Outline for Seller's Guide by wanghonghx

VIEWS: 57 PAGES: 219

									                Icon Residential Lenders Lending Guide
                           Table of Contents


Section 100                  Introduction

Section 200                  Philosophy

Section 300                  Broker Eligibility/Broker Approval

Section 400                  Submission Process

Section 500                  Icon’s IQ System

Section 600                  General Underwriting Guides

Section 700                  Mortgage Insurance

Section 800                  Lock Policy

Section 900                  Funding/Closing

Section 1000                 Compliance

Section 1100                 QC

Section 1200                 Forms




Icon Lending Guide – Table of Contents                            Revised 05/06/11
100 - Introduction

Icon Residential Lenders, LLC (Icon) are mortgage service providers whose objective is to
provide customers a variety of competitive lending programs while maintaining the highest quality
loan standard and providing excellent customer service. Created on the belief that our people are
our greatest asset and our clients deserve the very best in terms of effort, care, and intellectual
capacity while staying focused on results. Icon does business across the country in all states
except Alaska and U.S. territories.

This guide is intended to provide Icon’s standard requirements and policies and procedures. The
material in this guide is organized in chapters and then divided sections and subsections. This
guide contains a Table of Contents, policies, procedures and forms.

Icon may issue written updates to the guide for important policy and procedure changes, and
new/revised loan programs. It is the customer’s responsibility to review and comply with all
updates and changes to this guide.

Announcements will be communicated to Icon’s staff. Brokers will be notified through their Icon
Account Executive. All announcements are posted on Icon’s website for reference. The
information contained in the announcement thereby becomes a part of this guide.

Icon’s website is accessible at www.iconwholesale.com. Users do not require a username or
password. Icon’s website provides users quick access to the tools and references for
successfully doing business with Icon. Included on the website are Icon’s contacts, Icon’s
Lending Guide, announcements, rate sheets, forms, Icon’s approved partners, information on DO
Sponsor and Icon IQ.

Icon IQ allows customers to conduct business with Icon electronically. Customers can review
their pipeline, price loans, compare programs, register loans and upload loans and conditions.

Icon’s Account Executives are available for questions regarding pricing, program guidelines, loan
scenarios, and web support.

Icon’s knowledgeable and experienced operations staff is dedicated to helping the broker meet
their borrower’s needs. The operations team can assist with questions concerning specific loan
information, status, turn times, etc. The operation team is available from 8am to 5pm PST.

Icon reserves the right to make changes to this guide without notice.




Icon Lending Guide – Section 100                                                    Revised 06/15/10
200 – Philosophy

Icon’s business objective is to lead the mortgage industry with motivated, streamlined processes
that leverage existing relationships, while maintaining profitable, sustainable and controlled
growth. Icon focuses on building a lending entity with the best service levels and customer
experiences, supported by competitive pricing and products.

Icon strategy continually develops and implements unique synergies and competencies to build
profitability and keep costs low. Icon strives to make the loan process one of the easiest in the
business. Icon creates client relationships of enduring value using high-touch personalized client
service. Furthermore, Icon provides highly competitive loan programs that strongly communicate
to our clients that we are here to offer a unique partnership that will allow our clients to achieve
the best execution with exceptional customer service.

Icon’s Risk Management focuses on execution, efficiencies, cost controls and exit strategy. We
begin with the end in mind, and doing business in a new way, implementing unique strategies that
capitalize on the evolution of the mortgage industry. Competitive loan programs are a necessity
to retain market attention. Competitive pricing and loan programs focused on the needs of our
clients is a key to long-term success. The ability to respond promptly to the market changes and
client request/input is crucial.

Icon strives to be on the pinnacle of change. We are proactive versus reactive. Icon studies
current value drivers closely, anticipates change and transforms the operating models and
business architectures accordingly. Icon believes that today’s innovative lender must have the
capability to transform business performance by increasing the value of the customer franchise,
by lowering operating costs and increasing customer loyalty through competitive pricing
supported by exceptional customer service standards.

By designing flexible business arrangements, Icon has positioned itself for the future. Icon builds
relationships based on value added services to the client with technology, reporting capabilities,
production and execution.

At Icon, we focus on building a relationship driven business, not a transaction driven business.
We are committed to building long lasting partnerships with our direct customers, vendors, and
investors. Building strong relationships is the key to Icon’s success

With fresh, forward thinking, individually centric, ultimately unique customer experiences, Icon will
become the best example of lending in the mortgage banking industry.




Icon Lending Guide - Section 200                                                      Revised 12/11/09
                    Section 300 - Broker Eligibility/Broker Approval

                                    Table of Contents

300 – Introduction
301 – General Eligibility Requirements
302 – New Application Document Requirements
302.01 Submission Requirements for Conforming Programs Broker Approval
302.02 Submission Requirements for FHA Broker Approval
302.03 Submission Requirements for VA Authorized Agent
303 – Notification of Change
303.01 What to Submit
303.02 When to Submit
304 – Regulatory Compliance
305 – Annual Recertification
306 – Quarterly Evaluations
307 – Quarterly Reviews for FHA Originators
308 - Audits
309 – Availability of Records




Icon Lending Guide – Section 300                                         Revised 5/6/11
         300       Introduction

         Mortgage Brokers who wish to participate in the Icon Residential Lenders, LLC (“Icon”) Wholesale
         Lending Program must meet the eligibility requirements that are described in this Lending Guide.

         301       General Eligibility Requirements (Conventional)

         The Broker must meet the requirements stated below, unless such requirements are waived by
         Icon, in order to participate in the program:

          Experience               The Management Staff of the Broker will be reviewed for
                                   demonstrated knowledge, expertise and experience in the mortgage
                                   field.

          Standards                The Broker must follow generally accepted mortgage lending
                                   practices with respect to its loan origination activities.

          Net Worth*               $25,000 in accordance with generally accepted accounting principles.

          Legal                    1) The Broker must be duly organized, validly existing, and in good
          Standing                    standing under the laws of the jurisdiction of its organization.
                                   2) The Broker must be qualified to transact business and properly
                                      licensed in each jurisdiction where it originates mortgage loans.
                                   3) The Broker must be in good standing with all applicable
                                      regulatory authorities and not subject to any actions, sanctions, or
                                      extraordinary supervision of its operations.
                                   4) The Broker must have the power and authority to enter into and
                                      comply with all of the terms of the Broker Lending Agreement
                                      (including the terms and conditions of this Wholesale Lending
                                      Guide), and the Broker must execute such Agreement.
                                   5) The Broker’s compliance with the terms and conditions of the
                                      Broker Lending Agreement and this Wholesale Lending Guide will
                                      not violate any provisions of its articles of incorporation, charter or
                                      by-laws or any other instrument relating to the conduct of its
                                      business, the ownership of its property, or any other agreement to
                                      which it is a party or to which it is bound.

          Maintaining              The Broker must continue to meet the Eligibility Requirements
          Eligibility              described in this Section to maintain its eligibility and approval to
                                   participate in the Icon Wholesale Lending Program. Subsections 303,
                                   304, 305, and 306 provide details on the review process, and audit
                                   and record availability requirements.

          Compliance               The Broker must do business in a manner consistent with FNMA’s
          With Laws                lending policies, as set forth in FNMA’s Selling Guide, Part A, Subpart
                                   A3, Chapter A3-2-01 and A3-2-02. (You may access FNMA’s Selling
                                   Guide at www.efanniemae.com).

          Icon may request evidence of the Broker’s compliance with each of these
          eligibility criteria at any time.
          * Net Worth Requirements: Each Broker must have a minimum net worth of $25,000 in
          accordance with generally accepted accounting principles. Exceptions to this standard
          may be considered on a case-by-case basis subject to Senior Management Approval.

Icon Lending Guide – Section 300                                                                    Revised 5/6/11
         302      New Application Documentation Requirements

         302.01 Submission Requirements for Conforming Programs Broker Approval

         Brokers requesting approval to participate in the Icon Conforming Programs must submit the
         following documents. An approved signatory of the company must execute all documents.
                  Completed Broker Application.
                  NOTE: Federally regulated institutions are exempt from providing social security
                        numbers.
                  Completed Broker Lending Agreement. Any changes or alterations must be approved by
                  Icon Senior Management.
                  Corporate Resolution or LLC Operating Agreement or Articles of Organization.
                  Executed Loan Fraud Zero Tolerance Policy Acknowledgement
                  Resume for all officers and key personnel with > 10% ownership. Federally regulated
                  institutions are exempt from the resume policy.
                  Executed W-9.
                  QC plan.
                  Current financials that include an Income Statement and Balance Sheet:
                       The Income Statement and Balance Sheet must be from the most recent six (6)
                       months. If the YTD information does not cover the most recent six (6) months the
                       prior years Income Statement and Balance Sheet will be required.
                       When reviewing the net worth of the broker, Icon will consider the quality of the
                       assets that are listed on the Balance Sheet. Items such as artwork, vehicles, etc.
                       may be excluded from the net worth calculations if they represent a significant
                       percent of the capital.
                  Copies of broker licenses for all states of licensure or First Line Data Confirmation of
                  Licensing.
                  Signed DU User Agreement
                  Signed IQ Set-up form.

         Icon reserves the right to require additional documentation and/or information as it deems
         necessary.
         Brokers must submit their completed Broker Application package to their Account Executive.




Lending Guide – Section 300                                                                           5/6/11
         302.02 Submission Requirements for FHA Broker Approval

         Brokers requesting approval to participate as an FHA broker with Icon must meet the following
         requirements:
                  Broker must currently be an approved broker or be in the process of approval with Icon.
                  The broker must submit a completed FHA Sponsorship Request Form. Brokers may
                  obtain the FHA Sponsorship Request Form from Icon’s website or from their Account
                  Executive.
                  Brokers that are currently approved as a Full Eagle broker must submit their FHA
                  Originator ID number and Q.C. plan
                  Brokers who were previously approved as an FHA Mini-Eagle broker are required to
                  submit their previous FHA ID number and their Q.C. plan.
                  Brokers without prior FHA experience are required to submit the following along with the
                  FHA Sponsorship Request Form:
                       Training Certificate (requirements detailed on the FHA Sponsorship Request Form),
                       or
                       Processor resume indicating two years experience, or
                       Copies of non-mini eagle approval letters/email indicating approval to submit FHA
                       loans from two other wholesale lenders.
         Icon reserves the right to require addition documentation and/or information as it deems
         necessary.
         Brokers should submit their completed FHA Broker Application package to their Account
         Executive.

         302.03 Submission Requirements for VA Broker Approval

         Brokers requesting approval to participate as a VA broker with Icon must meet the following
         requirements:

                  Broker must currently be an approved broker or be in the process of approval with Icon.
                  Broker must submit a completed VA Authorized Agent Request Form to Icon along with
                  the following:
                       Brokers VA Approval Letter
                       A check for $100.00 made out to the Department of Veterans Affairs (not required if
                       requesting approval to submit VA IRRRL transactions only). This is an annual fee
                                                             st
                       that expires each year on December 31 .
                       NOTE:    The VA fee is required per request. (e.g. a request for the corporate office
                                plus any number of branches would require a $100.00 fee. If a separate
                                request is made for additional branches another $100.00 fee would apply).
         Icon reserves the right to require addition documentation and/or information as it deems
         necessary
         Brokers should submit the above documentation to Icon’s Client Administration department.




Lending Guide – Section 300                                                                          5/6/11
         303      Notification of Change

         303.01 What to Submit

         The Broker must notify Icon, in accordance with the requirements of the Broker Eligibility section
         (Section 301) of the Icon Wholesale Lending Guide, of any changes to the information described
         below.
                  Name, address, management, affiliates, insurance claims or modifications, or a change
                  not covered elsewhere.
                  Merger, acquisition, transfer of stock, transfer of assets to non-Icon approved entities,
                  merger or acquisition of your parent, related servicing relationships.
                  Regulatory actions, management actions, judgments, and new or terminated business
                  relationships.

         Notification of changes submitted by the broker does not constitute approval of the change, and
         Icon reserves the right to require additional information.

         303.02 When to Submit

         Broker must submit the required notification of change no less than 75 days prior to a proposed
         transfer of assets without accompanying liabilities to an entity that is not Icon-approved OR
         assets of a Mortgage-related function without the transfer of accompanying liabilities to an entity
         that is not Icon-approved.

         304      Regulatory Compliance

         The Broker agrees to notify Icon of any suspension, sanction, or disciplinary action taken against
         it by FNMA/FHLMC, GNMA, and/or HUD/VA, or any other federal, state or local governing
         authority within five business days of notification to the Broker.

         The Broker warrants that ongoing compliance with all applicable governing laws, rules and
         regulations, including but not limited to the following:
                  Real Estate Settlement Procedures Act (RESPA)
                  Fair Credit Reporting Act (FCRA)
                  Fair Housing Act
                  Fair Lending Act
                  Truth-in-Lending Act
                  Consumer Protection Act
                  Home Ownership and Equity Protection Act
                  Equal Credit Opportunity Act (ECOA)
                  Home Mortgage Disclosure Act (HMDA)
                  Patriot Act of 2001
                  Mortgage Disclosure Improvement Act of 2009 (MDIA)
                  Appraiser Independence Requirements

Lending Guide – Section 300                                                                           5/6/11
         305      Annual Recertification
         Each year, on or before the broker’s approval date, Icon will issue a Recertification Letter and the
         broker must deliver the following documents, in addition to any additional documentation
         requested in the letter, to Icon for annual review:
                  Annual Broker Recertification Form
                  Updated licenses for all states in which the broker is originating loans or First Line Data
                  report with the same verifications.
                  Updated financials
                  Updated resumes if change in management
                  MARI update
                  QC plan.
                  Google search update
         Brokers should submit their completed annual review package to their Account Executive within
         15 days of the receipt of the Recertification Letter. Failure to provide the requested
         documentation will result in deactivation.

         306      Quarterly Evaluations
         Quarterly, Icon reviews or evaluates the performance of its approved brokers. Brokers with low
         pull-through or who have low production may be deactivated. If a broker is deactivated for low
         volume or pull-through rates, the broker is eligible to reapply with Icon after 3 months. A new
         Broker Application Package will be required.

         307      Quarterly Reviews for FHA Originators
         Each quarter Icon will run a Neighborhood Watch Delinquency report on brokers who submit FHA
         loans to Icon to ensure the loans meet Icon’s guidelines. Brokers not meeting Icon’s guidelines
         will be deactivated.

         308      Audits

         Icon or its appointed agent may audit the Broker’s mortgage loan origination operations, and
         examine the books and records relating to any mortgage loan received by the Broker and funded
         by Icon. The Broker will facilitate such audits and provide Icon or its agent access to the Broker’s
         office, books, and records at reasonable times during the Broker’s normal business hours.




Lending Guide – Section 300                                                                            5/6/11
         309      Availability of Records

         All Brokers are required to respond promptly to any request for documents or records that Icon
         may require pertaining to the business dealings between the Broker and Icon. A failure to
         respond in a timely manner to such requests will cause Icon to conclude that the Broker cannot
         produce such documents, in accordance with all agreements in effect between the Broker and
         Icon at the time of loan funding, or the current agreement(s) in effect at the time of the request. In
         such cases Icon will take appropriate actions based on the Broker’s inability to produce the
         requested documentation, including mortgage loan repurchase and/or suspension of the Broker’s
         approval Status.
         In the event that Icon is required to take legal action to obtain access to contested documents or
         records, the Broker will be liable for any legal fees, costs, and other related expenses that are
         incurred in enforcing their rights of access.




Lending Guide – Section 300                                                                            5/6/11
      Section 400 – Loan Submission & Submission Standards

                                   Table of Contents


400 – Loan Submission

401 – Submission Standards
401.01 Regular Submission Standards
401.02 FHA Submission Standards
401.03 VA Submission Standards

402 – Mortgage Disclosure Improvement Act (MDIA)

403 – IQ Submissions

404 – Additional Submission Requirements




Icon Lending Guide – Section 400                         1/19/11
400 – Loan Submission

Brokers have the option to submit loans to Icon for underwriting via e-mail, fax, Icon’s IQ System,
or courier/mail service. All submissions require a completed submission form, which is located
under the Forms tab on Icon’s website at www.iconwholesale.com.

Loans may be submitted to Icon via the following methods:

    •    Email - Regular submissions - westsubmissions@iconresidential.com
    •    Email – FHA submissions – fhasubmissions@iconresidential.com
    •    Email – VA Submissions – vasubmissions@iconresidential.com
    •    Email – Registration of loans – registration@iconresidential.com
    •    Fax - 949-258-5583
    •    Icon’s IQ System - Refer to Section 500 – Icon’s IQ System for uploading procedures
    •    Courier –          Icon Residential Lenders
                            2301 Campus Dr., Ste 100
                            Irvine, CA 92612

401 - Submission Standards

All loan submissions are required to have the minimum documentation as listed below.
Submissions without the minimum documentation will be placed on hold for the missing
documents. The broker and the Icon Account Executive will be notified of the missing items. If
the missing items are not received by Icon within 72 hours of notification, the file will be cancelled.

The cut off time for new submissions is 2:00 pm Pacific Standard Time.

401.01 - Regular Submission Standards

Regular file submissions can be e-mailed, faxed, mailed, or uploaded through IQ as detailed in
Section 400.

Regular submissions require the following:
    •    Completed Icon Submission Form
    •    Fannie Mae 3.2
    •    DU Findings (if applicable)
    •    1008
    •    Typed 1003
    •    Borrowers Signed Authorization or Initial 1003 signed and dated within compliance by
         borrower and loan officer. Borrowers Signed Authorization must allow/assign to Icon the
         ability to pull borrower’s credit, verify income, assets, etc. A general Borrowers Signed
         Authorization is not acceptable.
    •    Full income documentation




Icon Lending Guide – Section 400                                                                1/19/11
    •    Sales Contract (if applicable)
    •    All of broker’s initial disclosures signed by borrower.
    •    State specific disclosures as required.


401.02 - FHA Submission Standards
FHA file submissions can be e-mailed, faxed, mailed or uploaded through IQ as detailed in
Section 400.

FHA submissions require the following:

    •    Completed Icon FHA Submission form
    •    Transmittal Summary
    •    Typed 1003
    •    1003 Addendum
    •    Standard income documentation
    •    Sales contract (if applicable)
    •    Fannie Mae 3.2
    •    FHA Connection printout (casefile assigned to Carnegie)
    •    Important Notice to Homebuyer
    •    Informed Consumer Choice Disclosure
    •    For Your Protection: Get a Home Inspection (purchase transactions only)
    •    All broker initial disclosures, signed by the borrower, as required by state and federal law.
    •    State specific disclosures as required.

401.03 – VA Submission Standards
VA file submissions can be e-mailed, faxed, mailed or uploaded through IQ as detailed in Section
400.

VA submissions require the following:
    •    Completed Icon VA Submission Form
    •    Completed VA Submission Fee Sheet
    •    Signed initial 1003
    •    Proposed loan worksheet (VA Form 26-8923)
    •    Clear CAIVRS
    •    Current payoff demand
    •    New VA case number with Carnegie as the lender
    •    Credit Report from an Icon approved vendor. Refer to Section 650.03 – Credit Report
         for a list of Icon’s approved credit agencies. A 12-month payment history is required.



Icon Lending Guide – Section 400                                                                1/19/11
    •    Prior loan validation
    •    Signed VA indebtedness (VA Form 26-8937)
    •    Copy of ID
    •    Copy of social security card
    •    FNMA 3.2
    •    All broker initial disclosures, signed by the borrower, as required by state and federal law.
    •    State specific disclosures as required


402 - Mortgage Disclosure Improvement Act (MDIA)

MDIA loan registration requires the following:

    •    Submission form
    •    Typed 1008/1003. Must be sent to Icon within 24 hours of the time loan application was
         taken.
    •    Submission Fee Sheet
    •    Fannie Mae 3.2
    •    Signed Borrower Email Authorization form, if applicable.

403 - IQ Submissions

Loans may be submitted via Icon’s IQ portal.

Refer to the appropriate list above for documentation requirements. Icon does require the broker
to e-mail or fax the completed submission form to the appropriate addresses/fax number as
notification that the uploaded file is ready for submission.


Refer to Section 500 of the Lending Guide for instructions on IQ.

Loans that are placed in “Submitted” status in IQ must have a complete submission package
uploaded within ten (10) days of submission. Submitted loans that are not complete after ten (10)
days will be cancelled. Refer to Section 800 – Lock Policy for specific details.


404 – Additional Submission Requirements

E-mail capacity can be limited. Loan files exceeding 5mb may not be received by Icon due to the
file capacity. It is recommended that files exceeding 5mb are sent in multiple attachments to
ensure receipt by Icon.

Loans must be fully submitted within ten (10) days of the initial lock or the lock is subject to
cancellation. Refer to Section 800 – Lock Policy for specific details.




Icon Lending Guide – Section 400                                                                   1/19/11
500 – Icon IQ

Icon IQ is an online tool enabling the client to conduct each step of the loan process online. In
addition, clients can monitor the status of the loan as well as manage their respective pipeline.
Icon IQ provides the following functions:

    •       Quick Pricer
    •       Loan Registration
    •       Loan Eligibility/DU
    •       Loan Documents Upload Feature
            •     Upload the entire credit package to Icon for underwriting
            •     Upload underwriting conditions for review and sign off.
    •       Rate Lock
    •       Loan Pipeline Management
            •     View All loans submitted to Icon
            •     Check status of loans in real time
            •     Printable pipeline reports
•   Administrative Functions
    •       Administer users within their own company

Icon IQ is accessible through Icon’s website at www.iconwholesale.com.

Clients are required to have a username and password. A completed and signed IQ
Administrator Set-Up form is required as part of the Broker Application process. This form allows
clients to receive a username and password in order to access IQ. The IQ Set-Up Form can be
found on Icon’s website under the Broker Approval link.

An IQ User Guide with instructions for navigating within Icon IQ is also available on the website.

Client support is available through Icon’s IQ Help Desk Monday through Friday 8:00 am – 5:00
pm PST. Contact the Help Desk as follows:

        •       Phone: (888) 706-4483
        •       Email: iconiq@iconresidential.com




Icon Lending Guide - Section 500                                                       Revised 4/22/10
                Section 600 - General Underwriting Guidelines
                                   Table of Contents


600 – Introduction
610 - Underwriting Philosophy
620 - Predatory Lending
630 - State Regulations & Restrictions
640 – Eligibility
641 - Borrower Eligibility
641.01 Eligible Borrowers
641.02 Ineligible Borrowers
641.03 Co-Borrower
641.04 Non-occupant Co-Borrower
641.05 Non-Borrowing Spouse
641.06 Separated Borrower
641.07 Living Trust/Inter Vivos
641.08 Power of Attorney
641.09 Permanent Resident Alien
641.10 Non-permanent Resident Alien
641.11 First Time Homebuyer
641.12 Payment Shock
641.13 Non-arms Length Transaction
641.14 At-interest Transaction

642 - Eligible Transactions
642.01 Purchase Transactions
642.01.1 Auction Transactions
642.01.2 FHA Short Sale
642.02 Refinance Transactions
642.02.1 Limited Cash-Out (Rate/Term)
642.02.2 Cash-out
642.02.3 Texas Section 50(a)(6) (Texas cash-out)
642.02.4 FHA Short Payoff
642.03 Inherited Properties
642.04 Construction to Permanent



Icon Lending Guide – Section 600                                Revised 5/6/11
642.04.1 Limited Cash-Out Refinance (Rate/Term)
642.05 Contract of Sale/Land Contract
642.05.1 Purchase
642.05.2 Refinance
642.06 Lease Option
642.07 Continuity of Obligation
642.08 Multiple Properties Owned
642.09 Multiple Loans to One Borrower
642.10 Ineligible Transactions

643 - Documentation Eligibility

650 – Credit
650.01 Traditional Credit
650.02 Non-Traditional Credit
650.03 Credit Report
650.04 Unacceptable Credit Report Practices
650.05 Consumer Credit Bureau Blocks
650.06 Credit Score
650.07 Determining the Representative Score
650.08 Reviewing Credit History & Analysis of Risk
650.09 Social Security Number
650.10 Potential Red Flags on Credit Report
650.10.1 Incorrect, Duplicate and Multiple SSN
650.10.2 Credit Report Alerts
650.10.3 Address & Employment Discrepancies
650.10.4 Inquiries
650.10.5 Changes in Credit Usages
650.11 Authorized Users
650.12 Payment History
650.13 Mortgage/Rental History
650.14 Derogatory Credit
650.14.1 Past Due
650.14.2 Disputed Accounts
650.14.3 Bankruptcy/Foreclosure/Deed-in-Lieu/Short Sale
650.14.4 Forbearance




Icon Lending Guide – Section 600                          Revised 5/6/11
650.14.5 Consumer Credit Counseling
650.14.6 Tax Liens and Judgments
650.14.7 Unpaid Collections/Charge-offs

660 - Ratios/Liabilities
660.01 Housing Ratio
660.02 Debt-to-Income Ratio
660.03 Conversion of a Principal Residence
660.04 Qualifying Ratios
660.05 Liabilities
660.05.1 Debt Payoff/Consolidation
660.05.2 Revolving
660.05.3 Installment Debt
660.05.4 Lease Payments
660.05.5 Deferred Installment Debt
660.05.6 Loans Secured by Retirement Accounts
660.05.7 Business Debt
660.05.8 HELOC
660.06 Contingent Liabilities/Co-Sign
660.06.1 Court Ordered Assignments of Debt
660.06.2 Property Settlement ―Buyout‖
660.06.3 Mortgage Assumptions
660.07 Other Types of Liabilities
660.07.1 Alimony/Child Support
660.07.2 Garnishment
660.07.3 Bridge Loans
660.07.4 Demand Loans
660.07.5 Net Rental Loss/Negative Rental Income
660.07.6 Un-Reimbursed Business Expenses
660.07.7 Overdraft Protection
660.07.8 Payroll Deductions
660.07.9 Special Assessments

670 - Employment & Income
670.01 Employment Stability
670.02 Verbal Verification of Employment




Icon Lending Guide – Section 600                  Revised 5/6/11
670.03 Sources of Income
670.03.1 Wage Earner
670.03.2 Automobile Allowance
670.03.3 Bonus Income
670.03.4 Commission Income
670.03.5 Military Income
670.03.6 Overtime Income
670.03.7 Part-Time, Second Job & Multiple Job Income
670.03.8 Seasonal Job Income
670.03.9 Trailing Spouse/Co-borrower Income
670.03.10 Self-Employed Income
670.03.11 Non-Salaried Income, Fixed Income, & Additional Sources of Income
    670.03.11(a) - Alimony /Child Support
    670.03.11(b) - Boarder Income
    670.03.11(c) - Capital Gains
    670.03.11(d) - Disability Benefits
    670.03.11(e) – Education Benefits
    670.03.11(f) - Foster Care Income
    670.03.11(g) - Interest and Dividend Income
    670.03.11(h) - Mortgage Differential Payments
    670.03.11(i) - Notes Receivable
    670.03.11(j) - Public Assistance Income
    670.03.11(k) - Rental Income
    670.03.11(l) - Retirement or Pension Income
    670.03.11(m) - Royalty Income
    670.03.11(n) - Social Security Income
    670.03.11(o) -Trust Income
    670.03.11(p) - Unemployment Benefits
    670.03.11(q) - VA Benefits
    670.03.11(r) – Tip Income
670.03.12- 4506-T Forms

680 – Assets
680.01 Ineligible Sources of Assets
680.02 Acceptable Sources of Assets
680.02.1 - Checking/Savings Accounts



Icon Lending Guide – Section 600                                              Revised 5/6/11
680.02.2 - Business Funds
680.02.3 - Deposit on Sale
680.02.4 - Government Bonds
680.02.5 - IRA/Retirement/Keogh Accounts
680.02.6 - Inheritance
680.02.7 - Insurance Settlement/Lawsuit
680.02.8 - Life Insurance
680.02.9 - Pooled Funds
680.02.10 - Stocks, Bonds, & Other Investments
680.02.11 - Trust Account
680.02.12 - Bridge or Swing Loan
680.02.13 - Trade Equity
680.02.14 - 1031 Exchange
680.02.15 - Lease/Rent with Option to Purchase
680.02.16 - Land Equity
680.02.17 - Borrowed Secured Funds
680.02.18 - Community Seconds and Subsidy Programs
680.02.19 - Subordinate Financing
680.02.20 - Seller Carry Back
680.02.21 - Sale of Personal Property
680.02.22 - IRS Refund
680.02.23 - Repayment of Debt
680.02.24 - Existing Home Equity
680.02.25 - Gift Funds
680.02.26 - Gifts of Equity
680.02.27 - Gifts from a Relative
680.02.28 - Gifts from a Church, Municipality, or Non-profit Organization
680.02.29 - Contributions by Interested Third Parties

    680.02.29 (a) - Interested Party Contributions
    680.02.29 (b) - Sales Concessions

690 - Property Valuation
690.01 Appraiser Requirements
690.02 Appraisal Requirements
690.03 Unacceptable Appraisal Practices




Icon Lending Guide – Section 600                                            Revised 5/6/11
690.04 Acceptable Appraisal Forms
690.04.1 - Single Family Residence
690.04.2 - Multi-Family Residences
690.04.3 - Condominium Units
690.05 Required Appraisal Attachments
690.06 Additional Appraisal Requirements
690.07 Electronic Appraisals
690.08 Age of the Appraisal
690.09 Acceptable Age of Appraisal for Loans requiring a Second Appraisal
690.10 Final Inspections/Completion Report & Appraisal Update
690.11 Declining Markets
690.12 Recently Remodeled or Renovated Properties
690.13 Other Property Characteristics
690.13.1 - Accessory Apartments/Non-permitted Additions/Granny or In-Law Units
690.13.2 - Deed Restrictions
690.13.3 - Deferred Maintenance
690.13.4 - Electrical Systems
690.13.5 - Environmental Hazards
690.13.6 - Excess Land/Acreage
690.13.7 - Foundation Settlement
690.13.8 - Functional Kitchen
690.13.9 - Heating Systems
690.13.10 - Illegal & Non-Conforming Use
690.13.11 - Leaseholds
690.13.12 - Multiple Dwellings
690.13.13 - Plumbing
690.13.14 - Private Roads
690.13.15 - Private Water Supply
690.13.16 - Repair Requirements
690.13.17 - Rural Properties
690.13.18 - Security Bars
690.13.19 - Sewage Disposal System
690.13.20 - Survey
690.13.21 - Termite Report and Clearance
690.13.22 – Roof Inspection



Icon Lending Guide – Section 600                                                 Revised 5/6/11
690.14 Ineligible Properties
690.15 Analysis of the Appraisal
690.16 Appraisal Reviews
690.16.1 – Appraisal Reviews for High Balance Conforming Loans

690.17 Condominiums & PUDs
690.17.1 - New Projects
690.17.2 - Established Projects
690.17.3 - Ineligible Projects
690.17.4 - Types of Project Review
690.17.5 - Limited Review
    690.17.5(a) - Attached Units
    690.17.5(b) - Detached/Site Condominiums
690.17.6 – CPM Expedited Project Review
    690.17.6(a) - New Projects
    690.17.6(b) - Established Projects
690.17.7 - FHA Approved Projects
690.17.8 - Fannie Mae Review
690.17.9 - Lender Full Review
    690.17.9(a) - Additional Requirements for Lender Full Review for Established Projects
    (excluding 2-4 unit projects)
    690.17.9(b) - Additional Requirements for Lender Full Review for New Projects (excluding 2-4
    unit projects)
    690.17.9(c) - Additional Requirements for Two-Four Unit Projects
    690.17.9(d) - Evaluation of the Condominium Documents
              Common Ares & Facilities
              Project Management
              Articles of Incorporation
              CC&Rs, By-Laws
              Budget
              Insurance
          HOA Questionnaire
690.18 PUDs (Attached & Detached)




Icon Lending Guide – Section 600                                                    Revised 5/6/11
Program Details/Matrices
              Agency Conforming
              Agency High Balance
              DU Refi Plus
              FHA
              Portfolio Conforming
              Portfolio High Balance
              Portfolio DU Refi Plus
              Jumbo Program
              Texas Section 50(a)(6)
              VA Program
              Freddie Mac Super Conforming




Icon Lending Guide – Section 600             Revised 5/6/11
600 – Introduction

Icon Residential Lenders (Icon) is dedicated to the origination of quality loans. This manual and
the underwriting guidelines that follow provide criteria, direction and consistency for underwriting
loans. Although Icon’s loans are sold to many investors, our programs follow Fannie Mae and
FHA standard guidelines. The intent of this manual is to provide the guidelines that differ from the
published policies of Fannie Mae and FHA. However, this manual is not all inclusive of all
situations that may arise from loan to loan. These guidelines are parameters and are not
definitive. Icon utilizes prudent mortgage compliance underwriting when evaluating loans. These
underwriting guidelines may change without notice to meet our investors’ requirements and market
needs.

610 - Underwriting Philosophy

Icon implements the fundamental requirement that the terms of the loan be related to the
probability of the borrower’s repayment and to the value and marketability of the mortgaged
property.

Icon will underwrite, analyze, and perform a quality control audit on each file. Each loan is
underwritten with emphasis placed on the overall quality of the loan. Occasionally, Icon may apply
underwriting criteria which is either more stringent or more flexible than current market conditions.
The loan package must contain sufficient information to enable the underwriter to conclude an
informed and knowledgeable decision. In the event the loan requires different parameters then
those stated in this manual, the more conservative guideline will apply.

In determining a credit decision, Icon evaluates the three ―C’s‖ of underwriting: credit, collateral,
and capacity.

Briefly stated, the credit is evaluated for borrower’s willingness and ability to repay the mortgage in
addition to all other current obligations. In addition, borrower has demonstrated a history of paying
the obligations in a timely manner. The collateral is evaluated to ensure the market value is
accurately represented; the improvement conforms to the neighborhood and has good
marketability. All aspects of the borrower’s profile are evaluated to determine if the borrower has
the stability of employment, the savings history, and a demonstrated performing credit history
resulting in the borrower’s capacity to repay the mortgage in a timely manner.

Each of these topics will be discussed in greater detail in the manual.




Icon Lending Guide – Section 600                                                          Revised 5/6/11
620 - Predatory Lending

Icon Residential Lenders is committed to the practices of fair lending. All persons involved with
the mortgage origination process are expected to comply with all laws and regulations which apply
to the mortgage industry. Each individual is responsible for becoming familiar with and practicing
the fair lending regulations set forth by the federal and state government.

Icon Residential Lenders complies with the provisions of the Equal Credit Opportunity Act when
evaluating an applicant’s loan request. Icon does not discriminate against any applicant on the
basis of race, color, religion, national origin, sex, marital status, family status, age, receipt of public
assistance or if the individual has exercised in good faith any right under the Consumer Credit
Protection Act.

Icon Residential Lenders will not permit any High Cost loans as defined by HOEPA or any ―High
Cost‖, ―threshold‖, ―covered‖, or ―predatory‖ loans as defined by federal, state or local law.

630 - State Regulations & Restrictions

Icon Residential Lenders will lend in all states except Alaska. Some programs offered by Icon may
not be available in specific states due to state law. It is the responsibility of the submitting broker
to ensure the loan complies with all state regulations. Copies of all federal and state required
disclosures are to be included in the loan file at the time of submission.

No payments to the mortgage broker are permitted unless the service was actually rendered and
is reasonably related to the value of the service. This includes, but is not limited to the Mortgage
Broker Fee and Yield Spread Premium. At the time of application, the mortgage broker must
disclose the exact amount of the total compensation the broker will receive from any source,
including the lender. Any undisclosed fees or fees in excess of the initial disclosure will be
credited to the borrower to pay closing costs, if permitted by program guidelines.

All refinance transactions must have a net tangible benefit to the borrower. Icon’s underwriter
must use standard industry practices to verify borrower’s income, employment, assets, etc and to
determine the borrower has the ability to repay the loan.


North Carolina – North Carolina’s rate spread home loan applies to the following loans:
         The borrower is a natural person,
         The debt is incurred primarily for personal, family or household purposes,
         The principal amount of the loan does not exceed the Fannie Mae conforming loan limits
         for a single family dwelling,
         The loan is secured by a manufactured home or a 1-4 unit family dwelling, either existing
         or the loan proceeds will be used for construction, and is, or will be, the borrower’s
         primary residence.




Icon Lending Guide – Section 600                                                             Revised 5/6/11
A rate spread home loan is defined as a loan where the APR exceeds each of the following
thresholds:

         For First Lien Loans: (i) the yield on U.S. treasury securities having comparable
         periods of maturity on the 15th day of the month prior to the loan application by 3% or
         more; (ii) the conventional mortgage rate published in FRB Statistical Release H-15 for
         fixed-rate first mortgages during the week preceding the week in which the interest rate
         is set by 1.75% or more; and (iii) the average prime offer rate for a comparable
         transaction as of the date the interest rate is set by 1.5% or more.
         For Junior Lien Loans: (i) the yield on U.S. treasury securities having comparable
         periods of maturity on the 15th day of the month prior to the loan application by 5% or
         more; (ii) the conventional mortgage rate published in FRB Statistical Release H-15 for
         fixed-rate first mortgages during the week preceding the week in which the interest rate
         is by 3.75% or more; and (iii) the average prime offer rate for a comparable transaction
         as of the date the interest rate is set by 3.5% or more.
If the loan meets the above criteria, the loan is a rate spread home loan and is ineligible for
financing with Icon.

Rhode Island – All refinance transactions that are paying off an existing mortgage that refinanced
the property within the previous five (5) years must have a net tangible benefit to the borrower. A
copy of the Rhode Island Home Loan Protection Act Disclosure Net Tangible Benefit form (Form 3
HLPA) must be signed by the broker and/or lender and the borrower and included in the loan file.

