked rate. Interbank Wholesale may deny the original
                                  locked rate on expired locks due to market illiquidity. Rates not listed on the current Ratesheet are
                                  illiquid rates and Client may not be able to relock them.
                             •    Loans that are relocked must also meet all current product eligibility guidelines.
                             C. Holiday or Weekend Lock Expirations
                             If a rate lock expires on a weekend or a Interbank Wholesale observed holiday, Clients must request to
                             extend the rate lock during weekly standard hours until 5:00 PM CT before the rate actually expires
                             Example: The rate lock expires on Saturday 9/19/09. On Friday, 9/18/09 Client extends the rate lock for
                             fifteen additional days using the extension fees published on the 9/18/09 Ratesheet. Therefore, the Lock




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                             Expiration date is Monday,10/19/09.

 SUSPENDED LOANS             Interbank Wholesale will not close loans with incomplete closing and/or credit packages.

 WITHDRAWING OR CANCELING    A. Withdrawing or Canceling Loans
 LOANS
                             A Client may request Interbank Wholesale to cancel or withdraw a Loan. Once cancelled or withdrawn,
                             the Loan immediately ceases to be price or guideline protected. There can be no reinstatement of that
                             specific Loan number. Should Client request a Loan reinstatement and should Interbank Wholesale
                             reinstate the Loan, it will be re-registered and Re-priced according to worst case pricing policies. All
                             extension fees remain with the Loan. Cancellation may take place through the website or through the
                             Registration or Lock Desk.
                             B. Cancellation of Best Efforts Delivery Commitments
                             Interbank Wholesale monitors patterns to identify potential non-compliance with the Best Efforts Delivery
                             Commitment policy. Interbank Wholesale reserves the right to contact the applicant in the event of a
                             cancellation, to confirm the status of the Loan. In the event a loan is closed and delivered for purchase,
                             and is subsequently withdrawn or deemed un-purchasable, Interbank Wholesale at its discretion will
                             assess a cancellation fee.
                             Client is responsible for monitoring and ensuring that authorized personnel only make the request for
                             cancellation.

 POLICY/LOAN PROGRAM         Not offered at this time.
 EXCEPTIONS
                             If and when they are offered, the following policy and procedure will be followed: Interbank Wholesale
                             will consider exceptions on a case-by-case basis by submission of a completed Loan Exception
                             Request. Client must register the Loan in order for Interbank Wholesale to consider it. When the loan is
                             outside current guidelines, Client can only register the loan into a pending status by contacting the Lock
                             Desk via phone or fax. Interbank Wholesale will review but not lock loans in a pending status until the
                             pending status clears. Interbank Wholesale will not lock any Loan under consideration until the exception
                             is approved and Client submits current request to lock. In general, policy and Loan Program exceptions
                             will be subject to additional price adjustments.
                             Interbank Wholesale may at its discretion, charge a cancellation fee if the decline of an exception
                             request results in cancellation of a locked Commitment

 RATE NEGOTIATIONS           Under certain market conditions, Interbank Wholesale will consider a re-negotiation of a locked rate on
                             Best Efforts Delivery Commitments. The minimum market movement needed before Interbank
                             Wholesale will consider renegotiating the rate is 0.25% in RATE for the same product and lock term.
                             At Interbank Wholesale's discretion and depending on market conditions, some products at times will not
                             be eligible for negotiation regardless of market move.
                             Client must have a Best Efforts Delivery Commitment pull through and delivery rate that is acceptable to
                             Interbank Wholesale, in its discretion.
                             Client must close and disburse the negotiated loan within 10 calendar days and Interbank Wholesale will
                             change the Lock Expiration to reflect this. The Loan must not have been expired, cancelled, or
                             withdrawn. Only one rate negotiation per Commitment can be granted.
                             The new price will have an additional .50 basis points cost to Client added to current day pricing at the
                             renegotiated rate (for the same product and lock term). The new negotiated price will not exceed the
                             original quoted price. The end Borrower must receive the full benefit of the renegotiation in the form of a
                             rate reduction with no additional points.

 PROBLEM RESOLUTION          Any contingency, issue, process, or scenario not covered in this document should be considered outside
                             of Interbank Wholesale's policy, and, therefore, subject to review by the Lock Desk. Clients are
                             encouraged to call the Lock Desk when they have questions or pricing issues with a Loan. An agent will
                             make every effort to resolve the issue, but if the issue cannot be resolved, the matter may be escalated
                             to the Senior Relationship Manager for resolution.




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CHAPTER 3:                   COMPLIANCE
 OVERVIEW                        The Broker must submit each mortgage loan in compliance with the applicable underwriting guidelines in
                                 this 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 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)
                                 •    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             In Accordance with the Mortgage Disclosure Improvement Act (MDIA), effective with applications
 IMPROVEMENT ACT (MDIA)          received on July 30, 2009:

                                 •    InterBank Wholesale 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 Wholesale or anyone else, except for a credit report fee,
                                      until three business days after InterBank Wholesale provides the initial disclosures
                                 •    The closing of the loan cannot occur until a minimum of seven business days after InterBank
                                      Wholesale has delivered the disclosures.
                                 •    InterBank Wholesale will re-disclose if it is determined that the APR is outside of tolerance due to
                                      the following:
                                 •    The APR is understated by more than 1/8th of 1% for any reason.
                                 •    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.
                                 •    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

 HIGH COST AND RESPONSIBLE       InterBank Wholesale high cost policy will conform to all Federal, State, County, City, and Agency
 LENDING RESTRICTIONS            requirements, including consumer laws.
                                 No loan funded may violate high cost regulations as set forth by the above mentioned entities.
                                 InterBank Wholesale 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          InterBank adheres to the Home Valuation Code of Conduct in the ordering and processing of the
 CONDUCT (HVCC)                  appraisals on all Conventional loans. InterBank orders all Conventional 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 lender or forbidden from performing such work; and (2)
                                 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


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                             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 Wholesale, the Broker warrants that the loan is in full compliance with
                             all regulatory requirements




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 CHAPTER 4:                  SUBMISSION OF LOAN FILES
 SUBMITTING LOANS              A Broker should not submit loans until the Broker has been approved by InterBank Wholesale
                               Corresopndent Funding (InterBank Wholesale).

 CONVENTIONAL LOANS UP TO      InterBank Wholesale Brokers must submit Conventional loan files to InterBank Wholesale. Loans submitted
 FNMA MAXIMUM                  to InterBank Wholesale must be registered with InterBank Wholesale prior to the submission.
                               To ensure your loans are processed and underwritten in a timely fashion, please follow the important
                               information below.

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

 UNDERWRITING DECISIONS        •    Your contract underwriter will fax the loan approval and conditions to you.
                               •    All conditions should be faxed to your contract underwriter. The originals should be sent via fax to
                                    InterBank Wholesale.
                               •    A InterBank Wholesale underwriter will review any loan denied by your contract underwriter.
                               •    Your contract underwriter, upon approval of your loan, will order mortgage insurance.
                               ** In order to expedite the processing and closing of loans, Brokers must send the COMPLETE loan
                               file to InterBank Wholesale


 GOVERNMENT LOANS              InterBank Wholesale Brokers must submit government loan files to InterBank Wholesale 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.

 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.

 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
                               (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 Wholesale 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 of this manual.

 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:

                               •    90 days at date of loan approval
                               •    90 days at date of note signing for existing properties and new construction

 CREDIT REPORTS AND            Conforming
 VERIFICATIONS                 Document-Age Limitations
                               The following document-age limitations apply to credit reports and verifications for conforming loans:

                               •    90 days at date of note signing for existing properties
                               •    120 days at date of note signing for new construction




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CHAPTER 5:                   UNDERWRITING

 CONVENTIONAL
 CONFORMING LOANS


 GENERAL GUIDELINES

 PRODUCTS                        InterBank currently offers the 15, 20, 25, and 30 yr. Conventional Conforming Loan Products. See the
                                 InterBank Conforming Fixed Rate Matrix 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.
                                 The following types of non-arms length transactions are permitted, as long as the underwriting
                                 requirements are met:

                                 •    Family sales or transfers (with/without consideration) – including the estate of a deceased family
                                      member unless the transaction is a probate sale.
                                 •    Corporate sales or transfers (from a business to a personal owner).
                                 •    Borrowers who are employed in the Real Estate, Mortgage or construction trade field that are
                                      participants in the construction or financing of the property.
                                 •    Borrower(s) who are employed in the Real Estate, Mortgage or construction trade field that are
                                      participants and receive profit from the listing, selling, financing or are participants in the
                                      construction of the property.
                                 •    A purchase and sale transaction between a property owner and tenant, excluding a “lease
                                      purchase” transaction.
                                 •    Borrower(s) may act as the Realtor of the subject property; however, the borrower(s) may not apply
                                      the commission from the subject property toward their down payment, closing costs, or reserve
                                      requirements.
                                 •    Tenant currently occupying property and purchasing from the seller.
                                 Credit and Underwriting Requirements for Non-arm’s Length
                                 The following credit and underwriting guidelines apply to all non-arms length transactions:

                                 •    Maximum 90.00% LTV/CLTV
                                 •    Not permitted for Second Homes and Investment properties.
                                 •    All assets needed to close loan must be documented, regardless of LTV.
                                                 o     The accounts may not be co-mingled in joint accounts between the interested
                                                       parties.
                                                 o     The assets used to close the loan must be accessible to the borrower only (and not
                                                       any of the other interested parties).
                                                 o     The borrower’s assets to close the loan must be documented.

                                 •    Full appraisal (1004D) required, regardless of AUS findings. The appraisal must acknowledge the
                                      non-arms length transaction and any impact on value.
                                 •    A fully executed, legally binding purchase and sales agreement is required and the relationship
                                      between the parties must be disclosed.
                                 Note: These relationships may influence the transaction and are generally not encouraged for financing.


 TRANSACTION TYPES


 Purchase                        A purchase transaction is one in which the proceeds are used to finance the purchase of a home.

 Refinance                       A refinance transaction occurs when the borrower obtains a new loan on a currently owned residence.
                                 InterBank Wholesale identifies the following refinance transaction types. Seasoning and Continuity of



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                                        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.


            Refinance Credit Rule       •    InterBank Wholesale will not purchase any loan as a refinance transaction that is currently involved
                                             in foreclosure proceedings.
                                        •    InterBank Wholesale will not purchase any loans participating in ‘churning”, where the borrower is
                                             getting a new refinance every 3-to-6 months.


                General Refinance       •    Continuity of obligation requirements must be met. See Continuity of Ownership/ Obligations
                   Requirements         •    A property currently listed for sale, or listed for sale within the past 6 months, is not eligible for a
                                             refinance transaction.
                                        Calculate the timing by using the verified date the subject was removed from the MLS to the actual date
                                        of loan application.

         Seasoning Requirements


              Transaction Eligibility
                                             Rate/Term or Limited Cash Out (LCO)                                        Cash Out


                                        •    For Primary Residence and Second Homes:              •     The current loan must be a minimum of 6
                                                                                                        months old from the Current Note Date to the
                                             o    There is no minimum time that the                     Application Date.
                                                  borrower has held the current loan.             •     The same borrowers on the existing
                                        •    For Investment Properties                                  Note/Title must be the new application, if not;
                                                                                                        Continuity of Obligor Requirements must be
                                             o    The borrower must have acquired the                   met. See Continuity of Ownership/
                                                  property a minimum of 6-months prior                  Obligations for details.
                                                  to application date.                            •     If there is no existing lien on the property
                                                                                                        (e.g. purchased for cash or paid-in-full).
                                             o    If the property has been owned less
                                                  than 6-months, it is not eligible for                 o    The borrower must evidence
                                                  refinance.                                                 “ownership” (title) for a minimum of 6
                                                                                                             months; the transaction must be
                                        •    The same borrowers on the existing                              completed and priced as a cash-out.
                                             Note/Title must be on the new application, if
                                             not, Continuity of Obligor Requirements must
                                             be met. See Continuity of Ownership/
                                             Obligations for details.
                                        •    If the property was subject to a cash-out
                                             refinance within the past 6 months (from
                                             Current Note Date to Application Date), the
                                             loan must be underwritten and priced to the
                                             more restrictive cash out guidelines.
                                        •    A copy of the most previous HUD-1 must be
                                             provided to document whether or not cash
                                             was taken.




   Calculation of Value “Seasoning”
                                        Rate/Term or Limited Cash Out (LCO)                       Cash Out


                                        Properties with existing lien

                                        •    Use the current appraised value.
                                        Important:

                                        •    If the property has been owned less than 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




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                                         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.
                                    •    InterBank Wholesale reserves the right to request additional documentation.
                                    Property “free & clear”, no existing lien

                                    •    Property acquired within 6-12 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 12 months prior to the application date for new financing:
                                                     o    Base LTV on the appraised value.



         Continuity Of Obligation
                                    Rate/Term or Limited Cash Out (LCO)                     Cash Out


                                    Mortgage Amount: The mortgage amount is                 •    If there is no Continuity of Obligation (see
                                    limited to:                                                  Continuity of Ownership/ Obligations) and
                                                                                                 there is an outstanding lien on the property,
                                    •     The sum of the unpaid balance of the
                                                                                                 the loan is eligible as follows:
                                          existing first mortgage, closing costs, points,
                                          pre-paid items, and, if applicable, the amount         o     The property must have been acquired
                                          required to satisfy certain subordinate loans                (owner on title) for a minimum of 6-
                                          used for the original purchase of the                        months.
                                          property.
                                                                                                 o     The transaction must be completed and
                                         o     Any “cash” back to the borrower may                     priced as a cash-out refinance.
                                               not exceed the lesser of $2,000 or 2%
                                               of the loan amount.                          The maximum LTV is limited to the lesser of the
                                                                                            product maximum or 50.00%.
                                    •    Subordinated Second liens: There are no            Mortgage Amount:
                                         seasoning requirements for current
                                         secondary liens that are being subordinated        •    The mortgage amount must be used to pay
                                         to the new loan. See Subordinate Financing.             the current unpaid principal balance of the
                                                                                                 existing first mortgage; it may be used to pay
                                         o     It is critical that the existing secondary        closing costs, points, pre-paid items,
                                               liens are subordinated at closing to the          subordinate mortgage liens and additional
                                               new mortgage.                                     cash to the borrower.

                                    •    See Special Purpose Refinance for details          •    Subordinate Liens: No seasoning
                                         on Buyout of Spouse, Inherited Property                 requirement
                                    Note: Please see “Transaction Eligibility” for
                                    details on R/T refinance for loans where the most
                                    recent transaction within 6 months has been a
                                    cash-out refinance.


 Construction To Permanent          Construction-to-Permanent financing involves the granting of a long-term mortgage to a borrower to
 Financing                          replace the interim construction financing used for the construction of a new home. InterBank Wholesale
                                    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-loan must meet LTV/CLTV based on purchase parameters
                                    •     Refinance Transaction structure – loan must meet LTV/CLTV 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.
                                    Important: InterBank Wholesale 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.




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                    Requirements   Unless otherwise referenced in the InterBank Wholesale Product suite or Underwriting Guidelines,
                                   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.
                                   •     If there are weather related completion items. See Escrow (Completion) Holdbacks.
                                   •     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 Wholesale specific product or underwriting guidelines or DU
                                         for any topic not addressed herein.
                                   •     See the InterBank Wholesale Construction-to-Perm Requirements Matrix for additional guidelines.


               Age of Documents    •    Credit – 90 days prior to the Funding Date
                                   •    Appraisal – 120 days prior to Funding Date
                                        o     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   If the borrower is acting as his/her own builder/general contractor or sub-contractor and his/her primary
                        Industry   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 documented, regardless of the transaction structure
                                        o     The itemized cost breakdown must be documented/supported by providing copies of receipts,
                                              bills, lien waivers, lot purchase agreement, etc.