Virginia – Icon’s underwriter must complete the Virginia Anti-Flipping Worksheet for all refinances
paying off an existing mortgage that refinanced the property within the previous 12 months. A
copy of the existing note may be required.

640 – Eligibility

Icon Residential Lenders will only extend credit to individual applicants/borrowers. An applicant is
defined as anyone who applies for funds in the form of a loan secured by real property with the
obligation of repaying the debt in full with interest. The borrower is the individual obligated to
repay the loan secured by the mortgage premises. For the loan to be eligible, the applicant(s)
must conform to certain eligibility requirements.

641 – Borrower Eligibility

641.01 – Eligible Borrowers
Eligible borrowers are:
         A natural person.
         U.S. citizens or permanent resident aliens and must have a valid social security number.
         Non-permanent resident aliens with valid social security number. Refer to Section 641.10
         – Non-Permanent Resident Alien for requirements.
         Borrowers who have attained the legal age according to the local and state jurisdiction
         where the property is located. The borrower must be able to enter into a binding contract
         prior to the execution of the Note and Security Instrument. There is no maximum age limit
         for the borrower.


Icon Lending Guide – Section 600                                                         Revised 5/6/11
641.02 - Ineligible Borrowers
Ineligible borrowers are:

         Borrowers without a valid, legitimate social security number
         Foreign nationals
         Borrowers with diplomatic immunity
         Borrowers who do not meet the eligibility requirements set forth in this manual.
         Corporations, estates, life estates, limited or general partnerships, not-for-profit
         organizations, schools, churches, etc.
         Co-signer. A co-signer is an applicant who does not take title to the security property. A
         co-signer does not have an interest in the subject property but executes the loan
         application and signs the mortgage note. A co-signer is ineligible for financing with Icon.
         Borrower’s who are employed by the submitting broker or brokerage, regardless of job
         function.
         Borrowers using a General Power of Attorney or a Specific Power of Attorney on cash out
         refinance transactions or non-owner occupied transactions, or loans closing in the name of
         a trust.

641.03 - Co-Borrower

A co-borrower is an individual who applies jointly with the applicant for shared or joint credit and
who takes title to the property and is obligated on the mortgage and the note. The co-borrower
must execute the Note and the Security Instrument.

The income, assets, liabilities of the co-borrower must be documented if used as a basis for loan
qualification.

The liabilities of the co-borrower or co-signer must be considered if the borrower resides in a
community property state, if the subject property is located in a community property state, or if the
borrower is relying on other property located in a community property state as a basis for
repayment of the loan.

641.04 - Non-Occupant Co-Borrower

The following applies when a non-occupant co-borrower is on the loan:

         The maximum LTV is 90%.
         The occupying borrower must contribute a minimum of 5% of the purchase price towards
         the down payment from his/her own funds.
         The occupying borrower must demonstrate the ability and willingness to repay the
         mortgage.
         The maximum ratios for the occupying borrower are 35% / 43% regardless of AUS
         Findings. Exceptions to the maximum ratios will be determined on a case-by-case basis.
         The loan must contain compensating factors and receive an AUS Approve/Eligible
         Finding. A pricing adjustment may apply.

Icon Lending Guide – Section 600                                                           Revised 5/6/11
         The income from the non-occupant co-borrower cannot be used for qualifying.
         Although the income from the non-occupant co-borrower can be used to offset certain
         weaknesses of the occupying borrower (i.e.: limited reserves, limited credit history, higher
         than normal qualifying ratios), the income from the non-occupant borrower cannot be used
         to offset significant or recent instances of major derogatory credit in the occupant
         borrower’s credit history or lack of stable employment history.
         The non-occupying co-borrower must be a blood or legal relative, domestic partner,
         fiancée or fiancé.
         If the occupying borrower does not meet the above requirements, the loan will be
         reviewed as an investment property.
         Some programs may not permit non-occupant co-borrowers. Refer to program description
         for eligibility.
         Transactions with a non-occupant co-borrower are subject to MI availability on LTVs >
         80%.

The Agency Conforming fixed rate loan product allows the maximum qualifying ratios requirement
of 35%/43% for the occupying borrower to be waived provided all of the following criteria is met:
         The LTV is ≤ 80%
         There is no subordinate financing
         Subject is 1-unit
         Purchase or limited cash out refinance
         AUS Approve/Eligible finding

NOTE: The income from the non-occupant co-borrower still cannot be used for qualifying even if
      the borrower meets the above criteria.

641.05 - Non-Borrowing Spouse/Non-Purchasing Spouse

Icon Residential Lenders will accept loan applications from married applicants whose spouse is
not a part of the loan transaction. A non-borrowing spouse may have rights in a property either as
a co-owner of the property, state community property rights, or marital rights laws. The non-
borrowing spouse is required to execute the security instrument and all applicable documents as
applicable per statutory or decisional law of the state to create a valid lien, pass clear title, and
waive rights to the property.

Pursuant to the California Domestic Partner Rights and Responsibilities Act of 2003, as well as the
Nevada Domestic Partnership Act, a domestic partner has community property rights, and in
California, homestead rights, in the property owned by their partner. In Vermont, a party to a civil
union may have homestead rights in property owned by their partner. In Connecticut, the civil
union law and New Hampshire’s Same Sex Marriage law, provides same sex couples with the
same benefits, protections, and responsibilities under law as those granted to spouses in a
marriage. Non-borrowing spouse signature requirements will apply to non-borrowing domestic,
same sex marriage and civil union partners on loans secured by California, Connecticut, New
Hampshire, Nevada and Vermont property.




Icon Lending Guide – Section 600                                                        Revised 5/6/11
641.06 - Separated Borrower

If a borrower is separated, documentation is necessary to determine the division of assets,
liabilities, and potential obligations.

If the borrower is legally separated, a copy of the recorded legal separation agreement is required
in order to exclude specific obligations that would otherwise be included in the borrower’s
qualifying ratios.

641.07 - Living Trust/Inter Vivos Revocable Trust

Icon Residential Lenders will accept loans in the name of an Inter Vivos Revocable trust (also
called a living trust, family trust, or revocable living trust). A copy of the recorded trust documents
should be included with the loan submission. At least one of the individuals must be a Primary
Beneficiary and an occupying borrower whose income and assets are used to qualify for the loan.
Also, if no institutional trustee was appointed, this same individual must be a trustee.

The living trust agreement must contain specific language giving the trustee the power to revoke
the trust. The trustor can change or cancel the trust at any time for any reason during the trustor’s
lifetime. The ability to revoke the trust allows the trustor to regain control of the property.

The mortgaged property held in the trust may be owner occupied single family (condo and PUD
included), or a second home. Investment property is not permitted. At least one of the trustors
whose income and assets are used to qualify must occupy the property.

The trustee must execute the Note, the Security Instrument, and all applicable riders/addendums.
Each applicant must execute the promissory Note and all applicable addendums. The trustee is to
execute the appropriate documents using the following format:
―(Name of Trustee), Trustee of the (Name of Trust) under trust instrument dated (Date of Trust),
for the benefit of (Name of Beneficiary)‖. The beneficiary is the borrower.

Trustee is also to execute the acknowledgement of all terms and covenants contained in the
Security Instrument and applicable riders. If borrower does not execute this, the borrower must
sign as a trustee and as an individual.

An Attorney’s Opinion Letter from the borrower’s attorney is required to verify the following:
         The trust was validly created and is duly existing under applicable law
         The trust is revocable
         The borrower is the settler of the trust and the beneficiary of the trust
         The trust assets may be used as collateral for a loan
         The trustee is:
              Duly qualified under applicable law to serve as trustee
              Is the borrower
              Is the settler
              Is fully authorized under the trust documents and applicable law to pledge or
              otherwise encumber the trust assets

In lieu of an Attorney’s Opinion Letter verifying the above, a Trust Certification from the title
company is permitted in the following states:
Icon Lending Guide – Section 600                                                           Revised 5/6/11
Alabama, Arizona, Arkansas, California, Delaware, District of Columbia, Idaho, Iowa, Kansas,
Maine, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Hampshire, New Mexico, North
Carolina, Ohio, Oregon, Pennsylvanian, South Carolina, South Dakota, Tennessee, Texas, Utah,
Vermont, Virginia, and Wyoming.

The title commitment cannot contain any exceptions to coverage based on the mortgaged property
being held in a trust.

A Power of Attorney is not allowed if the loan is closing in the name of a trust. The trustee must
execute the documents.

Loans may be closed in the name of one trust only; multiple trusts are ineligible.

641.08 - Power of Attorney

Icon will allow a Specific Power of Attorney appointed by the borrower for purchase and rate/term
refinance transactions. A Power of Attorney (POA) is ineligible on:
         Cash out refinance transactions
         Loans closing in the name of a trust.
         Investment property transactions.
A signed letter of explanation is required from the borrower as to why the borrower cannot sign the
final documents and is appointing a POA for the transaction

Requirements for the Power of Attorney:
         Cannot be a party to the transaction
         Is preferably a family member of the borrower.
         Must be specific to the transaction and indicate the property address.
         Must be signed and dated on or before the date of the Note.

The POA must be approved by Icon Management prior to docs. The original 1003, original initial
disclosures, and purchase contract (if applicable) signed by the borrower is required.

641.09 - Permanent Resident Alien

A Permanent Resident Alien is defined as an individual who is granted the right to work and live
permanently in the United States. Although Permanent Resident Aliens are not U.S. citizens, they
are entitled to the same rights, products, programs, and lending parameters as U.S. citizens.

A borrower who is a Permanent Resident Alien must meet the following requirements:
         Borrower has been employed in the United States with a 2-year employment history that is
         expected to continue for at least 3-years.
         Borrower must have a 2-year credit and income history.
Borrowers with less than a 2-year employment history in the United States may require additional
credit, asset and income references/documentation to support the credit decision. Only
documentation that meets the same standards for authenticity, accuracy, and completeness that
applies to other types of documentation should be considered.


Icon Lending Guide – Section 600                                                       Revised 5/6/11
A copy of the front and back of the borrower’s Green Card is required for all permanent resident
aliens whose income and/or assets are being used to qualify for a loan.

NOTE: The Green Card states ―Do Not Duplicate‖ for the purpose of replacing the original card.
      The U.S. Citizenship and Immigration Services (USCIS) does however allow photocopying
      of the Green Card. Making an enlarged copy or copying on colored paper may alleviate
      any concern the borrower may have with photocopying.

641.10 – Non-permanent Resident Alien

The Agency Conforming and FHA programs allow non-permanent resident aliens to provide an
unexpired I-797A, Notice of Action as evidence of non-permanent resident alien and work
authorization status. When utilizing an ARM product on the Agency Conforming program a valid
visa is required (H-1, H-2A, H-2B, H-3, L-1, E-1 and G series). An I-797A, Notice of Action is
ineligible to document work authorization status on ARM products.

If the I-797A is expiring within 1-year of the application date and there is a history of prior
renewals, no additional documentation is required. If there is no history of prior renewals, the loan
may be ineligible unless satisfactory documentation is obtained from the employer that the
continuation of employment is likely.

All standards for determining stable monthly income, adequate credit history and sufficient liquid
assets must be applied in the same manner to non-permanent resident alien borrower(s). A valid
social security number is required.

FHA loans require the property to be the borrower’s principal residence.

Borrowers with diplomatic immunity and World Bank employees are ineligible regardless of visa
status.

The Agency High Balance program requires non-permanent resident aliens provide evidence of an
unexpired, valid, acceptable visa. A copy of the visa must be included in the loan file. An
unexpired, valid visa is the only eligible documentation; petitions and work authorizations are not
acceptable.

The following are acceptable visa types when utilizing a fixed rate product on the Agency High
Balance:

    A Series (A-1, A-2, and A-3). A Series visas are given to officials of foreign governments,
    immediate family members and support staff. Only applicants without diplomatic immunity, as
    verified on the visa, are eligible.

    E-1, Treaty Trader. The E-1 visa is essentially the same as the H-1 or L-1 visa. The title refers
    to the foreign country’s status with the United States.

    G Series (G-1, G-2, G-3, G-4, and G-5). G Series Visas are given to employees of
    international organizations that are located in the United States. Examples include United
    Nations, Red Cross, UNICEF and the International Monetary Fund. Applicants with diplomatic
    immunity are not eligible. Verification that the applicant does not have diplomatic immunity
    must be obtained from the applicant’s employer and/or from the applicant’s passport.


Icon Lending Guide – Section 600                                                        Revised 5/6/11
    NOTE: World Bank employees with a G series visa are ineligible.

    H-1, Temporary Worker. The H-1 visa is the most common type of visa. This visa is given to
    foreign citizens who are temporarily working in the United States.

    L-1, Intra-Company Transferee. L-1 visas are given to professional employees whose
    company’s main office is in a foreign country.

    TN, NAFTA Visa. This visa is used by Canadian or Mexican citizens for professional or
    business purposes.

    TC, NA Visa – This visa is used by Canadian citizens for professional or business purposes.

The following are acceptable visa types when utilizing an ARM product on the Agency High
Balance program:
         E-1
         G series. World Bank employees with a G series visa are ineligible.
         H-1, H-2A, H-2B, and H-3
         L-1

All standards for determining stable monthly income, adequate credit history and sufficient liquid
assets must be applied in the same manner to each borrower including those who are non-
permanent resident aliens.

641.11 - First Time Homebuyer

Agency guidelines define a first time homebuyer (FTHB) as an individual who is purchasing a
property and has not had any ownership interest (sole or joint) in a residential property during the
previous 3 year period preceding the date of purchase of the subject property. Acceptable
occupancy types are as follows:

         Primary residence
         Second home
         Non-owner occupied (investment) property
First time homebuyers purchasing an owner-occupied primary residence may be a part of a non-
arms length transaction.

641.12 - Payment Shock

Payment shock applies to the percentage of increase of the proposed housing payment in relation
to the existing housing payment. Payment shock is considered when determining the risk and
evaluating the borrower. Generally, Icon prefers the payment shock to be less than 200%.
However, borrowers with a higher payment shock are eligible based on the entire loan
documentation, credit depth, employment history, reserves, etc. Not all programs limit the
payment shock but payment shock may apply in cases of layered risk.




Icon Lending Guide – Section 600                                                        Revised 5/6/11
For example: borrower rents for $1200 per month. Proposed PITI on purchase transaction is
$3500. The payment shock is 192%. $1200 - $3500 divided by $1200 = 191.67%.

641.13 – Non-Arms Length Transactions

A non-arms length transaction exists anytime the applicant has a personal or business relationship
with any other entity related to the loan. Examples of non-arms length transactions are family
sales or transfers, builder/developer transactions, renters buying from landlords, employees
working for a family member/relative. Non-arms length transactions are considered on a case-by-
case basis on owner-occupied transactions only.

There are no exceptions to the parameters and documentation requirements listed below:

    Principals, senior managers, employees or family members of a submitting broker or lender
    are ineligible.
    Model home builder leasebacks are ineligible.
    Borrowers employed by the Seller, in the construction or lending trades:
         1-2 unit properties only
         Relationship must be disclosed on original application.
         Second appraisal by Icon approved appraiser required.
         A loan secured by the builder/developer for a property owned by the builder/developer is
         ineligible.
         If the property is new construction, only primary residences are eligible if the borrower has
         an affiliation with the builder/developer/seller.
    In-Family Sales:
         Principal residence only
         24 month satisfactory credit rating on existing mortgage required (i.e. no family bail-out)
         Transactions that involve family members purchasing the property from another family
         member and the property is a short sale are ineligible.
    Borrower employed by a family member:
         Borrower must provide the last 2 years 1040’s and a current paystub.
         Executed and processed 4506-T.
         Documentation is required evidencing borrower does not have 25% or greater interest in
         the family business; if borrower does have 25% or greater interest, the borrower will be
         considered self employed and qualified accordingly.
    Buying from landlord:
         Eligible with 12 months cancelled checks.
         Transactions that involve the tenant purchasing the property from the landlord and the
         property is a short sale are ineligible.

All non-arms length transactions require the appraiser to acknowledge the non-arms length
transaction as well as comment if the market value of the property has been affected by the non-
arms length transaction.

Second home and investment properties that are a non-arms length transaction are ineligible.

Icon Lending Guide – Section 600                                                         Revised 5/6/11
Section 641.14 – At-interest Transactions

An at-interest transaction involves persons who do not have close ties or are not related but may
have a greater vested interest in a transaction. An example would be a person who plays more
than one role in the same transaction (listing/selling agent and mortgage broker). At-interest
transactions inherently carry an increased risk due to the greater vested interest in the transaction
by one of the parties. The following are examples of at-interest transactions:
         Builder also acting as realtor/broker
         Realtor/broker selling own property
         Realtor/broker acting as listing or selling agent as well as the mortgage broker.

At-interest transactions are considered non-arms length transactions and will be considered on a
case-by-case basis.

The following at-interest transactions are ineligible.
         The broker is selling their own property
         The broker is acting as the listing agent as well as the mortgage broker.
    NOTE:      Icon will consider an at-interest transaction when the broker is acting as the
               selling agent (buyer’s agent) as well as the mortgage broker as follows:
                         Agency Conforming and High Balance: Owner-occupied transactions only.
                         Portfolio Conforming and High Balance: Owner-occupied, second home and
                         investment transactions
    The broker cannot have any other relationship or close ties to the borrower other than the
    broker/realtor relationship.
Second home and investment properties that are an at-interest transaction are ineligible except as
noted above.
At-interest transactions are subject to the following requirements:

         Borrower must provide a copy of the canceled earnest money check to verify payment to
         the seller.
         The borrower must be able to verify that 5% of the sales price has been saved, however
         these funds do not have to be used toward the down payment.
         Borrower is not now, nor has been in the previous 24 months, on title to the property.
         A payment history of the existing mortgage on the subject property evidencing no
         delinquent payments in the most recent 12-months
         A written explanation of the relationship between the borrower and the seller and the
         reason for the purchase must be provided by the borrower.
         At minimum, an enhanced desk review or a 2055 is required. Additionally the appraiser
         must verify the properties last sale date and price and must provide recent listing and/or
         marketing materials. The purchase contract must also be reviewed. Refer to Section
         690.16 – Appraisal Reviews for Icon’s approved Appraisal Review Companies.




Icon Lending Guide – Section 600                                                        Revised 5/6/11
642 - Eligible Transactions

642.01 - Purchase Transactions
A purchase transaction is a transaction in which the proceeds are used to finance the purchase of
a property. The LTV is based on the lower of the sales price or current appraised value. A copy of
the fully executed purchase contract and all attachments or addenda is required for all purchase
transactions. Any changes/alterations to the purchase contract must be initialed by all parties
involved in the transaction.
Icon requires the seller to be on title a minimum of 90 days. Icon will allow the purchase of a
property where the seller is the owner of record ≤ 90 days on the Portfolio Program only, subject
to MI company guidelines.
Properties in which the seller has been on title less than 6 months and the value has increased will
be prudently evaluated. The appraiser must justify any increase in value. When utilizing an ARM
product on the Agency Conforming or Agency High Balance program, the seller is required to be
on title a minimum of 12 months. If the property has been sold >3 months but <12 months the
loan will require additional underwriter review to ensure that there has been no foreclosure bail-
out, a distressed sale, inflated value due to unsubstantiated improvements, etc.

The borrower cannot receive any monies back from the transaction unless the cash back is for
overpayment or reimbursement of borrower’s fees, or reimbursement for costs paid by the
borrower in advance. Cancelled checks from the borrower are required to evidence the fees paid.

Icon will not accept a re-negotiated purchase contract that increases the sales price after the
appraisal has been completed if:

         The appraised value is higher than the originally contracted sales price that was provided
         to the appraiser, and
         The new purchase agreement and/or addendum to the purchase agreement is dated after
         the appraisal, and
         The only change to the purchase agreement was the sales price.
If the purchase agreement was renegotiated after the completion of the appraisal, the LTV will be
based on the lower of the original purchase price or the appraised value, unless:
         The renegotiation was only for seller paid closing costs and/or pre-paids where seller paid
         closing costs/pre-paids are common and customary for the area and are supported by the
         comparables, or
         The purchase contract was amended for a new construction property due to
         improvements that have been made that impact the tangible value of the property. An
         updated appraisal must be obtained to validate the value of the improvements.

642.01.1 – Auction Transactions

Properties purchased at auction are subject to the following.

Eligible property types:
         Single family residence (attached or detached)


Icon Lending Guide – Section 600                                                       Revised 5/6/11
         2-4 units

All occupancy types are eligible. Investment transactions require a minimum credit score of 720
(unless a specific program is more restrictive) and a 5% reduction of the LTV/CLTV.

The maximum LTV/CLTV is calculated from the lesser of the accepted bid plus the auction buyer’s
premium or the appraised value. Only the auction buyer’s premium can be added to the accepted
bid to determine the total purchase price.

The auction terms must be included as part of the purchase contract provided to the appraiser for
review. If the combined auction buyer’s premium and the sales/marketing charges or fees exceed
12% of the total purchase price, the amount over 12% must be deducted from the purchase price.

Any expenses for repairs that will be itemized on the seller’s side of the HUD-1 require full
documentation of the repair(s) including but not limited to contracts, supporting work orders, or
other acceptable documentation in order to exclude these charges from the 12% cap. If
documentation is not provided, the repair fees must be included in the 12% cap.

Real Estate Owned (REO) properties obtained through an auction must have a Collateral
Consultation Review (CCR) performed by RELS. Icon will order the CCR

The following requirements apply to the auction house:
         Must be licensed, if required, and in good standing in the state where the auction took
         place.
         Must have been in business, at minimum, one year.

The following additional auction house requirements apply if the subject property was not
previously occupied OR the property was previously occupied and the appraiser identifies multiple
auctions in the same neighborhood (as defined by the appraiser).
         Auction house or auctioneer has no ownership interest in the properties being auctioned
         Auction house or auctioneer is not affiliated with the seller/developer of the property
         The contract between the auction house and seller has been reviewed and the
         requirements for all parties are reasonable and in line with industry standards, including,
         but not limited to:
              Services rendered and fees charged are reasonable and standard for the transaction.
              No price guarantee is made aside from establishment of a minimum bid or reserve
              price.

Parties named on the contract must match the supporting documentation (i.e. appraisal, title, etc.)

642.01.2 – FHA Short Sale

Borrowers obtaining an FHA insured mortgage after a short sale are eligible as detailed below.

Eligible Borrowers

Borrowers are eligible for a new FHA insured mortgage as follows:


Icon Lending Guide – Section 600                                                         Revised 5/6/11
         The borrower was current on their mortgage and other installment debts at the time of the
         short sale, and
         The proceeds from the short sale served as payment in full.

Ineligible Borrowers

Borrowers are not eligible for a new FHA insured mortgage as follows:
         The borrower pursued a short sale agreement on their primary residence to take
         advantage of declining market conditions, and
         The borrower is purchasing, at a reduced price, a similar or superior property located
         within a reasonable commuting distance.

Borrowers in default at the time of the short sale (or pre-foreclosure sale) are not eligible for a new
FHA insured mortgage for three (3) years from the date of the sale.

Borrowers who sold their home under FHA’s pre-foreclosure sale program are not eligible for a
new FHA insured mortgage for three (3) years from the date FHA paid the claim associated with
the pre-foreclosure sale.

Borrowers in default at the time of the short sale may be considered for an FHA insured mortgage
on a case-by-case basis if:

         The default was due to circumstances beyond the borrower’s control (i.e. the death of the
         primary wage earner, long term un-insured illness, etc.), and
         The credit report indicates the borrower had satisfactory credit prior to the circumstances
         that caused the default.

642.02 - Refinance Transactions

A refinance transaction replaces an existing loan(s) with a new loan to current owners, or places
financing on a property currently owned by the borrower where no financing exists. Refinance
transactions will be classified as either Limited Cash-out (Rate/Term) or Cash-out and must have a
benefit to the borrower. This can be evidenced by one or more of the following:

         Lower payment
         Lower interest rate
         Convert from ARM to fixed rate
         Pay off a balloon payment
         Convert from negative amortization loan to a fully-amortizing loan
         Consolidate debt
         Pay off tax lien
         Cash to pocket

NOTE: Depending upon the property’s location, additional evidence of benefit to the borrower
      may be required due to state or local regulations.



Icon Lending Guide – Section 600                                                          Revised 5/6/11
Properties listed for sale within the six months prior to underwriting are eligible for Icon financing
with evidence that the property was taken off the market prior to the application date.

642.02.1 - Limited Cash-Out (Rate/Term)

The LTV for any limited cash-out refinance is calculated on the current appraised value. Although
there is no minimum title-seasoning or mortgage seasoning requirement for limited cash-out
refinance transactions, Icon will prudently evaluate refinance transactions in which the borrower
recently acquired title to the property or recently refinanced the property.

Refinance transactions that are paying off an existing lien which was used to purchase the subject
property with less than one year mortgage seasoning, the LTV/CLTV will be based on the current
appraised value. Any increases in value must be adequately documented (i.e. comparables
support increase in value and market values are increasing, documentation of home
improvements, or a copy of the original appraisal showing subject property transferred below
market value). If the increase in value cannot be supported, the lower of the original purchase
price or the new appraised value is used to determine the LTV/CLTV.

If the existing lien being paid off is less than 12 months and was cash out refinance transaction
with a LTV greater than 80%, the new loan is ineligible as a rate and term transaction.

If the existing lien being paid off was closed within the previous 6 months and the previous
transaction was cash out refinance, the new transaction will be considered cash out. The note
date of the existing lien and the note date of the new lien will be used in determining the 6 months
time frame.

A property listed for sale within the previous six (6) months but was taken off the market prior to
the application date is eligible for a rate/term refinance transaction.

All refinance transactions must have a benefit to the borrower.

Borrowers must be obligated on the current mortgage loan. Refer to Section 642.07 - Continuity of
Obligation for details.

The mortgage amount is limited to sufficient funds required to accomplish the following:

         Pay off the unpaid principal balance of the existing first lien mortgage, including any
         prepayment penalty
         Pay off the unpaid principal balance of any existing subordinate mortgage that was used
         to purchase the subject property, including any prepayment penalty. A copy of the Final
         HUD-I executed by buyer and seller from the previous transaction may be required.
         Pay closing costs (including prepaid expenses)
         Disburse incidental cash to the borrower of no more than $2,000 or 2% of the loan
         amount, whichever is lower. The maximum cash back to the borrower on the DU Refi Plus
         program is $250.00.
         Principal curtailments are not permitted with the exception of the DU Refi Plus program
         which allows minimal curtailments.




Icon Lending Guide – Section 600                                                           Revised 5/6/11
The proceeds from a rate and term transaction to buyout an ex-spouse is permitted as long as the
borrower provides a copy of the recorded settlement agreement indicating the spouse is to be
bought out.
Texas rate/term refinance transactions, that are not subject to Texas 50(a)(6) requirements, are
eligible for a Renewal and Extension Rider if the loan is secured by the borrowers’ primary
residence. The new loan amount cannot exceed the payoff amount of the prior loan plus closing
costs and any amounts that may have been advanced by the lender. The borrower cannot receive
cash-back and loan proceeds cannot be used to pay off any other debts. The proceeds of the new
loan are used to renew and extend a purchase money first and if applicable, a purchase money
second or qualified home improvement loan.
When a first mortgage lien that is being renewed and extended, it is not required to have a
subordination agreement on the second lien, unless the title company requires a subordination
agreement to ensure that the lien will remain in first lien position.
A Renewal and Extension Rider, provided by the title company must be recorded with the deed of
trust in lieu of the subordination agreement. Any loan that is shown as being paid off on the
HUD-1 must be listed on the Renewal and Extension Rider
NOTE:      This policy only applies to rate/term refinance transactions located in the state of
           Texas and only when the rate/term is not subject to Texas 50(a)(6) requirements.

642.02.2 - Cash-Out

A refinance is considered cash-out if it exceeds any of the limitations indicated for rate/term
refinances, or if it involves disbursement of loan proceeds to pay off or pay down unsecured or
unseasoned debt.

The amount of cash disbursed in the form of paying off or paying down any unsecured or
unseasoned debt plus cash to the borrower may not exceed the limits specified in the program
details based on occupancy, CLTV, and documentation type. The maximum DTI on a cash-out
transaction is 45%.

There is a 6-month title-seasoning and 6 months mortgage seasoning requirement for all cash out
refinance transactions. Any prior refinances (limited cash out or cash out) must have closed at
least 6 months prior to the note date of the new transaction. The following also applies to cash-out
transactions:

    If the property was acquired less than 6 months from the application date, the loan is ineligible
    for cash out refinance transaction.
    If the property is owned free and clear (i.e. purchased for cash or any previous mortgage
    loan(s) have been paid off) and was purchased within the previous 6-12 months prior to the
    underwriting date, the LTV will be based on the lower of the sales price/acquisition cost or
    current appraised value.
    If the property is owned free and clear and was purchased more than 12 months from the
    underwriting date, the LTV will be based on the current appraised value.
    Properties listed for sale within the six months prior to underwriting are eligible with evidence
    that the property was taken off the market prior to the application date. Maximum LTV for
    cash-out refinance is the lower of 70% or maximum for product/occupancy/property type.




Icon Lending Guide – Section 600                                                         Revised 5/6/11
Properties with less than one year seasoning may require documentation supporting any
increases in value.

642.02.3 – Texas Section 50(a)(6) (Texas cash-out)

A Texas Section 50(a)(6) mortgage is a mortgage originated under provisions of the Texas
constitution which allows a borrower to take cash-out from a homestead property as long as
specific requirements are met. Texas law determines if the mortgage is a Texas Section 50(a)(6)
and the Texas definition of a ―cash-out refinance‖ or a ―limited cash-out refinance‖ may differ from
standard definitions. Once a loan is a Section 50(a)(6) loan, any subsequent refinance of the
homestead is also considered to be a Section 50(a)(6) loan and subject to all of its provisions.
The title commitment will identify if the loan is a Section 50(a)(6) loan.

The following are the general eligibility requirements for Texas Section 50(a)(6) loans.

         The property securing the loan must be an owner-occupied, 1-unit, primary residence and
         be classified as a homestead under Texas law. The following property types are eligible:
              Single family residence
              Planned Unit Development (PUD)
              Condominium.
         The property cannot exceed 10 acres, no exceptions. If adjacent property is owned, a
         survey must be provided that indicates the subject property is a separate parcel.
         The homestead must have access to and from a public roadway.
         The property cannot be classified for agriculture use according to the ad valorem tax
         designation.
         The maximum LTV/CLTV allowed under Section 50(a)(6) is 80%.
         Only one Section 50(a)(6) loan may be secured by the homestead property at any time.
         Twelve (12) month seasoning required when the existing loan is a Texas Section 50(a)(6)
         loan (first or second), determined by the Note date.
         Any spouse must execute the mortgage however the spouse is not required to be on the
         Promissory Note. All individuals on title and their spouse must sign all Texas cash-out
         documents. Only homestead owners can be on title at closing.
         Properties in a trust are ineligible.
         Power of Attorney is ineligible.
         FHA/VA transactions are ineligible.
The fees and charges on the loan cannot exceed 3% of the loan amount excluding prepaid items
and YSP. Discount points used to reduce the interest rate are not included in the 3% however
discount points used for closing costs must be included in the 3%. Fees paid to third parties (e.g.
appraisal, credit report, origination, pest control, title report, title insurance, third party closing
costs, etc. ) may be paid by the borrower but are included in the 3%. If closing costs are
 > 3%, fees must be reduced prior to close. Refunds to the borrower are not permitted.
Premium pricing is allowed if it is disclosed to the borrower at time of initial application.
The loan cannot close until twelve (12) days after the borrower has received and executed the
Notice Concerning Extension of Credit. The loan file must contain the Notice Concerning

Icon Lending Guide – Section 600                                                          Revised 5/6/11
Extension of Credit, individually signed and individually dated by all owners of the property and
their spouses. The beginning of the 12-day waiting period will never begin prior to the following:
              The receipt of the full credit file, which includes the signed and dated Notice
              Concerning Extension of Credit.
         NOTE: If the signed and dated copy of the Notice Concerning Extension of Credit is not
               provided in the credit file, the 12-day waiting period will not begin until Icon
               receives the signed and dated Notice.
There is a three (3) day right of rescission on all Section 50(a)(6) loans. The 3-day right of
rescission cannot begin until the closing date, following the 12-day waiting period.
The borrower’s first payment must be due no later than 60 days from closing.

There is a 6-month title seasoning required for all Texas cash-out refinance transactions.

Cash-out refinance transactions use the current appraised value to determine LTV/CLTV when the
property has a lien against it, regardless of the length of time the borrower has owned the
property. If the property is owned free and clear and was purchased within 6-12 months prior to
the application date, the LTV is based on the lower of the sales price/acquisition price,
documented by the HUD-1 or the current appraised value. Increase in property value must be
supported. If the property was purchased within 6 months prior to the underwriting date, the loan is
ineligible for cash-out.

If the borrower has an existing Section 50(a)(6) second lien and the new first mortgage will be a
cash-out then the existing second lien must be paid off.

The following are considered cash-out refinance transactions:
         Borrower is paying off a first and/or second mortgage that is not a Texas Section 50(a)(6)
         loan AND getting cash-out from the refinance.
         Borrower is paying off a first mortgage that is a Texas Section 50(a)(6) loan but is not
         getting any cash-out AND paying off a second lien that is not a Texas Section (50(a)(6)
         that was not used entirely to purchase the subject property or paying off a valid Texas
         home improvement loan.
         Borrower is paying off a first mortgage that is not a Texas Section 50(a)(6) loan AND is
         paying off a second lien that is a Texas Section 50(a)(6) loan and:
              The borrower is getting cash back from the refinance transaction, OR
              The borrower is not getting cash-out but is paying off the Texas Section 50(a)(6)
              second mortgage

The following documentation is required:

         A full appraisal, that includes an interior and exterior inspection, is required. The
         borrower(s) and the lender must sign a written acknowledgement as to the fair market
         value of the property on the date the loan closes. The appraisal must be attached to the
         acknowledgement.
         All individuals on title and their spouses must sign the Texas Home Equity Affidavit and
         Agreement (First Lien). (Fannie Mae Form 3185).



Icon Lending Guide – Section 600                                                          Revised 5/6/11
         The borrower(s) must be provided a complete and accurate copy of the final HUD-1 or
         HUD-1A and closing cannot occur less than one (1) business day thereafter. Borrowers
         are required to sign the Borrower’s Certification of Receipt of Settlement Statement and
         the Accuracy Thereof form at closing. Any changes made to the HUD-1 after the
         borrowers have signed will require an additional 24 hour waiting period.
         Borrower’s must receive a copy of all documents signed at closing and are required to
         sign the Texas Home Equity Receipt of Documents form.
         All loans must have a Texas Home Equity Loan Closing Instructions Addendum.
         A Texas Loan Policy of Title Insurance (Form T-2) is required. The policy must be
         supplemented by a Restrictions, Encroachments, Minerals Endorsement (Form T-19), an
         Equity Loan Mortgage Endorsement (Form T-42), including the optional coverage
         provided by paragraph 2(f), and a Supplemental Coverage Equity Loan Mortgage
         Endorsement (Form T-42.1). Deletions of the endorsements are not allowed.
         The legal instruments required for Texas Section 50(a)(6) loans are the following Fannie
         Mae forms:
              Texas Home Equity Security Instrument – Form 3044.1
              Texas Home Equity Note (Fixed Rate) – Form 3244.1
              Texas Home Equity PUD Rider (if applicable) – Form 3150.44
              Texas Home Equity Condominium Rider (if applicable) – Form 3140.44

642.02.4 – FHA Short Payoff

Borrowers are eligible for an FHA rate/term refinance transaction when the existing note holder(s)
will write off the amount of the indebtedness that cannot be refinanced into the new FHA insured
mortgage as follows:
         The borrower is current on their existing mortgage, and
         There is insufficient equity in the home based on its current appraised value, and/or
         The borrower experienced a reduction in income and does not have the capacity to repay
         the existing mortgage on the property.

In cases where the existing note holder(s) are not willing to write down the indebtedness, a new
subordinate lien may be obtained for the amount of which the payoff is short (subject to FHA
Guidelines). If payments on the new subordinate financing are required, they must be included in
the qualifying ratios unless the payments have been deferred for a minimum of 36 months.

642.03 - Inherited Properties
Inherited properties are eligible for a rate/term or cash-out refinance transaction with applicable
documentation (i.e. death certificate, court order, etc.). Borrower must qualify under program
guidelines and the reason for the title transfer must be explained.
642.04 - Construction to Permanent Financing

The conversion of construction-to-permanent financing involves the granting of a long-term
mortgage to a borrower for the purpose of replacing interim construction financing that the
borrower has obtained to fund the construction of a new residence.


Icon Lending Guide – Section 600                                                         Revised 5/6/11
The borrower must hold title to the lot, which may have been previously acquired or be purchased
as part of the transaction. All construction work (including any work that could entitle a party to file
a mechanics' or material-men's lien) must be completed and paid for—and all mechanics' liens,
material-men's liens, and any other liens and claims that could become liens relating to the
construction must be satisfied. The borrower must be the primary obligor on the mortgage or deed
of trust note for the permanent financing.

A construction-to-permanent financing mortgage may be closed as a limited cash-out refinance or
a cash-out refinance transaction. When a refinance transaction is used, the borrower must have
held legal title to the lot before he or she applied for the construction financing and must be named
as the borrower for the construction loan.

The same loan-to-value ratio requirements that apply for other purchase money and refinance
transactions apply to a construction-to-permanent financing mortgage. However, the method for
determining the loan-to-value ratio will vary based on the type of transaction and the length of time
the borrower has held legal title to the lot (and, in some instances, how title was acquired).