                                   •    The LTV/CLTV will be based on the lesser of the documented acquisition cost or appraised value
                                   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                 Base LTV/CLTV as follows regardless of “seasoning.”

                                   •    The lesser of:
                                                   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                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 loan
                                   application.

                                   •    If the lot was owned ≥ 12 months prior to application for the construction loan, the LTV/CLTV 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
                                        is based off the lesser of the current appraised value or documented total acquisition costs.
                                   All applicable refinance transaction guidelines must be met.




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 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                  Homes listed for sale within the most recent 6 months are not permitted for refinance transactions.
                                  Notes:
                                  •   Borrower must provide documentation of cancelled MLS listing or similar documentation 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.


 Special Purpose Refinance        Under certain special circumstances the Continuity of Obligor and/or the refinance requirements may be
                                  amended as follows:
                                  Buyout Refinance
                                  InterBank Wholesale 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—such as a 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 Underwriting 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 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 may be based on current appraised value


 CONVERSION OF PRINCIPAL          Borrowers who currently own their home typically have 3 options when they decide to purchase
 RESIDENCE                        a new one:

                                  •    Sell the current home and pay-off the outstanding mortgage. See Principal Residence Pending
                                       Sale for details when the current home does not sell prior to purchase of the new home.
                                  •    Convert the current home to a second home.
                                  •    Convert the current home to an investment property.
                                  The following outlines the requirements for borrowers that convert their current residence.


 Conversion of Current Property


               To a Second Home   •    Both the current and the proposed mortgage payments (including all Taxes, Insurance, HOA dues)
                                       must be used to qualify the borrower for the new transaction.
                                  •    Reserves are determined by the AUS, and could be up to 6-months PITI for each property.
                                  Exception:
                                  •   Reduced reserves, no less than 2-months for each property, may be considered under the




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                                         following circumstances:
                                               o     There is a documented minimum 30% equity in the existing property. The value of the
                                                     current property must be documented by a Fannie Mae 2055.


                 To an Investment   •    Both the current and the proposed mortgage payments (including all Taxes, Insurance, HOA dues)
                                         must be used to qualify the borrower for the new transaction.
                                    •    Reserves are determined by the AUS, and could be up to 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 a Fannie Mae 2055.
                                    •    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.


 ELIGIBILITY,                       InterBank Wholesale is committed to funding investment quality loans that meet acceptable risk
 OCCUPANCY, AND                     standards as defined by the mortgage industry. All loans funded by InterBank Wholesale must be
                                    underwritten according to the guidelines and requirements of InterBank Wholesale, Fannie Mae, and
 OWNERSHIP STATUS                   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.
                                    The following are permitted to the applicable InterBank Wholesale/agency underwriting guidelines:
                                    •    U.S. Citizens
                                    •    Permanent Resident Aliens
                                    •    Non-Permanent Resident Aliens
                                    •    Illinois Land Trust
                                    •    Inter Vivos Revocable Trust


 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 ALIEN           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 Wholesale 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 Wholesale.




                                                Type                                                Classification




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                                            E-1                   Treaty Trader


                                     G-1 through G-4              Representative, officer or employee of recognized and non-recognized
                                                                  foreign government and members of their immediate family



                                            H-1B                  Temporary Worker


                                             L-1                  Intra-company transferee


                                        TN/NAFTA                  Professionals from Canada or Mexico who enter the U.S. under the
                                                                  NAFTA agreements


                               Notes:
                               •   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 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 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”:

                               •    The “Deed of Trust” that transfers the title from the beneficiary to the trustee and;
                               •    The “Trust Agreement” that states the rights and power of direction.


 INTER VIVOS REVOCABLE TRUST   INTERBANK will fund loans subject to an inter vivos (living) trust as permitted by the applicable product.
 (IVRT)                        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.


 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 Wholesale will accept a Limited (or Specific) Power of Attorney that references the property
                               and authorizes the attorney in fact to enter into a real estate transaction and to mortgage the property.




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                             •    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.
                                         o           It must be acceptable to the title insurance company issuing the title insurance (no
                                                     title exception to the POA).
                                         o           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.
                             •    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.
                                         o           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/LP 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: LTV ≥ 80.00% the Owner Occupant must qualify at a max 35%/43%, regardless of AUS findings
                             or LTV. LTV ≤ 80.00% as allowed by the AUS.
                             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   InterBank Wholesale applies the following limitations to borrowers that hold multiple financed properties:
 SAME BORROWER
                             Borrowers are limited to a maximum of 4 financed properties, including the primary residence.




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                              •    Joint ownership is considered against the maximum.
                              Any liability on the personal credit report will also be considered against the maximum.


 MAXIMUM NUMBER OF            InterBank Wholesale will not accept loans where there are more than 5 borrowers on a loan. The AUS
 BORROWERS                    will not accept more than 5 borrowers and InterBank Wholesale 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) 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 Wholesale/Fannie Mae as well as the following
                                   additional guidelines below:
                                       o     Permitted for owner-occupied principal residences only.
                                       o     Permitted only after the borrower has made a 5.00% minimum down payment (from
                                             verified personal funds).
                                       o     The appraiser must note that the secondary financing being provided by the seller and not
                                             any negative impact on value or marketability.
                                       o     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 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 lender.
                              •    The secondary financing must meet any more restrictive current Fannie Mae/Freddie Mac
                                    guidelines as required by the AUS.
                              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.

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

 INTERESTED PARTY             Certain interested parties (seller, builder, Realtor, etc.) may choose to pay a portion of the closing costs
 CONTRIBUTIONS                (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.




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                             •     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 are considered sales concessions.



                                     Occupancy                LTV/CLTV                       Maximum Contribution
                                                                Range
                                  Primary Residence          75.01 – 90.00                              6%
                                    Second Home                 ≤75.00                                  9%

                                 Investment Property              All                                   2%

                                 Note: The maximum LTV/CLTV must be calculated based on the lesser of the reduced sales
                                 price (reduced by the sales concession) or appraised value, whichever is lower

                                 Ineligible Contributions

                                 Generally, the cost of any contributions that are in the form of personal property or “give-always”
                                 (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 IL, WI, TX, and CO.

 UNDERWRITING HELP           Use the following email address to request underwriting assistance:
                             uw@interbankwholesale.com

 NOTICE OF LOAN DECISION     Notice of Loan Approval or Suspension

                             •     Via facsimile or email.
                             Notice of Loan Denial

                             •     Phone call, and
                             •     Documentation via facsimile or email
                             Important Note: Once InterBank Wholesale declines a loan for funding in underwriting, the lock is
                             automatically cancelled. The loan is no longer locked.

 CONDITIONS/ STIPULATION     InterBank Wholesale 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 Wholesale requires that all prior-to-close (prior-to-doc) conditions be sent to the
                                   underwriter at one time.
                             Important Note:
                             Conditions that are sent to InterBank Wholesale separately will not be reviewed until all conditions for
                             the loan have been received.

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


 PRIVATE MORTGAGE            Loans Requiring Mortgage Insurance
 INSURANCE                   InterBank Wholesale will order the mortgage insurance on all loans that require InterBank Wholesale
                             underwriting.

 APPROVED MORTGAGE           InterBank Wholesale will obtain Mortgage Insurance (MI) from any of the following companies: Radian or
 INSURANCE COMPANIES         MGIC.




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                              Coverage
                              Mortgage Insurance coverage must meet the conditions on the DO findings report.

                              •    Lower Cost or Custom MI is not permitted.
                              •    Financed MI is not permitted.
                              Notes:
                              In all cases, when MI is required, the more restrictive MI guidelines apply. See Underwriting, Mortgage
                              Insurance Requirements for details.


 STANDARD MI COVERAGES
                                        LTV Ranges                    10-20 Year Terms                       25-30 Year Terms

                                    85.01 – 90.00%                           12%                                    25%

                                    80.01 – 85.00%                            6%                                    12%


                             Note: Reduced coverage is not allowed.


 MORTGAGE
 INSURANCE
 GUIDELINES TABLES

 PRIMARY RESIDENCE
                                                                       PURCHASE & RATE/
                                                                        TERM REFINANCE

                                                                           MAX        MAX LOAN             MIN FICO            MAX
                                                                           LTV         AMOUNT               SCORE               DTI

                              1 Unit Single Family                          90         $ 417,000              660              41%

                              2 Units                                       90         $ 533,850              680              41%

                              3-4 Units                                                   N/A                 N/A

                              Condominium                                   75            N/A                 N/A


 SECOND HOME
                                                                       PURCHASE & RATE/
                                                                        TERM REFINANCE

                                                            MAX        MAX LOAN             MIN FICO                    MAX
                                                             LTV        AMOUNT               SCORE                      DTI

                              1 Unit Single Family           90         $ 417,000               700                     41%

                              Condominium*                   75             N/A                 N/A


 MAXIMUM DTI RATIO            •    The maximum DTI ratio is 41%


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

 BORROWER EQUITY              •    The borrower is required to have the following minimum equity or down payment from their own
                                   funds




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 INELIGIBLE LOAN FEATURES                  •    FICO scores below 660
                                           •    Potential or scheduled negative amortization



 ALL LOANS WITH:                           •    No Income/No Assets (NINA) loans
                                           •    No Ratio loans
                                           •    No Doc loans
                                           •    Stated assets
                                           •    Stated employment
                                           •    Stated income
                                           •    3 to 4-unit properties
                                           •    Cash-out refinance loans
                                           •    Investment properties


 FULL DOC PRIME LOANS WITH:                •    Second home loans for 2–4 units, cooperatives, or manufactured housing


 INELIGIBLE PROPERTY                       •    Condotels
 CATEGORIES                                •    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.


 INELIGIBLE LOAN CATEGORIES                •    Programs/transactions for which Radian offers no published rates
                                           •    Government loans (FHA/VA/Rural Housing Service)
                                           •    Second mortgages
                                           •    Credit upgrades
                                           •    Wraparound mortgages
                                           •    Blanket mortgages
                                           •    Interim construction loans




DOCUMENTATION
            AUS “standard” (Full/Alt) documentation                                            AUS “reduced” documentation

 Income/Employment for 2-years                                        Income/Employment < 2-Years
 •   Direct VOE(s) covering 2-years (See Direct VOE                   •     InterBank Wholesale will accept the reduced requirements as note on
     Requirements.)                                                         the Findings, with the following overlays:
                o     If a Direct VOE is used, InterBank Wholesale                    o        Current Pay stub showing year-to-date.
                      always requires the pay stub, W-2 and/or tax
                      return to support.                                              o        One year’s W-2 or tax returns

 •    Current Pay stub covering 1 month and providing year-to-date                    o        V-VOE completed at time of underwriting and an
      income                                                                                   additional V-VOE to be conducted by InterBank
 •    Two-years W-2’s or signed tax returns                                                    Wholesale 24 hours prior to closing/disbursement.

                o     V-VOE completed at time of underwriting and                     o        4506-T, signed at closing.
                      an additional V-VOE to be conducted by
                                                                      See Income and Employment for more details.
                      InterBank Wholesale 24 hours prior to
                      closing/disbursement.

 •    4506-T, signed at closing.
 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 Wholesale will accept the AUS Findings.
 •    Other supporting documentation, see Assets for more details.    •     If bank statements are included, they must be a copy of the original
                                                                            bank statement, showing all appropriate identification information.




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  DIRECT VOE REQUIREMENTS    When used, a “direct” Verification of Employment (VOE) must be returned to the originating lender
                             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 Wholesale always requires a copy of the most recent Pay stub with year-to-date
                                   information to support the direct VOE.
                             •     InterBank Wholesale reserves the right to require that original documents be provided.
  IRS 4506-T                 In keeping with current Risk trends, effective immediately InterBank Wholesale 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 2-year.
                                             o     Self-Employed Borrowers: The most recent 2-years.
                                             o     For Jumbo loans that exceed $750,000: The most recent 2-years.
                             InterBank Wholesale Underwriting
                             For every credit qualifying loan sent to InterBank Wholesale for underwriting, InterBank Wholesale
                             requires a copy of the signed 4506-T in the underwriting submission file.
                             •     Loans submitted to underwriting without the signed 4506-T will not be processed.
                             •     InterBank Wholesale 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 3-years after the initial tax-filing year. If tax returns
                             have been amended, the underwriter (and InterBank Wholesale) must be able to document the
                             following, via the tax transcripts obtained using the 4506-T:
                             •     The IRS has processed and accepted the amended tax returns; that information is contained in the
                                   transcripts.
                             •     All outstanding liabilities and/or tax penalties have been paid; the transcripts show no outstanding
                                   money owed to the IRS.
                             Additionally, InterBank Wholesale will carefully review any increased income to insure its validity, and
                             the loan file should contain:
                             •     Documentation to support receipt of the income as well continuation of the income (reasonably for
                                   at least 2-years in the future).
                             •     The underwriter in these cases must make every effort to prudently document the added income
                                   and the reasonable expectation of continuation.


  VERBAL VERIFICATION OF     The Broker must verbally verify employment as follows:
  EMPLOYMENT
                             •    Salaried: A verbal verification of employment
                             •    Self-Employed: Verify the existence of the business through an independent third party (CPA
                                  letter, phone book or copy of the business license)
                             Note: InterBank Wholesale will obtain an additional V-VOE 24 hours before closing/disbursement.


  VERBAL VERIFICATION        The Verbal Verification must be completed independently by the broker. The following information must
  REQUIREMENTS               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.
                             •    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.




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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.

 BORROWER FUNDS SECURED BY      A loan secured by an asset may be used as Assets as follows:
 AN ASSET
                                •    May be used as a source of funds for down payment, closing costs, and financial reserves.
                                •    Document terms of the secured loan.
                                •    Calculate monthly payments and consider in debt ratio.


 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 specified limitation on the term of a bridge loan is not required.
                                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 lender’s commitment to the buyer of the present residence (if the
                                                     contract contains a financing contingency) with no stipulations.
                                                 o   Evidence of 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.
                                Businesses other than the following types may require additional supportive documentation as deemed
                                appropriate by the underwriter:
                                •    Sole proprietor
                                •    Sub Chapter S
                                •    Individually owned Corporation
                                Notes:
                                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 the use of these
                                funds will not adversely affect the business is required.


 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.


 CREDIT CARD FINANCING          Charges to a personal credit card may be used as follows:
                                •   The total borrowed may not exceed 2% of the loan amount, which may only include the following



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                                  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)


 CHECKING AND SAVINGS        Borrower’s bank statements for the most recent two months.
 ACCOUNTS
                             •    The statement must be a copy of the original bank statement showing the borrower’s name,
                                  institution name, and account number.
                             •    Underwriters reserve the right to request additional supporting documentation.
                             If a direct Verification of Deposit is provided, it must be accompanied by a copy of the original bank
                             statements.
                             Large deposits and recently opened accounts 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 ≥ 2% of the sales
                                  price.
                                              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


 ELIGIBLE ASSETS             The following types of accounts will be considered eligible liquid assets for closing costs and reserves:

                             •    Stocks/Bonds (70% if used for reserves)
                             •    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
                             •    Rent Credit in Options to Purchase (See Rent Credit for Options to Purchase for details.)
                             •    Retirement Fund
                             •    Savings Account
                             •    Trust Funds
                             •    The following types of accounts will be considered eligible assets for reserves at 60% of
                                  documented value:
                                              o    Individual Retirement (IRA) and Keogh Accounts
                                              o    401 (k) Plan Accounts
                             Verification Requirements

                             •    As determined by AUS and, if not required by AUS and assets were entered and submitted for AUS
                                  review, InterBank Wholesale requires supporting documentation (See AUS Supporting
                                  Documents).
                             •    Two consecutive monthly bank statements.
                             •    Satisfactory explanation and documentation should be provided for large deposits in excess of one
                                  month’s salary.