642.04.1 - Limited Cash-Out Refinance (Rate/Term)

When a rate/term refinance transaction or a cash-out refinance transaction is used in connection
with a lot that the borrower acquired 12 or more months before applying for the construction
financing, the loan-to-value ratio is determined by dividing the unpaid principal balance of the
construction-to-permanent mortgage by the current appraised value for the property (both the lot
and the improvements).

If the borrower acquired the lot within the 12 months preceding the date of the application for the
construction financing, the loan-to-value ratio is determined by dividing the unpaid principal
balance of the construction-to-permanent mortgage by the lesser of:
         The current appraised value for the property (both the lot and the improvements), or
         The total acquisition costs (which are the sum of the costs of the improvements and the
         sales price of the lot).

The file must include the appraiser's certificate of completion and a photograph of the completed
property. In addition, if the proceeds of the construction loan were used to build a new residence, a
copy of a certificate of occupancy (or an equivalent form) from the applicable government authority
is also required.

642.05 - Contract of Sale/Land Contract

A land contract (also known as contract for deed, contract sale, contract purchase, an Agreement
of Sale in Hawaii) is a form of seller financing in which the seller retains title to the property while
the buyer makes regular payments to the seller. Once the buyer pays the number of payments
and/or amount specified in the contract, the seller conveys the title to the buyer. A mortgage in
which the proceeds are used to pay the outstanding balance of a land contract or contract for deed
may be considered as either a purchase or a refinance transaction.

642.05.1 - Purchase

If the land contract or contract for deed was executed within the 12 months prior to the loan
application date, the transaction will be considered a purchase. Proceeds are used to pay the

Icon Lending Guide – Section 600                                                          Revised 5/6/11
outstanding balance on the installment land contract only. No loan proceeds can be disbursed to
the borrower. The LTV is calculated on the lower of:

         The appraised value at the time the new mortgage is closed, or
         The total acquisition cost. The total acquisition cost is defined as the purchase price
         indicated in the original land contract plus any out of pocket expenses paid by the
         borrower for rehabilitation, renovation, or energy conservation improvements.

642.05.2 - Refinance

If the land contract or contract for deed was executed more than 12 months prior to the loan
application date, the transaction will be treated as a rate/term refinance. Proceeds from the
refinance transaction may include the sum of the outstanding balance of the installment sales
contract and the costs incurred for rehabilitation, renovation, or energy improvements. A new
appraisal is required and the LTV must be calculated using the appraised value of the new
mortgage transaction.

642.06 - Lease Option

A transaction in which a borrower holds a lease with an option to purchase the subject property will
be treated as a purchase transaction. The LTV will be based on the lesser of the purchase price
or the current appraised value.

The seller may give the borrower credit toward the down payment based on a portion of previous
rent payments by the borrower. Copies of cancelled checks evidencing the monthly rent payment
per the purchase agreement are required. A comparable rent schedule is required to verify the
borrower paid in excess of the current market rents. Any monies paid in excess of the current
market rents may be credited back to the borrower.

642.07 - Continuity of Obligation

A continuity of obligation is required for all refinance transactions. A continuity of obligation exists
when one or more of the following occur:

         At least one borrower on the existing mortgage is a borrower obligated on the new
         mortgage.
         The borrower on title has been on title (but is not on the existing mortgage) and has been
         occupying the subject property for at least 12 months and has paid the mortgage for the
         previous 12 months (cancelled checks, front and back are required) or can demonstrate a
         relationship (spouse, relative, or domestic partner) with the current obligor.
         The existing loan being paid-off and the title are held in the name of a natural person or a
         limited liability corporation (LLC) as long as the borrower was a member of the LLC prior
         to transfer. Transfer of ownership from a corporation to an individual does not meet the
         continuity of obligation.
         The borrower recently inherited or was legally awarded the property (divorce/separation
         settlement).

If the borrower is on title and there is no continuity of obligation, the loan will be treated as a cash-
out refinance. The following applies:

Icon Lending Guide – Section 600                                                            Revised 5/6/11
         If the property is owned free and clear (i.e. purchased for cash or any previous mortgage
         loan(s) have been paid off) and was purchased within the previous 6-12 months prior to
         the application date, the LTV will be based on the lower of the sales price/acquisition cost,
         documented by the HUD-1 or current appraised value.
         If the property is owned free and clear and was purchased more than 12 months from the
         application date, the LTV is based on the current appraised value.
         If the borrower has been on title for a minimum of 6 months and there is an existing lien,
         the maximum LTV is 50% based on the current appraised value.

Properties gifted to the borrower are subject to the following:

         If the property is owned free and clear and there was not a transaction involved when the
         borrower was put on title, there is a 12-month seasoning requirement before the borrower
         can receive cash-out.
         If there is a lien on the property and the borrower has been on title a minimum of 6
         months, the loan will be treated as a cash-out refinance and the maximum LTV is 50%
         based on the current appraised value.

642.08 - Multiple Properties Owned

When the subject property is the borrower’s principal residence, generally there is no limit to the
number of financed properties a borrower may own, however, when utilizing an ARM product on
the Agency Conforming and Agency High Balance program, the maximum number of properties
owned is four (4) regardless of the subject properties occupancy type.

When the subject is a second home or investment property, the borrower may not own more than
4 properties that are currently being financed, including the borrower’s principal residence with the
exception of the Portfolio Conforming and Portfolio High Balance programs that allow 5-10
financed properties subject to specific criteria as detailed on the matrices.

 If a property is held in the name of a corporation and the borrower is the joint owner of the
corporation, the property will not be included in the number of financed properties as long as there
is no mortgage reported on the borrower’s credit report.

642.09 - Multiple Loans to One Borrower

Icon limits its exposure to the same borrower to a maximum of 4 loans, with an aggregate loan
amount of $2 million. The Jumbo program limits the total number of properties, financed or owned
free and clear to 4. Financed properties cannot exceed a cumulative loan amount of $2 million
dollars.

642.10 - Ineligible Transactions

The following are considered ineligible transactions:

         A borrower who currently owns a multi-unit property as his primary residence and is
         purchasing another owner occupied multi-unit property located in the same city/town.



Icon Lending Guide – Section 600                                                         Revised 5/6/11
         Restructured loans are ineligible. A restructured loan is a mortgage loan in which the
         terms of the original transaction have changed resulting the in the forgiveness of the
         mortgage or a restructure of the mortgage either through a modification or the origination
         of a new loan that results in any of the following:
                   Forgiveness of a portion of the principal and/or interest on either the first or
                   second Lien.
                   Application of a principal curtailment by or on behalf of the investor to simulate
                   forgiveness.
                   Conversion of any portion of the original mortgage debt to a soft subordinate
                   mortgage.
                   Conversion of any portion of the original mortgage debt from secured to
                   unsecured.
                   Payoff demands that are significantly lower than what is reporting on the credit
                   report or VOM as the high balance of the loan will be carefully examined.
         Transactions that do not meet the continuity of obligation requirement as outlined in
         Section 642.07
         Flip/bail out properties.
         Refinance transactions without a continuity of obligation.
         Refinance transactions without a benefit to the borrower.
         Purchase transactions were the Seller wants to lease back the subject property is not
         allowed, regardless of the duration of the lease back period.
         A transaction with an escrow holdback to bring the condition of the property to average or
         complete construction after the close of escrow.
         A transaction where more than one appraisal was obtained in an effort to secure an
         appraised value which substantiated the sales price of the subject property.

643 - Documentation Eligibility

Icon requires standard documentation for all loans as defined in this Lending Guide.

Credit reports cannot be older than 60 days at the time of funding. Loans with a credit report
greater than 60 days at funding will require a new credit report and will be subject to review. If
new liabilities are indicated the underwriter will recalculate the DTI and if the new DTI exceeds 3%
or more the loan will be re-submitted to DU, with the updated information, to determine if the loan
is still eligible.

Mortgage/rental verification should be within 60 days at the time of closing. If the mortgage is not
reported on the credit report, a VOM is acceptable provided it is from a known lending institution.
VORs are acceptable from a property management company. Borrowers who rent from an
individual are required to provide the most recent 12 months cancelled rent checks to evidence the
rental payment history. In addition, private party mortgages and borrowers renting from an entity
affiliated with the transaction require 12 months cancelled rent checks.

Income documentation requires the borrower’s most recent 30 day paystub with YTD earnings and
previous years’ W2. Paystub cannot be older than 30 days at time of funding. Asset


Icon Lending Guide – Section 600                                                             Revised 5/6/11
documentation cannot be older than 60 days at time of funding. At underwriter’s discretion, more
current income and/or asset documentation may be required.

A verbal verification of employment must be completed within 5 days of closing.

The title commitment cannot be older than 90 days at the time of docs and 120 days at the time of
funding. A title supplement or gap letter will be required when the title commitments exceeds 90
days. A new title report is required when the commitment exceeds 120 days.

The Closing Protection Letter and Survey cannot exceed 60 days at the time of docs.

Appraisals cannot be greater than 90 days at the time of underwriting and 120 days at the time of
funding. A new appraisal with three new comparables is required for appraisals greater than 120
days. At underwriter discretion, a recertification with new comparables may be required at the
time of underwriting when the appraisal is 90 days old.

Applications and early disclosures aged in excess of 90 days will be require a new application be
provided and re-issue of the early disclosures.

650 - Credit

A borrower’s credit history is considered to be one of the strongest indicators of the borrower’s
willingness and ability to repay the mortgage. A borrower who maintains an excellent long credit
history is more apt to continue managing his credit obligations in a timely manner. In contrast, a
borrower whose credit history indicates continual slow pays will most likely not change his pay
habits with a new mortgage.

A printed/written credit report is required for all borrowers applying for financing through Icon.
Each borrower must have an acceptable credit profile. The borrower’s credit history should
demonstrate his willingness and ability to manage his financial obligations in a timely manner is a
key element in determining the comprehensive risk for a mortgage.

The borrower’s overall credit history, including but not limited to, credit score, repayment patterns,
credit utilization, and level of experience in using credit has an affect on the eventual default risk of
a mortgage. As such, the underwriter will assess the risk through a comprehensive review of the
borrower’s credit history.

DU will generally determine the credit eligibility on the Agency Conforming Program. Icon will defer
to the DU Findings for trade line requirements, credit depth, mortgage/rental history requirements,
pay history, adverse credit requirements, re-established credit requirements, and consumer credit
counseling. Bankruptcy/foreclosure/short sales, refer to Section 650.14.3 –
Bankruptcy/Foreclosure/Deed-in-Lieu for specific Icon requirements.

The following Credit section defines the parameters for all other programs.




Icon Lending Guide – Section 600                                                           Revised 5/6/11
650.01 - Traditional Credit

Traditional credit history is used to determine the credit risk by evaluating the borrower’s
established credit history. Traditional credit consists of revolving, installment, and mortgage
trades.
Minimum trade lines will be determined by DU Findings.
650.02 - Non Traditional Credit

Non traditional credit consists of different reference sources such as utilities, insurance premiums,
cell phone, etc and is used in lieu of traditional credit trades. Icon does not extend financing to
borrowers with only non-traditional credit references.

650.03 - Credit Report
Icon will accept the submitting broker’s credit report provided it is generated by one of Icon’s
approved credit vendors. The credit report cannot be greater than 60 days at the time of funding.

The following is the list of Icon approved credit agencies:
         Credco
         Credit Plus
         Informative Research
         Universal Credit

A traditional credit report includes both credit and public record information for each applicant.

The credit report requirements are as follows:
         Cannot be greater than 60 days old at the time of funding.
              If original credit report will be over 60 days at funding, a new credit report will be
              obtained by Icon.
              If new liabilities are indicated, the loan will be subject to review by the underwriter and
              if the DTI increased by 3% or more the loan will be re-submitted to DU, with the
              updated information, to determine if it is still eligible.
         Must identify each applicant by name and verify the individual’s social security number.
         Any social security number discrepancy must be disclosed by the Credit Reporting
         Agency.
         Be an original report with no corrections, erasures, white out, etc.
         Show the names of the national repositories used to compile the information.
         Be issued by a consumer reporting agency that obtains or verifies all information from
         sources other than the borrower.
         Provide the name, address and phone number of the reporting agency preparing the
         report.
         Provide a credit score from each repository accessed.
         Report all inquiries made within the previous 90 days.

Icon Lending Guide – Section 600                                                             Revised 5/6/11
         Search all repositories for each locality in which the borrower has resided during the
         previous 2 year period.
         Access at least three national repositories and identify those which were accessed for
         compiling report. Acceptable repositories are Equifax, Experian, and Trans Union.
         Verify all disclosed accounts including but no limited to the date the account was opened,
         the high credit limit, the current status, the current balance, required payment, the date of
         the last activity on the account, and a payment history which provides a historical status of
         each account with the number of times the account has been past due. If a creditor does
         not include a reference on an open account, a separate written verification may be
         required at underwriter’s discretion. Open accounts must have been updated within 90
         days of the credit report.
         Contain a search of at least two public record sources and disclose any tax liens,
         judgments, bankruptcies, and foreclosures that are reportable under the Fair Credit
         Reporting Act.

650.04 - Unacceptable Credit Reporting Practices

The credit repository should not change information compiled from the credit bureau. Duplicate
information is permitted to be deleted as well as translate codes to ―plain‖ language or make
appropriate adjustments to resolve conflicting information.

The credit repository should only change information that is brought to the credit repository’s
attention by a creditor, the borrower/applicant or a party that is not associated with the sale,
purchase or mortgage financing.

Examples of unacceptable credit report practices are:

         Deletion of trade lines that pertain to a bankruptcy.
         The addition of a payment amount to a creditor’s trade line when the creditor does not
         require a payment.
         Restriction of information collected to a period of time shorter than seven years.
         Remove any derogatory information without written authorization of the creditor.
         Failure to report social security number discrepancies.

650.05 - Consumer Credit Bureau Blocks

Icon requires a credit report for each applicant from each of the 3 national credit repositories.
Consumers have the ability to block or freeze access to their credit when they are victims of
identity theft. The reporting agencies will advise of a security block or security freeze. All security
freezes from all bureaus will need to be lifted in order for Icon to decision a loan.

650.06 - Credit Score

The credit score has proven to be a consistent predictor of performance compared to traditional
underwriting and processing methods. To ensure the validity of the credit score, each trade line
should reflect all repositories that report the score. This will identify which trade lines were
considered when generating each credit score. Underwriters will closely review the scores, the
credit score codes, and the borrower’s credit history to ensure validity. Credit score codes must
Icon Lending Guide – Section 600                                                          Revised 5/6/11
be consistent with trade line information. For example, if the credit score code identifies
delinquent accounts, the credit report must also contain delinquent trades. Scores that do not
appear to represent an accurate picture of the borrower’s credit risk will not be considered usable.

Each borrower is required to have one valid credit score on all of Icon’s conventional loan
programs. When utilizing an ARM product on the Agency Conforming or Agency High Balance
program the borrower is required to have a minimum of two (2) credit scores.

Icon will allow one borrower on a transaction to not have a credit score on the FHA program
subject to the following:

         Loan must receive an ―Approve/Eligible‖ Finding.
         Only one borrower cannot have a credit score.
         DTI cannot exceed 31%/43% regardless of DU Findings.
         Two (2) months reserves are required. Reserves must be from borrower’s own funds.
         All borrowers must occupy the subject property.
         The borrower(s) with the credit score(s) must have a strong credit profile with no
         derogatory credit. If the credit profile of the primary borrower does not meet requirements
         the loan will be downgraded to ―Refer‖ and the loan will be ineligible.

650.07 - Determining the Representative Score

The representative credit score is determined as follows:

         If there are three (3) valid credit scores, the middle score is used.
         If there are three (3) valid credit scores and one is a duplicate, the duplicate is used.
         If there are two (2) valid credit scores, the lower of the two is used.
         If there is one (1) valid credit score that score is used.

650.08 - Reviewing Credit History & Analysis of Risk

The borrower’s willingness to repay debt is a key factor when determining the risk of the mortgage
transaction. The borrower’s credit history must support a responsible attitude towards credit. At
times, additional documentation may be required to establish this.

Determining the acceptability and strength of the borrower’s credit entails reviewing the entire
credit history. The underwriter must evaluate the following credit aspects in order to conclude an
acceptable credit history exists:

         Type and amount of outstanding credit
         Length of borrower’s credit history
         The use of the available credit
         Recent changes in the number of open accounts or overall amount of outstanding credit.
         Payment history and status of all accounts


Icon Lending Guide – Section 600                                                           Revised 5/6/11
         Recent inquiries showing on the credit report.
         Any public records or adverse items

650.09 - Social Security Number

All borrowers must have a valid, legitimate social security number. Borrowers without a valid,
legitimate social security number are ineligible for Icon financing. In addition, borrowers who have
a history of using invalid/illegitimate social security numbers are not eligible for Icon financing

650.10 - Potential Red Flags on the Credit Report

650.10.1 - Incorrect, Duplicate and Multiple Social Security Numbers

When a social security number search returns conflicting information, it can be an indicator of a
red flag. Incorrect, duplicate and multiple social security numbers shown on the credit report will
require further review. To eliminate any confusion, Icon requires a legible copy of the borrower’s
social security card or a legible printout from the Social Security Administration verifying the
borrower’s number.

         Incorrect social security number - the information associated with the social security
         number entered is not available.

         Duplicate social security number – the information indicates more than one individual is
         associated with the social security number entered.

         Multiple social security number – information indicates an individual has more than one
         social security number.

         Deceased Borrowers – information states the person to whom the social security number
         was issued has been reported deceased.

650.10.2 - Credit Report Alerts

Pursuant to the Fair and Accurate Credit Transactions Act, consumers have the right to protect
themselves from identity theft. As a measure to protect against this, consumers can request that a
credit reporting agency pass a fraud flag to users who request their credit report. Active military
personnel can also request the credit reporting agency to pass an active duty flag.

Icon’s underwriter will evaluate each of the bureaus to ensure there is no fraud or active duty flags
reporting. If there is an alert on the credit report, Icon’s underwriter must follow the instructions of
the consumer on the credit report before proceeding with the loan file. A borrower cannot be
declined for an alert. Icon and/or the submitting broker will need to provide documentation
evidencing they have contacted the borrower if the credit report reflects a fraud alert.
Documentation supporting communication with the borrower is to be placed in the credit file.

650.10.3 - Address & Employment Discrepancies

The credit reporting agency will indicate if the address and/or employment provided by the creditor
differ from the address on the credit report. Any discrepancy should be reviewed and resolved as
it may be a red flag for fraudulent activity.

Icon Lending Guide – Section 600                                                           Revised 5/6/11
650.10.4- Inquiries

The credit reporting agency will list all inquiries within the last 90 days. A letter of explanation from
the borrower is required on all credit inquiries that appear on the credit report. The letter of
explanation must specifically address each individual inquiry and indicate if new credit was
extended. If new credit was extended, the underwriter will reevaluate the loan to determine if the
new credit will affect the borrower’s ability to repay the loan.

FHA requires all inquiries made within the last 90 days, with no new credit established, to be
explained by the borrower.

650.10.5 - Changes in Credit Usages

Recent changes in the borrower’s credit usage may be an indication of the borrower having
difficulty maintaining his financial obligations. The underwriter should review all trades to
determine if there has been a recent significant increase in the number of open accounts and/or
the number and amount of outstanding balances.

650.11 - Authorized Users

Icon will not consider an account in which the borrower is an authorized user as an eligible trade.

650.12 - Payment History

A borrower’s ability to handle financial obligations is a good indicator of how the borrower will
repay the new mortgage. Although all of the credit history is evaluated, an emphasis is placed on
the pay history of the previous 24 months.

650.13 - Mortgage/Rental History

With the exception of the Agency Conforming program, a 24 months mortgage/rental history is
required for all borrowers. The credit report must provide the entire mortgage payment history. If
the mortgage history reporting on the credit report is less than 24 months, a history from the
mortgage servicer or 12 months cancelled checks are required. If the lien holder is a private party,
the borrower must provide 12 months consecutive cancelled checks (front and back), depending
on the selected program. When utilizing an ARM product on the Agency High Balance program a
loan will be ineligible if there are any housing payment delinquencies of 0x60 or greater within the
last 12 months regardless of the LTV or DU Findings.

When a rental verification is required, a rental verification may be accepted in the form of a credit
report trade line or a direct verification of rent (VOR) provided by a professional management
company. A VOR from an individual other than a professional management company is not
acceptable. If the landlord is not a professional management company, then 12 months
consecutive cancelled checks (front and back) are required to verify the rental history.

A verification of mortgage or a verification rent cannot be used to build a trade line in an effort to
meet the minimum established trade line requirements.

Refer to the individual program details for requirements on mortgage delinquency.


Icon Lending Guide – Section 600                                                           Revised 5/6/11
In the case of a non-arms length transaction in which the borrower rents from a family member or
if the borrower currently rents the subject property, 12 months cancelled checks (front and back)
are required to demonstrate the rental history.

650.14 - Derogatory Credit

The DU Findings will determine the acceptability of derogatory credit on the Agency Conforming,
Portfolio Conforming and FHA programs with the exception of unpaid collections and charge-offs.
Refer to Section 650.14.7 – Unpaid Collections/Charge-offs for requirements.

FHA programs require a letter of explanation for all derogatory credit.

The following policy applies to all other loan programs:

Generally, adverse credit is not allowed in the previous 24 months. Adverse credit is defined as
any trade reporting ≥ 90 days, collections, charge-offs, judgments, garnishments, tax liens, etc. All
open items must be paid prior to or at closing with the exception of medical collections < $250 per
incident or $1000 cumulative, which may be excluded from this requirement and will not be
required to be paid off.

650.14.1 - Past Due
Any past due accounts are required to be paid current prior to or at closing.

650.14.2 - Disputed Accounts

If the borrower states the information reported by the credit bureau is inaccurate or incorrect (i.e.:
lates, public records, tradelines that do not belong to the borrower, etc), documentation must be
provided by the creditor that the account in question does not belong to the borrower or that the
reported payment history is inaccurate and no further action is required.

If the tradeline does belong to the borrower and the reported payment history is accurate, it must
be taken into consideration in the credit risk assessment regardless of the age of the account or
the dispute. A new credit report, with the tradeline no longer reported as disputed, is required.

650.14.3 - Bankruptcy/Foreclosure/Deed-in-Lieu/Short Sale

Unless stated differently in the program details, a borrower is not eligible for financing if the
borrower has a bankruptcy discharged in the previous 4 years and/or a foreclosure settled within
the previous 7 years.

A bankruptcy can either be a Chapter 7 in which the borrower discharges all debt or a Chapter 13
in which the borrower completes a reorganization of debt. The age of a bankruptcy is calculated
from the date of the discharge for Chapter 7 and Chapter 13.

A Chapter 13 must be discharged in order for the loan to be eligible under Icon’s programs. A
borrower with a Chapter 13 that has been dismissed is not eligible. A Chapter 13 discharge
indicates a re-establishment of debt by the borrower by meeting the terms of the repayment plan.

A borrower with multiple bankruptcies is not eligible for Icon financing. A Chapter 13 becoming a
Chapter 7 is considered one bankruptcy provided the Chapter 13 was not dismissed by the court.

Icon Lending Guide – Section 600                                                          Revised 5/6/11
If the Chapter 13 was dismissed and borrower then filed a Chapter 7, the borrower would not be
eligible for Icon financing.

A foreclosure is defined as any 120-day mortgage late within the last 48 months, notice of default,
settlement on a real estate secured trade line, and forbearance agreements. The age of the
foreclosure is calculated from the date settled or the date of the most recent 120-day mortgage
late.

Borrowers are required to have re-established credit from like sources (i.e.: revolving, installment,
mortgage) paid satisfactorily. For bankruptcy, the borrower is to have a four year re-established
credit history. For foreclosure, borrower must have at minimum a seven year re-established credit
history and the borrower must be purchasing an owner-occupied property. A letter of explanation
is required from the borrower.

A foreclosure requires the following:
         A 7 year waiting period.
         A 3 year waiting period with a maximum 90% LTV or program maximum, whichever is
         less, when the foreclosure was due to document extenuating circumstances and subject to
         the following:
              Purchase of primary residence only
              Rate/term transactions are permitted for all occupancy types subject to eligibility
              guidelines.
A deed-in-lieu of foreclosure requires the following:
         2-year waiting period with a maximum 80% LTV or program maximum, whichever is less.
         4-year waiting period with a maximum 90% LTV or program maximum, whichever is less.
         7-year waiting period, the maximum LTV allowed per program guidelines.
         2-year waiting period with a maximum 90% LTV or program maximum, whichever is less,
         when the deed-in-lieu of foreclosure was due to documented extenuating circumstances.

A re-established good credit history consists of:
        Minimum 4 years (bankruptcy), 7 years (foreclosure) and 2 years (deed-in-lieu) re-
         established or reaffirmed credit with like sources.
        Minimum credit score of 680.
        Trade line requirements are determined by DU Findings.
        No past due or late since the discharge on the mortgage/rental rating.
        No more than 2x30 lates on installment or revolving trade lines in the previous 24 months.
        No 60 day lates since the discharge.
        No new public record, collection or charge-off.
NOTE: Second home and investment properties are ineligible when the borrower is < 7 years
      from the foreclosure completion date. Cash-out transactions are also ineligible < 7 years
      from the foreclosure completion date
A short sale, including a pre-foreclosure event, requires the following:


Icon Lending Guide – Section 600                                                          Revised 5/6/11
         Short sale due to financial mismanagement:
              Minimum of 4 years, and up to 7 years, must have elapsed since the completion of the
              short sale.
              The borrower may purchase a primary residence, second home or investment
              property with the greater of 10% minimum down payment or the minimum down
              payment required for the transaction.
              Borrower must have re-established an acceptable credit history.
              Minimum 680 credit score required.
         Short sale due to documented extenuating circumstances:
              A minimum of 2 years must have elapsed since the completion of the short sale.
              The borrower may purchase a primary residence, second home or investment
              property with the greater of 10% minimum down payment or the minimum down
              payment required for the transaction.

650.14.4 - Forbearance

Forbearance is an agreement to rearrange the terms of the original mortgage. For evaluation
purposes, forbearance or a loan workout is considered a foreclosure. A letter of explanation is
required from the borrower.

650.14.5 - Consumer Credit Counseling

Borrowers who have previously participated in consumer credit counseling are eligible for
financing provided the following exits:

         A minimum of 12 months have passed since the completion of the consumer credit
         counseling program.
         All accounts are paid satisfactorily.
         The borrower has demonstrated the ability to manage his credit since completion of the
         consumer credit counseling program.

Borrowers who participated in Consumer Credit Counseling and do not meet the above
parameters will be evaluated with exceptions granted on a case-by-case basis.

650.14.6 - Tax Liens and Judgments

All open tax liens and judgments must be paid off prior to or at closing. Tax liens and judgments
are not allowed to remain open as they could effect Icon’s first lien position. Loan proceeds may
not be used to pay off tax liens or judgments.

A letter of explanation from the borrower regarding the tax lien or judgment may be required by the
underwriter.




Icon Lending Guide – Section 600                                                      Revised 5/6/11
650.14.7 - Unpaid Collections/Charge-offs

Excessive unpaid collections and charge-offs are required to be paid prior to or at closing
regardless of DU Findings. Medical collections and charge-offs < $250 per incident or $1000
cumulative are allowed and are not required to be paid off.

660 - Ratios/Liabilities

A borrower’s monthly debt obligations in conjunction with the proposed housing expense and
stable monthly gross income are used to calculate the ratios. These are used as a benchmark
when determining whether or not the borrower will be able to meet the expenses involved in
homeownership.

660.01 - Housing Ratio

When calculating the monthly housing debt-to-income ratio, the following are included in the
proposed housing expense:

         The proposed principal and interest payment on the first and second (if applicable)
         mortgages secured by the subject property.
         The monthly amount of the hazard insurance
         The monthly amount of the real estate taxes
         The monthly amount of the mortgage insurance premium (if applicable)
         The monthly amount of home owner association dues (if applicable)
         The monthly amount of the flood insurance (if applicable)
         The monthly leasehold payment (if applicable)
         Any special assessments

If the property is new construction or recently built, the taxes are based on the estimated taxes
based on the completed improvements versus the unimproved land.

If the property is a resale, and the current taxes appear below standard county assessments, the
taxes will be based on the greater of the taxes per the title commitment/tax cert or the appraisal.

For purchase transactions located in California, the taxes will be calculated at 1.25% for qualifying.
Docs, funding figures and escrow accounts will be based on the higher of 1.25% of the sales price
or the current tax base.

660.02 - Debt-to-Income Ratio

When calculating the monthly debt-to-income ratio, the following are included:
         The proposed housing expense
         Monthly payments on all revolving debt
         Monthly payments on all installment debt with more than ten months remaining


Icon Lending Guide – Section 600                                                        Revised 5/6/11
         Monthly payment for Alimony/Child support if applicable
         Monthly PITI for second homes and other investment properties that are non-income
         producing real estate
         Monthly taxes, insurance, HOA dues for real estate owned free and clear

Refer to Sections 660.03 through 660.07.9 for additional items that may be included in the debt-to-
income ratio calculation.

660.03 - Conversion of a Principal Residence

If the transaction is a purchase and the borrower is retaining his current principal residence, the
following must be met:

Current principal residence is pending sale:
         If the current principal residence is pending sale but the transaction will not be closed (with
         title transfer to a new owner) prior to the new close of the new transaction, then both the
         current and the proposed mortgage payments are used to qualify the borrower for the new
         transaction.
         The borrower will also need verified six (6) months PITI reserves for both properties. Two
         (2) months PITI reserves for each property are permitted provided borrower’s current
         primary residence has 30% equity, minus outstanding liens, documented by a full
         appraisal or an AVM. The appraisal or AVM must be dated within sixty (60) days of the
         Note date. A Broker Price Opinion (BPO) is not allowed.
         The full PITI of the borrower’s current residence does not need to be included in the ratios
         if there is an executed sales contract and all contingencies have been released. A copy of
         the lender’s commitment letter/approval showing all no outstanding approval conditions
         exist for the purchaser is required.

Current principal residence is converting to a second home:

         If the borrower is converting his current principal residence to a second home, then both
         the current and the proposed mortgage payments and taxes and insurance must be
         included in the ratios.
         In addition, six (6) months PITI reserves are required for both properties. Reduced
         reserves of a minimum of two (2) months PITI for both properties may be considered if the
         current principal residence has at least 30% equity, minus any outstanding liens,
         documented by a full appraisal or an AVM. The appraisal or AVM must be dated within
         sixty (60) days of the Note date. A Broker Price Opinion (BPO) is not allowed.

Current principal residence is converting to an investment property – Agency Program:

         If the borrower is converting his current principal residence to an investment property, the
         borrower may use up to 75% of the gross rental income less outstanding liens, taxes and
         insurance for qualifying if the current principal residence has at least 30% equity, minus
         any outstanding liens, documented by a full appraisal or AVM. The appraisal or AVM
         must be dated within sixty (60) days of the Note date. A Broker Price Opinion (BPO) is not
         allowed. When utilizing an ARM product on the Agency Conforming or the Agency High


Icon Lending Guide – Section 600                                                          Revised 5/6/11
         Balance program only a full appraisal or 2055 may be used to document the equity in the
         current principal residence.
         The rental income must be documented with:
              A copy of the fully executed lease agreement.
              The receipt of a security deposit from the tenant and deposit into the borrower’s
              account.
         If the 30% equity in the property cannot be documented, rental income may not be used to
         offset the mortgage payment. Both the current and the proposed mortgage payments must
         be used to qualify the borrower for the new transaction; and 6 months PITI reserves are
         required for both properties.
         If the property being retained as an investment is a multi-unit property and borrower is
         vacating one unit, rental income may be used for the other units if the income is verified by
         Schedule E, regardless of the equity position. To give rental income to the unit currently
         occupied by the owner, borrower must have 30% equity in the property.

Current principal residence is converting to an investment property – FHA Program:
         If the borrower is converting his current principal residence to and investment property,
         FHA does not allow any rental income from the property being vacated to be used to
         offset the mortgage payment on that property except as follows:
              Rental income on the property being vacated, reduced by the appropriate vacancy
              factor as determined by the FHA Homeownership Center with jurisdiction in the
              properties area (refer to: http://www.hud.gov/offices/hsg/sfh/ref/sfh2-21u.cfm for the
              applicable vacancy factor) may be considered under the following circumstances:
                   The borrower is relocating with a new employer, or being transferred by their
                   current employer to an area not within reasonable or locally recognized
                   commuting distance. A copy of the fully executed lease agreement, with a
                   minimum one (1) year lease term, from date of loan closing, is required. Evidence
                   of the security deposit and/or first months rent being paid to the borrower is also
                   recommended.
                   The borrower has a minimum of 25% equity in the current principal residence
                   documented by a full appraisal or exterior-only appraisal (FNMA 2055). The
                   appraisal cannot be more than six (6) months old. The equity may also be
                   documented by comparing the unpaid principal balance to the original sales price
                   of the property.

660.04 - Qualifying Ratios

The maximum qualifying ratios are noted in each program matrix.

660.05 - Liabilities

660.05.1 - Debt Payoff/Consolidation

―Pay down‖ of a mortgage or installment account to 10 months or less to qualify the borrower is not
allowed. Installment and mortgage accounts must be paid in full. Payoff of revolving accounts to
qualify the borrower is generally not allowed. Any account paid off to qualify the borrower must be
closed. A copy of the letter from the closing agent to the creditor must be provided.
Icon Lending Guide – Section 600                                                         Revised 5/6/11
Potential credit abusers are not eligible to payoff debt to qualify. Debts that are paid off or will be
paid through the transaction are excluded from the debt ratio.

660.05.2 - Revolving

The minimum monthly payment for all revolving charge accounts with a balance is included in the
monthly debt ratio regardless of the number of payments remaining on the account. If the
revolving account is paid off and closed during the origination process or at loan closing, the
payment is not required to be included in the DTI ratio. Documentation is required confirming the
account was paid and closed.

If the credit report does not indicate the minimum monthly payment, the underwriter will use the
greater of $10 or 5% of the outstanding balance.


660.05.3 - Installment Debt

Installment accounts with more than ten monthly payments remaining are included in the debt
ratio. This applies to student loans in deferment and loans in forbearance. Installment accounts
with fewer than ten monthly payments remaining do not have to be included in the debt ratio.
However, the underwriter does need to evaluate if the remaining payments and outstanding
balances will have a significant impact on the borrower’s ability to meet his monthly obligations.

660.05.4 - Lease Payments

Lease payments are included in the debt ratio regardless of the number of payments remaining as
the expiration of the lease generally leads to a new loan or a new lease. Therefore, it is
considered a recurring monthly expense.

660.05.5 - Deferred Installment Debt

Deferred installment debt (i.e.: student loans, loans in forbearance) are included in the borrower’s
debt ratio if there are more than ten months remaining. For student loans, if the monthly payment
is not indicated on the credit report, the minimum monthly payment is calculated at 1.5% of the
outstanding balance. To use an amount less than 1.5% of the outstanding balance, the borrower
will need to provide documentation indicating the monthly payment.

660.05.6 - Loans Secured by Retirement Accounts

Payments of loans secured by the borrower’s 401(k) or Savings Investment Plan (SIP) are not
included in the debt ratio because they are voluntary payments. However, the underwriter will
consider these payments in terms of their possible impact on cash flow and debt ratios. The
borrower should provide a debt repayment plan if the inclusion of a 401(k) or SIP loan payment in
the monthly debts results in very high total obligations to income ratio or in a negative cash flow.

660.05.7 - Business Debt

Business debt can be excluded from the borrower’s debt ratio if the borrower can provide the most
recent 12 months cancelled checks (front and back) drawn against the business account
demonstrating that the debt has been paid timely on a regular basis.

Icon Lending Guide – Section 600                                                           Revised 5/6/11
If the borrower cannot provide sufficient evidence the account was paid by the business or paid
timely on a regular basis, the liability is factored in the borrower’s debt ratio. If the account has a
history of delinquencies, the liability will be factored in the borrower’s debt ratio.

When there are Schedule C and/or Schedule E losses for a business owned solely by a non-
signing spouse and it can be documented that the borrower has no involvement in the business,
the loss will not be factored into the borrower’s debt ratio unless the underwriter determines that
the loss is substantial enough to effect the borrower’s ability to re-pay the loan.

660.05.8 – Home Equity Line Of Credit

The payment on an existing HELOC must be included in the borrower’s debt ratio calculation. If
the actual payment is not shown on the credit report the payment on a HELOC with an outstanding
balance is calculated at 1% of the outstanding balance or the payment reflected on the borrower’s
statement may be used.

660.06 - Contingent Liabilities/Co-Sign

A contingent liability may or may not be considered when determining the borrower’s monthly
recurring obligations. A contingent liability typically exists when the borrower co-signs another
individual’s loan.

The payment is not counted in the borrower’s debt ratio if documentation is provided which clearly
evidences the primary obligor has made the payment consistently and timely for a minimum of 12
months. Acceptable forms of documentation are cancelled checks (front and back), bank
statements of the primary obligor’s account showing consistent amounts disbursed, money order
receipts, or a recorded settlement agreement.

If documentation cannot be provided evidencing consistent, timely payments, or the obligation has
a history of delinquencies, the liability will be factored in the borrower’s debt ratio.

660.06.1 - Court Ordered Assignments of Debt

When the borrower has an outstanding debt that was assigned to another party by court order and
the creditor does not release the borrower from the liability, the borrower has a contingent liability.
This obligation is not factored in the debt ratio as long as borrower provides a copy of the recorded
court document assigning the liability to another individual. Icon will disregard the payment history
after the assigned debt but will evaluate the borrower’s payment history prior to the assignment.

660.06.2 - Property Settlement “Buyout”

If the borrower is no longer responsible for a liability as a result of a divorce settlement but has not
been released from the obligation by the creditor, the payment will not be counted in the
borrower’s ratios if the borrower provides a copy of the recorded settlement agreement evidencing
the borrower is no longer responsible for the obligation.

If the borrower’s interest in a property is bought out by another co-owner of the property, and the
creditor does not release the borrower from the obligation, the borrower has a contingent liability.
The liability will not be counted in the borrower’s debt ratio as long as the borrower provides
recorded documentation confirming transfer of title to the property.

Icon Lending Guide – Section 600                                                           Revised 5/6/11
660.06.3 - Mortgage Assumptions

If a borrower sells a mortgaged property that he owns and the buyer assumes the outstanding
mortgage debt without a release of liability, the borrower has a contingent liability. The debt is not
factored in the borrower’s monthly recurring debt if borrower provides the all of the following
documentation:
         Proof of transfer of ownership
         A copy of the executed legal assumption agreement
         A 12 month payment history for the property purchaser that assumed the mortgage
         showing timely payments have been made (12 months cancelled checks, credit report)

If the payment history cannot be verified or if there are delinquencies, the payment will be factored
in the borrower’s monthly debt ratio.

660.07 - Other Types of Liabilities

660.07.1 - Alimony/Child Support

If the borrower is required to pay alimony, child support, or maintenance payments, the monthly
payment is counted as a recurring debt and is factored in the debt ratio. A copy of the recorded
divorce decree, recorded separation agreement, or property settlement agreement is required to
evidence the amount of the monthly payment and the duration of the payment. If the payments
remaining are less than ten months, the obligation is not counted in the debt ratio.

660.07.2 - Garnishment

A garnishment is an order to attach property or income to satisfy non payment of a debt.
Documentation to indicate the type of obligation, the amount of debt, the length of time required to
repay the debt in full and the applicant’s explanation are required. The monthly payment of the
garnishment should be included in the borrower’s debt-to-income ratio unless the underwriter
determines the debt should be paid in full.

660.07.3 - Bridge Loans


A bridge (or swing) loan is an acceptable source of funds provided the following requirements are
met:
         The bridge loan cannot be cross-collateralized against the new property.
         The lender must document the borrower’s ability to make the payments for the new home,
         the current home, the bridge loan, and any other obligations.

660.07.4 - Demand Loans

A demand loan does not have a monthly payment as it becomes due and payable in full on a
specified date. The debt may not be secured.




Icon Lending Guide – Section 600                                                         Revised 5/6/11
If the note is due within two years of the time of application and the borrower has sufficient
reserves available to repay the obligation in full, the obligation is not counted in the monthly debt
ratio.

If the borrower does not have sufficient reserves available to repay the obligation in full at the end
of the two year period, the obligation is treated as an installment loan and will be factored in the
debt ratio. A minimum payment of 5% of the unpaid balance is used for a monthly payment.

660.07.5 - Net Rental Loss/Negative Rent Income

If the investment property is owned free and clear, then only current real estate taxes, hazard
insurance, and homeowner’s association dues are included in the monthly debt ratio.
Documentation is required evidencing the property is free of any liens.

If there are outstanding liens on the investment property, the negative rental income should be
calculated using 75% of the gross rents less the monthly PITI. Refer to Section 670.3.11(k) –
Rental Income for additional details.

Any rent loss is added to the borrower’s monthly debt obligations versus a reduction to borrower’s
monthly income.

660.07.6 - Un-Reimbursed Business Expenses

Automobile loan payments and automobile lease payments that are included as un-reimbursed
expenses on the tax returns are considered recurring debts and are factored in the debt ratio.
They are not deducted from the income. Other un-reimbursed expenses may be treated as
reductions to income.

660.07.7 - Overdraft Protection Account

Overdraft is considered an unsecured revolving line of credit. If there is a balance, a minimum
monthly payment is factored in the ratios (the greater of $10 or 5%).

660.07.8 - Payroll Deductions

The underwriter will determine if any payroll deductions, other than standard deductions,
appearing on the borrower’s pay stub will be included in the debt ratio. The deduction can consist
of credit union, employer loans, garnishments, child support, and 401K loan. If the payment will be
included in the debt ratio, documentation will be required to support the monthly payment of the
debt and the balance.

660.07.9 - Special Assessments

If the subject property is located in a special assessment district, the locality has the right to
assess homeowners for the cost of developing the area (roads, sewers, schools). Any special
assessments stated within the appraisal and/or the title commitment must be included in the
borrower’s debt ratio. If the special assessment district is having financial difficulties, the
underwriter will evaluate the borrower’s ability to repay the mortgage should additional
assessments be imposed.

All special assessments are required to be escrowed.

Icon Lending Guide – Section 600                                                         Revised 5/6/11
670 - Employment & Income

In assessing the borrower’s employment and income, Icon reviews the stability of the borrower’s
income, the adequacy and continuance of the income, and if the income is derived from an
acceptable source. The employment and income provided must be in line with the industry
standards. This applies to all qualifying borrowers whether the borrower is salaried,
commissioned, self employed, or receives income from non-salaried sources such as trust income,
real estate income, notes receivables, capital gains, royalties, foster care, or other verifiable
miscellaneous earnings.

670.01 - Employment Stability

Icon will verify all qualifying borrowers’ employment for the two years preceding the date of the
application. All qualifying income should be stable, predictable, and likely to continue. It is the
stability and reliability of the income that contributes to successful homeownership. Generally,
income documentation requirements are determined by DU however, when utilizing an ARM
product on the Agency Conforming or Agency High Balance program, a paystub with YTD income
and a W2 are required regardless of DU Findings.

A borrower must have at least a 2 year continuous work history with stable income and a
reasonable expectation that the income will continue for the foreseeable future, typically three
years. Borrowers who frequently change jobs are eligible for Icon financing provided the
underwriter is able to determine the borrower has been employed in the same line of work for at
least 2 years, the income is stable, predictable, and expected to continue.

Borrowers who work in certain industries or are seasonal workers may have frequent job changes.
This type of borrower is eligible for Icon financing and will need to demonstrate the ability to
maintain a steady income despite the changes.

Gaps of employment greater than 30 days require a written letter of explanation from the borrower
and may be subject to additional documentation and/or a counter offer to the loan terms/program
requested. Gaps of employment greater than 60 days will be evaluated on a case-by-case basis.

Income from borrowers re-entering the workforce that have been unemployed a substantial
amount of time (1-year or more) may be considered if the borrower has been with their current
employer for a minimum of 6 months and there is evidence of a previous 2- year employment
history.

670.02 - Verbal Verification of Employment

Icon will perform a verbal verification of employment for all borrowers whose income is used to
qualify for the loan transaction. Icon will use web resources to obtain the employer’s phone
number and location for verifying employment. Verbal verifications of employment are to be
completed using the phone number obtained by Icon; employer phone numbers obtained from the
broker or cell phone numbers are not acceptable.

670.03 - Sources of Income

A borrower’s income can be derived from several sources. Income may be salaried,
commissioned, or self-employed. In addition to wage and self employed income, borrowers may

Icon Lending Guide – Section 600                                                      Revised 5/6/11
receive additional income in the form of capital gains, rents, royalties, trust income, and
nontaxable income such as child support, social security, disability, and public assistance for
example. As these are eligible sources of income, documentation is required to evidence receipt
of the income, the continuance of the income, and the stability of the income.

Eligible sources of income are defined as income received and paid tax on as evidenced by a U.S.
tax return. Income received from any source that cannot be verified is not acceptable for
qualifying the borrower and therefore is ineligible.

Nontaxable income must be documented with an award letter, policy agreement, account
statement, or any other document that addresses the nontaxable status of the income. If the
income is nontaxable and the income and its tax-exempt status are likely to continue for at least
three years, the income may be grossed up 125%. When utilizing an ARM product on the Agency
Conforming or Agency High Balance program nontaxable income must be grossed up.

FHA allows the income to be grossed up to a maximum of 125%.

Loans run through DU are not eligible for income documentation waivers. Icon will require income
documentation regardless of the DU Findings. At minimum, the borrower will be required to
provide the most recent 30 days paystubs with YTD earnings and the previous years W2 (salaried)
or the most recent years personal tax returns (self employed). Icon will verify the validity of all
income documentation submitted and may request additional documentation if any discrepancies
appear.

670.03.1 - Wage Earner

The income received as compensation for services paid by a person, business or organization at
specified intervals is considered salaried or wage earner income. There are four classifications of
wage earners.

Full Time – the borrower is a permanent employee of the company and works a standard work
week, typically 40 hours.

Part Time – the borrower is a permanent employee of the company but works fewer hours than a
standard work week, typically less than 30 hours per week.

Temporary – the borrower is not a permanent employee of the company. The borrower typically
works on an ―as needed‖ or contracted basis. If this is the borrower’s sole source of income and
the income is needed for qualifying, the borrower is required to have a 2 year continual history of
working temporary jobs in order to use the income for qualification.

Seasonal – the borrower works for a specified period of time on a specific job or contract. Once
completed, the borrower is on standby for the next assignment. Borrowers who fit into this
category are typically farm workers, union workers, roofers, landscapers.

Wage earners are paid on a regular basis. The interval may be hourly, weekly, bi-weekly, semi-
monthly, or monthly. Unless indicated differently in the DU Findings, borrowers are required to
provide a pay stub covering the most recent 30 days with year-to-date earnings, and the most
recent 2 years W2’s to verify income. Tax returns may be required if borrower owns more than
one rental property and/or borrower’s employment involves non-reimbursed employee expenses.



Icon Lending Guide – Section 600                                                        Revised 5/6/11
670.03.2 - Automobile Allowance

Icon will permit automobile allowances as acceptable source of income provided the borrower has
been receiving the income for at least two years. All associated business expenditures are to be
included in the calculation of the borrower’s total debt-to-income ratio. Automobile allowances that
have been received for less than two years will not be considered in the qualifying income.

If the borrower reports the allowance on form 2106 or Schedule C of his personal tax returns, Icon
will use the actual cash flow approach to determine if the payment will be added to the borrower’s
qualifying income or added to the borrower’s total monthly obligations. If the funds exceed the
borrower’s monthly expenses, the figure will be added to the borrower’s qualifying income. If the
funds are insufficient to cover the borrower’s monthly expense, the figure will be added to the
borrower’s total monthly obligations. If the borrower files Form 2106 and recognized ―actual
expenses‖ instead of the ―standard mileage rate‖, Icon will differ to the actual expenses section for
the actual lease payments to calculate the funds.

If the borrower does not report the allowance on Form 2106 or Schedule C, Icon will use the
income and debt approach. The full amount of the allowance will be added to the borrower’s
qualifying income. In addition, the full amount the lease or financing expenditure will be added to
the borrower’s total monthly obligations.

670.03.3 - Bonus Income

Bonus income is an eligible source of income provided the borrower has a documented 2 year
history of receiving bonus income. Bonus income can be paid monthly, quarterly, annually, or as
part of an incentive plan. The nature of the bonus income must be consistent in order to use the
bonus for qualifying. Bonus income should be averaged over a 24 month period. If there is a
decline in bonus income, Icon will evaluate the income to determine if the income is stable and can
be used for qualifying. If the income is used, the more conservative figure will be applied. If the
bonus income is ≥ 25% of the borrower’s annual income, the most recent 2 years tax returns are
required.

670.03.4 - Commission Income

As commission income can fluctuate, a two year average is required when qualifying the borrower.
In addition, there must be an established earnings trend. If the borrower does not have a two year
history of receiving income but has a 12 months history or greater, the income may be used if
there are solid compensating factors and there a future earnings trend is demonstrated. If the
commission income declines, the income is not considered stable. Icon’s underwriter will
determine the stability of the income. If the income is used, the more conservative figure will be
applied. Any significant increases or decreases in the commission income must be addressed by
the borrower.

Borrowers who receive ≥ 25% of their total annual income from commissions will be considered
self employed. The most recent 2 years personal tax returns are required. In order for the
commission income to be used for qualifying, the commission income reported on the tax returns
must cover at least a 12 month period.

670.03.5 - Military Income

Military personnel often receive different types of pay in addition to their base pay. Flight or hazard
pay, rations, clothing allowance, quarters’ allowance, and proficiency pay are acceptable sources
Icon Lending Guide – Section 600                                                         Revised 5/6/11
of income, as long as the borrower can evidence that this particular source of income will continue
to be received in the future. Income paid to military reservists while they are fulfilling their reserve
obligations also is acceptable if it meets the same stability and continuity requirements applied to
other types of second-job income.

670.03.6 - Overtime Income

Overtime income is an eligible source of income provided the borrower has a documented 2 year
history of overtime earnings. There must also be a likelihood of the overtime income continuing in
order to use the income for qualification. Overtime income should be average over a 24 months
period; however, if the overtime income has declined, Icon will evaluate the income to determine if
the income is stable and can be used for qualifying. If the income is used, the more conservative
figure will be applied. If the overtime income is ≥ 25% of the borrower’s annual income, the most
recent 2 years tax returns are required.

670.03.7 - Part-Time, Second Job & Multiple Job Income

A borrower who has a part-time or second job must have a continuous 2 year history of working
two jobs as well as a continuous 2 year history of the part-time/second job if the income will be
used to qualify. Borrowers with less than a continuous 2 year history may still be eligible if the
part-time, second job, or multiple job income has been received for a minimum of 12 months, the
income is stable, there is a strong likelihood of continuance, and the income is averaged.

670.03.8 - Seasonal Job Income

Seasonal part-time or second job income (including seasonal unemployment compensation) can
be considered as stable income if the borrower has worked the same job (or 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. Borrowers who have seasonal
jobs include holiday workers, outdoor laborers such as landscapers, construction workers, roofers,
etc.

Seasonal unemployment compensation may be used to qualify the borrower if it is documented,
clearly associated with seasonal layoffs, expected to recur, and reported on the borrower’s federal
income tax returns.

670.03.9 - Trailing Spouse/Co-borrower Income

Trailing spouse income is ineligible.

670.03.10 - Self-employed Income

Self employed borrowers are eligible with a documented 2 year history of the existence of the
business. Borrowers who receive income from any of the following sources are considered self
employed:

         A borrower who has ≥ 25% interest in a business that is a sole proprietorship (Schedule
         C), general and limited partnership (K-1 and 1065), corporation (1120) or a S-corporation
         (1120S).
         A borrower whose combined business interests comprise ≥ 25% of the total income.


Icon Lending Guide – Section 600                                                           Revised 5/6/11
         Borrower who receives commission income ≥ 25% of the total income.
         Borrower whose income is exclusively investments (interest income, dividends, capital
         gains, or real estate).
         Borrower who is a member of the clergy and files as self employed.
         Borrower who is a contract worker and receives 1099 income.
         Borrower who is employed by a family member (regardless of the percentage of
         ownership).
         Borrowers who are wage earners and also received ≥ 25% of their annual income in the
         form of bonus, commissions, and/or overtime.

Loans run through DU will defer to the DU Findings for required income documentation.

Self employed borrowers are required to sign a 4506-T and an 8821, if applicable.

A business license is required to document a 2 year existence of the business. If state or local
agencies do not require the business to have a license, other documentation may be provided to
establish the validity and length of operation of the business.

When there are Schedule C and/or Schedule E losses for a business owned solely by a non-
signing spouse and it can be documented that the borrower has no involvement in the business,
the loss will not be factored into the borrower’s debt ratio unless the underwriter determines that
the loss is substantial enough to effect the borrower’s ability to re-pay the loan.

670.03.11 - Non-Salaried Income, Fixed Income, & Additional Income Sources

670.03.11(a) - Alimony/Child Support

Alimony and/or child support are an eligible source of income provided it continues for a minimum
of three years after the date of the mortgage application and borrower has a minimum 6 months
history of receiving the full income on a regular and timely basis. A copy of the recorded divorce
decree or the recorded legal separation agreement is required to evidence the award of alimony
and/or child support and to evidence the payment amount of the alimony and/or child support
along with the duration of the payment. When utilizing this source of income, Icon will take into
consideration the borrower’s regular receipt of the payment and any limitations on the continuance
of the payment (i.e.: the age of the children for whom the support is being paid). If there is no legal
recorded document for the award, the income cannot be used in qualifying the borrower.

The borrower must provide evidence of receipt of payments for alimony or child support.
Acceptable documentation includes the borrower’s bank statements, personal tax returns and
copies of the checks along with deposit slips that show regular consistent payments.

Icon will consider the regularity and timeliness of the payments, as well as whether the borrower
received all or only part of the full amount that was due.

If the borrower has been receiving the full, regular, and timely payment for alimony or child support
for 12 months, the income is considered stable.




Icon Lending Guide – Section 600                                                         Revised 5/6/11
If the borrower has been receiving full, regular and timely payments for alimony or child support for
6-12 months, the income can be considered stable provided it does not constitute more than 30%
of the total gross income used to qualify the borrower.

When the borrower has been receiving full, regular, and timely payments for alimony or child
support for less than 6 months, the income is not considered stable and cannot be used to qualify
the borrower.

When the borrower has been receiving full or partial payments for alimony or child support on an
inconsistent or sporadic basis, the income is not considered stable and cannot be used to qualify
the borrower.

670.03.11(b) - Boarder Income

Most programs do not accept boarder income as an eligible income source.

For standard mortgages, a borrower with disabilities who receives rental income from a live-in
personal assistant may use the rental income for qualifying provided the rental income does not
exceed 30% of the total gross income used to qualify the borrower. The boarder will need to
provide evidence demonstrating a history of shared residency with the borrower (bank statement,
credit card statements, etc) along with the most recent 12 months cancelled rent checks
documenting the amount of rent paid.

670.03.11(c) - Capital Gains

If the income from capital gains is used to qualify the borrower, the most recent two years personal
tax returns are required to verify the income. The income should be consistent and likely to
continue. If the income is consistent for the previous two years, the income will be averaged for 24
months. If the income has fluctuated substantially, a three year history is required. The most
conservative approach will be used if the capital gain income is decreasing year after year.

670.03.11(d) - Disability Benefits

Disability benefit payments are considered an acceptable income source unless the terms of the
disability policy specifically limit the stability or continuity of the benefit payments. If the income
falls into a category that does not have a defined expiration date, Icon will conclude the income is
stable, predictable, and likely to continue. Additional documentation from the borrower is not
required.

Benefits that have a defined expiration date must have a remaining term of at least three years
from the date of the mortgage application in order to be used for qualifying the borrower.
If the benefit payment will be decreasing to a lower amount within the next three years due to
conversion to a long term benefit, Icon will use the lower amount (long term payment) when
qualifying the borrower.

The borrower is required to provide a copy of the disability policy or benefits statement to verify the
amount of disability payments and to determine whether there is a contractually established
termination or modification date. Icon will also require a statement from the benefits’ payer
(insurance company, employer, or other qualified and disinterested party) to confirm the
borrower’s current eligibility for the disability benefits.


Icon Lending Guide – Section 600                                                          Revised 5/6/11
670.03.11(e) – Education Benefits

Education benefits are not an acceptable source of income as they are offset by education
expenses.

670.03.11(f) - Foster-Care Income

Income that a borrower receives from a state-sponsored or county-sponsored organization for
providing temporary care for one or more children is an acceptable income source as long as the
borrower has a two-year history of providing foster-care services and is likely, in the foreseeable
future, to continue to provide such services at a level that supports the amount of income needed
for qualifying for the mortgage. If a borrower has not been receiving this type of income for two full
years, the income may still be used as long as the borrower has at least a 12-month history of
providing foster care services and this income does not represent more than 30% of the total gross
income that is used to qualify the borrower.

Acceptable documentation verifying foster-care income includes letters from the organization(s)
providing the income, the borrower’s most recent two years personal tax returns, or copies of the
borrower’s deposit slips or bank statements that confirm the regular deposit of the payments.

670.03.11(g) - Interest and Dividend Income

Interest and dividend income may be used as acceptable stable income if it has been received for
the past two years as documented by the borrower’s most recent two years personal tax returns
and it is expected to continue for a minimum of three years from the date of the mortgage
application. For qualifying, the income will be averaged over 24 months. If income is decreasing,
the income may be averaged over less than 24 months.

The borrower must provide evidence of ownership of the assets on which the interest and/or
dividend income was earned. Any assets used for down payment or closing costs must be
subtracted from the borrower’s total assets before calculating expected future interest or dividend
income.

670.03.11(h) - Mortgage Differential Payments

An employer may subsidize an employee’s mortgage payments by paying all or part of the interest
differential between the employee’s present and proposed mortgage payments. These payments
can be considered an acceptable source of income if the borrower’s employer verifies its subsidy
in writing, stating the amount and duration of the payments. The payments must continue for at
least three years from the date of the mortgage application. The differential payments are added to
the borrower’s gross income when calculating the qualifying ratio. The payments cannot be used
to offset the mortgage payment, even if the employer pays them to the mortgage lender.

670.03.11(i) - Notes Receivable

Income derived from payments on notes receivable may be used for qualification if the borrower
has received the income for the previous 12 months and the income will continue for at least three
(3) years from the date of the mortgage application. A copy of the note is required to establish the
amount and length of payment. The following are the verification requirement.

A 12-month history of receipt is required as evidenced by one of the following:

Icon Lending Guide – Section 600                                                        Revised 5/6/11
         Personal tax returns, or
         Bank statements showing consistent deposits, or
         Cancelled checks.

Payments on a newly executed note (less than 12 months) that specifies a minimum duration of
three years from the date of application are not eligible as they are not considered stable income;
however the payments may be used to justify a higher qualifying ratio.

670.03.11(j) - Public Assistance Income

Income from public assistance may be considered as an acceptable income source if
documentation is provided to show the income has been received for the past two years, and is
expected to continue to be received for at least three years from the date of the mortgage
application. Acceptable forms of documentation are letters or exhibits from the paying agency that
state the amount, frequency, and duration of the benefit payments.

Monthly Section 8 voucher payments also are an acceptable source of qualifying income. The
income does not require a two year history of receiving payments or for the payments to continue
for a specified period of time after the date of the mortgage application. Verification from the
public agency that issued the voucher to the borrower of the monthly payment amount and that the
income is non-taxable is required. If the income is non-taxable, the income may be adjusted up
125%. Refer to Section 670.03 – Sources of Income for additional information.

670.03.11(k) - Rental Income

Rental income can be used as a qualifying income provided the transaction meets the following
requirements.
         Subject property being financed is:
               Owner-occupied 2-4 unit primary residence, or
               SFR or 2-4 unit investment property
         The borrower must have a minimum of 6 months PITI reserves for each rental property
         that is financed when the subject property is an investment property.
Rental income generated from the subject property requires the appraiser to provide the following:
         Single-Family Comparable Rent Schedule (Form 1007), or
         Small Residential Income Property Appraisal Report (Form 1025) 2-4 unit properties, and
         Operating Income Statement (Form 216).
         The borrower must provide two years most recent personal tax returns and the related
         Schedule E to calculate the rental income making sure that depreciation or any interest,
         taxes, or insurance expenses are added back in the borrower’s cash flow analysis
Rental income generated from other investment property that the borrower currently owns but is
not the subject transaction requires the following:
         The borrower must provide two years most recent personal tax returns and the related
         Schedule E to calculate the rental income making sure that depreciation or any interest,
         taxes, or insurance expenses are added back in the borrower’s cash flow analysis.
If the borrower does not have a history of receiving rental income from a property because it was
acquired subsequent to filing the tax return, the rental income must be documented as follows:


Icon Lending Guide – Section 600                                                       Revised 5/6/11
        A copy of the fully executed lease agreement.
        A copy of the receipt of a security deposit from the tenant and deposit into the borrower’s
         account.

NOTE: If using a lease agreement only 75% of the gross rents may be used as the net rental
      income.

Refer to Section 660.03 – Conversion of a Principal Residence if the borrower is retaining their
current residence as a rental.

670.03.11(l) - Retirement or Pension Income

Retirement or pension income is an acceptable source of income provided the borrower can
evidence regular receipt of payments. Typically, the borrower will need to provide a copy of the
award letter evidencing the terms of the income and the most recent two months bank statements
evidencing receipt of the payment. Other forms of acceptable documentation are the most recent
two years filed personal tax returns or the most recent two years SSA-1099/W2s.

When the retirement income is received in the form of a monthly annuity payment or a monthly
distribution from a 401(k), IRA, or Keogh, documentation is required to determine that the income
is expected to continue for at least three years after the date of the mortgage application.

670.03.11(m) - Royalty Income

Royalty income may be used for qualifying provided the borrower has at least a 12 months history
of receiving the royalty payment. When utilizing an ARM product on the Agency Conforming or
Agency High Balance program royalty income requires a two (2) year history of receipt. This is
documented with the borrower’s most recent two years personal tax returns. The royalty income
reported on the tax returns must cover at least a 12 month period. The royalty payments must
continue for a minimum of three years after the date of the mortgage application.

670.03.11(n) - Social Security Income

Social security benefits with a definitive expiration date must have a remaining term of at least
three years from the date of the mortgage application in order for the income to be used in
qualifying the borrower. Typically, the borrower will need to provide a copy of the award letter
evidencing the terms of the income and the most recent two months bank statements evidencing
receipt of the payment. Social security income can also be verified with a copy of the award letter
and the most recent two years SSA-1099. Refer to section 670.03 - Sources of Income for gross
up of social security income.

670.03.11(o) - Trust Income

Trust income may be used as income for qualifying if the borrower has a two year history of
receiving trust income and the income will continue for a minimum of three years from the date of
the mortgage application. A copy of the Trust Agreement is required to confirm the amount,
frequency, and duration of the payments. If the Trust Agreement is not available, a statement from
the trustee confirming the amount, frequency and duration of the payments is acceptable.

A copy of the borrower’s most recent two years personal tax returns are required to evidence
receipt of the trust income.
Icon Lending Guide – Section 600                                                        Revised 5/6/11
Lump-sum distributions from the trust made before the loan closes may be used for the down
payment or closing costs if they are verified by a copy of the check or the trustee’s letter that
shows the distribution amount and a copy of the receipt from escrow/title.

670.03.11(p) - Unemployment Benefits

Unemployment benefits, such as those received by seasonal workers, may be considered as an
acceptable income source if the income is documented, has been received for the previous two
years, and is predictable and likely to continue. Copies of the borrower’s most recent personal tax
returns are required to establish a two year history receiving the benefit.

670.03.11(q) - VA Benefits

Typically VA benefits are an acceptable income source provided they are documented by a letter
or distribution form from the VA and will continue for at least three years from the date of the
mortgage application. Education benefits are not an acceptable income source as they are offset
by the education expenses.

670.03.11(r) – Tip Income

When utilizing an ARM product on the Agency Conforming or Agency High Balance program, if the
income from tips is used to qualify the borrower, the most recent 2-years personal tax returns and
all schedules are required to verify the income.

670.03.12 – 4506-T Forms

4506-T forms for the most recent 2-years processed and validated against the income
documentation provided is required for each borrower signing the Note/Mortgage. Results must
indicate no variances. When utilizing an ARM product on the Agency Conforming or Agency High
Balance program, the 4506-T must be signed at both application and closing.

Wage earners using the Portfolio Conforming or High Balance program, the 4506-T will be
processed per DU Findings. Self employed borrowers using the Portfolio Conforming or High
Balance program, the 4506-T will be processed for 1- year or per DU Findings if more than 1-year
required per DU.

680 - Assets

Assets are reviewed with the borrower’s income and credit to determine the reasonableness of the
transaction. A pattern of savings and an ability to manage assets should be demonstrated as well
as confirmation that the funds are from an acceptable legal source. A borrower’s ability to
accumulate assets gives insight into the individual’s creditworthiness and financial strength.

The borrower must verify sufficient assets to cover any down payment and closing costs
associated with the mortgage transaction as well as retain enough assets to meet any reserve
requirement.

Acceptable types of asset verification include the borrower’s current bank statements or financial
statements (all pages), a Verification of Deposit with minimum two month average balance
completed by the financial institution, or an internet printout. The internet printout must contain the

Icon Lending Guide – Section 600                                                         Revised 5/6/11
same information as the traditional documentation. All asset verification must be legible and
cannot contain any alterations, erasures, or similar indications that changes have been made.
Asset verification documents must be dated within 30 days at underwriting and 60 days at funding.

Deposits greater than one month’s gross income are required to be explained by the borrower and
will be verified, regardless of whether the funds are required to close the transaction.

680.01 - Ineligible Sources of Assets

The following sources of assets may not be used:

         Cash on hand (except as permitted by Community Lending Programs)
         Credit card cash advance
         Gifts which must be partially or fully repaid
         Proceeds from unsecured loans or personal loans
         Salary/bonus advance for future earnings
         Sweat equity
         Unsecured borrowed funds (credit card, unsecured lines of credit, overdraft protection,
         etc)
         1031 tax deferred exchange on an owner occupied or second home property

680.02 - Acceptable Sources of Assets

Assets used for down payment, closings costs, and reserves are eligible from the following
sources:

680.02.1 - Checking and Savings Accounts

Borrower to provide the most recent complete bank statements (all pages) or a VOD with a
minimum two month average balance of all accounts used to close the transaction and to verify
reserves. Any significant deposits may require an explanation and verification. When utilizing an
ARM product on the Agency Conforming or Agency High Balance program, if a VOD is provided
for asset verification, 1-month’s bank statement, at minimum, is required regardless of DU
Findings.

680.02.2 - Business Funds

Business funds are acceptable provided the borrower is 100% owner of the business and the
borrower can provide documentation evidencing the use of the business funds will not adversely
affect the ability of the business to operate. Icon will require a letter from the CPA or Tax Preparer
confirming the withdrawal of the funds will not have a negative impact on the business.

NOTE: Business funds may not be used to satisfy reserve requirements on the Agency High
      Balance program.




Icon Lending Guide – Section 600                                                         Revised 5/6/11
680.02.3 - Deposit on Sale

Funds used for the earnest money deposit are required to be verified. If the deposit exceeds
$2,000, a copy of the cancelled check or evidence the deposit has cleared the borrower’s account
is required (copy of the account statement showing funds cleared and a copy of the earnest
money deposit check). The account used for the earnest money deposit must also be verified.

680.02.4 - Government Bonds

Government bonds are valued at the purchase price unless redemption value can be determined
and verified. A letter from the redeeming institution confirming the redemption amount is required.
Acceptable documentation is required to evidence the funds have been liquidated/cash in and
deposited into borrower’s account.

680.02.5 - IRA/Retirement/Keogh accounts

Funds from an IRA/Keogh account are acceptable for down payment, closing costs and reserves
provided borrower can access the funds prior to retiring. Funds withdrawn from an IRA/Keogh
account are subject to penalties and income tax. The net withdrawal must be used as the trust
asset value. Acceptable documentation is required to evidence the liquidation of the funds and
deposit to borrower’s account. If the funds are used for reserves, they do not need to be
liquidated. However, Icon will use 60% of the total account value less any outstanding loans for
the available amount.

680.02.6 - Inheritance

Inheritance is an acceptable source of funds. A copy of the will or a letter from the trustee
documenting the distribution of the estate is required. Evidence of receipt of the funds by borrower
is also required. Inheritance can be used to satisfy borrower’s 5% contribution to the down
payment as the funds are considered to be the borrower’s money.

680.02.7 - Insurance Settlement/Lawsuit

If the borrower will be using funds received from an insurance claim or lawsuit settlement, the
borrower will need to provide a copy of the settlement agreement or judgment evidencing the
amount of the borrower’s portion of the settlement. Borrower will also need to provide a copy of
the settlement check evidencing receipt of the funds and deposit into borrower’s account.

680.02.8 - Life Insurance

The surrender value minus any outstanding loans is an acceptable source of liquid funds. If no
surrender value is given, the available amount will be based on 60% of the current value less any
outstanding loans.

680.02.9 - Pooled Funds

A borrower is allowed to pool their funds with funds from a relative who has lived with the borrower
for the previous 12 months to make up the down payment. Borrower must provide an affidavit that
states the following:


Icon Lending Guide – Section 600                                                       Revised 5/6/11
          Source of pooled funds
          The pooled funds are not borrowed
          The relationship between the borrower and the relative
          The relative as lived with the borrower for the previous 12 months
          The relative will continue to live with the borrower in the new residence for the
          foreseeable future.
NOTE: Funds provided by a relative who does not live with the borrower are subject to gift fund
      requirements. Refer to Section 680.02.25 Gift Funds for requirements.

680.02.10 - Stocks, Bonds, & Other Investments

Stock, bonds, or other investments must be verified by the stockbroker or by a copy of the
certificate evidencing the ownership. The most recent three months statements from the
brokerage firm confirming the value, type of security, account activity, and current value are
required. Icon will use 70% of the value of the instruments for reserve considerations. Acceptable
documentation is required to evidence the liquidation of the funds and deposit to borrower’s
account when the funds are being used for the down payment, closing or other costs.

NOTE: Non-vested restricted stock is not an acceptable source of reserves.

680.02.11 - Trust Account

Trust account funds may be used if the borrower has access to the funds. A copy of the trust and
a letter from the trustee is necessary to evidence borrower’s access to the funds. Documentation
is required to evidence the withdrawal of the funds.

680.02.12 - Bridge or Swing Loan

A bridge or swing loan is a form of a second trust deed that is collateralized by the borrower’s
current residence, which is typically for sale. The terms of the loan are required and should
include the amount, term, rate, minimum payment, and if the loan is renewable, in the event the
current residence does not sell. The bridge or swing loan repayment must be monthly

The borrower must qualify with the payment on the current residence including the bridge or swing
loan payment.

The bridge or swing loan cannot be cross-collateralized against the proposed property. A copy of
the agreement of the sale or listing for the property being sold is required.

Bridge loans on a property located in a declining market, as determined by the underwriter, or
realtor assessment, are not eligible.

680.02.13 - Trade Equity

The seller may take the borrower’s existing property in trade as all or part of the down payment as
long as the borrower’s equity contribution is a true-value consideration.




Icon Lending Guide – Section 600                                                          Revised 5/6/11
The equity contribution is calculated by deducting the outstanding balance of all liens against the
property that is being sold or traded, plus transfer fees from the lesser of that property, the lesser
of that property’s appraised value, or the amount agreed upon by the parties.

An appraisal for the property being traded is required. A preliminary title report is required to verify
the ownership of the property and to determine if there are any existing liens on the property.
Transfer of the property must be completed prior to or simultaneous to the closing of the proposed
property and evidenced by a Final HUD-I.

680.02.14 - 1031 Exchange

The net sale proceeds from a 1031 Exchange are an acceptable source of funds provided the
subject property is a non-owner occupied purchase. Borrower will need to provide a copy of the
Final HUD-I executed by all parties from the 1031 Exchange Sale, a copy of the Exchange Escrow
Instructions and/or Exchange Agreement, and a copy of the Final HUD-I executed by all parties
from the subject sale showing the Exchange funds deposited to the transaction.

If the funds have been deposited with an accommodator prior to the purchase exchange escrow, a
letter from the accommodator is required to verify the Exchange funds are available to be
deposited to the subject transaction and the amount of funds held by the accommodator.

680.02.15 - Lease/Rent with Option to Purchase

The portion of the payment which exceeds market rents can be applied to the down payment and
closing costs. Borrower must provide a copy of the lease agreement, cancelled checks for the
security deposit and the most recent 12 months cancelled checks for the rent payments. Evidence
of market rent is required.

680.02.16 - Land Equity

In a construction-to-permanent financing conversion loan, the land equity may be applied toward
the down payment. If the land was purchased within 12 months from the date of the mortgage
application, the cost of the land must be used to calculate the equity. If the land was purchased
more than 12 months prior to the date of the mortgage application, a current appraisal should be
used to establish the equity value.

680.02.17 - Borrowed Secured Funds

Borrowed funds secured by an asset may be used with documentation verifying the terms of the
loan and that the loan is secured. The monthly payment for the new loan must be calculated in the
debt ratio.

680.02.18 - Community Seconds and Subsidy programs

Community seconds and subsidy programs are only allowed on FHA –insured loans subject to
FHA guidelines.




Icon Lending Guide – Section 600                                                          Revised 5/6/11
680.02.19 - Subordinate Financing

Subordinate/secondary financing is permitted as an acceptable source of funds up to the
maximum CLTV offered by the program. Refer to the applicable program detail for maximum
CLTV.

When subordinate financing is present, the maximum LTV is 80% on purchase and cash-out
refinance transactions. Rate/term refinance transactions, existing subordinate financing may be
re-subordinated subject to program CLTV restrictions and MI guidelines. New subordinate
financing is ineligible.

Subordinate financing may be provided by an institutional lender, or the property seller.
Subordinate financing from any other source is ineligible. A copy of the note for the subordinate
lien is required to document the financing terms. The following restrictions apply:

    The subordinate lien must require regular payments of a minimum of interest only. For seller
    carry subordinate liens, the lien must require regular payments of principal and interest.
    The subordinate loan may not allow negative amortization.
    The subordinate lien must fully amortize and cannot have a maturity or balloon date less than
    five years from the date of the note.
    The interest rate on the subordinate lien must be at current market rate. This applies to both
    institutional and seller held lien. The market rate cannot be more than 2% below the posted
    net yield in effect at the time of closing the subordinate loan.
    The subordinate lien cannot include any wraparound terms that combine the amount owed on
    the first mortgage with that of the subordinate mortgage.
    The subordinate lien must permit repayment in full at any time without penalty.

680.02.20 - Seller Carry Back

If the seller is providing the subordinate financing, the following applies:
    The subject property must be owner occupied or second home.
    The sales contract needs to disclose the seller is providing secondary financing.
    All payments related to the secondary lien are included in the debt ratio.
    The lien must be recorded and clearly subordinate to Icon’s first mortgage.
    A copy of the note is required to determine the terms of the subordinate lien.
    Regular payments must cover principal and interest at the market rate.
    The subordinate lien cannot have a call option less than five years.
    The subordinate lien must permit repayment in full at any time without penalty.
    No non-arms length transaction in which there is a relationship between the buyer and the
    seller.
    No builder-carry second liens.