 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.
                             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




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                                             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 (IRA/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.
                             Gifts are not permitted for Investment properties.
                             The gift must be verified and documented as follows:

                             •    Donor’s gift letter stating: relationship to borrower, amount of the gift, date the gift was/will be given,
                                  the donor’s name and address and that the gift does not need to be repaid.
                                             o      The gift letter must executed by the donor.

                             •    Verification of transfer of gift funds via cancelled check, deposit slip and a copy of the check, or
                                  copy of the check and bank statement reflecting deposit.
                             Notes:
                             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 the following guidelines must be met:

                             •    Sales contract must reference the amount of equity gift being transferred.
                             •    Seller must be an immediate relative (Parent, grandparent, child, sibling, legally adopted or foster)
                                        o    The relative providing the gift of equity may not be, or have any affiliation with the
                                             builder, developer, real estate agent or any other interested party to the transaction.

                             •    Primary Residence Only.
                             •    Appraiser to acknowledge the gift equity and state no effect on value.
                             •    All limitations on gift funds apply. See Gifts for down payment guidelines.
                             •    The HUD-1 for the subject must reflect the exact dollar amount of the gift equity.
                                        o    The borrower may not receive any liquid funds from the trade equity.
                             Note:




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                              •    If the product specifically restricts Non-arm’s length transactions, a gift of equity is not permitted.
                              •    Interest Only products do not permit “gift of equity”


 INELIGIBLE ASSETS            The following assets are ineligible for loans funded by InterBank Wholesale:

                              •    Cash on hand
                              •    Sweat Equity
                              •    Cash Out proceeds
                              •    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.


 LARGE DEPOSIT                The following must be explained or documented in the loan file:
                              •    Any deposit larger than one month’s salary; and
                              •    Cumulative monthly deposits larger than one month’s salary.


 REAL ESTATE PROCEEDS         To use proceeds from the sale of a currently owned other-real-estate property for closing-fund
                              requirements and 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 OPTIONS TO   Option to Buy – (aka Lease Option to Purchase)
 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 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.

 RENT CREDIT FOR OPTIONS TO   Documentation Requirements
 PURCHASE (CONTINUED)
                              •    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.
 RESERVES                     AUS Underwritten
                              Determined by AUS findings. All recommendations must be followed. Acceptable AUS scenarios may
                              follow the reserve requirements recommended within the findings.
                              Principal Residence Pending Sale
                              If the borrower’s current principal residence is pending sale, and he or she is purchasing a new principal
                              residence, both the current and proposed mortgage payments must be used in qualifying the borrower
                              for the new mortgage loan.

                              •    Additionally, InterBank Wholesale requires minimum reserves of 6 months principal, interest, taxes,
                                   and insurance (PITI) for each property, but will allow a reduction to 2 months if 30% equity in the
                                   existing principal residence is documented with a current appraisal, minimum 2055.
                              •    Exception: InterBank Wholesale will not require the current principal residence’s PITI to be used in
                                   qualifying as long as the following additional documents are provided:
                                              o     6-months payment Reserves after closing on the current subject property
                                              o     The executed sales contract for the current residence, and
                                              o     A Clear firm commitment to purchase from the lender with confirmation that any



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                                                   financing contingencies are cleared.
                             Acceptable funds for Reserves

                             •    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.
                             •    Gift funds are never acceptable as reserves.
 RETIREMENT                  Retirement accounts (IRAs, Keogh accounts, 401(k) 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-
                             fund requirements:

                             •    Unless specified by an automated underwriting system, 60% of IRAs, Keogh Accounts, 401(k)
                                  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.
 SALE OF STOCKS OR BONDS     Funds from the sale of stocks or bonds is acceptable as long as the following apply:

                             •    The existence and value of the stock or bonds is verified.
                             •    The value of stocks are verified with a current statement from the stockbroker.
                             •    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 both the sale of the previous property (from which the 1031 assets are
                                   acquired) 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
                             Are required even if a VOD is received from each depository.

                             •    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 45 days earlier than the date of the loan application, a



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                                           more recent supplemental bank-generated form that shows the account number, balance and date
                                           is required

                                      •    The statements must be a copy of the original bank statements:
                                                 o    “FAXED” or statements downloaded from the Internet must clearly identify the name of
                                                      the depository or investment institution and the source of the information (e.g. the
                                                      information is contained in the banner that is at the top of the document).

                                      •    Bank or investment portfolio statements must clearly identify the borrower as the account holder
                                           and include:
                                                      o     The account number;
                                                      o     The time period covered by the statement;
                                                      o     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
                                      •    Retirement Accounts
                                      •    Retirement account statements must identify the borrower's vested amount and the terms and
                                           conditions for loans or the withdrawal of funds.
                                      •    Calculate at 60% of the vested amount.


CREDIT
 OVERVIEW                             InterBank Wholesale 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 Wholesale accepts the following types of credit reports, depending on the circumstances of the
                                      mortgage request.
                                      •     Residential Mortgage Credit Report (RMCR)
                                      •     AUS Credit Report -3 file merged report pulled into the AUS
                                      Note: Non-Traditional Credit Reports are not permitted under any circumstances.

 AGE OF DOCUMENTS                     All standard credit documentation used to determine the borrower’s eligibility must be no more than:
                                      •     90 days old for standard credit documents at the time of loan funding. 
                                      •     120 days prior to the funding date for existing properties and Construction-To-Permanent.
                                      •     Pay Stubs must be within 30-days of underwriting.
                                      •     Bank Statements must be within 45-days of underwriting.
                                      •     See Construction to Permanent Financing for specific details for construction to permanent
                                            financing.
                                      Note: InterBank Wholesale reserves the right to request updated credit at our discretion.

 BANKRUPTCY/ FORECLOSURE              InterBank Wholesale 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 or LP/Accept/Eligible,
                                             and meet the guidelines in this section.
                                      •     InterBank Wholesale 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                           •    Require a minimum 4-year period of re-established credit from the bankruptcy discharge or
 All but Chapter 13                        dismissal date.

 Re-established Credit – Chapter 13   2-Years from Discharge

                                      •    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 – Chapter 13   2-Years from Discharge/4-Years from Dismissal



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 Extenuating Circumstances      Minimum 2 years from discharge or dismissal. For all bankruptcy actions.
 All Bankruptcy & Foreclosure

 Multiple Bankruptcy Filings    Minimum 5-years re-established credit for borrowers with more than 1 bankruptcy filing in the past 7
                                years
 Foreclosure                    7 Years following completion of foreclosure proceedings.

                                Notes:

                                •    InterBank Wholesale will not refinance properties currently in foreclosure proceedings.
                                •    InterBank Wholesale will not make a loan to a borrower involved in a “short-sale” situation within 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 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 as an
                                extenuating circumstance.
                                •     A divorce (the event) should not be considered as 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 primary wage earner.
                                Re-established credit considerations
                                When reviewing loans with bankruptcies, InterBank Wholesale 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 5 credit references, active within the past 24-months, with at least 1
                                                      of the references being “traditional” (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 that were 30 days past due in the
                                                      most recent 24-months, and none 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



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                                                    debts must be verified and paid on time.

                              •    A written statement from the applicant satisfactorily explaining the causes of the bankruptcy.
                              Note: InterBank Wholesale 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 4 years
                              •    A minimum 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 incident is between 4
                                   and 7 years:
                              •    Purchase Transactions: The borrower must contribute the greater of 10% or the minimum
                                   required for the product. Gifts are not permitted.
                              •    Refinance Transactions: The minimum time elapsed must be 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 Wholesale.


 COLLECTIONS, CHARGE-OFFS,    InterBank Wholesale generally requires the borrower to pay off at (or prior to) closing. If the total
 JUDGMENTS, GARNISHMENTS,     balance of accounts is $5,000 or less we will not require them to be paid.
 AND OUTSTANDING LIENS
                              •    Documentation must substantiate that the accounts pose no threat to our mortgage lien and are not
                                   likely to affect the borrower’s equity position.
                              •    InterBank Wholesale requires that all outstanding judgments and tax liens must be paid (satisfied),
                                   regardless of AUS findings.
                              Notes:
                              If the AUS requires that the amount be paid, the AUS supersedes the InterBank Wholesale requirement.


 CONSUMER CREDIT COUNSELING   The presence of consumer credit counseling service does not alter the underwriting recommendation.
                              Whether the borrower has or has not completed his or her participation in the sessions before closing on
                              the mortgage transaction is not relevant since it is the borrower’s credit history that is of primary
                              importance.

                              •    If borrower is currently in CCC, borrower must provide a letter from the service stating that they can
                                   incur the new housing expense.
                              •    If the loan is approved through the AUS, the CCC has been considered and no further action is
                                   required.
                              Note: Underwriters must carefully review borrowers with CCC to determine over-all credit worthiness.
                              InterBank Wholesale 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.
                              •    When the credit report indicates that recent inquiries took place, the InterBank Wholesale 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 Wholesale’s determination, inquiries on the credit report are not adequately
                                   addressed in the loan file, InterBank Wholesale 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) 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 3 scores are provided for the borrower, the middle score is used to underwrite.




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                               •    If 2 scores are provided for the borrower, the lower score is used.
                               •    If only 1 score is provided, the borrower is not eligible.
                               •    To arrive at the score used to validate the salability of the loan to InterBank Wholesale – 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 ≥ the InterBank
                                    Wholesale 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 Wholesale underwriting for assistance.


 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


 MORTGAGE HISTORY              Follow AUS requirements for mortgage/rental history.

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

 RESIDENTIAL MORTGAGE CREDIT   Residential Mortgage Credit Report (RMCR) provides current, verified and detailed borrower information.
 REPORT                        The report agency verifies:
                               •    Most recent 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


 TRADE LINES                   A trade line reflects a history of open or paid credit obligations detailing borrower’s credit reputation.
                               •     Credit score should be obtained from 4 trade lines with a 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 > 24 months and cannot be a collection or charge-off



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 years of employment income



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                             history, using Verification of Employment forms and pay-stubs evidencing most current year-to-date pay
                             stub, must be within 30-days at the time of underwriting and W-2 forms for the past two years.

 DU                          Loans receiving an Approve through DU may follow the AUS findings for acceptable documentation of
                             income in lieu of the documentation stated within.
                             Note:
                             •    InterBank Wholesale always requires pay stubs, W-2’s and/or tax returns.
                                             o     See AUS Overlays for details.

                             •    A Verbal Verification of Employment at time of underwriting and 24 hours prior to funding.
                                             o     See Verbal Verification Requirements for details.

                             •    A fully executed 4506-T, regardless of the AUS findings must be in the loan file. See IRS 4506 for
                                  details.


 ALIMONY / CHILD SUPPORT /   If not specifically addressed in the AUS findings, the following guidelines apply:
 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 12 months and it must continue for at least three years after
                                    the date of the original mortgage loan application.
                             •      InterBank Wholesale will accept as verification of the award of alimony and/or child support one of
                                    the following documents:
                                        o    Copy of the divorce decree
                                        o    Formal separation agreement
                                        o    Court records

                                                   •  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    Court Records, continued

                                                   •    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 12 months.

                                                   •    Acceptable evidence would be deposit slips, canceled checks, bank
                                                        statements or Federal income tax returns.
                             Notes:
                             •   A 6 to 12 month documented history of receipt of the income is acceptable providing the income
                                 does not exceed 30% of the total gross qualifying income.
                             •   If income is received less than six 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.
                                        o    Documentation for alimony, child support income is not required if the borrower does not
                                             use the income to qualify.

 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.


 BONUS AND OVERTIME          Bonus and Overtime may be included if the income has been:

                             •    Consistently received for the most recent two 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
                                                   years.


 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.




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                             •    However it may be utilized as a compensating factor if:
                                              o    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:
                             •    3 years tax returns – showing a consistent history of capital gains being the borrower’s “salary.”


 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 average over the most recent two years.
                             •    Commission received 12 to 24-months may be considered if 12 months are reflected on tax returns.
                                  Commission received less than 12 months may be considered at the underwriter’s discretion.
                             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.
                             If a borrower earns over 25% of their income as commission, then the last 2-year federal tax returns with
                             all attachments are required.

 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 years
                             •    Benefits that will decrease to a lesser amount within the next three 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, such as insurance company, employer, etc., is required.


 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 2 year tax returns,
                                  including applicable schedules, are required to verify the amount and stability of the income as well
                                  as develop a two-year average of the income.


 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 12 to 24 month history is permitted as long as the income does not represent more than 30% of
                             the total gross income that is utilized in qualifying the borrower.
                             Documentation:
                             •     Letters from the state agency providing the income
                             •     Copies of deposit slips or bank statements confirming the regular deposits consistently for 3
                                   months.


 FOREIGN INCOME              InterBank Wholesale 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.


 NON-TAXABLE INCOME          InterBank Wholesale 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



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                                      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     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 3 years
                                 •    Copy of the note to establish the amount and length of payment
                                 •    Must have been received for the last 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 years may not be
                                 used as stable income.

 PART-TIME, SECOND OR MULTIPLE   All types of supplemental income must be received, uninterrupted, for the most recent two years and
 INCOME                          supported by IRS W-2 forms.

 PENSION / RETIREMENT            Income from retirement accounts must be verified by the employer’s statement or benefit letter, tax
                                 returns or IRS W-2 forms.
                                 •     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.


 PUBLIC ASSISTANCE               Public Assistance may be considered as an acceptable income source if the following apply:
                                 •    Received for the past two years
                                 •    Likely to continue for the next three 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
                                 Wholesale requires the following:
                                 •      Operating Income Statement, and one of the following:
                                                 o     Current Lease (if subject was acquired subsequent to filing previous year’s tax
                                                       return), or
                                                 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).
                                 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 Wholesale will require the following:
                                                 o     Signed Current Lease (for properties acquired subsequent to filing previous year’s
                                                       tax return), or
                                                 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 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).




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                             •    Net rental income/loss will be obtained from Schedule E (for properties acquired prior to filing
                                  previous year’s tax return).


 RENTAL INCOME (CONTINUED)   When the subject is an investment property:
                             If the underwriter must use rental income from the subject property to qualify the borrower, InterBank
                             Wholesale will require the following:
                             •      Minimum 2 years landlord experience, and
                             •      Evidence of 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 returns 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).
                             Exception Note:
                             For certain products, the 216 is not required if the borrower qualifies with the entire payment. If the 216
                             is not included in the loan file, the Gross Monthly Rents must be provided on the 1003.


 ROYALTY PAYMENTS            To be considered as an acceptable income source, the following apply:
                             •    Most recent two year tax returns, including Schedule E.
                             •    Document minimum 12 month receipt of income
                             •    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 (< 25%). Compensation may be based on an hourly, weekly,
                             monthly or semi-monthly basis.
                              Notes:
                             •    Wage earners employed by a family member or working at a family business must provide the last
                                  2 years tax returns with all schedules
                             •    Less than 2 years employment history may be considered at the underwriter’s discretion for recent
                                  college graduates or military personnel


 SALARIED INCOME HISTORY     InterBank Wholesale requires salaried borrowers to exhibit the following employment standards:

                             •    A minimum of two years employment history
                             •    Prior to closing, InterBank Wholesale requires that the Seller independently verify borrower is still
                                  employed via a Verbal VOE. See Verbal Verification Requirements for details.


 SALARIED DOCUMENTATION      Standard sources of proof of employment for a salary/wage-earning borrower are:

                             •    W-2 for the past 2 years
                             •    Current pay-stub evidencing 30-day earnings and/or showing YTD income
                             Note: Handwritten pay-stubs will not be accepted unless supported by a written VOE and tax returns.