Icon Lending Guide – Section 600                                                        Revised 5/6/11
680.02.21 - Sale of Personal Property

The sale of personal property or a personal asset is an acceptable source of funds. Borrower will
need to provide the Bill of Sale, documentation supporting the asset’s value, and evidence of
receipt and deposit of the proceeds from the sale.

680.02.22 - IRS Refund

Refund checks from the state revenue and IRS departments are acceptable sources of funds.
Satisfactory documentation is required to evidence the refund. Copies of the refund check(s) or a
copy of the federal/state tax return and a bank statement showing the deposit is acceptable.

680.02.23 - Repayment of Debt

Funds received by the borrower for repayment of loans to family or friends is acceptable provided
the borrower can evidence the transfer of the funds to the family member/friend at the onset of the
loan and that borrower had the ability to have made the loan.

680.02.24 - Existing Home Equity

The proceeds from the sale of the borrower’s current residence are an acceptable source of down
payment and closing costs. A copy of the Final HUD-I is required.

680.02.25 - Gift Funds

Gift funds are an acceptable source of funds for closing costs and the down payment, as long as
the borrower has met the minimum down payment requirement. Gift funds are ineligible to satisfy
reserve requirements.

Gift fund requirements are as follows:
         Gift funds can be provided by any of the following
              A relative, defined as the borrower’s spouse, child, or other dependent, or by any
              other individual who is related to the borrower by blood, marriage, adoption or legal
              guardianship, or
              A fiancé or fiancée, or domestic partner.
         When the LTV is > 80% LTV gift funds are allowed only after a minimum down payment of
         at least 5% has been made from the borrower’s own funds.
         If the LTV is ≤ 80% the entire down payment may be from a gift. ARM product requires
         minimum 5% borrower own funds regardless of LTV.
         The donor cannot be affiliated with the builder, developer, real estate agent, broker, or any
         other interested party to the transaction.
         Gift must be evidenced by a gift letter, signed by the donor and must include the following:
              Specify the dollar amount,
              Specify the date the funds were transferred,
              Include the donor’s statement that no repayment of funds is expected, and


Icon Lending Guide – Section 600                                                         Revised 5/6/11
              Indicate the donor’s name, address, telephone number and relationship to the
              borrower.
              Gift funds are allowed on owner-occupied primary residence or second homes. Gift
              funds are ineligible on investment property transactions.


Gift fund availability and transfer must be verified. The following is acceptable documentation:
         A copy of the donor’s check and the borrower’s deposit slip,
          A copy of the donor’s withdrawal slip and the borrower’s deposit slip,
         A copy of the donor’s check to the closing agent (must be a certified/cashier’s check), or
         A settlement statement showing receipt of the donor’s check.

680.02.26 - Gifts of Equity

Gifts of equity are an acceptable source of down payment and closing costs on the Agency
Conforming program. A gift of equity is allowed on primary residence transactions only with a
maximum 80% LTV. The LTV is based on the lower of the sales price or the appraised value.

Gift fund criteria detailed in Section 680.02.25 – Gift Funds must be met. Gift of equity
transactions also require the following:
    The gift of equity must be provided by one of the parties defined in Section 680.02.25 – Gift
    Funds.
    NOTE: A gift of equity from one spouse to another is ineligible.
    The borrower must be able to verify that 5% of the sales price has been saved, however these
    funds do not have to be used toward the down payment.
    The gift of equity cannot be a bail out of a relative or other individual.
    The gift of equity must be identified in the sales contract.
    The property must be sold at fair market value.
    The final equity exchange must be documented on the Final HUD-I.
A gift of equity is ineligible on second home and investment transactions.

680.02.27 Gifts from a Relative

Refer to Section 680.02.25 – Gift Funds for requirements.

680.02.28 - Gifts from a Church, Municipality, or Non-profit Organization

Gifts or grants from a church, municipality or non-profit organization are an eligible source of funds
as long as the borrower has met the minimum down payment requirement of 5%. If the LTV is
80% or less, the entire down payment may come from a gift or grant.

A copy of the award letter or a copy of the legal agreement stating the specific terms and
conditions of the gift is required. The document must verify that no repayment is required as well
as include the terms of how the funds will be transferred.

Seller funded gifts/grants are ineligible.

Icon Lending Guide – Section 600                                                        Revised 5/6/11
680.02.29 - Contributions by Interested Third Parties

Interested Party Contributions (IPCs) are defined as financing concessions or sales concessions
and consist of funds provided by someone other than the borrower to pay costs associated with
obtaining a mortgage that are normally the responsibility of the property purchaser. They may be
paid by the seller, lender, or by any other third party who has an interest in the property sale or
purchase transaction.

680.02.29 (a) - Interested Party Contributions

A contribution, monies not paid by the borrower, may be paid by the seller or by any other
interested party to the transaction, such as the builder, the developer, the real estate agent, the
broker, or an affiliate of any such party.

A relative, domestic partner, fiancée, fiancé, municipality, non-profit organization, or employer is
not considered an interested party unless he is the property seller or is affiliated with the property
seller.

Interested party contributions (IPCs) are allowed for recurring and non-recurring closing cost
credits but cannot exceed the actual cost/fees or the maximum allowed per LTV/CLTV and
occupancy type. Principal reductions are not allowed.

When the transaction contains IPCs, the sales contract, Good Faith Estimate, loan application,
appraisal report, and HUD-I must include or address all financing arrangements that have been
negotiated between the buyer and the seller.

The maximum interested party contribution is based on the lower of the sales price or appraised
value. The maximum limits are as follows:

    ●    Owner-occupied and LTV/CLTV > 90% = 3%
    ●    Owner-occupied/Second Home and LTV/CLTV ≤ 90% = 6%
    ●    Owner-occupied/Second Home and LTV/CLTV ≤ 75% = 9%
    ●    Investment property, all LTV/CLTV = 2%
    ●    For Sale By Owner (FSBO), all LTV/CLTV = 2%

Costs/Fees (financing concessions) that are subject to IPC Limits

Financing concessions are fees/costs that are credit to the borrower through the transaction. The
following items are considered interested party contributions:
    Origination, discount points, commitment fees
         Cost for interest rate shortfalls
         Appraisal costs
         Transfer taxes
         Stamps
         Attorney fees

Icon Lending Guide – Section 600                                                          Revised 5/6/11
         Survey charges
         Title insurance premiums or charges
         Real estate tax service fees
         Funds to subsidize a permanent interest rate buy down.
         Funds that are passed from an interested party to a non-profit and then to the buyer for
         payment of closing costs.
         Prepaid items – interim interest charges (limited to 30 days), real estate taxes covering
         any period after settlement (but only if taxes are being escrowed for future payments),
         hazard insurance premiums (maximum 14 months), and initial or renewal mortgage
         insurance premiums.
         Items paid by the seller that are the responsibility of the seller

Costs/Fees (financing concessions) not subject to IPC Limits

         Buyer/broker fees paid by the seller as part of the real estate commission, as long as the
         commission being paid is typical of the commission usually paid in that real estate market.
         Transfer related charges if they are common and customary for the seller to pay all or a
         portion of the charges. Examples are transfer tax, stamp tax, costs of title insurance
         policies and surveys, recording fees, and attorney fees.
         Gift funds from a donor that complies with gift policy.
         Gifts or grants from a non-profit organization that do not obtain funding from the seller or
         any other interested party to the transaction.
         Sales concessions.

680.02.29 (b) - Sales Concessions

Sales concessions are items and/or fees that are an incentive to the buyer. Sales concessions
may consist of furniture, automobiles, securities, decorator items, repair allowance, and other
―giveaways‖ granted by any interested party to the transaction. In addition, IPCs that exceed the
maximum allowable are considered sales concessions. Sales concessions are not calculated into
the IPC limit but their value is deducted from the sales price. The LTV will then be based on the
lower of the adjusted sales price or the appraised value.

An appraisal older than 90 days at underwriting will require a recertification of value made by the
original appraiser, indicating that the estimated value has not declined and market conditions
remain the same as described in the original appraisal. The recertification of value must be
completed on Fannie Mae Form 1004D (March 2005). At the underwriter’s discretion, additional
comparables may be required. If the update does not confirm the original value and market
conditions, a new appraisal may be required.

A new appraisal will be required if the original appraisal is more than 120 days old and the loan
has not funded.




Icon Lending Guide – Section 600                                                         Revised 5/6/11
690 - Property Valuation

Icon will extend financing for the purpose of purchasing or refinancing one-to-four (1-4) family
residential properties. The property must constitute an acceptable form of collateral for the
requested mortgage. The security for the mortgage may be a single family dwelling (detached or
attached), a townhouse, PUD or condominium unit, or a two-to-four (2-4) family income property.

Icon requires all appraisals must comply with Fannie Mae/Freddie Mac guidelines --- and with the
Appraiser Independence Requirements (AIR) issued by Federal Housing Finance Agency --- and
FHA’s Appraiser Independence Guidelines. Appraisals must also meet the minimum standards
established by FIRREA and USPAP and the provisions set forth by the Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010. Although Icon follows standard Fannie Mae
appraisal guidelines, any differences noted in this section of the manual will supersede.

Fannie Mae Appraiser Independence Requirements

Icon follows Fannie Mae’s Appraiser Independence Requirements and requires every appraisal
prepared by its approved Appraisal Management Companies (AMCs) or transferred from another
lender be AIR compliant, which includes:

    1. Requiring the appraiser be, at a minimum, licensed or certified by the state in which the
       property to be appraised is located; and

    2. No employee, director, officer, or agent of the Seller, or any other third party acting as joint
       venture partner, independent contractor, appraisal company, appraisal management
       company, or partner on behalf of the Seller, shall influence or attempt to influence the
       development, reporting, result, or review of an appraisal through coercion, extortion,
       collusion, compensation, inducement, intimidation, bribery, or in any other manner.

FHA Appraisal Independence Guidelines

Icon follows FHA’s Appraiser Independence guidelines. Icon will accept appraisals ordered
through one of Icon’s approved AMCs, or an appraisal issued in the name of another direct lender.
Appraisals issued in the name of another direct lender must provide evidence that the appraisal
meets FHA’s Appraiser Independence guidelines. Appraisals cannot be ordered directly by the
broker or issued in the name of the broker. Icon will furnish the borrower with a copy of the
appraisal no later than three (3) days prior to the closing of the loan.

Refer to Icon’s website for a list of AMCs under Approved Partners link.


690.01 - Appraiser Requirements

All appraisers must be licensed in the state in which the subject property is located. When the
sales price (purchase) or appraised value (refinance) is greater than $1,000,000, a certified
general appraiser must prepare the appraisal report. The appraiser’s license and certification
numbers must appear on the appraisal report. A copy of the appraiser’s Errors and Omissions
insurance is required with all appraisals. Insurance coverage must be sufficient to cover the loan
amount of the transaction, or $1,000,000, whichever is less.



Icon Lending Guide – Section 600                                                         Revised 5/6/11
Icon requires all appraisals be prepared by a licensed or certified appraiser who:
         Fully understands and complies with the Uniform Standards of Professional Appraisal
         Practices (USPAP), as published by the Appraisal Standards Board of the Appraisal
         Foundation.
         Is either an independent staff appraiser or independent fee appraiser as defined by Title XI
         of FIRREA (12 CFR Part 34).
         Is in good standing with the state licensing agency.
         Has no present or prospective direct or indirect financial or personal interest in the subject
         property, and has no personal bias or interest in the parties involved in the subject
         transaction.
         Was not assigned the appraisal subject to any required minimum or expected valuation of
         the subject property and is not compensated based upon the acceptability of the value
         derived in the appraisal.
         Demonstrates sufficient expertise and education in the appraisal of one-to-four (1-4) family
         residential properties similar to the subject property.
         Is currently an active appraiser.
         Does not appear on Icon’s list of excluded appraisers.


Unlicensed or uncertified appraisers that complete a portion or the entire appraisal report will
require the licensed or certified appraiser for whom they are working to: 1) sign the appraisal
report; 2) inspect the subject property (interior and exterior); and 3) check the box on the appraisal
report that indicates he/she has inspected the property.

690.02 - Appraisal Requirements

Standard appraisal requirements establish the value based on a thorough evaluation of both the
interior and exterior of the subject property. This includes a quantitative sales comparison analysis
and requires the assignment of a dollar value to reflect the market’s reaction to any features of a
comparable sale that differs from those of the subject property. The appraiser must perform a
visual interior and exterior inspection of the subject property, inspect the neighborhood, perform at
minimum a visual inspection of all comparables from the street, and research, verify, and analyze
data from reliable public and/or private sources.

All appraisals must be written, must contain the appraiser’s license number and original signature
(or acceptable digital signature), and a copy of the appraiser’s Errors and Omissions Insurance. All
subject property photos must be legible. Interior photos are required on all transactions.
Comparable photos may be photos provided by a multiple listing service if they are clear and
sufficiently detailed. The appraisal must be typed or computer-generated on an acceptable form
without blanks, alterations, or omissions.

The subject property address and legal description must match the loan application, sales
contract, settlement statement and title commitment. An appraisal without a complete and correct
common address or full legal description is not acceptable.

The loan amount and/or LTV can determine the type of appraisal and review required. Refer to
program details for specific appraisal requirements beyond what is listed below:


Icon Lending Guide – Section 600                                                          Revised 5/6/11
         On conforming loan amounts where LTV > 80%, a full appraisal by a state-licensed or
         state-certified appraiser with interior and exterior photos is required.
         On conforming loan amounts where LTV ≤ 80%, appraisal requirements are per DU
         findings.
         High balance loan amounts, regardless of LTV, require a full appraisal by a state-licensed
         or state-certified appraiser with interior and exterior photos.

         NOTE: Properties located in Florida and Nevada will require a full appraisal regardless of
               DU findings.

                   A full second appraisal is required on investment properties with a sales price or
                   appraised value under $100,000.

                   At-interest transactions, regardless of loan amount, require, at minimum, an
                   enhanced desk review or a Fannie Mae Form 2055 report (Exterior-Only
                   inspection) by an Icon-approved Appraisal Review Company.

    ●    Loan amount > $1 million: A Fannie Mae Form 1004 appraisal with interior photos
         completed by a state-certified general or residential appraiser and a field review by an
         Icon-approved Appraisal Review Company are required. The appraisal must have at least
         three (3) closed sales, one (1) pending sale and two (2) listings, all no older than six (6)
         months. If a pending sale is unavailable, an additional listing may be substituted.


690.03 - Unacceptable Appraisal Practices

Icon will not extend financing on any transaction in which the property valuation is not supported or
the appraiser engaged in unacceptable appraisal practices.

Examples of unacceptable appraisal practices include, but are not limited to:
           Improper comp selection.
           Excessive and unsupported comp adjustments.
           Failure to properly report subject’s 12-month listing history or contracted sale.
           Failure to properly report subject’s 36-month sales history or comps’ 12-month sales
           history.
           Misrepresentation of subject or comparables.
           Misrepresentation of the person completing the appraisal.
           Unprofessional conduct.


Mandatory Reporting of Appraiser Misconduct
If there is a reasonable basis to believe that an appraiser has not complied with ethical or
professional requirements for appraisers under applicable federal or state law, or the Uniform
Standards of Professional Appraisal Practice (USPAP), and the resulting non-compliance has a
material impact on value, Icon will report the appraiser to the appropriate state licensing agency for
further investigation.

Icon Lending Guide – Section 600                                                          Revised 5/6/11
690.04 - Acceptable Appraisal Forms

Acceptable appraisal forms generally follow Fannie Mae/Freddie Mac standards unless otherwise
stated in the Program Profiles. The appraisal report must be completed with all standard required
addenda and exhibits. Fannie Mae forms have a mandatory effective date of November 1, 2005,
and Freddie Mac forms have a mandatory effective date of January 1, 2006; both forms are
acceptable to Icon.

690.04.1 - Single Family Residences

All single-family residential appraisals, including PUD units, must be completed on Fannie Mae
Form 1004, with attachments. Site condo units may also be appraised on Form 1004 if the
appraiser provides sufficient information in the appraisal to determine project eligibility and owners
association fees.

Single-family investment properties always require a Single Family Comparable Rent Schedule
(Fannie Mae Form 1007) and an Operating Income Statement (Fannie Mae Form 216), regardless
of loan documentation type.

690.04.2 - Multi-Family Residences

Two-to-four (2-4) unit income properties must be completed on Fannie Mae Form 1025, with
attachments, and an Operating Income Statement (Fannie Mae Form 216), regardless of
occupancy or documentation type.

690.04.3 - Condominium Units

Attached condominium units require an Individual Condominium Unit Appraisal Report (Fannie
Mae Form 1073), with attachments. Detached units (site condos) may be appraised on Form 1073
or Form 1004 (e.g. site condo units).

690.05 - Required Appraisal Attachments

All appraisals require a Statement of Limiting Conditions and Appraiser’s Certification (Fannie Mae
Form 1004B) and the Market Conditions Addendum (1004MC), regardless of type.

The following attachments are required for all appraisals:

         A street map clearly showing the location of subject and each comparable sale and listing.
         A legible sketch of the subject dwelling including exterior dimensions (sketches of
         condominiums must indicate interior unit dimensions, not exterior building dimensions).
         Legible photographs of subject’s interior living areas (including kitchen, living room, and
         dining room, all bathrooms, and at least one bedroom), exterior front and rear elevations,
         and a street scene.
         Legible photographs of any special features or external influences that may have a
         material impact on subject’s value or marketability (positive or negative). Examples of
         amenities that have a positive effect on value include an extraordinary view, waterfront

Icon Lending Guide – Section 600                                                         Revised 5/6/11
         location, an in-ground pool, tennis court, and outbuildings. Negative external influences
         can include busy roadways, train tracks, airports, and commercial properties, abandoned
         or boarded-up homes, or environmental hazards.
         A legible photograph of each comparable sale and listing. An MLS photo may be used if
         new photographs cannot be obtained physically (e.g. due to inclement weather) or the
         property no longer resembles its appearance at the time of sale (e.g. has been torn down
         or added on to).
         Plat of surveys, flood maps, or plans and specifications, when applicable.
         An addendum explaining unusual items not adequately addressed on the appraisal form
         itself.


690.06 - Additional Appraisal Requirements
In addition to the appropriate appraisal form, the appraisal must include the following:
         The appraiser must review a copy of the sales contract on purchase transactions. The
         appraiser must acknowledge by checking the appropriate box on the appraisal that he has
         reviewed the sales contract and all addenda.
         Disclose any applicable information regarding the competency provision of the USPAP.
         Certify that the analysis is limited by the reported assumptions and conditions and is the
         appraiser’s own personal, unbiased professional opinion.
         Be based upon the market value of the property.
         Analyze and report in reasonable detail the sales history for the past 36 months for the
         subject property and the last 12 months for all comparables properties used in the report.
         Analyze any current agreement of sale, option, or listings for the subject property within
         the previous 12 months.
         Provide data on current revenues, expenses and vacancies for income producing
         properties.
         Analyze and report on appropriate discounts and deductions.
         Analyze and report the impact of financing concessions, rent or sales concessions,
         contributions (even if such items are common market practice), and discounts for
         proposed construction or partially leased properties.
         Analyze and report a reasonable marketing period and exposure time.
         Analyze and report on current market conditions and trends that affect the value of the
         property.
         Include a statement that the appraisal was not based upon a requested minimum
         valuation, specific valuation, or the approval of a loan.
         Include a legal description of the subject property.
         Identify and separately value any personal property, fixtures, or intangible items.
         Set forth all material assumptions and limiting conditions that affect the opinions, analysis,
         and conclusions expressed in the appraisal.
         The appraiser must address any property additions and provide detailed commentary
         regarding the quality, safety, and conformity to the neighborhood of the addition.

Icon Lending Guide – Section 600                                                           Revised 5/6/11
         Additionally, the appraiser should address if the addition affects the marketability of the
         property.

690.07 - Electronic Appraisals

Appraisers and brokers who use electronic appraisals must have in place appropriate measures to
ensure the authenticity, integrity, security, and accuracy of any electronic appraisal provided to
Icon (in electronic or printed form). The Seller is responsible for ensuring that the parties to any
electronic appraisal have appropriately agreed to the use of the electronic signature in a way that
will create a binding electronic record under the federal Electronic Signatures in Global and
National Commerce Act (E-SIGN) and the Uniform Electronic Transactions Act (UETA), and any
other applicable laws.

All electronic appraisals must include a comment by the appraiser describing the method used to
create the electronic signature and the intention to do so. The appraiser must also provide a
statement in the report or supporting attachments that any digital photographs used in the
appraisal have not been altered in any way.

690.08 - Age of the Appraisal

The appraisal must be dated within 90 days of underwriting regardless if the improvement is a
resale or new construction. The appraisal cannot be greater than 120 at the time of funding or a
new appraisal with three new comparable sales will be required. When utilizing an ARM product
on the Agency Conforming or Agency High Balance program, the appraisal must be dated 90 days
from the Note date.

An appraisal older than 90 days at underwriting will require a recertification of value made by the
original appraiser, indicating that the estimated value has not declined and market conditions
remain the same as described in the original appraisal. The recertification of value must be
completed on Fannie Mae Form 1004D. At the underwriter’s discretion, additional comparables
may be required. If the update does not confirm the original value and market conditions, a new
appraisal may be required.

A new appraisal will be required if the original appraisal is more than 120 days old and the loan
has not funded.

690.09- Acceptable Age of Appraisal for Loans requiring a Second Appraisal

Loans requiring two appraisals, one of the two appraisals may be up to 90 days at the time of
funding as long as an appraisal update has been completed.

The second appraisal may not be older than 120 days of the Note Date, with an appraisal update.
After 120 days a new second appraisal will be required.




Icon Lending Guide – Section 600                                                          Revised 5/6/11
690.10 - Final Inspections/Completion Report & Appraisal Update

Whenever an appraised value is subject to completion or repairs, a final inspection is required
prior to final disbursement of loan funds. The final inspection should be performed by the original
appraiser, and must be documented by a Completion Report (Fannie Mae Form 1004D).

The Completion Report must be accompanied by photos of the completed property (and, where
applicable, the completed repairs), and must state that the improvements have been completed in
accordance with the requirements and conditions stated in the original appraisal report. The
appraiser must also concur with the original appraisal and research, verify, and analyze current
market data in order to determine if the value has declined since the effective date of the original
appraisal. If the Completion Report indicates that market conditions or the property value has
declined since the original appraisal, a new appraisal is required.

690.11 - Declining Markets

Icon defines a property in a declining market as follows:

         The appraiser comments the subject is in a declining market, values are declining in
         subject’s area and/or the appraiser marks ―declining‖ in the Property Values Section of the
         appraisal.
         AUS Findings indicate subject is located or appears to be located in a declining market.
         Web resources used by underwriting indicate the subject is located in a declining market

Transactions with an LTV > 80% are subject to MI availability and the MI Companies’ declining
market guidelines.

690.12 - Recently Remodeled or Renovated Properties

Inflated appraisals made for cash-out refinances and purchases of flipped properties are a serious
concern in the mortgage industry. The following requirements apply to all properties for which
value is given in the appraisal to remodeling, renovation, rehabilitation, or other property
improvements or repairs made in the 12 months prior to the appraisal:

         If the work was performed by a third party, the appraiser must obtain a copy of the
         rehabilitation or remodeling contract showing an itemized list of repairs or improvements.
         If the property’s seller or borrower performed his or her own repairs or remodeling, the
         appraiser must provide a list of repairs or improvements and an estimate of costs.
         Interior photos of all stated repairs or improvements must be obtained on all loans, even
         those where the appraisal has been completed ―as is.‖
         Comparable adjustments must reflect the market's reaction to the improvements, not
         necessarily their cost. For example, swimming pools, electronic air filters, intercom
         systems, elaborately finished basements, carpets, luxury finishes or materials and other
         special features generally do not recapture value to the extent of their cost.
         If significant additions or conversions were made to the subject property, the appraiser
         must provide detailed commentary regarding the quality, utility, and conformity to the
         neighborhood of the improved property, and must indicate if permits were obtained.

Icon Lending Guide – Section 600                                                        Revised 5/6/11
690.13 - Other Property Characteristics

690.13.1 - Accessory Apartments/Non-Permitted Addition/Granny or In-Law Units

Properties with non-permitted accessory units, also known as granny units or mother-in-law suites
may be acceptable if all of the following are met:

         One or two-unit (1-2) property.
         Subject is typical, common and readily acceptable in the subject’s market area.
         Appraisal demonstrates market acceptance of these accessory units.
         Rental income from the accessory unit may not be used to help the borrower qualify.
         Existence of the unit must not jeopardize any future hazard insurance claim.
         Properties must conform to all zoning laws and/or regulations.
         Legal non-conforming use may be acceptable provided its current use does not adversely
         affect its value and marketability.
         Accessory unit is substantially smaller than the primary unit.
         Unit must not violate applicable zoning laws and/or restrictions in such a way that the
         property could not be rebuilt in its current design.

690.13.2 - Deed Restrictions

Icon will not extend financing on properties with deed restrictions that can potentially hinder Icon’s
first mortgage position. Any deed restriction must be subordinate to Icon’s mortgage and cannot
prevent the mortgagee to claim any hazard insurance settlement condemnation awards, prohibit
mortgagee’s legal right to remedy default under the mortgage terms, or restrict a notice of default
or foreclosure to be sent to any third party. A copy of the deed restriction is required.

For condominium projects, the number of restricted units must be disclosed. The association may
have the first right of refusal to purchase the unit but should not have the first right to lease, sale,
or transfer a unit in connection with a mortgage foreclosure, acceptance of a deed in lieu of
foreclosure, etc.

The condominium documents cannot restrict the unit owner’s right to sell, transfer or convey the
unit. Limitations/restrictions to unit owners for occupancy or specified age groups are permissible
provided the limitations are legally valid and necessary to maintain the character of the project.

Properties with deed restrictions are limited to one-to-two (1-2) units, purchase or rate and term
refinance only.

690.13.3 - Deferred Maintenance

Property must be in average or better condition. Deferred maintenance may be permissible
provided the neglected item(s) is not structural in nature or has a negative effect on marketability.
Deferred item(s) may be left in ―as is‖ condition if cosmetic in nature only and the cost to cure does
not exceed $2,000.

Icon Lending Guide – Section 600                                                           Revised 5/6/11
690.13.4 - Electrical Systems

An electrical certification from a licensed electrician will be required whenever the appraisal states
a fair or poor rating concerning the adequacy or condition of the system. Any inadequacies must
be corrected prior to close.

690.13.5 - Environmental Hazards

The appraisal report should note the existence of known environmental hazards and its affect on
value and marketability of the property. Properties located adjacent to or containing environmental
hazards are ineligible for financing. Environmental hazards include, but are not limited to:

         Evidence of radon above EPA safety levels which is left untreated.
         Properties built on or near toxic waste dumps, clean-up sites, etc.
         Evidence of toxic molds or other contagions.


Properties must conform to Fannie Mae/Freddie Mac hazardous substance guidelines when
issued.

690.13.6 - Excess Land/Acreage

Icon requires a property with significant land area to be appraised in its entirety. Icon will lend on
properties with a maximum lot size of 10 acres. The appraisal must show subject’s lot is typical for
the neighborhood by analyzing comparable sales which bracket subject’s lot size.

690.13.7 - Foundation Settlement

If the appraisal report notes evidence of excessive settlement, the appraiser must clearly define
the effect on value and marketability of the subject property. Settlement problems which denote
the structural deficiencies and/or significant negative impact on the value and marketability must
be corrected prior to closing. Generally, a structural engineer’s report will be required prior to
making a loan decision.

690.13.8 - Functional Kitchen

All properties require a functioning kitchen consisting of a working sink and stove/oven. Properties
with only a microwave or a hot plate are not acceptable.

690.13.9 - Heating Systems

A central heat source with ductwork or baseboard in all rooms is required on all properties. A
heating certification from a licensed heating contractor may be required whenever the property has
a gravity heating furnace or when the appraisal states a fair or poor rating on the adequacy of the
system. Any inadequacies must be corrected prior to closing. A solar or wood-burning heating
system must contain a central backup system to be acceptable.




Icon Lending Guide – Section 600                                                         Revised 5/6/11
NOTE: Properties located in Hawaii without a permanent heat source are eligible if appraiser
      reports it is normal and customary for the property location.

690.13.10 - Legal Non-Conforming Use

Icon will extend financing on certain legal non-conforming properties provided the appraiser
confirms through the local municipal building department that subject’s improvements can be
100% rebuilt to their current use in the event of partial or full destruction.

An accessory unit is allowed provided: the subject property is one-to-two (1-2) units; and the illegal
unit conforms to the subject neighborhood, is residential in nature, and meets the test of ―common
and customary for the market.‖ The property must be appraised in conformity with its legal use
(e.g. single family residence) and the borrower must qualify without any rental income from the
illegal unit. Icon also requires a statement from the appraiser that subject can be rebuilt to its
current use in the event of partial or full destruction.

The appraiser must provide at least two (2) comparable sales of similar properties with an illegal
accessory unit.

690.13.11 - Leaseholds

When a mortgage is secured by a Leasehold Estate, or is subject to the payment of ―ground rent,‖
the borrower has the right to ―use and occupy‖ for a stated term under certain conditions contained
within the lease. Also, note that the leasehold agreement must last at least 10 years longer than
the term of the loan.

The valuation of a property that is subject to a leasehold interest may require a complex analysis,
so the appraiser must develop a thorough, clear, and detailed narrative to be included in the
appraisal report that identifies:

         Terms of the lease
         Remaining term of the lease as of the effective date of the appraisal
         Any restrictions and conditions of the lease agreement or ground lease and discuss what
         effect, if any, they have on the value and marketability of the subject property.

In developing the sales comparison approach to value, the appraiser must use as comparable
sales properties that have similar leasehold interests.

When there are sufficient numbers of closed comparable sales or properties with similar leasehold
interests available, the appraiser should use them in the analysis of the market value of the
leasehold estate for the subject property and report them in the sales comparison analysis grid on
the applicable appraisal report form. However, if the market does not have enough adequate
comparable sales available with similar leasehold interests, the appraiser may use sales of similar
properties with different lease terms or, if necessary, sales of similar properties that are fee simple
estate ownership may be used, as long as the appraiser explains why they had to be used. When
using fee simple estate ownership comparable sales, the appraiser must make the appropriate
adjustments for the difference in ownership and support these adjustments with documentation in
the appraisal. At a minimum, the appraisal must contain at least two (2) sales that are similar
leasehold estate interest comparable sales, which can be either closed, or pending sales.


Icon Lending Guide – Section 600                                                         Revised 5/6/11
690.13.12 - Multiple Dwellings

Multiple dwellings on one lot must comply with local zoning requirements and be typical and
common for the area. The Appraiser must provide comparables to support the value of the
additional units. Properties with more than two additional dwellings are ineligible for financing by
Icon. Examples of this type of property would be two single-family homes on one lot, or a single
family home and a two family dwelling on one lot.

Multiple dwelling PUDs on one lot to be encumbered by one lien are not eligible for Icon financing.

690.13.13 - Plumbing

A plumbing certification from a licensed plumber will be required whenever the appraisal states a
fair or poor rating concerning the adequacy or condition of the system. Any inadequacies must be
corrected prior to close.

690.13.14 - Private Roads

Private roads providing access to the subject property may be eligible for Icon financing provided
the Title Company insures the accessibility to the property from a public street and any
maintenance costs are included in the qualifying ratios. A copy of the road maintenance
agreement may be required if significant upkeep of the road will be required (e.g. frequent snow
removal, etc.). Private road agreements will not be required in California. Private roads must
provide year-round access.

690.13.15 - Private Water Supply

Private water supply for properties whose water sources are derived from a well, shared well,
community well, or other private source must meet the following guidelines:

         Be a single family residence.
         Water supply provides a year-round source of water.
         Mechanical systems utilized to provide water to the subject property are in good working
         order.
         A water certification is required if the appraiser or purchase contract indicates the
         necessity. The report should be provided by a city, county, state (or governing body)
         official or a qualified entity stating:
              The water supply system is in proper working order and pumping an adequate supply
              of water for the property; and
              The water supply is potable and complies with local and/or state health authority
              standards. (In absence of a local health authority, a reputable chemical testing
              agency must certify that the water is fit for human consumption).
         The water certification(s) must be dated no more than 120 days prior to the Note Date.




Icon Lending Guide – Section 600                                                        Revised 5/6/11
690.13.16 - Repair Requirements

At its discretion, underwriting may require any repairs considered necessary to ensure good and
marketable property. Repairs may be ordered regardless of whether the property is appraised ―as
is‖ or ―subject to repairs.‖

690.13.17 - Rural Properties

Icon will extend financing on rural properties with a maximum 10 acres. A rural property is defined
as a property located in an area that is less than 25% built up or an area that is designated by the
appraiser as rural. In addition, Icon categorizes a property as rural when the comparable sales are
greater than five (5) miles and older than six (6) months.

The following applies to all rural properties:

         The property must be residential in nature.
         The property must conform to existing zoning requirements.
         Lot size must be common and customary for the market and supported by comparable
         sales.
         The property must be accessible year-round by all-weather roads that meet local
         standards.
         The property must have adequate working utilities that are typical for the market.
         The property should not have many outbuildings.
         Maximum 80% LTV.

Rural properties with multiple outbuildings may indicate a commercial use. Agricultural properties,
income-producing properties, farms, etc. are ineligible for financing. Refer to Section 690.14 -
Ineligible Properties for more information.

690.13.18 - Security Bars

Properties with security bars must comply with local fire codes and must have quick releases or
safety releases on at least one window in each bedroom. In addition, bedrooms must have
adequate egress to the exterior of the home – occupants must be able to get outside of the home
if there is a fire.

690.13.19 - Sewage Disposal System

Sewage disposal systems may require certification if the appraiser or purchase contract indicates
the necessity. The report should be provided by a county, state, (or governing body) official or
qualified entity stating:

         The sewage disposal system complies with applicable local and/or state health standards,
         is in proper working order, and can be expected to function satisfactorily; or
         Local and/or state health standards do not apply for the sewage disposal system; however
         it is found to be in proper working order and adequate for the property.

Icon Lending Guide – Section 600                                                       Revised 5/6/11
         For systems one year old or less, the certification may be no more than one year old on
         the date of closing. For systems more than one year old, the certification may be dated no
         more than 120 days prior to the note date.

690.13.20 - Survey

A survey is required where typical in the market area, or where the title commitment indicates an
exception to survey matters.

In areas where surveys are not customary, the title insurance policy must insure against loss or
damage by any violation, variation, encroachment or adverse circumstance which would have
been disclosed by an accurate survey.

A copy of the survey must be obtained if the estimated HUD-1 shows a charge for the survey.

690.13.21 - Termite Report and Clearance

A pest inspection report and clearance is required if the appraisal reports evidence of termites or
other insect infestation, or the terms of the sales contract call for a pest inspection report, or if the
Estimated/Final HUD I reflect a charge for a termite inspection. All Section I items must be cleared
prior to closing. Any significant structural damage due to pest infestation must be corrected prior
to closing.

690.13.22 - Roof Inspection

Water stains noted within the appraisal report will result in a roof inspection by a licensed roofer
with a minimum 3-5 year remaining life expectancy.

690.14 - Ineligible Properties

Icon will not extend financing on the following:
         Properties listed for sale at the time of loan application are ineligible for a refinance
         transaction.
         Non-warrantable condos and non-warrantable PUDs
         Condos purchased at auction
         Kiddie condos
         Condotels
         Co-operative Units
         Time share projects
         Manufactured housing/modular homes
         Properties located on Indian Reservation and/or Tribal Land
         Properties on leased land in which the lease does not meet Fannie Mae requirements
         Properties with less than 600 square feet, including two-to-four (2-4) unit dwellings in
         which any unit is less than 600 square feet


Icon Lending Guide – Section 600                                                            Revised 5/6/11
         Income producing properties (e.g. farms, ranches, orchards, wineries, Bed & Breakfast,
         school, adult care facilities, etc.)
         Unique properties (e.g. berm, earth, geodesic, etc.)
         Units without a functional kitchen or a working heat source
         Properties in fair or average minus condition
         Commercially or industrially zoned properties
         Mixed-use properties
         Properties greater than 10 acres
         Properties zoned agricultural and the highest and best use is other than residential
         Properties utilized as a place of worship
         Multi-family dwellings containing more than four (4) units
         Properties subject to hazardous conditions
         Properties that do not have full utilities meeting all standard and local code
         Unimproved land
         Properties in Hawaii located in Lava Zones 1 & 2
         Properties with deferred maintenance exceeding $2,000
         Properties with an escrow withhold to bring the condition to average or complete
         construction after the close of escrow.
         Land Trusts in Illinois.
         Property with problem drywall (such as ―Chinese drywall‖)

690.15 - Analysis of the Appraisal

Icon utilizes CoreLogic, Fannie Mae AVMs, its Appraisal Department, and approved Appraisal
Review Companies to aid with the analysis of the collateral. Any appraisal red flags detected by
an underwriter will escalate the report to their manager and/or Icon’s Appraisal Department to
determine if a desk review or field review is warranted.

Underwriters evaluate all facets of the appraisal including but not limited to the marketing time,
housing trends, neighborhood characteristics, listing history, comparable selection, adjustments,
across the board adjustments, recent sales and/or transfers of the subject property and
comparables, condition, and photos.