 SALARIED VERIFICATION OF    “Stand alone” Verifications of Employment are not permitted for verification of employment or income.
 EMPLOYMENT
                             •    VOE’s must always be supported by a copy of the most recent pay stub validating the current
                                  “salary” and the current year-to-date, and
                             •    W-2’s for 2 years
                             •    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 years and the borrower’s employer indicates that there is a reasonable
                             expectation that the borrower will be rehired for the next season.
                             Notes:
                             •    Income must be calculated over the most recent 24 months.




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                                •    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 years to be
                                considered.
                                Acceptable verification for Social Security benefits includes once of the following:
                                •    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 returns or W-2’s for the most recent two years.


 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) is required for 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 pay-stubs 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.
                                Standard sources of proof of employment for a self-employed borrower are:

                                •    On all self-employed borrowers a unaudited Profit and Loss Statement (P&L), signed by the self-
                                     employed borrower, is required if the loan is underwritten after the end of the first quarter (fiscal or
                                     calendar, dependent upon the business)
                                                 o   An audited P & L may be required at the underwriter’s discretion.
                                •    Sole Proprietorship
                                                 o   Last two years personal 1040s
                                                 o   Schedule “C”
                                                                If tax filing deadline has passed, must obtain an executed extension.
                                •    General and Limited Partnership, Limited Liability Corporations and “S” Corporations
                                                 o   Last two years personal 1040s
                                                 o   Last two years 1065s
                                                 o   Last two years K-1s
                                                 o   All associated schedules
                                •    Corporations
                                                 o   Last two years personal 1040s
                                                 o   Last two years 1120s
                                                 o   All associated schedules


 SELF-EMPLOYED INCOME HISTORY    Self-employed borrowers must have a history of stable and durable income for the previous 2 years. A
                                 written income analysis should be prepared and included in the loan file.
                                •     Prior to closing, InterBank Wholesale requires that the Broker independently verify the existence
                                      of the business via a verbal verification of employment 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 years
                                •   Likely to continue for the next two years
                                •   Copies of the past two year tax returns


 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 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




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                                  the trust agreement and the most recent 2 years signed, dated federal tax returns, with supporting
                                  schedules. The borrowers should have personal access to the trust assets.


 UNACCEPTABLE SOURCES OF     Income derived from any of the following may not be used in qualifying income.
 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.
                             •    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 years
                             •   Likely to continue for the next two years
                             •   Copies of the past two year tax returns


 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 years
                             Note: Education benefits are not acceptable.



QUALIFYING RATIOS AND LIABILITIES


 SUMMARY                     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 finding.


 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 homeowner association 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.

                             •    A favorable comparison validates the ability of the Borrower to repay the loan based on his financial
                                   strength
                             •    The Debt to Income ratio (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 with over ten (10) payments remaining
                             •    All revolving debt
                             •    Alimony, child support or maintenance payments with more than ten (10) payments remaining



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                             •    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 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 if a monthly payment is not provided) on revolving
                             accounts, regardless of the balance, must be included in the total debt to income 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.



PROPERTY

 OVERVIEW                    InterBank Wholesale’s appraisal process fully complies with the Home Valuation Code of Conduct
                             (HVCC). InterBank Wholesale orders appraisals through its approved Appraisal Management
                             Companies (AMCs), which are independent and have no affiliation with InterBank Wholesale or its
                             principals or officers. See InterBank Wholesale’s HVCC Polices and Procedures for complete
                             information.

 APPRAISAL ORDERING          InterBank Wholesale orders all appraisals through its approved AMCs. Orders are placed by InterBank
                             Wholesale 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 Wholesale reserves the right to:
 WHOLESALE
                             •    Question the appraiser’s findings or request additional information from the appraiser if deemed
                                  necessary in InterBank Wholesale’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 Wholesale does not permit provisional appraisers or appraiser trainees to solely complete
                                  appraisals for loans sold to InterBank Wholesale 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 4/01/09, InterBank Wholesale 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            90 days old for existing properties and Construction-To-Permanent. 120 days for new construction.


 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.

                                                    Appraisal Forms

 FNMA 1004                   Used for single-family properties, both attached & detached including PUD and site-detached



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                                             condominiums.
 FNMA 1004D                                  Used for appraisal updates and/or completion reports for all 1-4 Unit appraisal reports.
 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.
 FNMA 1073                                   Used for condominium properties.
 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)

 FNMA 216 One-to-Four Unit                   Form required for one-to-four unit owner occupied and non-owner occupied rental properties where the
 Investment Property Operating               borrower is using rental income to qualify.
 Income Statement.

 FNMA 1007 Single Family                     Form required for single-family properties (1-unit investment only) regardless of borrower using rental
 Comparable Rent Schedule                    income to qualify and AUS findings.

 Important: Evidence of the marketable rent is always required.

                                                             Streamline Appraisal Forms
                                             Permitted as applicable to the AUS and the Product Summary

 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                              Form 2075 is not acceptable to InterBank Wholesale under any circumstances. The 2055 is the minimal
 Property Inspection Report                  appraisal form acceptable to InterBank Wholesale.

 PHOTOGRAPH SPECIFICS –                      Photographs must be originals that are produced by either photography or electronic imaging. We do not
 SUBJECT                                     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 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 of any property located in a soft or declining market is 90.00%.
 •    At least 2 of the 3 comparables must be dated within 90-days of the appraisal date.
                  o     If the appraiser is unable to provide 2 comparables within 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.
                  o     When the appraiser is unable to provide this (or other) information, second level reviews through InterBank Wholesale
                        escalation processes may be required on loans underwritten by InterBank Wholesale.
 •    A minimum of 1 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.
 Important Note:
 InterBank Wholesale will not fund any loan where the borrower pays over the list price in a declining or oversupply market (6 months or greater).
 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.



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 COMPARABLES                                •    All current Fannie/Freddie 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 1 comparable from outside the development/project and/or from outside the influence of the developer.
 •    Additionally, if possible a minimum of 2 re-sale comps to verify that current transactions have been exposed to the open market.
                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 Wholesale 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 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.
                                           Important 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 WHOLESALE                       InterBank Wholesale will fund/purchase condominium properties for certain products as long as they
 ACCEPTABLE CONDOS                         meet InterBank Wholesale-specific requirements.
                                           •     InterBank Wholesale does not permit investment condos.
                                           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.
 Single Family Detached Units               •    Project analysis is not required; however
                                            •    The project type must be identified on the 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 condo
                                            •    The loan must be Approve/Eligible, and
 Q for Established
                                            •    The findings must state that the property is a condo subject to Limited Review.
                                            •    The InterBank Wholesale Form, InterBank Wholesale Condo 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,

                                            Fannie Mae clarification, Excerpted from Fannie Mae Announcement 08-34: (1/01/09)

                                            •    The Limited Review process is intended to be used on a “spot loan” basis, meaning that lenders
                                                 may originate loans that arise through the ordinary course of business.
                                            •    A lender 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 forth in Announcement 07-18.
                                            •    However, if the lender has targeted the project with specific marketing efforts or is named as a
                                                 preferred lender by either the developer or the project’s home owner’s association, the project is



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                                                 ineligible for Limited Review and the lender must use one of the other project review processes.

                                            The projects require a full analysis by the Seller
 Seller Warranty                            •    The loan must be submitted to DU or LP, and the property identified as a condo
                                            •    The loan must receive an approve or accept eligible. The DU findings do not state “Limited Review.”
 Lender-Delegated Review
                                            Note: Freddie Mac Streamline condo warranties are not eligible for sale to InterBank Wholesale.
 P for New
                                            •     The InterBank Wholesale Form, InterBank Wholesale Condo Questionnaire must be completed,
 Q for Established
                                                  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 Wholesale
                                                   Condo Questionnaire.
                                            •    The project must be properly identified on the Fannie Mae 1008 to Fannie Mae requirements,

 Fannie Mae Approved Project                The project does not require analysis.

                                            •    The loan must be submitted to DU or LP, and the property identified as a condo
                                            •    The loan must receive an approve or accept 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,

 FHA-Approved Project                       The project does not require analysis.

                                            •     The loan must be submitted to DU or LP, and the property identified as a condo
                                            •     The loan must receive an approve or accept eligible.
                                            •     A copy of the most recent FHA-Approved Condominium List showing the approval of the subject
                                                  project address, building number and unit number. (Printed from CHUMS).
                                            •    The project must be properly identified on the Fannie Mae 1008 to Fannie Mae requirements,

 Non-Warrantable Condos                     If the project is unable to be warranted to one of the types listed in this matrix, the project is considered
                                            “unwarrantable” and is not eligible for sale to InterBank Wholesale.

 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 Wholesale.
             o   InterBank Wholesale 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-purchase/funding audit.
             o   Seller’s for which InterBank Wholesale underwrites the loan are fully responsible for completing applicable Condo Questionnaire’s
                 and providing required information to InterBank Wholesale.

 INTERBANK WHOLESALE                        Ineligible condo projects are defined by Fannie Mae and Freddie Mac, Seller should refer to those
 INELIGIBLE CONDOS                          published guidelines for complete details.
                                            In general, the following characteristics may be used to identify projects that are ineligible.
                                            •     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.
                                            •     The unit is fully furnished.
                                            •     The unit does not have a full kitchen.
                                            •      The project provides any of the following services:
                                            •     Management desk
                                            •     Bellman
                                            •     Daily maid service
                                            •     Food service
                                            •     Telephone service
                                            •     Centralized utilities, for example: central telephone
                                            •     Centralized key system not in negotiated terms
 GENERAL CONDO REQUIREMENTS                 The following InterBank Wholesale 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 Wholesale or Fannie Mae guidelines.



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                                            •     Project has demonstrated market acceptance.
                                            •     When applicable, validate with the mortgage insurer that the project is acceptable for coverage.
                                            Condo Questionnaire: 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.
                                 The Condo Questionnaire must be fully completed prior to making a warranty.

                  Topic                                                                    Condo Guidelines

 Completion                                 •     All common areas and any recreational facilities are complete for legal phase.
                                            •     If completion is in question, obtain the 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.

                                            •     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 Wholesale 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.

 Number of Units Rented                     Maximum 25% (of total number of units sold) may be rental.

                                            Fannie Mae Clarification, excerpted from Fannie Mae Announcement 08-34:

                                            •     Fannie Mae permits the inclusion of financial institution 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 Factors              •     Any adverse environmental factors affecting the condominium project 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.

                                            •     The following types of litigation generally pose little or no risk to the project and are acceptable:
                                                         o     HOA is suing individual owners for unpaid dues.
                                                         o     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.
                                                         o     Other suits filed by the HOA that do not impact the value or livability of the project.

                                            •     The following types of litigation may impact the project's marketability and are generally not
                                                  acceptable:
                                                         o     HOA 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



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                                              and the project is financially sound and marketable.
                                         o    Suits filed against the HOA in which the damages exceed or are not covered by the
                                              HOA's insurance.

                             •    Projects involved in pending litigation (lawsuit has not yet been filed) may be approved when the
                                  risk to the project is assessed and it is determined that:
                                         o    HOA insurance will cover potential damages,
                                             OR
                                         o    HOA is in a position to benefit from the lawsuit.

 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 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 Wholesale 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:
                             Lenders 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 100.00% 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 lenders to verify hazard insurance (including wind and flood insurance, if
                                  applicable) coverage at the project level as part of their review of a project.
                             •    Lenders 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.

 Degree of Development       Geographical areas less than 25% developed are generally not acceptable for maximum financing.
                             •   Areas between 25% and 75% developed and showing steady growth pattern are acceptable for
                                 maximum financing.
 Deed Restrictions           Occupancy Restrictions

                             •    Reasonable local, state or federal restrictions on the maximum number of occupants permitted to
                                   occupy a dwelling unit are acceptable as long as such limitations are applied to all occupants and
                                   do not operate to discriminate on the basis of race, color, religion, sex, national origin, handicap or
                                   familial status.
                                               o    If any restriction is noted in the purchase contract, appraisal, title commitment or in
                                                     the project covenants/restrictions that appears not to apply to all occupants, contact
                                                     InterBank Wholesale Underwriting to determine whether the loan is eligible for
                                                     purchase.
                             Age Restrictions
                             If a housing development has an age restriction, it must comply with one of the following Fair Housing Act
                             exemptions:

                             •    Government Housing Programs



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                                                              o    The prohibitions against discrimination on the basis of age or familial status do not
                                                                   apply with respect to dwellings provided under any State or Federal Program
                                                                   specifically designed and operated to assist the elderly or to house elderly persons.
                                                                   The Secretary of HUD must determine that the development meets this exemption.
                                              •    Age Restrictions – 62 years of age or older
                                                             o     The prohibitions against discrimination on the basis of age or familial status do not
                                                                   apply with respect to dwellings intended for, and solely occupied, by persons 62
                                                                   years of age or older.
                                              •    Age Restrictions – Any Age Restriction
                                                             o     The prohibitions against discrimination on the basis of age or familial status do not
                                                                   apply with respect to dwellings intended and operated for occupancy by person 55
                                                                   years of age or older provided that all of the following apply:
                                              At least 80% of the occupied units are occupied by persons 55 years of age or older, and The housing
                                              facility or community publishes and adheres to policies and procedures that demonstrate the intent to
                                              provide housing to persons 55 years of age or older, and The housing facility or community can provide
                                              documentation for verification of occupancy, by means of

                                              •    Reliable surveys and affidavits;
                                              •    Examples of published written policies and procedures for determination of compliance with the Act.
                                              Documentation Requirements for Age-Restricted Properties

                                              •    When it is determined that a housing development is subject to age restrictions, the Homeowners
                                                   Association must complete and sign the form Housing Developments Subject to Age Restrictions
                                                   (See www.interbankwholesale.com ).
                                              •    By signing this form, the association certifies that the housing development is in compliance with the
                                                    Fair Housing Act.
                                              •    The fully executed form must be included in the underwriting package.
 INELIGIBLE PROPERTY TYPES                    The following property types are ineligible:
                                              •    Manufactured Housing (all mobile              •     Unique (one-of-a-kind) properties
                                                   homes)                                        •     Properties in “fair” condition
                                              •    Dome Homes                                    •     Properties sold at auction(1)
                                              •    Earth Berm                                    •      Properties without a clear title
                                              •    Store Front” properties                       •     Properties with less than 600 square feet
                                               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 Wholesale. 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 12 months of the older of the         Treat the transaction as a purchase:
 application date/ or the oldest credit
 document in the file.                        •    Underwrite and price the loan as a purchase
                                              •    Base the LTV on the lower of current appraised value or acquisition cost.
                                              •    Acquisition Cost is equal to the sum of:
                                              •    Original purchase price, and
                                              •    Documented cost of renovations or improvements.

 Greater than 12 months of the older of       Treat the transaction as a refinance:
 the application date/ or the oldest credit
 document in the file.                        •    Underwrite and price the loan as a Rate/Term (Limited Cash Out) refinance
                                              •    Base the LTV on current appraised value.




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



ESCROW (COMPLETION) HOLDBACKS

 OVERVIEW                                   Escrow (completion holdbacks) may be permitted for weather related items only.
 ELIGIBILITY                                Permitted under the following requirements and restrictions.
                Topic                                                             Requirements/Restrictions

 ELIGIBLE MORTGAGES                         A mortgage subject to the following are eligible for an escrow holdback (for completion):

                                            •    Owner-occupied new construction
                                            •    Detached single-family residence or detached PUD
                                            •    Modular (factory Built not eligible)
                                            •    Maximum LTV’s:
                                                       FRM = 90.00%                                    ARM = 90.00%

 MARKETABILITY/ACCEPTABILITY                Repairs/completion items must meet the following restrictions:

                                            •    The repair/completion must be weather-related in nature and may not affect the livability or safety of
                                                 the dwelling.
                                            •    The dwelling must be habitable, safe and structurally complete.
                                            •    For any item, there must be no adverse affect to marketability.
                                            •    The incomplete work cannot prevent the issuance of the Certificate of Occupancy (or jurisdictional
                                                 equivalent).
                                            •    The work must be completed within a specific time frame, and the notice of completion forwarded to
                                                 InterBank Wholesale as a “trailing document.”

 INELIGIBLE COMPLETION ITEMS                The following repairs/completion items are not eligible for completion holdbacks

                                            •    Structural Repairs                         •     Roof Repairs
                                            •    Well/Septic                                •     Clean-up/correction of environmental hazards
                                            •    Foundation Work                            •     Any items deemed inappropriate by InterBank
                                                                                                  Wholesale Underwriting

                                            Important: When in doubt, contact InterBank Wholesale underwriting to confirm eligibility.

                Topic                                                               Requirements/Restrictions

 TIME AND ESCROW LIMITS                     •    Maximum combined repair items may not exceed 10% of the lesser of the appraised or sales price.
                                            •    Minimum amount to complete the escrow will be 150% (1.5 times) of the estimated cost to
                                                 complete.
                                            •    Weather Related Items –Max completion period is 90 days.
                                                             o    For those states with extreme weather, contact InterBank Wholesale for approval to
                                                                  extend the period up to a maximum of 180 days.

 DOCUMENTATION REQUIREMENTS                 Before loan closing:

                                            •    Appraiser’s cost breakdown (item by item) or contractor’s (not the builder) bid used to determine the
                                                 amount of escrow.
                                                            o     The maximum amount for completion escrow is 10% of the lesser of the property’s
                                                                  cost or the appraised value.
                                            •    A copy of the signed escrow agreement must be included in the closed loan delivery package.
                                                            o     The escrow agreement must include language that specifies that InterBank
                                                                  Wholesale may use the funds to complete the repairs if not completed by the
                                                                  expiration date of the escrow account.
                                            As final trailing documents, forwarded within the time limits noted above.

                                            •    A clear final inspection from the appraiser. (Fannie Mae 1004D/Freddie Mac 442)
                                            •    FHA loans require a Mortgagee’s Assurance of Completion Form.
                                            •    The Broker is responsible to ensure the repairs are complete within 6-months




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 SWIMMING POOL ESCROWS       Not Permitted.

 LEASEHOLD ESTATE OVERVIEW   InterBank Wholesale will fund/purchase conventional loans secured by property held in a leasehold
                             estate for certain specific products.
                             See the specific product suite for more details.



                                     Leasehold Requirements Matrix
                 Topic                                                      Requirements

 Market Acceptance           The property must be located in an area in which they are common and customary and receive market
                             acceptance.

                             •    The appraiser must address this market acceptance.

 Real Property               •    The mortgage must cover the property improvements and the leasehold interest in the land.
                             •    The leasehold and improvements must constitute real property, be subject to the mortgage lien, and
                                   be insured by the lender’s title policy.

 Riders                      •    A Leasehold Rider to the Security Instrument is required on all leasehold estates.
                             •    It must incorporate a cross-default provision so that a default on the lease is a default on the
                                   mortgage.

 Title                       •    The title may not make an exception to the leasehold and
                             •    It must be an ALTA Leasehold Policy.

 Term                        The term of the leasehold estate should run for at least 5-years beyond the maturity date of the
                             mortgage loan.

                             •    This requirement does not apply if fee simple title will vest in the borrower at an earlier date.

 Fannie Mae Guidelines       The leasehold must meet the more restrictive of InterBank Wholesale/Fannie Mae requirements as
                             outlined in the most current InterBank Wholesale Broker Guide or Fannie Mae Broker Guide
                             (www.efanniemae.com)

 LOCATION                    InterBank Wholesale does fund/purchase properties in urban, suburban and rural areas to
                             InterBank Wholesale/Fannie Mae guidelines.
                             •    InterBank Wholesale 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 Wholesale will accept “true” log homes under the following additional restrictions:
                             •     Contact InterBank Wholesale pricing for special pricing for Log Homes.
                             •     The log home must demonstrate market acceptance.
                             •      The appraiser must provide a minimum of 2 true log homes as comparables within 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 Wholesale will accept properties that are residential in nature up to 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:
                                              o      Properties zoned agricultural are limited to 10 acres, no exceptions.
                                              o     Value based on a lesser amount of acreage than the actual lot size is not
                                                     acceptable on any loan.
                                              o    Any properties exceeding 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 1 current sale from the subject development/builder and either
                             •    One closed sale from a competing development/builder, or
                             •    One closed sale from the subject development that has closed within 90-days from the date of the
                                   subject property appraisal.



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 MODULAR/ FACTORY BUILT 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.
                                                 o   Prefabricated, panelized, or sectional housing units must conform to all local
                                                      building codes in the jurisdiction in which they are permanently located.
                                                 o   Modular homes must be built to the state building code requirements of the state in
                                                     which they are to be installed.
                                                 o   The Modular home must conform to all building codes, local zoning requirements
                                                     and International Code Council (ICC) building codes.
                                                 o   Modular homes are not the same as “manufactured homes” or “mobile homes.”
                                They 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 Wholesale will not fund/purchase Modular/Factory Built homes that are part of a PUD or
                                      condominium.
                                •     InterBank Wholesale Appraisal Requirements:
                                                 o    Marketing time must not exceed 6 months
                                                 o    Appraiser must provide a minimum of 2 similar factory-built comparables
 MIXED USE PROPERTIES           InterBank Wholesale 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.
                                •     In general, the commercial use should not exceed 20% of total gross living area of the property.
                                •     The commercial use should generate a minimal amount of traffic noise.
 OUTBUILDINGS                   Underwriters must give properties with outbuildings special consideration in the appraisal review.
                                •   Properties with minimal outbuildings, such as a 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.

                                •    Properties with the presence of significant outbuildings, such as a large barn, storage areas for
                                     equipment or farm-type animals, or a silo, indicate that the property is agricultural in nature.
                                Regardless whether the outbuildings are assigned value or not, InterBank Wholesale 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.
                                •      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 Wholesale 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.



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                                            •     A PUD is a project that consists of common property and improvements that are owned and
                                                  maintained by the Homeowner’s Association (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 Singe 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 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 Lender-
                                                   delegated Review of the PUD Project.
                                            •      If the loan receives a DU Approve, the Limited Review consists only of the following warranties:
                                                      o    The Project is not an ineligible project. See InterBank Wholesale 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 )

 Notes: If the attached PUD is not a Type E (HOA in unit owner’s control) and it does not receive the “Limited Review” finding in DU, the property is
 not eligible for purchase by InterBank Wholesale.

 REO/REPO PROPERTIES                        InterBank Wholesale 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 operational 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 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 5 miles of the subject property.
                                            •      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.
                                            See Lot Size- Maximum Acreage
 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 code states otherwise.
 SUBJECT PROPERTY SIZE                      •     Properties less than 600 sq ft. are not eligible for funding/purchase.




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CONFORMING ADJUSTABLE RATE MORTGAGE -
Not currently offered at this time

CONFORM INTEREST ONLY ADJUSTABLE RATE MORTGAGE
Not currently offered at this time

NON-CONFORMING MORTGAGES
Not currently offered at this time




GOVERNMENT LOANS

PRODUCTS


 FHA FIXED RATE MORTGAGES            InterBank currently offers the 15 and 30 yr. FHA Fixed Rate Loan Products. See the InterBank FHA
                                     Matrix for specific product details.


 FHA ADJUSTABLE RATE                 Not currently offered at this time
 MORTGAGE



TRANSACTIONS


 PURCHASE TRANSACTIONS               A purchase transaction is one in which the proceeds are used to finance the purchase of a home.


 REFINANCE                           A refinance transaction occurs when the borrower obtains a new loan on a currently owned residence.
                                     InterBank Wholesale identifies the following refinance transaction types.
                                     •     Streamline Refinance Without Appraisal
                                     •     Streamline Refinance With Appraisal
                                     •     Rate/Term
                                     •     Cash Out Refinance
                                     Cash back to borrowers for Streamline and Rate/Term refinances is limited to a maximum of $500.


 REFINANCE CREDIT RULE               •    InterBank Wholesale will not purchase any loan as a refinance transaction that is currently involved
                                          in foreclosure proceedings.
                                     •    InterBank Wholesale will not purchase any loans participating in ‘churning”, where the borrower is
                                          getting a new refinance every 3-to-6 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.
                                                      o     FHA to FHA Refinances may subordinate existing junior liens with no CLTV
                                                            restrictions


 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.
                                     •    Subordinate Liens: No seasoning requirement.




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FHA UNDERWRITING GUIDELINES
 OVERVIEW                      InterBank Wholesale bases underwriting guidelines for FHA loans on FHA guidelines. If an underwriting
                               requirement is not specifically addressed in the product guidelines or in this Underwriting chapter, 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 to be eligible for funding by
                               InterBank Wholesale.
                               Manual Underwriting
                               Limited to DU Approve/Eligible downgrades and 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.

 LOAN ORIGINATION FEE          The maximum Loan Origination Fee that can be charged to the borrower is 1% of the loan amount.

 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.

 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
                               •    Prepaid Expenses
                               •    Seller-paid Closing Costs
                               •    Up-Front MIP

 MULTIPLE MORTGAGES TO SAME    •    A borrower may have no more than four financed properties, including the subject property.
 BORROWER                      •    A borrower may have no more than one FHA loan with maximum financing.

 NON-OCCUPANT CO-BORROWER      Non-Occupant co-borrowers are permitted with the following restrictions:

                               •    One unit property if the LTV exceeds 75%
                               •    Maximum 75% LTV 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



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                               •       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.

 SECONDARY FINANCING           The borrower may receive secondary financing to cover the entire cash investment requirement from the
                               following sources:

                               •       Federal, state, and local governmental 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 downpayment of at least 3.5% of the sales price
                               •       Family member (parent, grandparent, or child)

 MORTGAGE INSURANCE            FHA Mortgage insurance provides protection against losses as a result of mortgage default. All FHA
 PREMIUMS                      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. 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/Annual MIP – paid in the monthly mortgage payment
                               •       Monthly MIP is calculated by multiplying the base loan amount by the applicable premium factor.


                                                              Mortgage Insurance Premiums

                                        LTV/Loan Term                Purchases and               Streamline Refinances
                                                                 Rate/Term and Cash-Out
                                                                       Refinances
                                                                     (non-streamline)

                                                                   UFMIP          Monthly        UFMIP          Monthly

                                   LTV > 95%                       1.75%           .55%           1.50%           .55%
                                   Term > 15 Years

                                   LTV ≤ 95%                       1.75%           .50%           1.50%           .50%
                                   Term >15 Years

                                   LTV > 90%                       1.75%           .25%           1.50%           .25%
                                   Term ≤15 Years

                                   LTV ≤ 90%                       1.75%           None           1.50%           None
                                   Term ≤15 Years


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.

 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. Please refer to the 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


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                                •    Real estate commissions
                                •    Rent credits
                                •    Retirement Accounts
                                •    Stocks / Bonds
                                •    Secondary Financing
                                •    Secured loans
                                •    Sweat equity
                                •    Systematic Savings
                                •    Trade equity

 BANK ACCOUNTS                  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.

                                •    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 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 statements must be a copy of the original bank statements:
                                                  o    “FAXED” or statements downloaded from the Internet must clearly identify the name of
                                                       the depository or investment institution and the source of the information (e.g. the
                                                       information is contained in the banner that is at the top of the document).
                                •    Bank or investment portfolio statements must clearly identify the borrower as the account holder and
                                     include:
                                                  o    The account number;
                                                  o    The time period covered by the statement;
                                                  o    All deposits and withdrawal transactions (for a depository account) or all purchase and
                                                       sale transactions (for a financial portfolio account); and
                                                  o    The ending account balance

 BORROWER FUNDS SECURED BY AN   A loan secured by an asset may be used as Assets as follows:
 ASSET
                                •    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 may be used as an acceptable source of funds if the following are complied with:

                                •    Satisfactory explanation of how funds were accumulated
                                •    Satisfactorily demonstrated savings ability
                                •    Verification of funds deposited into a financial institution or being held by a title company or real estate
                                     agent
                                                 o     If funds are held by a title company or realtor, a company representative must verify
                                                       receipt of the funds, the amount received, and the date received and the person
                                                       providing the funds.
                                The Borrowers must provide a detailed written statement stating the following:

                                •    Dollar amount saved
                                •    Time-period taken to accumulate funds
                                •    How funds could be accumulated over stated time-period
                                •    Why conventional depository sources were not used
                                •    Explanation as to where funds were stored until their deposit
                                •    Borrower certification that the privately accumulated funds were not received from any party to the
                                     transaction, nor were they the proceeds of a gift or the result of the sale of an asset.

 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



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                                                    statement should cover the period up to and including the date the check cleared).
                                                o   Copy of the cancelled check

 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
                             •    Signatures 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 office
                             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 not be transferred at closing.
                             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
                             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 (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 lender
                             •    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:
                                                o   Copy of the donor's cancelled check or other withdrawal documentation showing the
                                                    withdrawal from the donor's account
                                                o   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:


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                                              o    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
                                              o    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 meets
                             FHA requirements and the transfer of funds are properly documented. Correspondent Funding does no allow
                             non-profit entities to provide gifts to homebuyers for the purpose of paying off installment loans, credit cards,
                             collections, judgments and 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 canceled 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 Wholesale must review and approve the non-profit or municipality gift or grant documentation.
                             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 (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           An income tax refund not yet received may be used as funds for down payment or closing costs.

                             •    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.

 REAL ESTATE PROCEEDS        To use proceeds from the sale of a currently owned other-real-estate property for closing-fund requirements
                             and 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.



 I RETIREMENT ACCOUNTS       Retirement accounts (IRAs, Keogh accounts, 401(k) 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-fund
                             requirements:

                             •    Unless specified by an automated underwriting system, 60% of IRAs, Keogh Accounts, 401(k)
                                  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.

 SALE OF STOCKS OR BONDS     Funds from the sale of stocks or bonds is acceptable as long as the following apply:

                             •    The existence and value of the stock or bonds is verified.
                             •    The value of stocks is verified with a current statement from the stockbroker.


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                             •    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.

 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,” subject to all FHA gift requirements. A gift letter is required and all
                             Correspondent Funding 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 the 4155.1.

 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 both the sale of the previous property (from which the 1031 assets are
                                  acquired) 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

 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 the 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 Wholesale:

                             •    Donated funds in any form, such as 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                    •    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.
                             •    Gift funds are never acceptable as reserves.
                             •    Cash reserves are not required on one and two-unit property transactions.
                             •    A minimum of 3 months PITI cash reserves are required for all 3-4 unit properties.



CREDIT


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 OVERVIEW                             InterBank Wholesale 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 Wholesale accepts the following types of credit reports, depending on the circumstances of the
                                      mortgage request.

                                      •    Residential Mortgage Credit Report (RMCR)
                                      •    AUS Credit Report -3 file merged report pulled into the AUS
                                      •    Non-traditional credit is not permitted.
                                           .
                                      Note: All Credit Reports must include FACT Act messages and fraud alerts.

 AGE OF DOCUMENTS                     All standard credit documentation used to determine the borrower’s eligibility must be no more than:

                                      •    Existing Construction: No more than 120 days old prior to the Note date. 
                                      •    New Construction: No more than 180 days old prior to the Note date.
                                      •    Pay Stubs must be within 30-days of underwriting.
                                      •    Bank Statements must be within 45-days of underwriting.


                                      Note: InterBank Wholesale reserves the right to request updated credit at our discretion.

 BANKRUPTCY/ FORECLOSURE              InterBank Wholesale 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.
                                      •    InterBank Wholesale 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 – Chapter 7    •    Require a minimum 2-year period of re-established credit from the bankruptcy discharge date.