Comparable Sales
         Icon requires a minimum of three (3) comparable sales closed within six (6) months of the
         date of the appraisal and located within one (1) mile of the subject property; in essence,
         comparables must be located within subject’s neighborhood and not require excessive
         adjustments.
         Comparable sales located outside of subject’s neighborhood must be fully addressed by
         the appraiser. If the appraiser selects comparables outside of subject’s neighborhood in
         lieu of available closer comparables, the appraiser must explain in detail why the more
         distant comparables were selected.
Icon Lending Guide – Section 600                                                          Revised 5/6/11
         Comparables that fall outside the above parameters may require an appraisal review.

Adjustments
         Line, net and gross adjustments should not exceed 10%, 15% and 25% of the selling price
         for each comparable sale or listing.
         If adjustments are made to the appraisal for effective age, the appraiser must provide an
         explanation for the adjustments and the condition of the property.
         Comparable sales are to be adjusted to the subject property with an exception for sales
         and financing concessions which are adjusted to the market at the time of sale.
         Time adjustments must reflect the difference in market conditions between the date of sale
         of the comparable and the effective date of the appraisal for the subject property.
         Adjustments outside of the above parameters may require an appraisal review.

In addition to analyzing the above requirements, Underwriters implement the procedures outlined
below to evaluate the adequacy and reliability of appraisal documentation:
        Underwriters review CoreLogic’s LoanSafe report on each loan. This report provides a
        RDS Score, T-Ratio, Mean/Median, History Pro, and other information that the underwriter
        will consider as part of their analysis of subject’s current market conditions.
        If the T-Ratio is moderate to low but the Mean/Median is more than 10% below the
        appraised value, and the LTV/CLTV is below maximum financing, the underwriter will
        request a Fannie Mae AVM.
        Findings with a T-Ratio of 95 or greater are not eligible for Icon financing.
        Findings with a T-Ratio ≥ 80 or ≤ 95 require a second review by Senior Management.
        If the LoanSafe does not support the value or reflects a high T-Ratio, or low Mean/Median,
        the underwriter will upgrade the review to a Desk Review. This may be waived if the LTV is
        50% or below and the risk category is Low or Moderate, and the file has been reviewed
        with Senior Management.
        Underwriters will upgrade the AVM to a desk or field review, as dictated by the
        characteristics of the property and appraisal, if any of the following circumstances apply:
                   The AVM does not support value or reflects a confidence score other than Low
                   Risk Category.
                   The LTV/CLTV is > 70% and the loan is cash-out;
                   Financing from Icon on the subject property exceeds $650,000;
                   The underwriter determines additional support for value is required based on the
                   characteristics of the subject property, quality of the appraisal or the comparables
                   selected. For example:
                           Subject property is classified as ―rural‖;
                           Appraiser has used comparables aged > six (6) months;
                           Distance of comparables appears to be excessive based on location of
                            property;
                           Appraiser uses time adjustments not adequately supported by paired
                            sales analysis;
                           Appraiser failed to bracket adjustments;
Icon Lending Guide – Section 600                                                          Revised 5/6/11
                           Value of subject exceeds predominant value by more than 125%.

At the underwriter’s discretion, a field review may be required in lieu of an AVM or a desk review.

690.16 - Appraisal Reviews
When a field review is required, the broker must order the review from an Icon Approved Review
Company. The same AMC or appraiser that completed the original appraisal cannot perform the
appraisal review.

Approved appraisal review companies and AMC’s are assigned by region:
Appraisal Review Company                  Appraisal Management Companies (AMC)
   ResDirect/RELS Valuations                  AMC Settlement Services
                                              AppraiserLoft
                                              Axis
                                              Streetlinks


Refer to Icon’s website at www.iconwholesale.com under ―Approved Partners‖ for detailed
information.

690.16.1 – Appraisal Reviews for High Balance Conforming Loans

A field review (Fannie Mae Form 2000) is required on the High Balance Conforming Loan product
if:
         The property is valued at $1,000,000 or more and the LTV/CLTV is greater than 75%.

If the field review findings are different than the original appraisal, the lowest of the original
appraised value, the field review value or the sales price (for purchases) must be used to calculate
the LTV ratios.

This requirement is in addition to the standard DU appraisal requirements.




Icon Lending Guide – Section 600                                                       Revised 5/6/11
690.17 - Condominiums & PUDs

Icon follows Fannie Mae guidelines regarding the eligibility of attached/detached condominiums,
and attached/detached PUDs.

This section of the manual outlines Icon’s requirements for condo eligibility. Guidelines under this
topic that differ from Fannie Mae published guidelines will supersede.

Icon will not grant exceptions to the condominium eligibility requirements.

A condominium is a form of ownership characterized by holding title to a single unit together with a
proportionate undivided ownership interest in the common elements. The common elements
typically include land, roofs, floor, walls, lobbies, and community spaces and facilities. The
common elements are generally maintained, but not owned, by a non-profit homeowner’s
association.

Each condominium project requires approval by Icon Residential Lenders. Icon maintains a list of
condominiums that have either been approved or declined. It is recommended that an originator
check with their Icon Account Executive or Account Manager to see the status of a project prior to
submitting a loan for underwriting.

Condominium projects are classified as either a new project or an established project.

690.17.1 - New Projects

New projects are defined as follows:
         Less than 90% of the total units have been conveyed to the unit purchasers,
         The project is not fully complete (proposed construction, new construction or the proposed
         or incomplete conversion of an existing building to a condo.),
         The project is newly converted,
         The project is subject to additional phasing or annexation, and
         The developer is still in control of the homeowner’s association.

New projects require the following:
         A Lender Full Review and a Condo Project Manager (CPM) approval, or
         A FNMA PERS approval, or
         An FHA approval, if applicable, and
         A 70% presale ratio.

    NOTE: Condominium projects and condo conversions located in the state of Florida and in
    the city of Las Vegas, Nevada require a PERS approval. No other project approval types will
    be accepted for new projects/conversions in these areas.
              FHA loans secured by a condominium require the condominium project to currently be
              FHA approved; ―spot approvals‖ are not allowed. FHA project approvals are eligible
              on FHA loans only; conventional loans secured by a condominium may not use an

Icon Lending Guide – Section 600                                                         Revised 5/6/11
              FHA project approval. Conventional loans require a Lender Full Review or a PERS
              approval.

All standard condo documentation and the HOA Condominium Questionnaire, if applicable, is
required.

New Condo conversions require the following:
         A Lender Full Review and a CPM approval or
         A FNMA PERS approval, or
         An FHA approval, if applicable, and
         A 70% presale ratio, and
         The project is 100% complete.


    NOTE: Condominium projects and condo conversions located in the state of Florida and in
          the city of Las Vegas, Nevada require a PERS approval. No other project approval
          types will be accepted for new projects/conversions in these areas.
              FHA loans secured by a condominium require the condominium project to currently be
              FHA approved; ―spot approvals‖ are not allowed. FHA project approvals are eligible on
              FHA loans only; conventional loans secured by a condominium may not use an FHA
              project approval. Conventional loans require a Lender Full Review with a CPM
              approval or a PERS approval.
All standard condo documentation and the HOA Condominium Questionnaire, if applicable, is
required.

690.17.2 - Established Projects

Established projects are defined as follows:

    Projects in which at least 90% of the units have been purchased and conveyed to the unit
    purchasers,
    The project is 100% complete,
    The project is not subject to additional phasing or annexation, and
    Control of the Homeowners Association has been turned over to the unit owners.

690.17.3 - Ineligible Projects

Icon will not lend on the following types of projects:

         Condotels – a project that is managed and operated as a hotel or motel is considered a
         condotels or condominium hotel. If any of the following are present, the project is
         considered a condotel:
              The project includes registration services/rental desk and offers unit rentals on a daily
              basis
              The name of the project includes ―hotel‖ or ―motel‖
              The project limits or restricts the owner ability to occupy the unit

Icon Lending Guide – Section 600                                                          Revised 5/6/11
              The project has a mandatory rental pool that requires the unit owners to either rent
              their unit or to give a management firm control over the occupancy of the unit.
              The project offers cleaning services
              The project offers services such as a commercial hotel even though the units are
              individually owned.
         Projects with non-incidental business operations owned or operated by the homeowners
         association. Examples are a restaurant, spa, health club, beauty parlor, etc.
         Projects which have more than 20% commercial space.
         Projects that are classified as investment securities. If the project has documents on file
         with the Securities and Exchange Commission or if the project is promoted or
         characterized as an investment opportunity.
         Any project or building that is owned by several owners as tenants-in-common, or by a
         homeowners association in which individuals have an undivided interest in a residential
         apartment building and land, and have the right to exclusive occupancy of a specific
         apartment in the building.
         Timeshare or segmented ownership projects
         Houseboat projects
         Co-ops not located in the state of New York or in the New Jersey counties of Bergen,
         Essex, Hudson, Middlesex, Monmouth, Morris, Passaic and Union.
         Multi-dwelling unit condominiums which permit an owner to hold title to more than one unit
         with ownership evidenced by one single deed and financed by a single mortgage.
         Condominium projects that represent a legal non-conforming use of the land, if zoning
         regulations prohibit rebuilding the improvements to current density should there be partial
         or full destruction.
         Projects on leased land that do not meet Fannie Mae’s requirements.
         Projects in which the recreational facilities are leased.
         Any project in which the homeowners association or developer is named as a party to
         current litigation. Projects in which the homeowners association or developer is named as
         the plaintiff in a foreclosure action or as a plaintiff in an action for past due homeowners’
         association dues are eligible.
         Any project in which 15% or more of the total units are greater than 30 days delinquent on
         the dues and/or the total number of delinquent units is greater than 15%.
         Projects with inadequate reserves.
         Projects with deed restrictions (i.e. first right of refusal).
         Units that are appraised as a condo, but there is no recorded Master Declaration.
         Projects which are unable to supply the necessary condominium documents for a full
         review or projects that do not meet the eligibility requirements.
         Projects that do not meet the owner occupied/second home occupancy ratio.
         Condo projects with excessive sales/financing structures.
         Any project in which Icon has met its maximum exposure ratio of 10%.


Icon Lending Guide – Section 600                                                         Revised 5/6/11
         Condominiums located in mountainous ski resorts – examples Aspen, Lake Tahoe,
         Mammoth, Park City, Sun Valley, etc.
         A new project or new condo conversion located in the state of Florida or in Las Vegas,
         Nevada that does not have a PERS approval.
         Condominium property that is a construction-to-permanent transaction.
         A 2-4 unit condo conversion that does not receive a project ―Eligible‖ determination from
         Condo Project Manager (CPM).
         A new condo conversion project that was a non-gut rehab without a PERS approval.


690.17.4 - Types of Project Review

Icon requires that all condominium projects meet Fannie Mae’s project requirements in addition to
meeting the requirements of this manual. Requirements that differ from Fannie Mae will
supersede.

The project requirements depend on the project classification. There are five types of condo
classifications/review for a condominium project - Limited Review, Condo Project Manager (CPM)
Expedited Review, Lender Full Review, FHA-Approved Projects, and Fannie Mae Review.
Project Classification Codes & Definitions

The project code must be reflected on the final 1008.
         P – Limited Review – New Detached Project
         Q – Limited Review – Established Project or Established Two-Unit to Four-Unit Project
         R – CPM Expedited Review or Lender Full Review - New Project and new Two-Unit to
         Four-Unit Project
         S – CPM Expedited Review or Lender full Review – Established Project or Established
         Two-Unit to Four-Unit Project
         T – Fannie Mae Review – Project Eligibility Review Service (PERS)
         U – FHA-Approved Projects and any FHA approval required conditions

690.17.5 - Limited Review

A Limited Review allows the underwriter to evaluate and approve a condominium project with
limited documentation.

Icon allows a Limited Review when the DU Findings indicate a Limited Review is acceptable and
the condominium project meets all of the requirements detailed in Section 690.17.5(a) – Attached
Units and Section 690.17.5 (b) – Detached/Site Condominiums of this Lending Guide.

NOTE: A Limited Review is only eligible on the Agency Conforming program. All other programs
      require a Lender Full Review.

New condominiums and newly converted condominiums in Florida are not eligible for Limited
Review.




Icon Lending Guide – Section 600                                                       Revised 5/6/11
690.17.5(a) - Attached Units

In order for a condominium project with attached units to be eligible for a Limited Review, all of the
following must be meet:
         The project is not an ineligible project as defined in Section 690.17.
         The project is an established project and all of the following exist:
              90% of the units are conveyed to unit owners
              All units, common areas and facilities are 100% complete
              The project has been turned over to the unit owners
         The subject property is not a manufactured home.
         The project has the proper insurance coverage as described in Section 900 –
         Funding/Closing of the Lending Guide.
         The project is not a new attached project.
The documentation required to perform a Limited Review is a completed Icon HOA Questionnaire,
a copy of the current master insurance policy with hazard and liability for the project. Maximum
LTV/CLTV for a limited review on an attached unit with DU Approve/Eligible.


                            Occupancy            Maximum LTV/CLTV*
                            Primary Residence    ≤ 90%/90%
                            Second Home          ≤ 75%/75%
                            Investment           Not Allowed

NOTE: LTVs > 80% are subject to MI availability.

690.17.5(b) - Detached/Site Condominiums

Detached or Site condominiums are units that resemble a detached single-family dwelling. The
project can either be established or newly constructed. A Limited Review on a detached/site
condo is eligible if all of the following apply:

              The subject property is a single detached unit in a condominium project and is not a
              manufactured home.
              The project is not an ineligible project as defined in Section 690.17.3
              The appraiser has commented in the appraisal on the effect of the condo form of
              ownership on the marketability of the individual unit.
              All comparable sales must be similar detached/site condominiums. One comparable
              must be from a competing project and one must be from the subject’s project. If the
              project is new construction and the comparable sale is within the subject’s project, the
              comparable cannot be from the same builder.
              The mortgage title insurance policy satisfies the special title insurance requirements
              for units in a condominium project.


Icon Lending Guide – Section 600                                                         Revised 5/6/11
              If the project is new, the completion requirements may be waived if the items are
              minor and do not have a major impact on marketability.
              The unit may be covered by individual hazard and flood insurance and is required to
              carry coverage the same as a detached single dwelling or the unit may be covered by
              a master policy. If the unit consists only of air space and the dwelling and site are
              considered common areas, a master insurance policy is required.
              If the condo project is new, the appraiser has used at least one comparable that is a
              detached condo unit, from either a competing project or the subject project, which was
              built by a builder who did not build the subject property.

690.17.6 – Condo Project Manager (CPM) Expedited Project Review

CPM Expedited Project Review is available for all projects that do not meet the Limited Review
requirements or the project is not on the FHA Approved Project List or Fannie Mae Accepted
Condominium Development List. These lists can be found at www.efanniemae.com.

Even though the CPM Expedited Project Review may be more flexible with certain requirements,
(i.e. allow for lower presale ratios on newer projects), the CPM Expedited Project Review still
requires the Lender to review the budget and represent and warrant that the project meets the
legal requirements discussed in the Lender Full Review section of this chapter.
The documentation required for CPM Expedited Project Review is a HOA Questionnaire
completed on Icon’s form, a copy of the current annual budget, master insurance policy for hazard
and liability, fidelity bond (if applicable), recorded CC&Rs, By-Laws, and Articles of Incorporation.

CPM Expedited Project Review is not available for new condominiums or newly converted
condominiums located in Florida. New condominiums or newly converted condominiums located
in Florida require Fannie Mae PERS approval. PERS approved projects can be located on Fannie
Mae’s website at www.eFannieMae.com.

690.17.6(a) - New Projects (excluding 2-4 unit projects)

When using CPM Expedited Project Review, in addition to meeting the legal requirements stated
in the Lender Full Review Section, the project must adhere to the following:

         The project is not an ineligible project per Section 690.17.3.
         The project has a Lender Full Review and CPM approval
         If the project is new, the project should meet 70% presale ratio. However, CPM may allow
         a lower presale ratio based on the project characteristics.

690.17.6(b) - Established Projects (including 2-4 unit projects)

Established projects and 2-4 unit projects with Expedited Project Review must adhere to the
following:

         The project is not an ineligible project per Section 690.17.3.
         No single entity (the same individual, investor group, partnership, etc) may own more than
         10% of the total units in the project. If there are less than 10 units in the project, no single
         entity may own more than 1 unit. For 2-4 unit projects, only one unit may be an
         investment; the other remaining units must be a primary residence or second home.
Icon Lending Guide – Section 600                                                           Revised 5/6/11
         Amenities may be incomplete provided the items are minor and do not have a major affect
         on marketability.
         Control of the homeowners association must have been turned over to the unit owners.
         The units in the project may be owned fee simple or leasehold and unit owners must be
         the sole owners of the recreational facilities and have rights to the use of the project
         facilities, common areas. Leasehold properties must meet Fannie Mae lease
         requirements.

690.17.7 - FHA Approved Projects

Condominium projects that are FHA Approved do not require a full lender review. The project
must be listed on the FHA Approved Project List and must have met all approval conditions
(presale, occupancy status, and completion). There cannot be any further approval requirements.
A copy of the printout showing the FHA Project Approval is required for the file. Icon will only
accept FHA Project Approvals that are dated on or after January 1, 2000.
The FHA Approved Project List is located at https://entp.hud.gov/idapp/html/condlook.cfm.

New condominiums and newly converted condominiums located in Florida are not eligible under
the FHA Approved Project Review.

The project cannot be an ineligible project per Icon’s guidelines. A current HOA Questionnaire
completed on Icon’s form and a copy of the master insurance policy for hazard and liability, flood,
HO-6 and fidelity bond, if applicable, are required.

690.17.8 - Fannie Mae Review – Project Eligibility Review Service (PERS)

Projects with a Fannie Mae PERS approval do not require a full lender review. Icon does require a
copy of the PERS approval, current completed HOA Questionnaire on Icon’s form, a copy of the
master insurance policy for hazard and liability, HO-6 and flood and fidelity bond if applicable.

The project cannot be an ineligible project per Icon’s guidelines and the project must meet Icon’s
condo eligibility requirements for presale, investor concentration, number of units owned by one
entity, and reserves.

690.17.9 - Lender Full Review

Projects that do not qualify under the Limited Review or CPM Expedited Review process will be
evaluated under the Lender Full Review process. Projects evaluated on the Lender Full Review
process will also require a CPM approval. All project classifications are eligible for the Lender Full
Review process with the exception of new condominiums or newly converted condominiums
located in the state of Florida or in Las Vegas, Nevada.

All projects evaluated under the full review process must meet the eligibility criteria described
below:

         The project must meet all eligibility requirements set forth in this section
         The project cannot be an ineligible project as defined in Section 690.17.3 of this chapter.
         The project cannot consist of manufactured housing.


Icon Lending Guide – Section 600                                                         Revised 5/6/11
         The project must meet the insurance requirements as set forth in this section.
         The project cannot have any unacceptable environmental problems.
         For conversions, all rehabilitation work must be 100% complete and have been done in a
         workman like manner.
         If the project is a conversion that does not entail gut rehabilitation, an engineer’s report is
         required to verify that all necessary repairs are complete, replacement reserves are
         identified for all capital improvements and are determined to be adequate by Icon.
         If the conversion was legally created during the previous three years, a Lender Full
         Review and a CPM approval is required. A copy of the architect’s or engineer’s report that
         was originally obtained for the conversion of the project is required to ensure the report
         commented favorably on the structural integrity of the project as well as the condition and
         remaining useful life of the major components in the project. This includes but is not
         limited to the roof, heating and cooling systems, plumbing, electrical systems, elevators,
         boilers, etc.
         All reviews are valid for three months.

690.17.9(a) - Additional Requirements for Lender Full Review for Established Projects
              (excludes 2-4 unit projects)

         All units, common elements, and facilities must have been completed. This includes the
         units, common elements and facilities of any master association.
         At least 90% of the total units have been conveyed to unit purchasers.
         Control of the homeowner’s association has been turned over to the unit owners.
         At least 51% of the total units in the project have been conveyed to owner occupied or
         second home purchasers.
         No single entity (the same individual, investor group, partnership, etc) may own more than
         10% of the total units in the project. If there are less than 10 units in the project, no single
         entity may own more than 1 unit.
         The units in the project must be owned in fee simple and the unit owners must have the
         sole ownership interest in, and rights to the use of the project’s facilities, common
         elements, and limited common elements.
         The project must be covered by hazard, flood, HO-6, liability, and fidelity insurance
         required for condominium projects.
         The project must be demonstrably well managed. If the project is professionally managed,
         the management contract must be for a reasonable term. The termination provision
         cannot require any type of penalty for termination or require an advance notice of more
         than 90 days.
         The project’s operating budget must be consistent with the nature of the project. The
         budget must provide for adequate reserves based on the project’s age, remaining life, and
         on the quality and replacement cost of the major common element components.
         The project may not contain more than 20% commercial/non-residential usage. This is
         based on the total square footage.
         All facilities related to the project must be owned by the unit owners or the homeowners
         association. The developer cannot retain any ownership interest in any of the facilities.

Icon Lending Guide – Section 600                                                           Revised 5/6/11
         The amenities and facilities, including parking and recreational facilities cannot be subject
         to a lease between the unit owners and the homeowners association or any other party.
         The units should be individually metered. If not, the project’s plans should provide for the
         ready adoption of unit metering.
         The units in the project must be owned in fee simple or leasehold. The unit owners must
         be the sole owners of and have rights to the use of the project’s facilities, common
         elements, and limited common elements. If the project is leasehold, the terms of the lease
         must meet Fannie Mae requirements.

690.17.9(b) - Additional Requirements for New Projects (excludes 2-4 unit projects)

         The project must have a Lender Full Review and CPM approval, a PERS approval, or an
         FHA approval if an FHA loan, to be eligible for Icon financing.
         The project, or the subject’s legal phase, must be ―substantially complete.‖ This means
         that a certificate of occupancy (or other substantially similar document) has been issued
         by the applicable government agency for the project or subject phase and that all the units
         in the building in which the unit securing the mortgage is located are complete, subject to
         the installation of ―buyer selection items‖ such as appliances.
         At least 70% of the total units in the project or subject’s legal phase must have been
         conveyed or be under a bona fide contract for purchase to owner occupied principal
         residence or second home purchasers. For a specific legal phase (or phases) in a new
         project, at least 70% of the total units in the subject’s legal phase(s), considered together
         with all prior legal phases, must have been conveyed (or be under contract to be sold) to
         owner occupant principal residence or second home purchasers. For the purposes of the
         review process, a project consisting of one building cannot have more than one legal
         phase.
         The project must provide most recent audited financials and/or projected budget for Icon’s
         review. The budget must include allocation for line items pertinent to the type of condo,
         provide for the funding of replacement reserves for capital expenditures and deferred
         maintenance (at least 10% of the budget). The budget must also provide adequate
         funding for insurance deductible amounts.
         No more than 15% of the HOA fee payments and/or 15% of the total units may be one or
         more months delinquent.
         No single entity (the same individual, investor group, partnership, etc) may own more than
         10% of the total units in the project.
         The project may not contain more than 20% commercial/non-residential usage. This is
         based on the total square footage.
         The units in the project must be owned in fee simple or leasehold. The unit owners must
         be the sole owners of and have rights to the use of the project’s facilities, common
         elements, and limited common elements. If the project is leasehold, the terms of the lease
         must meet Fannie Mae requirements.

690.17.9(c) - Additional Requirements for Two – Four Unit Projects
         The project must meet all eligibility requirements
         The project cannot be an ineligible project per Section 690.17.3


Icon Lending Guide – Section 600                                                         Revised 5/6/11
         All units, common elements, and facilities must have been completed. This includes the
         units, common elements and facilities of any master association.
         No single entity (the same individual, investor group, partnership, etc) may own more than
         1-unit in the project.
         All but one unit in the project must have been conveyed to owner occupied principal
         residence or second home purchasers.
         The units in the project must be owned in fee simple or leasehold. The unit owners must
         be the sole owners of and have rights to the use of the project’s facilities, common
         elements, and limited common elements. If the project is leasehold, the terms of the lease
         must meet Fannie Mae requirements.
         A 2-4 unit condo conversion project requires the following additional requirements:
              A project ―Eligible‖ Determination from Condo Project Manager (CPM).
              An engineers report.
              A completed Condominium Questionnaire Full/Limited Review (2-4 Units).
              Regardless of how title is held, if the current mortgage is a wrap-around mortgage,
              Icon requires concurrent closings and copies of the Note, Deed and HUD-1 from each
              of the other transactions or the loan is ineligible.

690.17.9(d) - Evaluation of the Condominium Documents

The documentation required for project review is a copy of the Icon HOA questionnaire, recorded
Articles of Incorporation, CC&Rs, and By-Laws, the current annual budget, liability & hazard
insurance, flood and hurricane insurance, if applicable, and the fidelity bond, if applicable.

In addition to the eligibility requirements listed above, Icon will perform a full project review. The
following are key points that will be evaluated in the review, however the review is not limited to
these points.

Common Areas & Facilities: The common areas and facilities should be consistent with the
nature of the project and should be competitive within the marketplace. The common areas and
facilities must be owned by the unit owners or the homeowners association. The developer may
not retain any ownership interest. The common areas and facilities also may not be subject to a
lease between the unit owners or the homeowner’s association and another party.

Project Management: The project should be professionally managed by an independent
professional management firm. The contract with the management firm should be for a
reasonable term and should not include any equitable provisions for termination.

Articles of Incorporation: The condominium project must exist in full compliance with state law
requirements.

CC&R’s and By-Laws:

         Right of first refusal: The condominium project/association cannot have any limitations on
         the ability to sell a unit and the project cannot have any right of first refusal which would
         impact the mortgagee’s rights to foreclose or take title to the unit, accept a deed of
         assignment in lieu of foreclosure, or sell/lease a unit acquired by the mortgagee.

Icon Lending Guide – Section 600                                                           Revised 5/6/11
         Mortgagees and Guarantors rights: The condo documents must give the mortgagors and
         guarantors a timely written notice of the following:
                   Condemnation or casualty loss that affects either a material portion of the project
                   or the unit secured by mortgagor,
                   Any 60 day delinquency in assessments or charges owed by the unit owner of the
                   unit secured by mortgagor,
                   A lapse, cancellation, or modification of any insurance policy maintained by the
                   association, and
                   Any proposed action that requires the consent of a specified percentage of
                   mortgagees.
         Mortgage protection clause: The condominium documents cannot give a unit owner or any
         other party priority over any rights of the first mortgagee of the unit pursuant to its
         mortgage. This applies to insurance proceeds, condemnation awards for losses to taking
         of a unit and/or common elements, and delinquent homeowners’ dues.
         Other Mortgagee Rights as required by FNMA (i.e.: termination of the project due to
         destruction or condemnation or for other reasons agreed to by mortgagees).
                   Amendments of a material adverse nature to mortgagees must be agreed to by
                   mortgagees that represent at least 51% of votes of unit estates that are subject to
                   mortgages.
                   Any action to terminate the legal status of the project after destruction or
                   condemnation or for other reasons must be agreed to by mortgagees that
                   represent at least 51% of the votes of unit estates that are subject to mortgages.
                   Implied approval is assumed when a mortgagee fails to submit a response to any
                   written proposal for an amendment within 60 days after it receives proper notice
                   provided the notice was delivered by certified or registered mail with a ―return
                   receipt‖ requested. Project documents recorded prior to 8/23/2007 may provide
                   for implied approval within 30 days, etc.
                   Unpaid dues: A first mortgagee who obtains title to a unit through a mortgage or
                   through foreclosure will not be liable for more than six months of the unit’s unpaid
                   dues or charges accrued before acquisition of title.
         Binding Arbitration Agreement: This is required for projects with less than 10 units for
         resolutions of disputes.

Budget: The budget should be consistent with the nature of the project. The budget must contain
sufficient funds to cover replacement reserves for capital expenditures and deferred maintenance
(at least 10% of the budget), and to cover insurance deductible amounts. An adequate reserve
fund must be in place for replacement of the common areas and facilities. The budget must be
prepared, at minimum, on an annual basis.

Insurance: The project must meet the minimum insurance requirements for all condominium
projects. Both Full and Limited Review processes will require copies of all applicable insurances
(Hazard, Liability, Fidelity, Flood, Wall-In/HO-6 and Hurricane).

A project’s legal documents may allow for the individual unit owners to obtain their own hazard
insurance and allow for a blanket insurance policy to cover the common areas and facilities. Icon
will require evidence of sufficient current insurance for both the individual unit and the project.

Icon Lending Guide – Section 600                                                          Revised 5/6/11
For other projects, a master or blanket insurance policy must be in effect. Icon requires a copy of
the master insurance policy for the project evidencing hazard, liability, flood, hurricane, and fidelity
bond if applicable.

         Hazard Insurance: Icon requires a copy of the master insurance policy for the project. The
         premiums are to be paid as a common expense and the policy must cover all of the
         common elements and limited common elements that are normally included in coverage.
         These include fixtures, building service equipment, and common personal property and
         supplies belonging to the owners’ association. The insurance should cover 100% of the
         insurable replacement cost of the project improvements including the individual units. The
         maximum deductible cannot be more than 5% of the policy face amount.

         Liability Insurance: The project must maintain a commercial general liability insurance
         policy for the entire project, including all common areas and elements, and any other
         areas under its supervision. If there is commercial usage in the project, the policy should
         cover the commercial spaces that are owned by the homeowner’s association. The
         commercial general liability insurance policy should provide coverage for bodily injury and
         property damage that result from the operation, maintenance, or use of the project’s
         common areas and elements. The amount of coverage must be at least $1million for
         bodily injury and property damage for any single occurrence.

         Flood Insurance: The project must carry flood insurance if the project is located in a flood
         zone. The policy must cover the common elements and common areas including
         machinery and equipment that are a part of the building. Contents coverage is required.
         The contents coverage should equal 100% of the insurable value of all contents that are
         owned in common by the association members. This includes machinery and equipment
         that are not part of the building. For each unit, the policy must cover 100% of the
         replacement cost of the insurable value of the improvements or the maximum coverage
         allowed of $250,000.

         Fidelity Bond: Projects with > 20 units require a fidelity bond. The minimum coverage on
         the fidelity bond is as follows:

              The Fidelity Bond must cover the maximum funds that are in the possession of the
              HOA or its management agency at any time while the policy is in force. This amount
              is, at minimum, the sum of 3 months HOA dues on all projects in the project (# of units
              x monthly HOA dues x 3 = minimum coverage amount).
            NOTE:      A Directors and Officers policy is not acceptable coverage.

         Hurricane Insurance: Projects requiring hurricane/windstorm coverage must have an
         effective policy covering the common elements and the individual units. If the policy is
         combined with the hazard policy, the maximum deductible is 5% of the face amount of the
         insurance policy. If the policy is separate from the hazard policy, for the common areas,
         the maximum deductible is the lesser of $10,000 or 1% of the face amount of the policy.
         For the individual units, the maximum amount is the higher of $1,000 or 1% of the
         replacement cost of the unit. If the policy provides for a separate wind-loss deductible, the
         maximum deductible is the higher of $2,000 or 2% of the replacement cost of the unit.

         A Walls-In / HO-6 Insurance: HO-6 insurance, covering a minimum of 20% of the condo
         unit’s appraised value with a 5% deductible, is required for all condo projects including 2-4

Icon Lending Guide – Section 600                                                          Revised 5/6/11
         unit projects on all conventional and government transactions. This policy is required
         when the master policy does not cover unit interior improvements and betterment.

         NOTE: HO-6 insurance does not cover the contents of the condominium.

HOA questionnaire: The HOA condo questionnaire is completed by the homeowners association
or the developer.

         All units, common elements and facilities in the project must be complete and the project
         cannot be subject to any additional phasing. If the project is new construction, the
         subject’s legal phase must be complete. A certificate of occupancy is required for new
         construction projects.
         No single entity may own more than 10% of the units in a project, other than the developer
         during the initial sales period.
         No litigation is permitted.
         No more than 15% of the association dues can be more than one month delinquent.
         No more than 20% of the total square footage of the project can be used for commercial
         purposes.
         The units in the project must be owned fee simple or leasehold.
         Occupancy ratio:
              New projects & condo conversions: At least 70% of the total units in the project or the
              subject legal phase must be conveyed or be under contract for purchase to owner-
              occupant principal residence or second home purchasers.
              Established projects: Projects with 3 or more units the owner occupied/second home
              ratio is 51%. The investor ratio is limited to 49%, unless stated differently in the
              program guidelines. Projects with only two units, one unit must be owner-occupied
              primary residence or second home
         Multi-family dwellings are not permitted.

690.18 - PUDs (attached & detached)
Attached and detached PUDs have two classification types: established projects and new projects.

Detached PUDs
Detached PUDs, both established projects new projects do not require a review provided all units
in the project are detached.

Two units or multi-units detached PUDs encumbered by one lien are ineligible. Condo Project
Regimes (CPR) in Hawaii are eligible provided the title report indicates the property is a CPR and
the appraiser provides three comparables from other CPRs. A master insurance policy is not
required.

Attached PUDs
Attached PUDs, both established projects and new projects must meet the following:

         The project meets Icons eligible project requirements.

Icon Lending Guide – Section 600                                                        Revised 5/6/11
         The project is not ineligible as defined in the ineligible projects topic of this chapter (i.e. the
         project is not a conversion).
         The project does not consist of any manufactured housing.
         The subject unit meets the insurance requirements.
         The subject unit is 100% complete.
         The unit owners are in control (established projects only).
         The marketability of an attached PUD is established.

A master insurance policy is required.

690.19 – Cooperative Projects

A cooperative project consists of units owned by a cooperative housing corporation. The owner is
a shareholder in the co-op project. The co-op housing corporation maintains both the common
elements and the individual units.

Each co-op project requires approval by Icon regardless of FNMA approval.

690.19.1 - Eligible Projects

Co-op share loan financing is eligible as follows

         Maximum 90% LTV (subject to MI guidelines)
         No subordinate financing
         Fixed rate, purchase, rate/term and cash-out transactions
         Primary residence and second home
         Conforming and High Balance loan amounts
         Project must meet all of the requirements for a cooperative housing corporation under
         Section 216 of the IRS Code.
         Projects located in the state of New York or the New Jersey counties of:
              Bergen
              Essex
              Hudson
              Middlesex
              Monmouth
              Morris
              Passaic
              Union
         Minimum of 5 units
         Established projects
         Conversion projects if the co-op board has been operating for a minimum of one year and
         an Engineer Survey/Property Condition Assessment is provided if the conversion is less
         than 3 years old.

Icon Lending Guide – Section 600                                                             Revised 5/6/11
         Cooperatives with commercial units subject to the following:
              The commercial units should be managed by a separate association or the rental
              income from the commercial units should not exceed 20% of the total operating cost of
              the association; and
              The projects commercial unit space cannot exceed 25% of the total project square
              footage and should be compatible with the overall residential nature of the project.
              The commercial units should not negatively impact the marketability of the project and
              should be common in the market area.

690.19.2 - Ineligible Projects

The following types of cooperative projects are ineligible:

    Projects not located in the state of New York or in an eligible county in New Jersey as
    identified under Section 690.19 - Eligible Projects.
    Projects consisting of single family detached residences
    Cooperative hotels
    Cooperative timeshares
    Projects that represent a legal but non-conforming use of the land.
    Multi-dwelling projects, i.e., projects that allow be a stockholder and have occupancy rights in
    more than one dwelling but the ownership financed with one share loan.
    Projects that are subject to leasehold estates/ground rents. A Proprietary Lease that gives the
    borrower the right to occupy the unit is eligible.
    Projects with units subject to resale restrictions
    A tax sheltered syndicate leasing to a cooperative or ―leasing‖ cooperatives, i.e., projects
    where the land and improvements are leased to the co-op corporation even when the co-op
    corporation owns part of the building.
    Limited equity co-ops (AKA Mitchell-Lama developments). These projects, located in New
    York City, are projects where the co-op corporation places a limit on the amount of return that
    can be received when the stock or shares are sold.
    Projects in which the developer or sponsor has an ownership interest or other rights in the
    project real estate or facilities, other than the interest or rights it has in relation to any unsold
    units.
    Co-op projects in New Jersey created after May 9, 1988 (applies to new construction or
    conversions).

690.19.3 - Required Documentation for Cooperative Project Approval

The following documentation is required to evaluate the co-op project for approval:

         Individual Cooperative Interest Appraisal Report (FNMA Form 2090 dated March 2005).
         Fannie Mae form 1074 is not acceptable.
         Current audited financial statements, including footnotes, or
         New York Attorney General’s Disclosure Statement with the projects financial statements.
         Evidence the project has adequate hazard, liability, fidelity and flood (if applicable)
         insurance coverage as required by FNMA.
Icon Lending Guide – Section 600                                                             Revised 5/6/11
         A New York Attorney General’s Disclosure Amendment is required when the
         sponsor/holder of unsold shares owns more than 10% of the cooperative project shares.

690.19.4 – Occupancy and Pre-sale

         At minimum, 51% of the total units in the co-op project must be owner-occupied (primary
         residence or second home)
         No single entity (individual person, investor group, partnership, etc.) other than the
         sponsor or holder of the unsold shares, may own more than 10% of the stock
         shares/occupancy rights.

690.19.5 – Insurance Requirements

The cooperative project must maintain hazard, liability, fidelity (if applicable), flood (if applicable)
and business income insurance. The coverage that follows must come from an insurance carrier
that meets the following rating requirements:

         A.M. Best rating: General policy holder’s rating of ―A‖ and a Financial Size Category of ―V‖,
         or
         Standard and Poors rating: An ―A‖ or better Insurer Financial Strength Rating.

690.19.5(a) – Hazard Insurance

The co-op corporation must maintain a property insurance policy. The policy must cover 100% of
the insurable replacement cost of the project improvements, including the individual units.

Additional coverage, for mechanical breakdown or equipment failure must be equal to, at
minimum, 100% of the insurable replacement cost of the building housing the property, or $2
million, whichever is less.

The maximum deductible for common areas is 5% of the policy face amount unless state law
requires a higher maximum.