 Extenuating Circumstances –          •    Require a minimum of 12 months from the bankruptcy discharge date.
                                      •    Require supporting documentation to verify the extenuating circumstances.
 Chapter 7
                                      •    Require supporting documentation that all debts have been paid.

 Re-established Credit – Chapter 13   •    Require a minimum of 12 months of the payout period has elapsed under the bankruptcy and the
                                           payout performance has been satisfactory with required payments made on time.
                                      •    Borrowers must receive written permission from the counseling agency to enter into the mortgage
                                           transaction.

 Foreclosure or Deed-in-Lieu          •    Require a minimum of 3 Years since the date of the foreclosure completion.


                                      Notes: InterBank Wholesale will not refinance properties currently in foreclosure proceedings.




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 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 as an
                             extenuating circumstance.
                             •     A divorce (the event) should not be considered as 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 primary wage earner.
                             Re-established credit considerations
                             When reviewing loans with bankruptcies, InterBank Wholesale 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 5 credit references, active within the past 24-months, with at least 1
                                                 of the references being “traditional” (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 that were 30 days past due in the
                                                 most recent 24-months, and none 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 Wholesale 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 4 years
                             •    A minimum 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 incident is between 4
                                  and 7 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 12 months, unless the Total
                                                Mortgage Scorecard decision is Approve/Eligible.
                             •    Purchase Transaction: For borrowers purchasing a short sale, non-arms length transactions are



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                                    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 Wholesale.

 COLLECTIONS, CHARGE-OFFS      •    Collections are not required to be paid, but are considered in the analysis of creditworthiness of
                                    borrower
                               •    The borrower must provide a written explanation for all adverse credit.

 CONSUMER CREDIT COUNSELING    The presence of consumer credit counseling service does not alter the underwriting recommendation.
                               Whether the borrower has or has not completed his or her participation in the sessions before closing on
                               the mortgage transaction is not relevant since it is the borrower’s credit history that is of primary
                               importance.

                               •    If borrower is currently in CCC, borrower must provide a letter from the service stating that they can
                                    incur the new housing expense.
                               •    If the loan is approved through the AUS, the CCC has been considered and no further action is
                                    required.
                               Note: Underwriters must carefully review borrowers with CCC to determine over-all credit worthiness.
                               InterBank Wholesale 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.
                               •    When the credit report indicates that recent inquiries took place, the InterBank Wholesale 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 Wholesale’s determination, inquiries on the credit report are not adequately addressed in
                               the loan file, InterBank Wholesale 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) 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 3 scores are provided for the borrower, the middle score is used to underwrite.
                               •    If 2 scores are provided for the borrower, the lower score is used.
                               •    If only 1 score is provided, the borrower is not eligible.
                               •    To arrive at the score used to validate the salability of the loan to InterBank Wholesale – 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 ≥ the InterBank
                                    Wholesale 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:
                                              o     The account must be brought current
                                              o     The account has been paid off
                                              o     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:

                               •    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 Wholesale underwriting for assistance.

 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


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                               •    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   Residential Mortgage Credit Report (RMCR) provides current, verified and detailed borrower information.
 REPORT                        The report agency verifies:
                               •    Most recent 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

 TRADE LINES                   A trade line reflects a history of open or paid credit obligations detailing borrower’s credit reputation.
                               •     Credit score should be obtained from 4 trade lines with a 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 > 24 months and cannot be a collection or charge-off


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 years of employment income
                               history, using Verification of Employment forms and pay-stubs evidencing most current year-to-date pay
                               stub, must be within 30-days at the time of underwriting and W-2 forms for the past two years.

 AGE OF DOCUMENTS              •    Existing Construction: No more than 120 days old prior to the Note date. 
                               •    New Construction: No more than 180 days old prior to the Note date.
                               •    Pay Stubs must be within 30-days of underwriting.

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

                               •    InterBank Wholesale always requires pay stubs, W-2’s and/or tax returns.
                               •    A Verbal Verification of Employment at time of underwriting and 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 /     If not specifically addressed in the AUS findings, the following guidelines apply:
 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 12 months and it must continue for at least three years after
                                    the date of the original mortgage loan application.
                               •    InterBank Wholesale will accept as verification of the award of alimony and/or child support one of
                                    the following documents:
                                                o    Copy of the divorce decree
                                                o    Formal separation agreement
                                                o    Court records
                                                                 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.
                                                                 The document must specify the amount of the award and the period of



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                                                              time over which it will be received. The borrowers must provide
                                                              evidence that the funds have been received for the last 12 months.
                                                              Acceptable evidence would be deposit slips, canceled checks, bank
                                                              statements or Federal income tax returns.
                             Notes:

                             •    If income is received less than 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 years.
                             •    The employer indicates these payments will continue
                             •    Income must be averaged over the two 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 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
                                                  years.

 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:
                                             o     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:
                             •    3 years tax returns – showing a consistent history of capital gains being the borrower’s “salary.”

 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 average over the most recent two years.
                             •    Commission received 12 to 24-months may be considered if 12 months are reflected on tax returns.
                                  Commission received less than 12 months may be considered at the underwriter’s discretion.
                             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.
                             If a borrower earns over 25% of their income as commission, then the last 2-year federal tax returns with
                             all attachments are required.

 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 years
                             •    Benefits that will decrease to a lesser amount within the next three 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, such as insurance company, employer, etc., is required.

 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 2 year tax returns,
                                  including applicable schedules, are required to verify the amount and stability of the income as well
                                  as develop a two-year average of the income.

 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.



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                                 Note: A 12 to 24 month history is permitted as long as the income does not represent more than 30% of
                                 the total gross income that is utilized in qualifying the borrower.
                                 Documentation:

                                 •    Letters from the state agency providing the income
                                 •    Copies of deposit slips or bank statements confirming the regular deposits consistently for 3
                                      months.

 FOREIGN INCOME                  InterBank Wholesale 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.

 NON-TAXABLE INCOME              InterBank Wholesale 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     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 3 years
                                 •    Copy of the note to establish the amount and length of payment
                                 •    Must have been received for the last 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 years may not be
                                 used as stable income.

 PART-TIME, SECOND OR MULTIPLE   All types of supplemental income must be received, uninterrupted, for the most recent two years and
 INCOME                          supported by IRS W-2 forms.

 PENSION / RETIREMENT            Income from retirement accounts must be verified by the employer’s statement or benefit letter, tax
                                 returns or IRS W-2 forms.

                                 •    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.

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

                                 •    Received for the past two years
                                 •    Likely to continue for the next three 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



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                             Wholesale requires the following:

                             •    Operating Income Statement, and one of the following:
                                              o    Current Lease (if subject was acquired subsequent to filing previous year’s tax
                                                   return), or
                                              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).
                             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 Wholesale will require the following:
                                              o    Signed Current Lease (for properties acquired subsequent to filing previous year’s
                                                   tax return), or
                                              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 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).
                             •    Net rental income/loss will be obtained from Schedule E (for properties acquired prior to filing
                                  previous year’s tax return).

                             When the subject is an investment property:
                             If the underwriter must use rental income from the subject property to qualify the borrower, InterBank
                             Wholesale will require the following:

                             •    Minimum 2 years landlord experience, and
                             •    Evidence of 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 returns 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).
                             Exception Note:
                             For certain products, the 216 is not required if the borrower qualifies with the entire payment. If the 216
                             is not included in the loan file, the Gross Monthly Rents must be provided on the 1003.

 ROYALTY PAYMENTS            To be considered as an acceptable income source, the following apply:

                             •    Most recent two year tax returns, including Schedule E.
                             •    Document minimum 12 month receipt of income
                             •    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 (< 25%). Compensation may be based on an hourly, weekly,
                             monthly or semi-monthly basis.
                             Notes:

                             •    Wage earners employed by a family member or working at a family business must provide the last
                                  2 years tax returns with all schedules
                             •    Less than 2 years employment history may be considered at the underwriter’s discretion for recent
                                  college graduates or military personnel

 SALARIED INCOME HISTORY     InterBank Wholesale requires salaried borrowers to exhibit the following employment standards:

                             •    A minimum of two years employment history
                             •    Prior to closing, InterBank Wholesale requires that the Seller independently verify borrower is still
                                  employed via a Verbal VOE. See Verbal Verification Requirements for details.




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 SALARIED DOCUMENTATION         Standard sources of proof of employment for a salary/wage-earning borrower are:

                                •    W-2 for the past 2 years
                                •    Current pay-stub evidencing 30-day earnings and/or showing YTD income
                                Note: Handwritten pay-stubs will not be accepted unless supported by a written VOE and tax returns

 SALARIED VERIFICATION OF       “Stand alone” Verifications of Employment are not permitted for verification of employment or income.
 EMPLOYMENT
                                •    VOE’s must always be supported by a copy of the most recent pay stub validating the current
                                     “salary” and the current year-to-date, and
                                •    W-2’s for 2 years
                                •    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 years and the borrower’s employer indicates that there is a reasonable
                                expectation that the borrower will be rehired for the next season.
                                Notes:

                                •    Income must be calculated over the most recent 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 years to be
                                considered.
                                Acceptable verification for Social Security benefits includes once of the following:

                                •    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 returns or W-2’s for the most recent two years.

 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) 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 25% or more of the total

 SELF-EMPLOYED DOCUMENTATION    Handwritten pay-stubs 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.
                                Standard sources of proof of employment for a self-employed borrower are:

                                •    On all self-employed borrowers a unaudited Profit and Loss Statement (P&L), signed by the self-
                                     employed borrower, is required if the loan is underwritten after the end of the first quarter (fiscal or
                                     calendar, dependent upon the business)
                                                 o   An audited P & L may be required at the underwriter’s discretion.
                                •    Sole Proprietorship
                                                 o   Last two years personal 1040s
                                                 o   Schedule “C”
                                                                If tax filing deadline has passed, must obtain an executed extension.
                                •    General and Limited Partnership, Limited Liability Corporations and “S” Corporations
                                                 o   Last two years personal 1040s
                                                 o   Last two years 1065s
                                                 o   Last two years K-1s
                                                 o   All associated schedules
                                •    Corporations
                                                 o   Last two years personal 1040s
                                                 o   Last two years 1120s
                                                 o   All associated schedules

 SELF-EMPLOYED INCOME HISTORY   Self-employed borrowers must have a history of stable and durable income for the previous 2 years. A
                                written income analysis should be prepared and included in the loan file.

                                •    Prior to closing, InterBank Wholesale requires that the Broker independently verify the existence
                                     of the business via a verbal verification of employment through the CPA, business license or



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                                  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 years
                             •    Likely to continue for the next two years
                             •    Copies of the past two year tax returns

 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 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 2 years signed, dated federal tax returns, with supporting
                                  schedules. The borrowers should have personal access to the trust assets.

 UNACCEPTABLE SOURCES OF     Income derived from any of the following may not be used in qualifying income.
 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       Acceptable if properly documented:

                             •    Received for the past two years
                             •    Likely to continue for the next two years
                             •    Copies of the past two year tax returns

 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 years
                             Note: Education benefits are not acceptable.



QUALIFYING RATIOS AND LIABILITIES


 SUMMARY                     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 homeowner association 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.

                             •    A favorable comparison validates the ability of the Borrower to repay the loan based on his financial
                                   strength
                             •    The Debt to Income ratio (DTI) is calculated by the sum of the following divided by the Borrower’s



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                                   stable monthly income:
                              •    Monthly housing expense on the Primary as calculated above
                              •    All installment debt with over ten (10) payments remaining
                              •    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 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 not used to “off-set” car payments

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

 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   •    Home Equity Lines of Credit (HELOC) are permitted to FHA guidelines.


                              Note: 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.)




PROPERTY

 APPRAISAL STANDARDS AND      Each appraisal report must:
 REQUIREMENTS
                              •    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 Wholesale.
                              •    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 the subject and comparables are required.
                              •    Present a complete and accurate evaluation of the property that supports the appraised value.


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                             •    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     Appraisers must be state-licensed and strictly adhere to USPAP guidelines.
                                             o     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.

 AGE OF APPRAISAL            •    Existing Construction – 180 days prior to the Note date. Updated appraisals are not permitted.
                             •    New Construction – 360 days prior to the Note date. InterBank Wholesale’s DE Underwriter may
                                  grant an extension provided:
                                             o    Construction has begun prior to the appraisal expiration date.
                                             o    An updated appraisal with a recertification of value is required.
                                  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 revision of the listed appraisal form must be used.

                                                   Appraisal Forms

 FNMA 1004                   Used for single-family properties, both attached & detached including PUD and site-detached
                             condominiums.

 FNMA 1004D                  Used for appraisal updates and/or completion reports for all 1-4 Unit appraisal reports.

 FNMA 1004C                  Used for Manufactured Homes

 FNMA 1004MC                 Used to provide market condition information. Required on all appraisals.

 FNMA 1073                   Used for condominium properties.

 FNMA 1025                   Used in the appraisal of 2-to-4 unit properties (A duplex, triplex or fourplex).

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

 ADVERSE MARKETING           The level of collateral risk associated with housing trends indicating values are unstable or declining
 CONDITIONS                  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 (i.e. declining values, over supply, or marketing times in
                             excess of 6-months) require careful review and the following specific required support documentation:

                             •    At least 2 of the 3 comparables must be dated within 90-days of the appraisal date.
                                              o     If the appraiser is unable to provide 2 comparables within 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.
                                              o     When the appraiser is unable to provide this (or other) information, second level
                                                    reviews through InterBank Wholesale escalation processes may be required on
                                                    loans underwritten by InterBank Wholesale.
                             •    A minimum of 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.
                             A Second Appraisal is required if the property if all of the following exist:

                             •    Base loan amount exceeds $417,000 and
                             •    Base LTV is 95% or higher and
                             •    The property is determined to be in a declining market



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                              Important Note:
                              InterBank Wholesale will not fund any loan where the borrower pays over the list price in a declining
                              or oversupply market (6 months or greater).

 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 FHA 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 1 comparable from outside the development/project and/or from outside the
                                   influence of the developer.
                              •    Additionally, if possible a minimum of 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 Wholesale 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.

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

 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 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.
                              Important 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.

 INTERBANK WHOLESALE          Only existing condominiums (Project completed more than 1 year) that have been approved
 ACCEPTABLE CONDOS            by FHA are eligible.

 GENERAL CONDO REQUIREMENTS   The following InterBank Wholesale 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 Wholesale or FHA guidelines.
                              •      Project has demonstrated market acceptance.
                              •     Project must be at least 51% owner occupied.
                              Condo Questionnaire: The FHA Project Questionnaire Established Condominiums must be
                              completed by the Home Owners Association.
                              Please refer to FHA Guidelines for all Condominium Requirements


 CONDO GUIDELINES
 COMPLETION                   •    All common areas and any recreational facilities are complete for legal phase.
                              •    If completion is in question, obtain the Final Certification of Substantial Completion (FNMA
                                    1081).

                              •    Legal phase of conversion must be complete.
                              •    Additional phasing and add-ons allowed.




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                             •    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 FHA 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 fiduciary concerns.

 UNITS SOLD                  •    51% sold to bona fide purchasers who either have closed or have executed purchase contracts.

 MULTIPLE OWNERSHIP          A maximum of 10% of the total unit may be sold to one party.

 COMMERCIAL USE              Commercial use within the project may not exceed 25% 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 must be addressed by the
 FACTORS                          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.

                             •    The following types of litigation generally pose little or no risk to the project and are acceptable:
                                              o     HOA is suing individual owners for unpaid dues.
                                              o     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.
                                              o     Other suits filed by the HOA that do not impact the value or livability of the
                                                    project.
                             •    The following types of litigation may impact the project's marketability and are generally not
                                  acceptable:
                                              o     HOA 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.
                                              o     Suits filed against the HOA in which the damages exceed or are not covered by
                                                    the HOA's insurance.
                             •    Projects involved in pending litigation (lawsuit has not yet been filed) may be approved when the
                                  risk to the project is assessed and it is determined that:
                                              o     HOA insurance will cover potential damages, OR;
                                              o     HOA is in a position to benefit from the lawsuit.

 DELINQUENT HOA DUES         No more than 15% of the units are delinquent over 30-days on their HOA dues.

 INSURANCE                   •    InterBank Wholesale 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 FHA and Sellers should refer to FHA’s guidelines. See www.hud.gov for
                                  details.

 DEGREE OF DEVELOPMENT       Geographical areas < 25% developed are generally not acceptable for maximum financing.

                             •    Areas between 25% and 75% developed and showing steady growth pattern are acceptable for
                                  maximum financing.

 DEED RESTRICTIONS           Occupancy Restrictions

                             •    Reasonable local, state or federal restrictions on the maximum number of occupants permitted



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                                  to occupy a dwelling unit are acceptable as long as such limitations are applied to all occupants
                                  and do not operate to discriminate on the basis of race, color, religion, sex, national origin,
                                  handicap or familial status.
                                            o    If any restriction is noted in the purchase contract, appraisal, title commitment
                                                  or in the project covenants/restrictions that appears not to apply to all
                                                  occupants, contact InterBank Wholesale Underwriting to determine whether the
                                                  loan is eligible for purchase.
                             Age Restrictions
                             If a housing development has an age restriction, it must comply with one of the following Fair Housing
                             Act exemptions:

                             •    Government Housing Programs
                                            o     The prohibitions against discrimination on the basis of age or familial status do
                                                  not apply with respect to dwellings provided under any State or Federal
                                                  Program specifically designed and operated to assist the elderly or to house
                                                  elderly persons. The Secretary of HUD must determine that the development
                                                  meets this exemption.
                             •    Age Restrictions – 62 years of age or older
                                            o     The prohibitions against discrimination on the basis of age or familial status do
                                                  not apply with respect to dwellings intended for, and solely occupied, by
                                                  persons 62 years of age or older.
                             •    Age Restrictions – Any Age Restriction
                                            o     The prohibitions against discrimination on the basis of age or familial status do
                                                  not apply with respect to dwellings intended and operated for occupancy by
                                                  person 55 years of age or older provided that all of the following apply:
                             At least 80% of the occupied units are occupied by persons 55 years of age or older, and The
                             housing facility or community publishes and adheres to policies and procedures that demonstrate the
                             intent to provide housing to persons 55 years of age or older, and The housing facility or community
                             can provide documentation for verification of occupancy, by means of

                             •    Reliable surveys and affidavits;
                             •    Examples of published written policies and procedures for determination of compliance with the
                                   Act.
                             Documentation Requirements for Age-Restricted Properties

                             •    When it is determined that a housing development is subject to age restrictions, the
                                  Homeowners Association must complete and sign the form Housing Developments Subject to
                                  Age Restrictions (See www.interbankwholesale.com ).
                             •    By signing this form, the association certifies that the housing development is in compliance with
                                   the Fair Housing Act.
                             •    The fully executed form must be included in the underwriting package.

 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 auction(1)
                             •    Properties without a clear title
                             •    Properties with less than 600 square feet
                             •    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 Wholesale. 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.



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 UNDERWRITING THE LAND       •     If the buyer is obtaining mortgage financing to pay-off the land contract, it may be underwritten
 CONTRACT FOR SALE                 as either a purchase or a refinance, under the following conditions provided the borrower
                                   receives no cash at closing. The LTV is the lesser of:
                                               o     The appraised value
                                               o     The total cost to acquire the property, plus allowable closing costs and, if
                                                     treated as a refinance, reasonable discount points.
                             •     If the borrower receives more than $250 at closing, the LTV is limited to 85% of the sum of the
                                   appraised value and allowable closing costs.

 LEASEHOLD ESTATE OVERVIEW   InterBank Wholesale will fund/purchase conventional loans secured by property held in a leasehold
                             estate for certain specific products.
                             See the specific product suite for more details.



                                                     Leasehold Requirements Matrix
                                          Topic                                           Requirements

                                 Market Acceptance            The property must be located in an area in which they are common
                                                              and customary and receive market acceptance.

                                                              •    The appraiser must address this market acceptance.

                                 Real Property                •    The mortgage must cover the property improvements and the
                                                                    leasehold interest in the land.
                                                              •    The leasehold and improvements must constitute real
                                                                    property, be subject to the mortgage lien, and be insured by
                                                                    the lender’s title policy.

                                 Riders                       •    A Leasehold Rider to the Security Instrument is required on all
                                                                   leasehold estates.
                                                              •    It must incorporate a cross-default provision so that a default
                                                                    on the lease is a default on the mortgage.

                                 Title                        •    The title may not make an exception to the leasehold and
                                                              •    It must be an ALTA Leasehold Policy.

                                 Term                         The term of the leasehold estate should run for at least 5-years
                                                              beyond the maturity date of the mortgage loan.

                                                              •    This requirement does not apply if fee simple title will vest in
                                                                   the borrower at an earlier date.

                                 FHA Guidelines               The leasehold must meet the more restrictive of InterBank
                                                              Wholesale/FHA requirements as outlined in the most current
                                                              InterBank Wholesale Broker Guide or FHA Guide (www.hud.gov)

 LOCATION                    InterBank Wholesale does fund/purchase properties in urban, suburban and rural areas to
                             InterBank Wholesale/FHA guidelines.

                             •     InterBank Wholesale 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 Wholesale will accept “true” log homes under the following additional restrictions:

                             •     Contact InterBank Wholesale pricing for special pricing for Log Homes.
                             •     The log home must demonstrate market acceptance.
                             •      The appraiser must provide a minimum of 2 true log homes as comparables within 6-months
                                     marketing time.
                             Note: Homes with “log siding” are not considered “true” log homes and are not subject to these
                             restrictions.




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 LOT SIZE- MAXIMUM ACREAGE      InterBank Wholesale will accept properties that are residential in nature up to 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 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 10 acres may be acceptable, contact underwriting. Pricing
                                       adjustments may apply.

 NEW CONSTRUCTION OR EXISTING   Regardless of market conditions, appraisals for properties located in a new construction subdivision
 CONSTRUCTION LESS THAN ONE     or development must include at least 1 current sale from the subject development/builder and either
 YEAR OLD
                                •    One closed sale from a competing development/builder, or
                                •    One closed sale from the subject development that has closed within 90-days from the date of
                                      the subject property appraisal.
                                •    Maximum LTV is 90% of the lesser of the appraised value or the original sales price.

 MODULAR/ FACTORY BUILT         Factory-built housing must assume the characteristics of site-built housing and be legally classified as
 HOMES                          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.
                                                o    Prefabricated, panelized, or sectional housing units must conform to all local
                                                      building codes in the jurisdiction in which they are permanently located.
                                                o    Modular homes must be built to the state building code requirements of the
                                                     state in which they are to be installed.
                                                o    The Modular home must conform to all building codes, local zoning
                                                     requirements and International Code Council (ICC) building codes.
                                                o    Modular homes are not the same as “manufactured homes” or “mobile homes.”
                                They 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 Wholesale will not fund/purchase Modular/Factory Built homes that are part of a PUD
                                      or condominium.
                                •     InterBank Wholesale Appraisal Requirements:
                                                 o    Marketing time must not exceed 6 months
                                                 o    Appraiser must provide a minimum of 2 similar factory-built comparables

 MIXED USE PROPERTIES           InterBank Wholesale 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.
                                •    In general, the commercial use should not exceed 20% of total gross living area of the property.
                                •    The commercial use should generate a minimal amount of traffic noise.

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

                                •    Properties with minimal outbuildings, such as a 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



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                                                   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.
                                             o     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.
                             •    Properties with the presence of significant outbuildings, such as a large barn, storage areas for
                                  equipment or farm-type animals, or a silo, indicate that the property is agricultural in nature.
                             Regardless whether the outbuildings are assigned value or not, InterBank Wholesale 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.

                             •    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 Wholesale 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 Homeowner’s Association (HOA) for the benefit and use of the individual
                                  PUD units.
                             •    A PUD owner received title to a lot that includes the dwelling.




PROPERTY FLIPPING
 OVERVIEW                    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.
                             •      A flip transaction is evident if the title reveals several changes in ownership in the course of a few
                                    months.
                             •      Flip transactions are ineligible for funding/purchase by InterBank Wholesale.

 CHAIN OF TITLE              For all loans, InterBank Wholesale requires at time of funding/purchase, evidence in the loan file of a
                             minimum 12-month chain of title.
                             •    If the preliminary title or title binder evidence that chain with no indication of flipping, no further
                                  documentation is required.



                                                   If the Title…                                             Then…

                                 Evidence that the seller or the property              InterBank Wholesale considers this property
                                 owner has owned the subject property 3-               ineligible unless the seller has been transferred
                                 months or less                                        and/or must make a job move or the property is
                                                                                       a company relocation or an inheritance.

                                 Evidences that the seller or the property             InterBank Wholesale requires a reasonable
                                 owner has owned the subject property more             explanation for the property turn-over.
                                 than 3-months but less than 12 months

                                 Evidences that the seller has owned the               InterBank Wholesale does not require additional
                                 property a minimum of 12 months                       documentation

                                 Notes: If, in InterBank Wholesale’s opinion, the property value is artificially inflated, InterBank
                                 Wholesale reserves the right to refuse funding/purchase of the loan.



 UNDERWRITING REQUIREMENTS   Conventional loans:
 FOR PURCHASE TRANSACTIONS
                             •   InterBank Wholesale requires a 6-month chain of title, showing the property seller’s name on the
                                  current title.



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                                            •    InterBank Wholesale does not allow double escrows.



 RED FLAGS                                  InterBank Wholesale has identified the following as “red flags” that may indicate a property flip:
                                            •     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 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 Wholesale will review loans prior to funding/purchase for the indicated red flags.




*InterBank Wholesale 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 program. By submitting a loan to InterBank Wholesale, the Broker warrants that the loan is in
full compliance with all regulatory requirements




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CHAPTER 6:                   RESERVED FOR FUTURE USE




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CHAPTER 7:                   CLOSING
GENERAL INSTRUCTIONS            The Broker Closing Department will provide closing documents to closing agents/attorneys. InterBank
                                Wholesale Correspondent Funding Broker Fulfillment (InterBank Wholesale) at its discretion may utilize a
                                third party document preparation vendor to prepare closing documents.
                                Closings must be scheduled with the Loan Coordinator forty-eight (48) hours prior to closing. Loans must
                                be approved and all prior to closing conditions must be cleared before closing documents are released.
                                This forty-eight (48) hour notice applies to refinances as well as purchases.
                                Loans that are re-scheduled, postponed, or modified (e.g., change in program, mortgage amount, term,
                                etc.) less than forty-eight (48) hours prior to closing may be subject to a re-draw fee and will have to be
                                within MDIA compliance. Please see Compliance, Chapter in this Wholesale Broker Guide.
                                The following outlines InterBank Wholesale's requirements for all loan closings. Please review each item
                                carefully and contact the designated InterBank Wholesale closer with any questions or problems.


RATE LOCK AT CLOSING            The loan must have a correct, valid rate lock to be scheduled for closing. All of the loan terms must be
                                identical to those completed online via the Web site at www.InterBankWholesale.com.


SCHEDULING                      The Broker must contact the InterBank Wholesale's Processing Unit to schedule a loan closing and fax the
                                completed InterBank Wholesale's Broker Lending Settlement Request form (see InterBank Wholesale
                                Forms Library on our website). InterBank Wholesale's Closing Unit will confirm scheduled closings with the
                                Closing Agent.


PRE-CLOSING QUALITY CONTROL     Prior to loan closing, InterBank Wholesale completes a quality control checklist. At this time, a verbal
                                verification of employment (VOE) is obtained, and the file is reviewed. If either of these inquiries results in
                                conflicting information, the Broker will be advised of any necessary changes as a result of the new
                                information.


DOCUMENTATION REQUIREMENTS      •    Broker Fee/Settlement Request Form
                                •    Escrows
                                •    Hazard Insurance
                                •    Flood Insurance (if applicable)
                                •    Mortgage Insurance (if applicable)
                                •    Tax Record Information Sheet
                                •    Insured Closing Letter / Closing Service Letter
                                •    Title Commitment
                                •    Power of Attorney (if applicable)
                                •    Wiring Instructions or Check Payee Instructions (as applicable)
                                •    Documentation to clear all underwriting, appraisal and closing conditions

COMPLIANCE REQUIREMENTS         1.   Communicate Credit Decisions

                                     o    It will be the sole responsibility of the Broker to communicate credit decisions and loan terms and
                                          conditions to the borrower.
                                2.   Broker Closing Request Form

                                     o    The Broker Closing Request form must be completed by the Broker for every loan closing. The
                                          Broker Closing Request form provides the InterBank Wholesale closer with all of the fees, the title
                                          company information, and the terms associated with the loan. It is extremely important for the
                                          Broker to provide accurate information. The Broker is required to sign and date the Broker
                                          Closing Request form. If any changes to the document occur, InterBank Wholesale must be
                                          notified immediately. A revised signed and dated Broker Closing Request form must be
                                          resubmitted by the Broker.

                                     o    This form is sent to the Broker for completion when the loan is approved, CLEAR TO CLOSE.
                                3.   Escrows
                                     o    Sufficient escrows should be collected to comply with the aggregate escrow accounting method
                                          and state regulations regarding cushions.
                                     o    InterBank Wholesale will collect escrows as calculated using the aggregate analysis method with
                                          a two (2) month cushion, unless a lower cushion is required by state law. In the case of a
                                          refinance, a sufficient amount of escrow is required to be collected to enable payment of the full
                                          year premium when due.
                                     o    The escrow waiver option (taxes and insurance) must be established at the time of registration



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                                      and is subject to the following eligibility requirements:
                                           Primary residence and second homes
                                           Minimum representative credit score 620
                                           LTV of 80% or less, unless mandated by state law (maximum LTV is 90% in California ).
                                           Borrowers must qualify with a payment amount including an estimate of monthly taxes and
                                           insurance.
                                           Provide evidence of a one (1) year prepaid hazard / flood insurance policy at closing.
                                           Escrow waiver consent form where state law requires (must be signed at closing).
                                           Loans receiving an Expanded Approval decision are NOT eligible for an escrow waiver
                                           Investment properties
                                           70% LTV or less
                                           Minimum representative credit score 700
                                           Minimum cash reserves 6 months PITI with 33/38 ratios
                                  o   Please note that a reduction in price will be assessed to all loans utilizing this option.
                             4.   Property Insurance Requirements
                                  o   The following guidelines apply to both Hazard Insurance and Flood Insurance.
                                      Insurance Carriers
                                                 The insurance company must have one of the following:
                                                      •    A "B" or better general policy holder' rating in Best's "Insurance Reports";
                                                           or
                                                      •    A "6" or better financial performance index rating in Best's "Insurance
                                                           Reports"; or
                                                      •    An "A" or better rating in Demotech's Hazard Insurance Financial Stability
                                                           Ratings"; or
                                                      •    A "BBBq" qualified solvency ratio rating by Standard and Poor's Insurer
                                                           Solvency Review"; or
                                                      •    A "BBB" or better claims-paying ability rating by Standard and Poor's
                                                           Insurer Solvency Review".
                                      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 Wholesale does not require the borrower, on a refinance, to
                                                 purchase a new policy as long as the expiration date is no less than sixty (60) days
                                                 from date of settlement. 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 Wholesale 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 one (1) year. Policies with terms of three (3)
                                                 years are acceptable.
                                      Mortgagee Clause
                                                 The mortgagee clause on all first and second mortgage policies, binders, and
                                                 certificates of insurance must show InterBank Mortgage as the mortgagee using the
                                                 following language:
                                                 InterBank Mortgage Company, Its Successors and/or Assigns
                                                 3200 Doolittle DR
                                                 Northbrook, IL 60062
                                      Coverage on Condominium Units
                                                 A Certificate of Insurance covering the condominium development is required.
                                                 Coverage must cover 100% of the insurable replacement cost of the project
                                                 improvements including the individual units in the project. When the property is a
                                                 condominium and the property insurance is included in the association fee,
                                                 InterBank Wholesale still requires 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.
                                                 HO-6 Policy: InterBank Wholesale requires insurance on the contents and will
                                                 escrow for contents insurance. If the association has not secured flood insurance,
                                                 the individual borrower must also obtain insurance on their unit.
                             5.   Hazard Insurance
                                      The Broker must provide proof of hazard insurance policy (or, where required by state law,