690.19.5(b) – Liability Insurance

The co-op corporation must maintain liability insurance for the entire project, including all common
areas and elements, and any other areas under its supervision.

The amount of coverage, at minimum, is $1 million for any single occurrence of bodily injury and
property damage. Buildings with elevators require at, minimum, $2 million in coverage.

690.19.5(c) – Fidelity Bond Insurance

Fidelity bond insurance is required when the cooperative project has more than 20 units. The
policy must name the cooperative corporate as the insured and the premiums must be paid as a
common expense by the cooperative corporation. The minimum amount of coverage is as follows:

         The amount of coverage must be equal to the greater of the following:


Icon Lending Guide – Section 600                                                            Revised 5/6/11
              Three months of assessments/maintenance fees of all units in the project, or
              The sum of all cash and reserve fund monies that are in the custody of the
              cooperative corporation or its management agent.
         If the ―greater of‖ the above is the sum of all cash reserves but the Fidelity Insurance
         coverage is at least three months maintenance fees, then reduced coverage may apply as
         follows:
              The cooperative corporation maintains separate bank accounts for the working and
              reserve accounts and each have appropriate access controls. The bank statements
              for the accounts must be sent directly to the cooperative corporation.
              If the cooperative project is professionally managed, the management company
              maintains separate records and bank accounts for each project/association that
              utilizes its services. The management company cannot have the authority to write
              checks against or transfer funds from the cooperative’s reserve account.
              Two members of the Board of Directors must sign any checks written against the
              reserve account.

              Even with all of the above controls in place, the minimum coverage must equal at least
              the sum of three months assessments on all units in the project.

         If the cooperative project is professionally managed, a Managing Agent Bond is also
         required. This may be a separate policy or a rider to the cooperatives policy.

690.19.5(d) – Flood Insurance

Flood insurance is required when any part of the cooperative project is located in a Special Flood
Hazard Area (SFHA). The cooperative corporation must have a master policy that covers the
building(s) and any other common elements and property, including machinery and equipment,
owned by the shareholders.

The policy must be equal to the replacement value of the building(s), up to a maximum of
$250,000 per building with a maximum deductible of $25,000 per building. The premiums must be
paid as a common expense.

690.19.5(e) – Business Income/ Rent Loss Insurance

If the cooperative project is less than 70% owner-occupied, the cooperative corporation must
maintain business income insurance to ensure against lost maintenance fees in the event of fire or
other casualties as follows:

         Six (6) months insurance is required if the building is ≤ 3 stories tall, or
         Twelve (12) months insurance is required if the building is > 3 stories tall.

Business income insurance is not required if the project is at least 70% owner-occupied.




Icon Lending Guide – Section 600                                                         Revised 5/6/11
690.19.6 – Transfer Fees (Flip taxes)

The entire amount of the transfer fee (flip taxes) must be deducted from the lesser of the
appraised value or the sales price on purchase and refinance transactions unless:

         The transfer fee is assessed only when the cooperative unit shares are sold at a profit, or
         The transfer fee is waived in the event of a foreclosure.

The transfer fee is usually noted in the sales contract and by the appraiser.

Cooperative projects that do not identify the value of the transfer fee or if the cooperative board will
determine the value at a later date, are ineligible.

690.19.7 – Projects in Litigation

Projects in litigation, arbitration or mediation process are considered on a case-by-case basis.
Projects in litigation require applicable documentation to validate the basis of the litigation.

The following types of litigation generally do not pose a risk to the cooperative project and are
typically acceptable:

         Cooperative board is suing an individual shareholder for unpaid dues
         Cooperative board is being sued for a ―slip and fall‖ type of liability issue and the project
         has sufficient liability insurance to cover the claim
         Other suits that have been filed by the cooperative board that do not affect the livability or
         the value of the project.

The following types of litigation will affect the value and livability of the project and will therefore
make the project ineligible:

         Lawsuit filed against the builder/developer for construction defects that affect health and
         safety.
         Cooperative project involved in a lawsuit where the damages being sought will not be
         covered by the project’s insurance or will exceed coverage.

Projects with pending litigation that does not involve construction defects as noted above may be
eligible if it is determined that:

         The projects insurance is sufficient to cover any potential damages, or
         The project will benefit from the lawsuit.

690.19.8 – Financial Stability

The most recent financial statements must be obtained from the cooperative board. Financial
statements must include income and expense statements, including footnotes, and the most
recent New York Attorney General’s Disclosure Statement, which will include the financial
statements and operating budget for the cooperative project. The project’s financial stability can
be determined as follows:


Icon Lending Guide – Section 600                                                             Revised 5/6/11
         Maintenance fees are adequate to cover the expenses of the project
         No more than 10% of the unit shareholders are more than 30 days delinquent in any
         obligation to the cooperative corporation
         Reserves are adequate for the age and condition of the building(s)
         If the rent from unsold units does not support the maintenance fee incurred by those units,
         the negative cash flow from those units will not cause the borrower’s maintenance fees to
         increase more than 20%.
         The sponsor (or the holder of the cooperative projects unsold shares) is current on
         maintenance fees and other obligations of the cooperative project and has been current
         for the previous 12 months.
         The sponsor (or the holder of the cooperative projects unsold shares) is current on any
         financial obligations associated with any other projects in which the sponsor holds a
         minimum 10% interest.

The cooperative project is required to provide the current operating budget in the following
circumstances:

         The financial statements are more than 16 months old, or
         The appraiser provided information that is significantly different than the information in the
         financial statements, or
         The financial statements indicate significant negative cash flow.

690.19.9 – Underlying Blanket Mortgage

The appraiser must verify the amount and terms of the underlying blanket mortgage on the project
and the information must also be included in the projects financial statements.

If the underlying blanket mortgage is subject to ARM financing or has a balloon payment that is
due in less than 2 years, the following applies:

         The expected increase in the underlying blanket mortgage payment must be prorated to
         apply to the maintenance fee for each unit, and
         The expected increase in the maintenance fee should not exceed 10%, and
         The borrower must be qualified using the expected new maintenance fee.

690.19.9(a) – Pro Rata Share

The pro rata share of the underlying mortgage is calculated as follows:

[(the underlying blank mortgage balance ÷ total number of outstanding shares in the cooperative
corporation) x number of subject shares] ÷ (appraised value of the unit + subject share of
underlying blanket mortgage) = pro rata share.

690.19.10 - Subsidies/Tax Abatements

If any subsidies, tax abatements, or similar benefits will end, either in whole or in part, within two
years, the amount of the subsidy/abatement/benefit must be added to the borrower’s monthly
housing expense for qualifying.

Icon Lending Guide – Section 600                                                           Revised 5/6/11
690.19.11 - Development of Geographic Area

Geographic areas with development between 25% and 75%, showing a steady growth pattern are
eligible for maximum financing. Area less than 25% developed are generally not eligible for
maximum financing.




Icon Lending Guide – Section 600                                               Revised 5/6/11
                                               Matrices/Program Details
                                                 Agency Conforming


               Primary Residence
               Fixed Rate & ARM
Purpose      Units         LTV                CLTV
                               1,4
              1          95%                  95%
 P&R          2           80%                 80%
             3-4          75%                 75%
                               2,4
              1          85%                  85%
   C         2-4          75%                 75%

                  Second Home
                Fixed Rate & ARM
Purpose      Units         LTV                CLTV
                                1,5
 P&R           1         90%                  90%
                                 5
   C           1          75%                 75%

                                 6
                    Investment
                    Fixed & ARM
Purpose      Units         LTV                CLTV
               1           80%                80%
   P          2-4          75%                75%
               1           75%                75%
   R          2-4          75%                75%
               1           75%                75%
   C          2-4          70%                70%

              Interest-Only Product
                                          6
              Primary Residence
                  5/1 ARM I/O
Purpose      Units         LTV                CLTV
                                 3
   P           1          70%                 70%
                                 3
   R           1          70%                 70%
   C          N/A          N/A                N/A

                                      6
                Second Home
                 5/1 ARM I/O
Purpose      Units         LTV                CLTV
                                 3
   P           1          70%                 70%
                                 3
   R           1          70%                 70%
   C          N/A          N/A                N/A

Purchase ("P"), Limited Cash-Out Refinance ("R"), Cash-Out Refinance ("C")

Refer to the following page for footnotes.



Icon Lending Guide – Section 600                                             Revised 5/6/11
Footnotes:
1. LTV's >80% are subject to MI availability. The following also applies to LTVs > 80%: Subordinate financing
   ineligible on purchase transactions; rate/term refinance transactions, existing subordinate financing may be re-
   subordinated. No new subordinate financing.
2. Cash-out transactions with an LTV > 80% subject to the following MI guidelines: Minimum 720 credit score.
   Eligible on single family detached only. Subordinate financing not allowed. Not eligible in AZ, CA, FL, MI, or NV.
3. Minimum credit score 720. Twenty four months reserves required based on the fully amortizing PITI .
4. Co-op: Max 90% LTV on purchase & rate/term refinance. Max 80% LTV on cash-out. Co-ops are subject to MI guidelines
   and the following: Eligible only in New York and certain counties in New Jersey. 1-unit only; > 80% LTV no subordinate
   financing; Fixed rate only. Refer to Program Notes for specifics.
5. Co-op: Max 80% LTV purchase & rate/term. Max. 75% LTV cash-out. Eligible only in New York and certain counties in New
  Jersey. Fixed rate only. Refer to Program Notes for specifics.
6. Co-ops ineligible on investment properties and IO product.

Loan limits:

          Minimum loan amount: $75,000
          Maximum loan amount: Agency conforming loan limits
Florida condominiums are limited to the following:
          Primary Residence – max 75%/75% regardless of DU findings
          Second Home maximum 70%/70% regardless of DU findings. (ARM product – second home
          ineligible)
          Investment condominiums are ineligible

The loan limits for Hawaii are as follows (subject to MI loan limits if LTV > 80%):

          1-unit: $625,500                                                      3-unit: $967,950
          2-unit: $800,775                                                      4-unit: $1,202,925

Automated Underwriting System

          All loans require an Approve/Eligible from DU. Income and asset documentation is per DU
          Findings. Income waivers are not permitted.

Available Markets

Eligible in all 50 states, except as follows:
          Alaska, Guam, Puerto Rico, and the Virgin Islands are ineligible.
          Refer to Section 600 of Lending Guide for specific state restrictions.

Eligible Properties

Single family residences, warrantable condos and PUDs, 1-4 family dwellings are eligible. SFR's on
leased land are eligible, provided lease meets FNMA requirements. Refer to Section 600 of the Lending
Guide for restrictions on FL condos.




Icon Lending Guide – Section 600                                                                         Revised 5/6/11
Ineligible Properties

Non-warrantable condos, condos purchased at auction, non-warrantable PUDs, manufactured homes,
condotels & co-ops, working ranches, board and care homes, earth-berm homes, commercial properties,
vacant land, leased land that does not meet FNMA requirements, unique properties, properties less than

600 sq ft including units less than 600 sq ft., investment condos in Florida. New condominium projects or
condo conversions located in the state of Florida or Las Vegas, Nevada without a PERS approval.
ARMs: Second homes secured by a condominium in Florida are ineligible. A Lender Full Review is
required for all existing Florida condominium projects. A Limited Review is not acceptable

Eligible Transactions

Purchase, limited cash-out refinance, (rate/term) and cash-out refinances are eligible per program matrix.
ARMs: Purchase transactions require proof the property seller has owned the property for 12 months. A
transaction where the property has been sold within the last 12 months will require additional underwriter
to review to ensure there has been no foreclosure bail-out, a distressed sale, inflated value due to
unsubstantiated improvements, etc.

Ineligible Transactions
         Non-arms length transactions may be ineligible.
         Restructured loans are ineligible. A restructured loan is a mortgage loan in which the terms of the
         original transaction have changed resulting in the forgiveness of the mortgage or a restructure of
         the mortgage either through a modification or the origination of a new loan that results in any of
         the following:
              •    Forgiveness of a portion of the principal and/or interest on either the first or second lien.
              •    Application of a principal curtailment by or on behalf of the investor to simulate
                   forgiveness.
              •    Conversion of any portion of the original mortgage debt to a soft subordinate mortgage
              •    Conversion of any portion of the original mortgage debt from secured to unsecured.
    •    Second home and investment properties that are non-arms length transactions are ineligible.
    •    Purchase transactions where the Seller wants to lease back the subject property is not allowed.
    •    Conventional loan secured by a condominium using an FHA project approval.
    •    Interest-Only feature on investment transactions.
    •    Cash-out on an Interest-Only transaction.
Eligible Borrowers
    •    U.S. Citizens, permanent aliens, non- permanent resident aliens with an unexpired I-797A, and
         FNMA eligible Revocable Inter-Vivos trusts are eligible.
    •    Refer to Section 641.10 of Icon's Lending Guide for non-permanent resident alien borrowers
         documentation requirements. ARMS: A valid visa is required for non-permanent resident aliens.
         Acceptable visa types are H-1, H-2A, H-2B, H-3, L-1, E-1 and G series. World Bank employees
         with a G series visa are ineligible.



Icon Lending Guide – Section 600                                                            Revised 5/6/11
 Ineligible Borrowers
         Foreign Nationals or borrowers with diplomatic immunity.
         Borrowers with no credit score and/or borrowers with alternative trades to meet credit
          requirements
Documentation Types
Full/Alt Doc: Income and asset documentation is verified per DU Findings.
Credit Score
         The minimum representative credit score is 620 regardless of DU Findings.
         Fixed rate loans:
             Borrowers must meet the minimum credit score as outline on the matrix regardless of DU
             Findings. The lowest decision score among all borrowers is used for loan qualification.
             Borrower must have a minimum of one (1) credit score.
         ARMs: Each borrower must have a minimum of two (2) credit scores

Mortgage/Rental Verification
         Mortgage/Rental Verification is per DU Findings. Mortgage/rental rating cannot have any 60 or
         greater lates in the previous 12 months. At underwriter’s discretion or if the loan is a non-arms
         length transaction, cancelled checks may be required.

Credit History
Trade line requirements are determined by DU Findings. Borrower must have good re-established credit
since the bankruptcy and/or foreclosure. Foreclosures require a 7 year waiting period from the completion
of the foreclosure action. Refer to Icon's Lending Guide Section 650.14.3 for detailed information
regarding bankruptcy/foreclosure/deed-in-lieu of foreclosure and short sale requirements.

DTI
         Maximum DTI as determined by DU Findings. Cash-out transactions, the maximum DTI is 45%
         regardless of DU Findings.
         Loans >80% LTV maximum DTI 41% or 45% as determined by MI guidelines.

Employment / Income
A two year employment history with no gaps must be verified. Gaps greater than 30 days require a
written explanation from the borrower.
Wage Earner / Salary Income:
         A 2 year employment history in the same line of work, as stated on the application, is required
         Income documentation requirements are determined by DU. ARMs: A paystub and W2 are
         required regardless of DU Findings.
         A verbal verification of employment confirming the length of employment and position is required
         within 5 days of closing.
Self-Employed Income:
         Income documentation requirements are determined by DU.
         A verbal verification that the business has been in existence and operation for a minimum of 2
         years is required within 5 days of closing.
         Other sources of Income:


Icon Lending Guide – Section 600                                                        Revised 5/6/11
          Other source of income may be used to qualify. Documentation requirements are determined by
          DU. Verification of length of time received and continuation are verified per DU Findings.
ARMs:
          All disclosed non-taxable income MUST be grossed up.
          Royalty income requires a two (2) year history of receipt.
          Tip income must be documented with most recent two (2) year's personal income tax returns with
          all schedules.
4506-T
Fixed rate loans: The 4506-T will be processed for the most recent 2-years.
ARMs: The 4506-T must be signed at application and again at closing and will be processed for 2-years.


MLS
          Properties listed for sale within the last 6 months must have evidence the property is off the
          market. ARMS: Borrower must provide written confirmation of intent to occupy the property if
          transaction involves a primary residence that was listed for sale within the previous 6 months.
          Maximum LTV for cash-out refinance is the lower of 70% or maximum LTV for
          product/occupancy/property type.
Multiple Properties Owned
          Fixed rate loans: Primary residence - no limit. ARMs: Primary residence limited to a maximum
          of 4 properties owned.
          Second home and investment - maximum 4 financed properties including borrower's principal
          residence.
          If a property is held in the name of a corporation and borrower is the owner of the corporation, the
          property will not be included in the number of financed properties as long as there is no mortgage
          rating on the individual's credit report.
          Icon limits its exposure to a maximum of 4 loans per borrower with a total aggregate of $2 million.

Conversion of Principal Residence to Second Home or Investment Property
If borrower is retaining his current principal residence, the following applies:
Current principal residence is pending sale but the transaction will not be closed (with title transfer to a
new owner) prior to the new transaction, then both the current and the proposed mortgage payments
must be used to qualify the borrower for the new transaction. Borrower must have at least 6 months PITI
reserves for both properties. 2 months PITI reserves are permitted provided the borrower has 30% equity
in the current principal residence as evidence by a full appraisal or AVM. BPOs are not allowed.
          Borrower can be qualified without using the PITI of the current principal residence provided
          borrower has 6 months PITI reserves for both properties (2 months with documented 30%
          equity) and lender has a copy of the executed sales contract for the current residence and there
          is evidence that all financing contingencies have been cleared.
Conversion to a Second Home:
      •   Both the current and the proposed mortgage payments must be used to qualify the borrower for
          the new transaction; and
      •    6 months of PITI for both properties is required to be in reserves. Lender may consider reduced



Icon Lending Guide – Section 600                                                         Revised 5/6/11
          reserves of no less than 2 months for both properties if there is documented equity of at least 30
          percent in the existing property minus outstanding liens documented by a full appraisal or AVM.
          BPOs are not allowed.
Conversion to an Investment Property:
Borrower may be qualified using 75% of the rental income to offset the mortgage payment if there is
documented equity of at least 30%
in the existing property minus outstanding liens documented by a full appraisal or AVM. BPOs are not
allowed. ARMs require a full appraisal or 2055. An AVM is not allowed to document equity on an ARM
transaction when converting principal residence to investment property.
The rental income must be documented with:
 •   A copy of the fully executed lease agreement; and
 •   The receipt of a security deposit from the tenant and deposit into the borrower’s account.
If the 30 percent equity in the property cannot be documented, rental income may not be used to offset
the mortgage payment.
 •   Both the current and the proposed mortgage payments must be used to qualify the borrower for the
     new transaction; and
 •   6 months of PITI reserves for both properties is required.
Assets
         Fixed rate loans: Asset verification is required per DU Findings. ARMs: If a VOD is provided for
         asset verification, 1-month's bank statement, at minimum, is also required regardless of DU
         Findings.
         All funds used to close the transaction must be disclosed on the application and input in DU.
         Funds coming from a source other than what is verified and disclosed are required to be re-run
         through DU and documented per the DU Findings.
         A copy of all funds used to close the transaction must be in the file at the time of closing/wire.
         Funds must be from a verified source.
Gift Funds
         > 80% allowed after 5% borrower own funds contribution. Subject to MI guidelines.
         ≤ 80% entire down payment may be from gift. ARM product requires 5% borrower own funds
         regardless of LTV.
         Not eligible on investment transactions
Cash Reserves
         ≤ 80% LTV per DU Findings
         80% LTV 2 months reserves required regardless of DU Findings.
         2-4 Unit primary home transactions require 6 months PITI cash reserves, when rental income
         from the units are used for qualifying.
         Minimum of 24 months reserves required based on fully amortizing PITI on Interest-Only
         transactions.




Icon Lending Guide – Section 600                                                          Revised 5/6/11
Interested Party Contributions
         Investment Property: 2%
         Primary Residence or Second Home: 75% CLTV or less = 9%; 75.01% CLTV - 90% CLTV = 6%:
         > 90% LTV/CLTV = 3%.
Amended Tax Returns
Tax returns filed prior to the application date:
         The original filed tax return and the amended return are required. If the return was amended ≤ 60
         days from the application, evidence of payment is required.
Tax returns filed after the application date:
         Borrower to provide evidence of filing and payment (or ability to pay if the check has not cleared).
         Borrower must also provide a letter of explanation regarding the reason for the amended filing.
Refinance Transactions
FNMA/FHLMC definition of cash out and limited cash-out refinance apply.
    ▪    6 month title seasoning required for all cash out refinances transactions. Any refinance on the
         subject property must have closed 6 months prior to the application date of the new refinance
         transaction if the previous transaction was cash out refinance.
    ▪    Limited cash-out refinance transactions use current appraised value to determine LTV/CLTV,
         regardless of the length of time the borrower has owned the property. Increase in property value
         must be supported.
    ▪     Cash-Out refinance transactions use the current appraised value to determine LTV/CLTV,
         regardless of the length of time the borrower has owned the property. Increase in property value
         must be supported. If the property was purchased within 6 months prior to the underwriting date,
         the loan is ineligible for cash out.
    Continuity of Obligation
    To be eligible for a limited cash-out refinance, a continuity of obligation is required.
    • A continuity of obligation exists when:
         At least one borrower on the existing mortgage is a borrower obligated on the new mortgage.
         The borrower on title has been on title (but is not on the existing mortgage) and has been
         occupying the subject property for at least 12 months and has paid the mortgage for the previous
         12 months (cancelled checks, front and back, are required) or can demonstrate a relationship
         (spouse, relative or domestic partner) with the current obligor.
         The existing loan being paid off and the title have been held in the name of a natural person or a
         limited liability company (LLC) as long as the borrower was a member of the LLC prior to transfer.
         Transfer of ownership from or corporation to an individual does not meet the continuity of
         obligation requirement.
         The borrower recently inherited or was legally awarded the property (divorce/separation
         settlement).
    • If the borrower is on title (minimum 6 months) but there is no continuity of obligation, as detailed
        above, the loan will be treated as a cash-out refinance. The following applies:




Icon Lending Guide – Section 600                                                           Revised 5/6/11
           If the property is owned free & clear and was purchased within 6 - 12 months prior to the
           application date, the LTV is based on the lower of the sales price/acquisition price, documented
           by the HUD-1, or the current appraised value.
           If the property is owned free & clear and was purchased more than 12 months from the date of
           application, the LTV is based on the current appraised value.
           If the property has an existing lien and the borrower has been on title for a minimum of 6
           months the maximum LTV is 50%, based on the current appraised value.
Gift of Equity
Gifts of Equity are permitted provided the loan is a bona fide transaction.
         The gift of equity must be between family members (parent to a child, sibling to sibling, etc). A
         gift of equity between spouses is not permitted.
         A gift of equity may not be used to overcome a lack of continuity of obligation
         Ineligible on second home and non-owner occupied transactions

Appraisals
• LTVs > 80% full appraisal, with interior and exterior photos, required.
• LTV’s ≤ 80% appraisal requirement per DU Findings. NOTE: Properties located in Florida or Nevada
  will require a full appraisal regardless of DU Findings.
Acceptable appraisal forms:
▪ Form 1004 for SFRs and PUDs,
▪ Form 1073 for condos
▪ Form 1025, Small Residential Appraisal Income Report for 2-4 unit properties
▪ Form 1007, Market Rent Survey, required for investment properties for 1-unit properties.
▪ Form 216, Operating Income Survey, required for investment properties.
• Units must be a minimum 600 sq ft.
• Unit must contain a functional kitchen with a minimum of an oven/range and sink.
• With the exception of property located in Hawaii, all units must have a functional heat source.
• Market Condition Addendum is required on all appraisals
• Investment properties where the sales price or appraised value is < $100,000 will require a FULL
   second appraisal that is HVCC compliant be completed.
ARMs: Appraisal must be dated 90 days from the Note date (both existing properties and new
construction) and ≤ 120 days from funding date.

Declining Markets
If the LTV > 80%, the transaction is subject to MI guidelines and may require an LTV reduction. A
property is considered to be in a declining market if:
   • The appraiser states subject's market is declining or subject's neighborhood is declining.
   • Web resources used by underwriting indicate the subject is in a declining market.
   • MI specific declining market polices will apply >80% LTV



Icon Lending Guide – Section 600                                                           Revised 5/6/11
Subordinate Financing
         Maximum LTV is 80% when subordinate financing is present for Agency Conforming purchase
         and cash-out refinance transactions. Rate/term transactions existing subordinate financing may
         be re-subordinated subject to CLTV restrictions. No new subordinate financing.
         Minimum term for 2nds is 5 years.
         Maximum term for 2nds is 30 years, with no call provision within the first 5 years. The term on
         the 2nd TD may not exceed the term of the 1st TD.
         Institutional financing must provide for minimum interest only payments, with no negative
         amortization.
         Seller carry back financing must provide for regular payments of principal and interest.
         Seller or financial institution may provide secondary financing. Seconds from other sources are
         not permitted.

Interest-Only Feature Specific

• 1-unit primary residence and second home purchase and rate/term transactions only with a minimum
  credit score of 720. Cash-out is ineligible.
• Maximum 70% LTV/70% CLTV.
• Minimum of 24 months reserves required based on fully amortizing PITI.

Eligible Programs

         Fixed rate – 10, 15, 20 or 30 year term available. Co-op: Fixed rate with a 15, 20 or 30 year term
         only.
         ARMS – 3/1 5/1, and 7/1 ARMs available with 30 year term. LIBOR Index.
             3/1 caps: 2/2/6; 5/1 & 7/1 caps 5/2/5
             3 and 5 year ARMs: Qualify at the > of the fully indexed fully amortizing rate (index + margin)
             or the Note rate + 2%.
             7 year ARM: Qualify at the Note rate

    NOTE: Co-ops are ineligible for ARM product.

Mortgage Insurance Coverage

LTVs > 80% require mortgage insurance coverage per FNMA coverage amounts. Icon accepts standard
coverage amounts only. Acceptable MI companies are Essent, Genworth, MGIC and Radian. All loans
with LTVs > 80% are subject to MI guidelines and limitations. Refer to Section 700 of the Lending Guide
for detailed information regarding MI.

Eligible MI Products:

         Borrower paid mortgage insurance (BPMI) Monthly or single premium
         Lender paid mortgage insurance (LPMI) Single premium. Eligible on fixed rate product only.




Icon Lending Guide – Section 600                                                        Revised 5/6/11
Coverage Amounts

                                             LTV
 Loan Term                 80.01%-85%    85.01% - 90%   90.01% - 95%
 25 & 30 year                      12%       25%            30%
 10, 15 & 20                       6%        12%            25%




Icon Lending Guide – Section 600                                       Revised 5/6/11
                                                                        Agency High Balance
                                  Primary Residence
                                                                         Min
     Loan Type          Units             LTV           CLTV                     Loan Amount        Purpose
                                                                        FICO
                    1-unit, PUD,              1,6
       Fixed                            90%             90%             700      <=$625,500          P, R
                    Condo, co-op
                    1-unit, PUD,              1,7
       Fixed                            90%             90%             720          > $625,500        P
                    Condo, co-op
                    1-unit, PUD,                7
       Fixed                             80%            80%             700          > $625,500        R
                    Condo, co-op
                       1-unit,
       Fixed                             75%            75%             660      <=$625,500          P,R
                     PUD,Condo
                       1-unit,
       Fixed                             75%            75%             660          > $625,500      P,R
                     PUD,Condo
      Fixed &                                  2,5,9
                      2-4 units         75%             75%             740      <=$625,500          P, R
       ARM
      Fixed &                                 2,5,,9
                      2-4 units         75%             75%             740          > $625,500      P, R
       ARM
                       1-unit,                 4,9
        ARM                             75%             75%             680      <=$625,500          P, R
                     PUD,Condo
                       1-unit,                 4,9
        ARM                             75%             75%             680          > $625,500      P, R
                     PUD,Condo
      Fixed &       1-unit, PUD,                8                                       <=                8
                                         60%            60%             740                           C
       ARM          Condo, co-op                                                     $625,500*
      Fixed &       1-unit, PUD,                8                                                         8
                                         60%            60%             740      >$625,500*           C
       ARM          Condo, co-op


                                                Second Home
                                                                                Min
     Loan Type           Units                LTV          CLTV                           Loan Amount         Purpose
                                                                               FICO
      Fixed &       1-unit, PUD,                    8               7
                                          65%             65%                  740        <=$625,500           P, R
       ARM          Condo, co-op
      Fixed &        1-unit, PUD,                   8               7
                                          65%             65%                  740         >$625,500           P, R
       ARM           Condo, co-op
      Fixed &
                       2-4 units              N/A             N/A              N/A            N/A              N/A
       ARM


                                                               3,5,9
                                               Investment

        Loan Type               Units          LTV        CLTV             Min FICO       Loan Amount         Purpose


                         1-unit, PUD,
                                              65%         65%                  740        <=$625,500           P, R
      Fixed & ARM           Condo

                         1-unit, PUD,
      Fixed & ARM                             65%         65%                  740         >$625,500           P, R
                            Condo

      Fixed & ARM          2-4 units          65%         65%                  740        <=$625,500           P, R

      Fixed & ARM          2-4 units          65%         65%                  740         >$625,500           P, R

* Maximum loan amount - refer to www.eFannieMae.com or HUDs website https://entp.hud.gov/idapp/html/hicostlook.cfm for eligible areas and loan limits that
  may be higher.
  Footnotes:
  1. LTV's > 80% are subject to MI availability and guidelines. Max DTI 45% (subject to MI restrictions). Subordinate financing not eligible with purchase
     transactions. Rate/term refinance transactions > 80% LTV, existing subordinate financing may be re-subordinated subject to CLTV restrictions. No
     new subordinate financing.
  2. 2-4 units maximum loan amount - refer to eFannieMae.com or HUDs website. Maximum LTV on loans greater than $625,500 is 75%, w/
     subordinate financing 70% LTV.
  3. Investment properties acquired via auction require a 5% reduction in the LTV/CLTV.
  4. Interest-Only feature maximum 70%/70% LTV/CLTV with a minimum 720 credit score. Twenty four months reserves required
  5. Interest-Only feature ineligible on units, cash-out and investment transactions
  6. Co-ops: Max. 85% LTV. LTV > 80% requires minimum 720 credit score. No subordinate financing. Fixed rate only. Subject to MI Guidelines.
     Eligible in New York and in specific counties in New Jersey. Refer to Program Notes for eligible areas and additional requirements.
  7. Co-ops: Max. 80% LTV. Minimum 720 credit score. No subordinate financing. Fixed rate only. Refer to Program Notes for additional requirements.
  8. Co-ops: No subordinate financing. Fixed rate only. Refer to Program Notes for additional requirements.
  9. Co-ops: Ineligible on investment property, units and ARM products.




  Icon Lending Guide – Section 600                                                                                                  Revised 5/6/11
Florida Condominiums: Primary Residence max 75%/75%; 65%/65% second home (ARM product – second home
ineligible) Investment ineligible.

Loan Limits

         Minimum loan amount: $417,001.
         Maximum loan amount:
              1-unit - $625,500
              2-unit - $800,775
              3-unit - $967,950
              4-unit - $1,202,925

         Maximum loan amount for Hawaii:
              1-unit - $721,050
              2-unit - $923,050
              3-unit – 1,115,800
              4-unit – 1,386,650
         The maximum loan amount is determined by MSA. Only certain geographic areas and certain loan
         amounts are eligible for this program. Use the HUD Web site to determine geographic eligibility and
         maximum loan amount. https://entp.hud.gov/idapp/html/hicostlook.cfm

Automated Underwriting System

All loans require a DU Approve/Eligible. Manual underwrites are not permitted. Income and asset
documentation per DU Findings. Income waivers are not permitted.

Eligible Properties

1-4 unit properties, single family residences, warrantable condos, PUDs, and cooperative projects (minimum 5-units) located
in the state of New York and in the New Jersey counties of Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Passaic,
and Union.

Ineligible Properties

Manufactured homes, modular homes, non-warrantable condos, investment condos in Florida, condotels, non-warrantable
PUD's, working ranches, board and care homes, earth-berm homes, commercial properties, vacant land. New condominium
projects or condo conversions located in the state of Florida or Las Vegas, Nevada without a PERS approval. ARMs: Second
homes secured by a condominium in Florida are ineligible. A Lender Full Review is required for all existing Florida
condominium projects. A Limited Review is not acceptable




Icon Lending Guide – Section 600                                                                       Revised 5/6/11
Eligible Transactions

Purchase, Limited Cash out Refinance, and cash out refinances are eligible per program matrix. ARMs: Purchase
transactions require proof the property seller has owned the property for 12 months. A transaction where the property has
been sold > 90 days but < than 12 months will require additional underwriter review to ensure there has been no foreclosure
bail-out, a distressed sale, inflated value due to unsubstantiated improvements, etc.

High Balance Restrictions

• Must be eligible for geographic area and increased loan amount.
• Must meet minimum credit score for program and loan to value.
• Appraisal CANNOT be completed by a TRAINEE - must be a qualified licensed appraiser.
• Interest-Only feature allowed on 1-unit primary residence and second home purchase and rate/term transactions only.
  Subordinate financing not allowed.

Co-op Specific

Co-ops are subject to MI guidelines and the LTV restrictions on page 1 in addition to the following
:• Co-op must be located in New York or the New Jersey counties of Bergen, Essex, Hudson, Middlesex, Monmouth, Morris,
   Passaic, and Union.
• Minimum 5 units in co-op project
• LTVs > 80% require the following: • 720 minimum credit score • The greater of two months verified PITI or standard verified
   reserves are required on purchase transactions.
• 1- unit primary residence and second home.
 • Purchase, rate/term and cash-out eligible.
 • Subordinate financing not allowed
• Project must meet all of the requirements for a cooperative housing corporation under Section 216 of the IRS Code
.• A $200.00 cooperative fee is required.

Appraisal Requirements

  Full appraisal, with interior and exterior photos, required.
  Condominiums - appraiser to provide at least two comparable sales from outside of the subject project and outside the
  influence of the developer, builder or property seller.
  The appraiser performing the appraisal must be qualified to perform appraisals without oversight or supervision – no
  trainees allowed.
  The appraisal must be dated 90 days from the Note date (both existing and new construction) and ≤ 120 days from the
  funding date.
  Field Review is required for:
    Loan amount is > $625,500 and the LTV/CLTV is > 80%
    Appraised value is > $1,000,000 and LTV/CLTV is > 75%

Assets

Assets must be liquid and documented as detailed in Section 680 – Assets of the Lending Guide.

    LTV ≤ 80%:

  For LTVs ≤ 80%, follow DU Findings for funds to close, reserves, and borrower contribution requirement.
  If the transaction is an investment and the borrower has additional mortgaged investment properties, the borrower’s total
    liquid assets must enough to cover 6 months PITI for each mortgaged property along with the subject property .




Icon Lending Guide – Section 600                                                                        Revised 5/6/11
    LTV > 80%:

     For LTVs > 80%, verification of funds is required for purchase and refinance transactions.


     For primary residence and second home, the most recent 2 months bank statements are required to verify funds.

     For investment properties, the most recent 3 months bank statements are required.
     All deposits totaling one month’s gross qualifying income require a letter of explanation. At underwriter discretion,
       source/paper trail of the funds may be required. Original bank statements may also be required at underwriter’s
       discretion.

Bankruptcy/Foreclosure

No bankruptcy or foreclosure within the previous 7 years.

Credit

  The minimum trade requirement as stated in Section 650 - Credit. LTVs > 80% are subject to MI Company guidelines.
  Maximum 0x60 mortgage or rental lates in the previous 12 months. LTVs > 80% will defer to MI Company guidelines
  which may not permit any lates in the previous 12 months.
  A letter of explanation signed by the borrower is required for all derogatory credit.

Debt to Income Ratio

  LTV > 80% = maximum 41% or 45% determined by DU and MI guidelines.
  LTV ≤ 80% = maximum 45%, no exceptions.

Employment/Income

  All transactions require a processed 4506-T for the previous 2-years. ARMs: The 4506-T must be signed at application
  and at closing and will be processed for the previous 2-years.
  For LTVs ≤ 80%, follow DU Findings.
  For LTVs > 80%, the following applies:

Wage Earner

  Employment requirements are per Section 670 – Employment & Income of the Lending Guide.
  The most recent 30 days paystubs with YTD earnings are required.
  The most recent 2 years W2’s for all jobs are required regardless of the length of time with the employer.

Self Employed

  The business must have been in existence for a minimum of 2 years. Verification is required.
  Sole Proprietor - complete personal tax returns for the most recent 2 years along with all W2s are required.
  Partnership, Corporation, S-Corp – in addition to the personal tax returns, the most recent 2 years business returns are
  required.

Other Income

  Other income must be documented and calculated per Section 670 – Employment & Income of the Lending Guide. All
  sources of other income must have a two year history of receiving the income in order to be used for qualifying.
  Alimony & Child Support – must document 12 months receipt of the income. If borrower can only verify 6-12 months
  receipt, the income may still be used provided it does not exceed 30% of the total qualifying income .




Icon Lending Guide – Section 600                                                                          Revised 5/6/11
  Less than 6 months receipt cannot be used for qualifying. Inconsistent or partial payments cannot be used as qualifying.
     ARMs require the following:
     A paystub and W2 are required regardless of DU Findings.
     All disclosed non-taxable income must be grossed up.
     Royalty income requires a two (2) year history of receipt.
     Tip income must be documented with the most recent 2-years personal income tax returns with all schedules.

Mortgage/Rental History/Verification

At underwriter’s discretion, cancelled checks or mortgage/rental verification may be required regardless of DU Findings. For
LTV > 80%, 0x30 in the previous 12 months and maximum 1x30 in previous 24 months. ARMs: Regardless of LTV or DU
Findings, a loan is ineligible if there are any housing payment delinquencies of 0x60 or greater with the past 12 months.