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                                      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:
                                           o     100% of the insurable value of the improvements; or
                                           o     The original loan amount, as long as it equals at least 80% of the insured value of the
                                                 improvements; or
                                           o     “100% replacement cost” coverage (where required by state law).
                                      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 six (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:
                                           o     On conforming loans, the maximum deductible is the greater of $1,000 or 1% of the
                                                 dwelling coverage.
                                           o     On nonconforming loans, the maximum deductible is the lesser of $1,000 or 1% of
                                                 the dwelling coverage.
                                      Evidence of Insurance
                                      When permitted by state law, InterBank Wholesale will require the policy with a paid receipt for
                                      the first year's premium prior to or at closing. Otherwise, InterBank Wholesale requires a binder
                                      with a paid receipt prior to or at closing.
                                      Evidence of insurance must include:
                                           o     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 Wholesale may accept the original documentation at closing, InterBank
                                      Wholesale must receive a copy of the policy or binder prior to preparing the closing documents.
                                      It is necessary to ensure that InterBank Wholesale has:
                                           o     A policy that is in effect
                                           o     Sufficient coverage
                                           o     A correct mortgagee clause
                                           o     The correct premium to calculate escrows
                             6.   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
                                      InterBank Wholesale will provide Standard Flood Hazarad Determinations w/Life of Loan
                                      Contracts for all broker loans. 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:
                                           o     Flood insurance is mandatory and evidence of such insurance must be provided if
                                                 any of the property improvements lie in Flood Zones A, Al-A30, AE, AH, AO, A-99, V,
                                                 V-30, VE, VO, M, or E.
                                           o     Flood Insurance is not required if the subject property is in Flood Zone B, C, D or X,
                                                 or is part of the property in a designated flood area, but the property improvements
                                                 are not.
                                           o     The minimum amount of flood insurance coverage is the lesser of:
                                                             The loan amount; or
                                                             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 Hazarad
                                      Determination identifies the property as being in flood zone "A" or "V".




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                                        The flood hazard area designation is determined through InterBank Wholesale's Standard Flood
                                        Hazarad Determination vendor. InterBank Wholesale notifies the broker when flood insurance is
                                        required on a loan as a condition of approval.
                                        Deductible
                                        The maximum deductible under the program is:
                                             o     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 PUD's).
                                        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 Wholesale 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 Wholesale when issued.
                             7.    Mortgage Insurance (MI)
                                        InterBank Wholesale will obtain Mortgage Insurance (MI) coverage for loans with LTV's 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. InterBank Wholesale will collect premiums as required by the mortgage insurance
                                        commitment.
                             8.    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 that InterBank Wholesale 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.
                             9.    Insured Closing Letter / Closing Service Letter / Closing Protection Letter
                                        InterBank Wholesale requires that an insured closing letter or closing service letter be issued for
                                        the specific agent who will be closing the loan. The insured closing letter or closing service letter
                                        is to reference InterBank Wholesale and the title agent or attorney closing the loan. The insured
                                        closing letter must be issued by the same title insurance company that will be issuing the final
                                        title policy for the loan. InterBank Wholesale will only disburse funds to approved settlement
                                        agents. The closing protection letter must be specific to the loan transaction. In New York and
                                        Texas , InterBank Wholesale will utilize its own closing attorneys.
                                        In states where it is common practice for closings to be conducted by an attorney, InterBank
                                        Wholesale will require an approved attorney's letter from the title insurance company
                                        indemnifying InterBank Wholesale for the acts of the attorney. This letter serves the same
                                        purpose as the closing protection letter. In attorney closing states where these letters are not
                                        issued, InterBank Wholesale will require a copy of the attorney's errors and omission insurance
                                        (E&O). The E&O is a form of insurance that covers liabilities for errors, mistakes and negligence
                                        at the time of closing.
                                        In escrow states, it is common for the title company to disburse funds. Escrow companies may
                                        be approved to disburse InterBank Wholesale's funds. InterBank Wholesale will require a copy
                                        of the escrow company's E&O policy. InterBank Wholesale requires E&O coverage in at least
                                        the amount of the loan, but not less than $1 million. Any exceptions to these coverage amounts
                                        must be approved prior to scheduling closing.
                                        All closing agents are expected to comply with InterBank Wholesale's closing instructions and
                                        return final/recorded documents within 120 days of loan closing.
                             10.   Title Insurance Coverage
                                        The Broker is responsible for ordering title insurance. The title commitment cannot be over sixty
                                        (60) days old. InterBank Wholesale and the borrowers are to be the proposed insured. The
                                        property address/legal description must be the same as the loan. InterBank Wholesale requires
                                        all standard ALTA/CLTV endorsements as required. Coverage amounts for first liens must be
                                        equal to the loan amount.




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                              11.   Power of Attorney
                                         A Power of Attorney is acceptable for the signing of loan documents, as long as the following
                                         conditions are met:
                                               o     Must be a specific power of attorney, which references the transaction and the
                                                     property address.
                                               o     Must be executed prior to signing the loan documents.
                                               o     Signature of Power of Attorney must be complete and on each document.
                                               o     InterBank Wholesale Closing Department must approve the power of attorney prior to
                                                     the loan closing.
                                               o     Title Company must be willing to insure the transaction without taking exception to
                                                     the Power of Attorney.

LOANS CLOSING IN TRUST        Loans closing in trust, either a Land Trust or an Inter Vivos Trust, must be approved by InterBank
                              Wholesale prior to closing. Trust agreements should be contained in the credit file when loan is submitted
                              for underwriting . At the current time, Interbank Wholesale will only consider Land Trusts from and within
                              the State of Illinois.


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”:

                              •     The “Deed of Trust” that transfers the title from the beneficiary to the trustee and;
                              •     The “Trust Agreement” that states the rights and power of direction.
                              Eligibility Requirements
                              Illinois Land Trusts are acceptable under the following conditions:

                              •     Conforming conventional fixed rate and ARM’s. Other products may permit; see the individual,
                                    products within the product suites for details.
                              •     AUS underwriting only with Approve/Eligible or Accept.
                              •     Owner occupied.
                              •     All beneficiaries are individuals;
                              •     The borrower must be one of the primary beneficiaries of the trust.
                              •     The trustee must be a corporation or financial institution (no exceptions) currently in the business of
                                    acting as trustee under Illinois Land Trusts.
                              •     The beneficiaries must have sole power of direction over the land trust and trustee.
                              •     All beneficiaries are obligated as individuals under the terms of the Note.
                              •     The borrowers have been underwritten and are qualified borrowers under the requirements of the
                                    product.
                              •     The term of the trust agreement is at least as long as the term of the security instrument.
                              •     Legal title to the property must be held in the name of the trustee on behalf of the land trust and may
                                    not be other owners.
                              •     The title insurance policy must ensure full title protection, and must indicate that title to the subject
                                    property is vested in the name of the trustee.
                              •     The policy may not list any exceptions with regard to the trust or the trustee. The title company must
                                    have received a copy of the trust.


INTER VIVOS REVOCABLE TRUST   InterBank Wholesale will fund loans subject to an inter vivos (living) trust as permitted by the applicable
(IVRT)                        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.
                              Inter Vivos Revocable Trust are permitted and accepted as “borrower and property owner” under the
                              following requirements:

                              •     In compliance and valid with state law.
                                               1.   An IVRT that is established and recorded in one state may not be applicable under
                                                    the laws of another state.
                                               2.   If the IVRT is not established in the same state as the subject property, the Attorney’s
                                                    Opinion Letter must state that, under the laws of the property state, the IVRT and the
                                                    trust documents are valid and enforceable. If an institutional trustee has been
                                                    appointed, that the Trustee is in fact authorized to act as Trustee.
                              •     Established by a natural person, as opposed to a legal entity.
                                               3.   It may be established by one individual or jointly by more than one individual.
                              •     Trustee must have the power to mortgage the security property.
                              •     Each individual establishing a Trust is a Trustor/Grantor/Settlor/Donor (the Settlor); the terminology
                                    used will depend upon the applicable state. Additionally, if no institutional trustee was appointed, this



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                                  same individual/Settlor must be a Trustee.

ELIGIBILITY REQUIREMENTS     •    Single Family, Primary Residence or Second Homes only.
                             •    At least one of the Settlor’s must be a borrower.
                             •    At least one of the Primary Beneficiaries must be a borrower and a Settlor.
                             •    At least one of the Primary Beneficiaries who is a borrower and a Settlor has reserved the right to
                                  Revoke, Alter, or Amend the Trust during his/her lifetime.
                             •    At least one of the individuals/Settlor must be the Primary Beneficiary and an occupying borrower
                                  whose income or assets were used to qualify for the loan.
                             At least one of the Trustees must be a Primary Beneficiary, borrower, and Settlor
                             Eligibility Requirements (Continued)

                             •    Full title must be vested in the trustee(s); no other owners.
                             •    Title exceptions with respect to the trust are not permitted.
                             •    Underwritten as if the individual(s) establishing the trust were the borrower(s).

INTERBANK FEES               •    Brokers should refer to the fee schedule provided with the Broker Agreement or reference the Broker
                                  Fee Schedule announcement via the secured Broker Bulletin Board at www.InterBankWholesale.com.
                             •    InterBank Wholesale fees will be netted from the wire / check on every broker loan.

FAXING LOAN DOCUMENTS AT     All loan documents at closing should be original documents. If a correction is needed at the closing table,
CLOSING                      certain documents may be faxed or mailed to the closing agent. A re-draw fee may be assessed if the
                             change was not due to a InterBank Wholesale error.

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

CORRECTIONS ON LOAN          It is InterBank Wholesale's intention to provide accurate closing documents. However, situations may arise
DOCUMENTS                    when a document(s) needs to be corrected. If this occurs, the closing agent must contact the InterBank
                             Wholesale Closer. At no point is the closing agent, broker, borrower, or any other party to make corrections
                             on the original closing documents without InterBank Wholesale's authorization. Unauthorized corrections
                             may result in invalid loan documents, which will require the borrowers to resign the documents or re-close
                             the entire loan.

CANCELLATION OF CLOSING      If for any reason the loan does not close, the InterBank Wholesale Closing Department must be notified
                             immediately for further instructions.

QUESTIONS                                                                 1-847-239-7272
                                                                    www.InterBankWholesale.com




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 CHAPTER 8:                  FUNDING
 FUNDING CONDITIONS             Purchase Money Transactions and Refinances Secured by Second Homes and Investments
                                Properties


                                 For funding on purchase loans and refinances on second home and investment properties, the following
                                conditions must be met:


                                •    All closing conditions must be cleared. The closing agent/attorney is responsible for faxing all “Prior
                                     to Funding” conditions as well as the final HUD-1 to the InterBank Wholesale Closing Department
                                     for approval.
                                •    The closing agent/attorney must receive a verbal approval from InterBank Wholesale to release
                                     funds.

                                NOTE : All closing packages for purchase transactions and refinances on second homes and
                                investment properties must be returned 24 hours after the loan closes. The original closing
                                conditions must be included with the package. After the package is received, a final audit is
                                performed on the closing package. If there are any issues, documents may have to be re-signed
                                resulting in a re-draw fee.

 REFINANCE LOANS                In order for a refinance loan secured by a primary residence to fund on the scheduled date, the following
                                conditions must be met:


                                •    The original, signed closing documents must be returned 24 hours after the loan closes. If the
                                     package is not received by InterBank Wholesale in the 24-hour time frame, the loan may not fund
                                     on the scheduled day. InterBank Wholesale must approve any exceptions.
                                •    All closing conditions are to be returned with the original closing package. The closing conditions
                                     are reviewed and cleared (if applicable) by the InterBank Wholesale.
                                •    All of the loan documents must be signed exactly as stated, with no unauthorized corrections made
                                     to the documents.

                                InterBank Wholesale will perform a final audit on the original closing documents. At this point, InterBank
                                Wholesale checks the entire package for accuracy. If the closing documents are not acceptable, the
                                closing agent is contacted. Depending on the issue, documents may have to be re-signed. This may
                                result in a re-draw fee charged.

 RIGHT TO CANCEL                On refinance loans of primary residences, the borrower(s) have the right to cancel the transaction within
                                the three (3) day rescission period. If the borrower(s) wishes to cancel, the Notice of Right to Cancel
                                document must be signed and faxed to the InterBank Wholesale Closing Department, with the original
                                following in the mail. The closing agent/attorney is responsible for verifying that InterBank Wholesale is
                                aware of the borrower(s) decision to cancel. The rescission period cannot be waived.
                                Please note that the rescission period starts once the last of these events occurs:

                                •    The borrower signs the Note.
                                •    The borrower receives the final TIL.
                                •    The borrower receives the Notice of Right to Cancel.

                                A delay in any of these events or a change in terms affecting the Note or TIL may delay funding the loan.

 FUNDING INSTRUCTIONS           InterBank Wholesale's preferred method for funding disbursements will be Fed Wire. The Broker and
                                closing agents/attorneys are responsible for providing the funding department with correct wiring
                                instructions. Each individual loan is required to have its own set of wiring instructions. InterBank
                                Wholesale will not accept Fed Wire instructions via telephone. These instructions are required to be
                                signed and completed by authorized personnel of the title agent and approved by InterBank Wholesale.


                                Written instructions must be included with the original signed closing package if not previously provided.
                                Funds are wired on the day of disbursement. InterBank Wholesale cannot be responsible for receiving
                                bank policies on applying wire funds at designated times of the day. InterBank Wholesale can, however,
                                provide confirmation of all wires using a "fed wire" reference number.

 DELAYS IN FUNDING              Rate locks are required to be valid until the day of funding . If a loan does not fund on the scheduled
                                funding date or the rate lock expires before the loan funds, the interest rate must be extended or re-
                                locked.




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 POST FUNDING ADJUSTMENT     A post funding adjustment may be a refund of monies owed to you or InterBank Wholesale due to
                             payment issues, pricing errors, and escrow impounds.
                             When faxing or e-mailing InterBank Wholesale, all supporting documentation must be included in order
                             to ensure a timely response. Failure to do so will further delay your request.

 REQUESTING A POST FUNDING   When requesting a post funding adjustment:
 ADJUSTMENT
                             1.   Complete the Request for an Adjustment to Purchase Advice form (see Forms Library).
                             2.   Forward the request form and documentation accordingly to InterBank Wholesale (see “Fax
                                  Information” or “E-mail Information” below).

 E-MAIL INFORMATION          For your convenience, you may e-mail supporting documentation to this address:
                             closing@interbankwholesale.com

 POST FUNDING ADJUSTMENT     Should you have specific questions in regards the status of a pending Request for an Adjustment to
 TEAM MEMBERS                Purchase Advice form request, you may contact a Post Funding Adjustment Team member at 847-239-
                             7272

 QUESTIONS                                                             1-847-239-7272
                                                                 www.InterBankWholesale.com




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