Reserves
LTV ≤ 80%:
         Follow DU Findings

LTV > 80%:
         Reserves must be verified as follows:
              Purchase transaction:
                 Primary Residence & Second Home – 2 months PITI
                 Investment property – 6 months PITI
                   If the transaction is an investment and the borrower has additional mortgaged investment
                   properties, the borrower’s total liquid assets must enough to cover 6 months PITI for each
                   mortgaged property along with the subject property.
              Refinance transaction:
                 Primary Residence & Second Home – no required
                 Investment property – 6 months PITI
                      If the transaction is an investment and the borrower has additional mortgaged investment properties,
                      the borrower’s total liquid assets must enough to cover 6 months PITI for each mortgaged property
                      along with the subject property.

         Refer to Section 660.3 – Conversion of Principal Residence for additional reserve requirements.

Seasoning
         6 month title seasoning and 6 months mortgage payments required for all cash out refinances. Any previous
         refinance (rate and term or cash out) on the subject must have closed 6 months prior to the application date of the
         new transactions.
         Limited Cash Out transactions use current appraised value to determine LTV/CLTV, regardless of the length of time
         the borrower has owned the property.
         Cash-Out – eligible for owner occupied transactions only. Borrower must have been on title for a minimum of 6
         months. LTV is based on the current appraised value.
         If the borrower has been on title for a minimum of 6 months and there is a lien on the property but borrower cannot
         demonstrate an acceptable continuity of obligation, the loan will be treated as a cash out refinance with a maximum
         50% LTV.




Icon Lending Guide – Section 600                                                                        Revised 5/6/11
Subordinate Financing
▪ Maximum LTV is 80% when subordinate financing is present. ARMs: A 5% reduction of the LTV is
  required when subordinate is present.
▪ Minimum term for 2nds is 15 years, with no call provision within the first 5 years.
▪ Terms must provide for minimum interest only payments, with no negative amortization
▪ Seller or financial institution may provide secondary financing. Seconds from other sources not
  permitted.
• Seller carry seconds not permitted if FSBO.
• Subordinate financing ineligible on co-ops.

Eligible Programs

  Fixed rate - 15 yr and 30 yr terms available
  ARM: 5/1 ARM available with a 30 year term. LIBOR index. Caps 5/2/5
       Qualified at the greater of the fully indexed/fully amortizing rate (index + margin) or the NOTE rate + 2%.
  5/1ARM Interest-Only. 30 year term with a 10 year IO period. Caps 5/2/5. LIBOR index.
       Qualified at the greater of the fully indexed/fully amortizing rate (index + margin) or the NOTE rate + 2%.
NOTE: Co-ops are ineligible for the ARM product.

Mortgage Insurance

LTVs > 80% require Mortgage Insurance Coverage per standard FNMA limits through Essent, Genworth, MGIC and Radian.

Standard coverage applies. Reduced Coverage or Lower Coverage MI is not available. Certain combination of features may
be limited by MI Guidelines for mortgage insurance, including declining market restrictions. Refer to Section 700 of the
Lending Guide for details.

Eligible MI products:

• Borrower paid mortgage insurance (BPMI). Monthly or single premium.
• Lender paid mortgage insurance (LPMI). Single premium, eligible on fixed rate product only.


                                            LTV
Loan Term                      80.01% - 85%    85.01% – 90%
30 year term                       12%              25%
15 year term                       6%               12%




Icon Lending Guide – Section 600                                                                          Revised 5/6/11
                                          Conforming and High Balance

                                                   DU Refi Plus

          Primary Residence                               Second Home                          Investment
              DU Refi Plus                                DU Refi Plus                         DU Refi Plus

 Purpose**    Units     LTV        CLTV       Purpose**     Unit   LTV    CLTV      Purpose*   Units    LTV      CLTV


     R        1-4      105%        110%          R           1     105%   110%          R      1-4     105%      110%

     C          Not available                   C          Not available                C         Not available
     Minimum Credit Score 620                   Minimum Credit Score 680                Minimum Credit Score 680


* Limited Cash-Out Refinance ("R"), Cash-Out Refinance ("C")

Loan Limits

         Minimum Loan amount: $75,000
         Maximum Loan amount: Agency conforming and High Balance loan limits per county maximum unless
         otherwise noted on matrix.

Appraisal
         Desk review required on all LTV’s > 95%.
         A full appraisal is required unless DU findings waive the appraisal requirement.

Automated Underwriting System
         All loans require an Approve/Eligible recommendation per DU Findings and identified as a DU Refi Plus
         casefile.

Benefit to Borrower
         A reduced monthly mortgage principal and interest payment; or
         A more stable mortgage product, for example, movement from an ARM to a fixed-rate mortgage.

Debt-to-Income Ratio
         DTI per DU Refi Plus results.
         Most current pay check stub and most recent W-2 are required.
         Most current federal tax return for self employed, as a minimum.

DTI for High Balance Loans
         DTI ratio ≤ 45%
         DTI ratio is ≤ 43% (for borrower) when there is a non-occupying co-borrower.

4506-T
Complete and signed 4506-T required on all loans. Tax transcripts for the most recent year required if income
information was used in the underwriting decisions



Icon Lending Guide – Section 600                                                                Revised 5/6/11
Eligible Borrowers
         Borrowers may be added in the new transaction provided the original borrowers remain on the loan.
         An existing borrower may be removed subject to the following:
         • The remaining borrower(s) are able to document that they have been making the payments from
            their own funds for the most recent 12 months prior to the application of the new mortgage. The 12-
            month pay history is not required when a borrower was removed due to death.
         • The borrower being removed from the loan is also removed from the deed (or evidence of death is
             provided, if applicable.

Eligible Programs:
         Fixed rate only (40, 20 or 15 year loan terms on High Balance, ARM and Interest Only ineligible.)

Ineligible Mortgages to be refinanced:
         Reverse mortgages
         Second mortgages
         Government mortgages

Minimum Credit Score:
         Primary residence is 660.
         Second home is 680.
         Investment property is 680.

MLS Seasoning:
         Properties listed for sale within the six months prior to underwriting are eligible with evidence that the
         property was taken off the market prior to the application date.
         Maximum LTV for cash-out refinance is the lower of 70% or maximum for product/occupancy/property
         type

Mortgage History:
         Must have a 12 month pay history on the subject property with no lates.

Mortgage Insurance
         Icon will accept loans that do not require Mortgage Insurance (MI).
         This includes scenarios where the original loan being refinance had an LTV ≤ 80% and the current loan
         has an LTV > 80%, but no MI is required per Fannie Mae’s MI waiver with this DU Refi Plus program.
         Loans requiring MI will not be eligible.

Occupancy:
         Occupancy status on the DU Refi Plus loan must be the same as on the prior transaction.

Properties:
         No restriction on the number of properties owned.
         No condo restrictions with condo warranty as per DU findings.




Icon Lending Guide – Section 600                                                                   Revised 5/6/11
         Must obtain copies of current condo insurances that are applicable – hazard, liability, flood, HO-6,
         hurricane, fidelity bond.
         Borrower can have a maximum of four (4) financed properties through Icon.
         No manufactured housing.


Seasoning:

         There are no seasoning requirements.
         Existing mortgage being paid off must have closed prior to March 1, 2009.

Subordinate Financing

         All existing subordinate financing must be re-subordinated.
         No new subordinate financing is permitted.




Icon Lending Guide – Section 600                                                                Revised 5/6/11
                                                                     FHA


              Program Type                     LTV        CLTV*         Units             Occupancy
                                                                 5
    Purchase                                  96.50%      100%           1-4                   O/O
    Refinance                                 97.75%      97.75%         1-4                   O/O
    Cash-Out                                  85.00%       85%           1-4                   O/O
                               1, 2, 3, 4
    Streamline w/ Appraisal                   97.75%       100%          1-4                   O/O
                                 1, 2, 3 ,4
    Streamline w/o Appraisal                   N/A         100%          1-4        O/O, 2nd Home, NOO


                       Mortgage Insurance Factors

                      Up-Front Mortgage Ins Prem.
    UFMIP - Purchase & Refi                                      1.00%
    UFMIP - Streamline Refi                                      1.00%
                       Annual Mortgage Ins Prem.
    MMI - LTV ≤ 95% and term > 15 years                          1.10%
    MMI - LTV > 95% and term > 15 years                          1.15%
    MMI - LTV > 90% and term ≤ 15 years                          0.50%
    MMI - LTV ≤ 90% and term ≤ 15 years                          0.25%


  Maximum loan amount: Maximum loan amounts are limited to county/MSA limits established by FHA. Refer to
  eFannieMae.com or HUDs website https://entp.hud.gov/idapp/html/hicostlook.cfm for eligible areas and loan limits that may
  be higher or lower.

  *CLTV applies to loan amounts ≤ $417,000. High Balance loans, the maximum CLTV is capped at the maximum LTV .

  1. Must have a tangible benefit to the borrower.
  2. Credit reports required on all transactions to ensure minimum credit is achieved and employment section of 1003 is completed.
  3. The maximum loan amount for 1 unit can not exceed the county limit, minus any refund of MIP plus the new upfront MIP.
     The maximum loan amount for 2 units can not exceed the county limit, minus any refund of MIP plus the new upfront MIP
     The maximum loan amount for 3 units can not exceed the county limit, minus any refund of MIP plus the new upfront MIP
     The maximum loan amount for 4 units can not exceed the county limit, minus any refund of MIP plus the new upfront MIP.
  4 High Balance Streamline Refinance transactions require a FHA Case number assigned on or after 11-17-09.
  5. Maximum CLTV is subject to HUD guidelines. Subordinate financing provided by organizations and private individuals are limited to the
     applicable LTV. Refer to Section 4155.1.5-C-2 through 4155.1.5-C-15 of HUD’s guidelines for specifics.
  6. High balance cash-out transactions require a minimum 660 credit score
  7. On Streamline Refinance transactions, if a credit report is not provided by one of Icon’s approved credit vendors, Icon will re-pull credit.
      Refer to Lending Guide Section 650.03 for a list of Icon approved credit vendors.




Icon Lending Guide – Section 600                                                                                       Revised 5/6/11
Available Markets
Eligible in all 50 states, except as follows:

▪   Alaska, Guam, Puerto Rico, and the Virgin Islands are ineligible.
▪   Refer to Section 600 of Lending Guide for specific state restrictions

Automated Underwriting System
     All loans require a DU Approve/Eligible finding.

Eligible Transactions
•   Purchase, Rate & Term Refinance, Cash-out Refinance, and Streamline Refinances are eligible.
•   Owner-occupied transactions are eligible. Second home and investment properties are eligible for Streamline
    Refinances without appraisal.

•   Submitting broker must be approved by Icon Residential Lenders prior to submitting loans for FHA programs.


Ineligible Transactions
     Properties with a resale date ≤ 90 days following the acquisition by the seller.
     FHA 203K renovation loans or streamline 203K
     FHA Section 8 loans
     FHA Energy Efficient Mortgage (EEM)
     FHA Hope (H4H)
     Cash-out refinance loans in the state of Texas
     Second home and investment transactions using the 5/1 ARM.
     Flip transactions (seller is owner-of-record < 90 days) when the sales price of the subject property is 20% or more above the seller’s
     acquisition cost. Acquisition cost is defined as what the seller paid to acquire the subject property. It does not include the cost of any
     improvements or repairs made to the property after purchase.

Maximum Loan Amount
•   The maximum loan amount cannot exceed the statutory limit for each county/MSA. The statutory limit varies by program
    and number of units. Refer to https://entp.hud.gov/idapp/html/hicostlook.cfm to look up the maximum loan amount for the
    number of units of the property for the county or MSA of the property location.
•   The LTV for a cash-out refinance is 85% excluding FHA upfront MIP.

Maximum LTV/CLTV

Purchase
           The maximum LTV cannot exceed 96.50% of the appraised value including the closing costs. The maximum CLTV is 100%
           except when the subordinate financing is from an organization or private individual, then the maximum CLTV is limited to the
           applicable LTV. Refer to Section 4155.1-C-2 through 4155.1.5-c-15 of HUD’s guidelines for specific details regarding subordinate
           financing.
            Borrower must contribute 3.5% of the sales price before any seller contributions are paid. This includes the down payment
           and/or the down payment plus closing costs.
           Gift funds are acceptable for the 3.5% borrower contribution requirement .




Icon Lending Guide – Section 600                                                                                         Revised 5/6/11
Rate/Term Refinance (non-Streamline) with ≤ 12 months ownership
         The maximum loan amount is based on the lowest of the following:
              The current principal balance plus closing costs and reasonable discount points
              97.75% of the appraised value exclusive of closing costs (Except for states with less than 2.1
              closing costs.
              The lower of the current appraised value or the original purchase price
         Cash back to the borrower cannot exceed $500.00.


Rate/Term Refinance (non-Streamline) with ≥ 12 months ownership
         The maximum loan amount is based on the current appraised value
         Cash back to the borrower cannot exceed $500.00.


Cash-Out Refinance (non-Streamline) with < 12 months ownership
         If the subject property was purchased within the previous 12 months, the value is based on the lower of the original sales price or
         the appraised value.
         The current mortgage may not be delinquent or in arrears.
         Owner-occupied transactions only
Cash-Out Refinance (non-Streamline) with ≥ 12 months ownership
         The maximum LTV is 85% provided the following is met:
              The subject property is owner-occupied for a minimum of 12 months prior to the application date
              Subject property is 1-4 unit dwelling. 3-4 units must meet ―self-sufficient‖ test.
              0x30 mortgage lates in the previous 12 months
              Any co-borrower or co-signer added to the note must occupy the property
              The LTV is based on the appraised value
              Refer to Appraisal topic for second appraisal requirements.
Streamline Refinance without an Appraisal
         The maximum loan amount cannot exceed the county limit, for the unit type, minus any refund of MIP plus the new up-front MIP if
         it will be financed in the loan. The new loan amount can never exceed the original loan amount.
         CLTV ≤ 100% - calculated on the original appraised value
         Cash back to the borrower cannot exceed $500.00.
Streamline Refinance with an Appraisal
         Maximum LTV is 97.75% (BLA)
         The maximum loan amount cannot exceed the county limit, for the unit type, minus any refund of MIP plus the new up-front MIP if
         it will be financed in the loan. The new loan amount can never exceed the original loan amount.
         CLV ≤ 100% - calculated on the new appraised value
         Cash back to the borrower cannot exceed $500.00.
         3 – 4 unit properties must meet the self-sufficiency test outline in HUD Handbook 4155.1 and (3) months PITI in reserves are
         required.




Icon Lending Guide – Section 600                                                                                     Revised 5/6/11
Streamline Refinance Specific

• Seasoning Requirements:
  • Must have made at least 6 monthly payments at time of application, less than 6 months is not eligible.
  • Maximum 0X30 mortgage lates in the previous 12 months
• Net Tangible Benefit Requirements
  • From a Fixed Rate to a Fixed Rate: New payment must have a reduction of at least 5% of the P&I and MIP.
  • From a Fixed Rate to a Hybrid ARM*: New payment must have a reduction of at least 5% of the P&I and MIP.
  • From a 1-year ARM to a Fixed Rate: The new interest rate cannot be greater than 2% above the current rate of the ARM.
  • From a 1-year ARM to a Hybrid ARM: The new interest rate must be, at minimum, 2% below the current interest rate.
  • From a Hybrid ARM (during the fixed period) to a Fixed Rate: New payment must have a reduction of at least 5% of the P&I and MIP.
  • From a Hybrid ARM (during the fixed period) to a Hybrid ARM: New payment must have a reduction of at least 5% of the P&I and MIP
  • From a Hybrid ARM (during adjustable period) to a Fixed Rate: The new interest rate cannot be > 2% above the current interest rate.
  • From a Hybrid ARM (during adjustable period) to a Hybrid ARM: New interest rate must be, at minimum, 2% points below the current
    interest rate.
 • Reduction in Term - Not eligible for Streamline refinance - Must be processed as traditional rate and term refinance.
  • Credit Report
 • If a credit report is not provided from one of Icon's approved credit vendors, Icon will re-pull credit. Refer to Icon's
   Lending Guide Section 650.03 - Credit Report for a list of Icon approved credit vendors.
• High Balance
  • Case number must be assigned on or after 11-17-09. Any loan submitted where the case number is older than 6
    months at the time of submission will require a letter of explanation.
Refer to minimum FHA Streamline Documentation Checklists for submission requirements.
Eligible Properties
          Single family residences
          HUD approved condo projects, with an approval dated on or after January 1, 2000.
          PUDs
          1-4 unit family dwellings
          Rural property – limited to 10 acres and zoned residential or agricultural. Commercial use not permitted and the property cannot
          be income producing. The land to value ratio should not exceed 30%.


Ineligible Properties
Non-HUD approved condo projects, condo projects with spot approval, condotels & co-ops, manufactured housing,
working ranches, board and care homes, earth-berm homes, commercial properties, vacant land, leaseholds, unique
properties.

Eligible Borrowers
• U.S. Citizens, Permanent Resident Aliens and Non-Permanent Resident Aliens are eligible.
• Non-Permanent Resident Aliens: subject property must be owner occupied. The borrower must have a social security
  number and an unexpired I-797-A. Refer to Section 641.10 of Icon's Lending Guide for specific requirements.
Ineligible Borrowers
▪ Foreign Nationals and borrowers with diplomatic immunity
▪ Borrowers with outstanding issues on Caivrs.
▪ Borrowers and/or parties to the transaction on HUD's Exclusionary List.
• A borrower with no credit score may be eligible subject to specific guidelines. Refer to the Credit Score section for
  requirements.




Icon Lending Guide – Section 600                                                                                      Revised 5/6/11
Multiple Loans to One Borrower
▪ Foreign Nationals and borrowers with diplomatic immunity
▪ Borrowers with outstanding issues on Caivrs.
▪ Borrowers and/or parties to the transaction on HUD's Exclusionary List.
• Borrowers with no credit score are not eligible.


Documentation Type
Full


Mortgage/Rental History
          1x30 mortgage/rental delinquency in the past 12 months if a purchase transaction.
          0x30 mortgage/rental delinquency in the past 12 months if transaction is cash-out or Streamline refinance.
          1x30 mortgage/rental delinquency in the past 12 months if transaction is a rate and term refinance.
          Mortgage/rental history must be verified for the previous 12 months if it does not appear on the credit report. Rental history should
          be verified through a legitimate property management company, a verifiable landlord or cancelled checks

Credit Score

          The minimum credit score is 620 regardless of DU findings.
          The following applies to all loans:
               Loans with an Approve/Eligible finding require a minimum 620 credit score
               Cash-out transactions require a minimum 620 credit score regardless of AUS findings.
          Streamline Refinance: The minimum credit score is 640 regardless of DU findings.
          High Balance cash-out Refinance: The minimum credit score is 660 regardless of DU findings.
          Icon will allow one borrower on a transaction to not have a credit score subject to the following:
               Loan must receive an Approve/Eligible Finding
               Only one borrower cannot have a credit score
               All borrowers must occupy the subject property
               The borrower(s) with the credit score(s) must have a strong credit profile with no derogatory credit. If the credit profile of the
               primary borrower does not meet the credit requirements the loan will be downgraded to a ―refer‖ and the loan will be ineligible


Credit History
Borrowers are required to have an established credit history. Alternative/non-traditional credit may not be used to
establish borrower's credit history.
▪ Collections, charge-off accounts:
  ▪ DU Approve/Eligible - collection and charge-off accounts are not required to be paid at close.
▪ Judgments and tax liens are to be paid off prior to closing unless the lien will subordinate to the first TD or the borrower
  has a repayment plan and has been making timely payments for a minimum of 12 months.
▪ Borrower to provide a letter of explanation for derogatory credit.
▪ Borrower to provide a letter of explanation for inquires within the past 90 days.
• Borrower must explain all collections and judgments in writing.
• Disputed Accounts:
  • Resolved non-mortgage disputed accounts are acceptable if the disputed account is identified as "resolved" on the
     decisioning credit report.
       • Resolved mortgage disputed accounts are acceptable subject to the following:
       • The account must show zero lates
       • A letter from the lien holder, on company letterhead, is provided indicating that the dispute has been resolved.
         The letter must include the borrower's name and the account number of the account in dispute.
       • If the original credit report did not identify the dispute as "resolved‖ a new decisioning credit report will be pulled
         once the dispute has been resolved. The new credit report must indicate the account is "resolved".
• If the disputed account is open, the loan will be declined.




Icon Lending Guide – Section 600                                                                                         Revised 5/6/11
Bankruptcy/Foreclosure
         Chapter 7 bankruptcy should be discharged a minimum of 2 years. Borrowers are required to have good re-established credit
         since the discharge. Borrower should not have any new derogatory credit since the discharge.
         Chapter 7 bankruptcy less than 2 years but greater than 12 months are allowed provided the borrower can prove the bankruptcy
         was caused by extenuating circumstances beyond the borrower’s control and the event leading to the bankruptcy is not like to
         reoccur. The borrower is required to document their ability to manage their finances.
         Chapter 13 bankruptcy is permitted if one year of the payout has occurred and all payments have been made on time. Permission
         from the court is required in order for borrower to obtain a new mortgage.
         Consumer Credit Counseling is permitted as long as the borrower has been making timely payments for a minimum of 12 months.
         Written permission from the counseling agency is required to obtain a new mortgage.
         Foreclosures must be greater than 3 years old to be eligible for FHA financing. If the foreclosure was due to extenuating
         circumstances beyond the borrower’s control (i.e. loss of primary wage earner, serious illness, etc.) and the borrower has good
         reestablished credit, the loan may be eligible.

Debt-to-Income Ratios
▪ Maximum DTI with a DU Approve/Eligible is per DU Findings. Maximum DTI on cash-out refinance transactions is
  45% regardless of DU Findings.
• Transactions where one borrower does not have a credit score, the maximum DTI is 31%/43% regardless of DU
  Findings.

Income
• Full income documentation is required on all loans with the exception of Streamline Refinances. If the transaction is
  not a Streamline Refinance, wage earner borrowers are to provide the most recent 30 days paystubs and the most
  recent two years W2's. Self employed borrowers are to provide the most recent two years 1040's and 1065's, 1120S'
  or 1120's if applicable.
  NOTE: If handwritten paystubs are provided without YTD income the following is required:
         • Loan must receive "Approve/Eligible" Finding,
         • 4 months bank statements (all pages) documenting receipt of income required
         • Maximum DTI 31%/43%.
• If the transaction is a Streamline Refinance, income documentation is not required. However, employment information
  is required on 1003 and will be verified.
▪ Social Security and retirement income may be grossed up 125% if it is non-taxable.
• An executed 4506-T and 8821, if applicable, are required on all transactions.
• Transactions involving a non-occupant co-borrower require the occupant borrower to, at minimum, have a gross
  monthly income that covers the mortgage PITI payment. This requirement does not apply to Streamline Refinance
  transactions.

Assets
         Asset documentation required per DU findings.
         When asset documentation required, borrower to provide most recent 60 day bank statements
         Acceptable sources of liquid assets include checking, savings, money market accounts, CD’s, stocks mutual funds trust funds, gift
         funds and cash on hand.
         Streamline Refinance: If assets are required to close, documentation is required.
Gift Funds
         Gift funds are acceptable for the entire down payment. Gift funds are not acceptable for reserves.
         Subject property must be owner-occupied.
         Gift fund donor must be a relative, domestic partner or fiancé.
         A gift letter is required and must include the name, address and phone number of the donor, the relationship to the borrowers, the
         amount of the gift and state that no repayment is required.
         Evidence of the transfer of the gift funds from the donor to the borrower is required.
         Gift funds cannot be cash on hand or be from a party related to the transaction (i.e. realtor, broker, seller).




Icon Lending Guide – Section 600                                                                                           Revised 5/6/11
Cash Reserves
          Cash reserves are not required on owner-occupied, 1-2 unit properties. At the underwriter’s discretion, cash reserves may be
          required as a compensating factor.
          3-4 unit properties require 3 months PITI in reserves
          Gift funds are not an acceptable source for reserves
          Funds borrowed against a 401K, IRA, thrift savings plan, etc. or equity in other properties are not acceptable sources for reserves.


Interest Party Contributions
           Third parties can contribute up to 6% toward buyers actual closing costs and prepaids. This can include
           permanent and temporary rate buy downs, mortgage interest, mortgage payment protection insurance, and
          upfront mortgage insurance premium. Contributions towards mortgage principal are not allowed.
          Contributions exceeding 6% must be deducted from the sales price before applying the appropriate LTV.
Appraisals
          A full appraisal from a FHA appraiser is required.
          The property must have been appraised/inspected within 120 days of the date of the note. If the appraisal is > 120 days a
          recertification of value is required. The Appraisal Update is subject to HUD guidelines. A Market Conditions Addendum (FNMA
          form 1004 MC) must accompany the Appraisal Update Report.
          HVCC does not apply to FHA loans, however FHA-insured loans are subject to FHA’s Appraiser Independence Guidelines. Refer
          to Icon’s Lending Guide Section 690 – Property Valuation for Icon’s requirements.
          Loan amounts > $1M require a full appraisal and an Enhanced Desk Review appraisal. The lesser of the appraised value, the
          review value or the sales price will be used to determine the LTV/CLTV of the transaction. Refer to Section 690.16 – Appraisal
          Review for approved appraisal review companies

Subordinate Financing
     ▪ Secondary financing is available from a family member, a government agency, or an FHA approved charitable
       organization/non-profit agency; secondary financing from other sources is not allowed.
     ▪ The combined loan amount of the first and second lien cannot exceed 100% of the lesser of the appraised value or
       sales price plus normal closing costs, prepaid expenses, and discount points. Refer to the Maximum LTV/CLTV
       section above for more details.
     ▪ If the subordinate financing is from a family member, the donor may not borrow the funds from an interested third party to the
       transaction. In addition, the donor may not be a co-signor to provide for minimum interest only payments, with no negative
       amortization.

Eligible Programs

          Conforming loan amounts: Fixed rate with a 15 or 30 year term or 5/1 ARM
          High Balance loan amounts: Fixed rate with a 30 year term or 5/1 ARM
          ARM caps: 1/1/5

          NOTE: 5/1 ARM not allowed on second home or investment transactions .

Escrows
Required for all transactions regardless of LTV.
Interest Only
Not permitted.




Icon Lending Guide – Section 600                                                                                      Revised 5/6/11
Mortgage Insurance Premium (MIP)

         Mortgage insurance is required on all transactions. Both an upfront and an annual premium are required as follows:
              Upfront premium:
                   Purchase and Refinance (non-streamlined) transactions: Premium factor is 1.00%
                   Streamline refinance transactions: Premium factor is 1.00%
              Annual premium:
                   LTV ≤ 95% and loan term > 15 years, the annual premium is 1.10%
                   LTV > 95% and loan term > 15 years, the annual premium is 1.15%
                   LTV > 90% and loan term is ≤15 years, the annual premium is .50%
                   LTV ≤ 90% and loan term ≤ 15 years, the annual premium is 0.25%




Icon Lending Guide – Section 600                                                                                  Revised 5/6/11
                                                                       Portfolio Conforming Program
                                       Standard Fixed, ARM
                       Purpose*         Units        LTV        CLTV
                                                     1,4,5
                                          1       97%           97%
                                          1             1       95%
                                                    95%
                          P
                                          2          80%        80%
 Principal Residence




                                         3-4         75%        75%
                                                          1,5
                                          1        97%          97%
                                          1             1       95%
                                                    95%
                          R               2          80%        80%
                                         3-4         75%        75%

                                                           2
                                          1         85%         85%
                          C               2          75%        75%
                                         3-4         75%        75%
                                       Standard Fixed, ARM

                          Purpose*        Units      LTV        CLTV
         Second Home




                                   4                      1
                               P              1     90%         90%


                                   4                      1
                               R              1     90%         90%


                                   4
                               C              1      75%        75%

                                        Standard Fixed, ARM
                        Purpose*         Units       LTV         CLTV

                                          1          80%         80%
                               4
                           P
                                          2           75%        75%
       Investment




                                          3-4        75%         75%
                               4
                           R              1-4        75%         75%

                                          1          75%         75%
                               4
                           C              2          70%         70%
                                          3-4        70%         70%




Icon Lending Guide – Section 600                                                                      Revised 5/6/11
Purchase ("P"), Limited Cash-Out Refinance ("R"), Cash-Out Refinance ("C")
Footnotes:
1. LTVs > 80% subject to MI availability and guidelines. The following also applies to LTVs > 80%: Subordinate financing ineligible on
    purchase transactions. Rate/term transactions, existing subordinate financing may be re-subordinated. No new subordinate financing
    allowed.
2. LTVs > 80% subject to the following MI guidelines for cash-out: Minimum 720 credit score. Eligible on sing family detached only. No
   condos. Subordinate financing not allowed. Cash-out is limited to $200,000. Not eligible in AZ, CA, FL, MI, NV
3. Special Requirements for 2nd home and NOO transactions when the borrower has 5-10 financed properties.
   · Purchase and rate/term transactions only. Cash-out not allowed
   · Minimum credit score 720
   · Second home/1-unit investment purchase transaction maximum 75% LTV/CLTV
   · Second home/1-unit investment rate and term refinance transaction maximum 70% LTV/CLTV
   · 2-4 unit investment purchase or rate/term refinance transaction maximum 70% LTV/CLTV
4. Minimum 700 credit score, maximum DTI 41%, or max 45% with ≥ 740 credit score. 1-unit, SFR or PUD. Purchase transaction only. Not
   available in restricted markets as determine by the MI company.
5. Minimum 720 credit score, maximum DTI 41, 1-unit, SFR or PUD or detached condominium. Purchase or rate/term.


Loan Limits for Hawaii are as follows (subject to MI loan limits if LTV > 80%):
▪ 1 unit: $625,500      ▪ 2 unit: $800,775
▪ 3 unit: $967,950      ▪ 4 unit: $1,202,925


Minimum 620 credit score regardless of DU Findings
Minimum 600 sq ft for all units and property types


Ineligible Properties
     Manufactured Homes, Non-warrantable condos, condos purchased at auction, and units in a cooperative
     Project, working ranches, board and care homes, earth-berm home, commercial properties, vacant land,
     leased land that does not meet FNMA requirements, unique properties, properties less than 600 sq ft,
     investment properties in FL and condominium projects located in the state of Florida or the city of Las Vegas, Nevada
     that are less than 3-years old.
     FL condos are limited to 75%75% for O/O, 70%/70% for Second Homes.

Eligible Transactions

     Purchase, Limited Cash-out refinance, and cash-out refinance. Cash-out transactions are limited to a maximum 45% DTI
     regardless of DU Findings.
     Resale purchase transactions with less than 90 days seasoning.
Multiple Properties Owned
     Primary residence - no limit.
     Second home and investment - Borrowers with 5-10 financed properties are eligible per LTV/CLTV limitations on matrix.
     Full rental income documentation is required regardless of DU Findings. The following applies:
          Minimum credit score 720
          No bankruptcy or foreclosure within the past 7 years.
          0x30 mortgage lates with the past 12 months on any mortgage loan.




Icon Lending Guide – Section 600                                                                                   Revised 5/6/11
     Rental income must be documented with 2-years' signed federal income tax returns including Schedule E or for as long
     as the property has been owned if less than 2-years. If property was acquired subsequent to the tax return a copy of the
     lease agreement is required. If using the lease agreement to calculate monthly net rental income only 75% of the gross
     rent may be used.
     Rental income on subject property must be fully documented as noted above or by obtaining an appraiser's opinion of
     market rent and, if applicable, copies of the current lease agreements. The gross rental income from the property is
     equal to the lesser of the market rent determined by the appraiser or the current rent based on the existing lease
     agreement(s).
     Reserve requirements per DU Findings.
     Icon limits its exposure to a maximum of 4 loans per borrower with a total aggregate of $2 million.


Eligible Programs
Fixed Rate: 15 and 30 year term available.
ARM: 5/1 ARM with 30 year term. LIBOR index. Caps: 2/2/6. Qualified at the greater of the fully indexed rate (index +
margin or the Note rate + 2 %.

Mortgage Insurance Coverage


LTVs > 80% require Mortgage Insurance Coverage per FNMA standard coverage amounts. Acceptable MI Companies are
Essent, Genworth, MGIC, and Radian. Reduced coverage is not eligible. All loans with LTV's > 80% must meet the MI
Company's guidelines and loan limitations. Refer to Section 700 of the Lending Guide for specifics.
Eligible MI products:
• Borrower paid mortgage insurance (BPMI) Monthly and single premium.
• Lender paid mortgage insurance (LPMI) Single premium only. Eligible with fixed rate product only. LPMI not available with
  LTVs > 95%.



                                               LTV
Loan Term       80.01%-85%         85.01% - 90%    90.01% - 95%      95.01– 97%
30 year              12%               25%              30%               35%
15                    6%               12%              25%               35%




Icon Lending Guide – Section 600                                                                           Revised 5/6/11
Portfolio High Balance
                                        Primary Residence
                                                                  Min
   Loan Type          Units             LTV           CLTV                      Loan Amount      Purpose
                                                                  FICO
                    1-unit,                 1,2,4
     Fixed                            90%             90%          700          <=$625,500         P, R
                  PUD,Condo
                    1-unit,                 1,2,4
     Fixed                            90%             90%          720          > $625,500           P
                  PUD,Condo
                    1-unit,
     Fixed                              80%           80%          700          > $625,500           R
                  PUD,Condo
                    1-unit,
     Fixed                              75%           75%          660          <=$625,500          P,R
                  PUD,Condo
                    1-unit,
     Fixed                              75%           75%          660          > $625,500          P,R
                  PUD,Condo
  Fixed & ARM       2-4 units           75%    ³      75%          740          <=$625,500         P, R

  Fixed & ARM       2-4 units           75%    ³      75%          740          > $625,500         P, R
                    1-unit,                                                        <=
     Fixed                              60%           60%          740                               C
                  PUD,Condo                                                     $625,500*
                    1-unit,
     Fixed                              60%           60%          740          >$625,500*           C
                  PUD,Condo

                                              Second Home
                                                                         Min
  Loan Type          Units             LTV            CLTV                         Loan Amount      Purpose
                                                                         FICO
                 1-unit, PUD,
    Fixed                              65%            65%                740       <=$625,500         P, R
                 Condo
                 1-unit, PUD,
    Fixed                              65%            65%                740        >$625,500         P, R
                    Condo
   Fixed &
                   2-4 units           N/A            N/A                N/A           N/A            N/A
     ARM
                                                             4
                                               Investment

     Loan Type                Units             LTV   CLTV       Min FICO        Loan Amount        Purpose


                        1-unit, PUD,
                                                65%    65%         740           <=$625,500          P, R
   Fixed & ARM             Condo

                        1-unit, PUD,
   Fixed & ARM                                  65%    65%         740            >$625,500          P, R
                           Condo

   Fixed & ARM           2-4 units              65%    65%         740           <=$625,500          P, R

   Fixed & ARM           2-4 units              65%    65%         740            >$625,500          P, R

** This matrix applies to loans run through DU 8.0 with a case file dated on or after 12-12-09 **
* Maximum loan amount - refer to www.eFannieMae.com or HUDs website https://entp.hud.gov/idapp/html/hicostlook.cfm
    for eligible areas and loan limits that may be higher.
Footnotes:
1. LTVs > 80% are subject to MI availability and guidelines. LTVs> 80% also subject to the following: Subordinate financing not eligible
    with purchase transactions. Rate/term refinance transactions, existing subordinate financing may be re-subordinated subject to CLTV
    restrictions. No new subordinate financing.
2. LTVs > 80% maximum DTI 41% or 45%, subject to MI guidelines. Cash-out transactions, maximum DTI is 45% regardless of CLTV.
3. 2-4 units maximum loan amount - refer to eFannieMae.com or HUDs website. Maximum LTV on loans greater than
   $625,500 is 75%, w/ subordinate financing 70% LTV.
4. Investment properties acquired via auction require a 5% reduction in the LTV/CLTV.


Florida condominiums are limited to the following:

     Primary residence – 75%/75% LTV/CLTV
     Investment properties are ineligible.




High Balance loans must meet the following requirements:



Icon Lending Guide – Section 600                                                                                   Revised 5/6/11
     Must be eligible for geographic area and increased loan amount.
     Must meet minimum credit score for program and loan to value.
     Appraisal CANNOT be completed by a Trainee – must be a qualified licensed appraiser.
     Interest-Only feature allowed on 1-unit primary residence and second home transactions only. Subordinate financing not
     allowed.


Ineligible Properties
     Manufactured Homes, Non-warrantable condos, condos purchased at auction, and units in a cooperative
     Project, working ranches, board and care homes, earth-berm home, commercial properties, vacant land,
     leased land that does not meet FNMA requirements, unique properties, properties less than 600 sq ft,
     investment properties in FL and condominium projects located in the state of Florida or the city of Las Vegas, Nevada that are less
     than 3-years old.
     FL condos are limited to 75%75% for O/O

Eligible Transactions

     Purchase, Limited Cash-out refinance, and cash-out refinance
     Resale purchase transactions with less than 90 days seasoning.
Multiple Properties Owned
     Primary residence - no limit.
     Second home and investment - Borrowers with 5-10 financed properties are eligible per LTV/CLTV limitations on matrix. Full rental
     income documentation is required regardless of DU Findings. The following applies:
     Minimum credit score 720
     No bankruptcy or foreclosure within the past 7 years.
     0x30 mortgage lates with the past 12 months on any mortgage loan.
     Rental income must be documented with 2-years' signed federal income tax returns including Schedule E or for as long as the property
     has been owned if less than 2-years. If property was acquired subsequent to the tax return a copy of the lease agreement is required. If
     using the lease agreement to calculate monthly net rental income only 75% of the gross rent may be used.
     Rental income on subject property must be fully documented as noted above or by obtaining an appraiser's opinion of market rent and,
     if applicable, copies of the current lease agreements. The gross rental income from the property is equal to the lesser of the market rent
     determined by the appraiser or the current rent based on the existing lease agreement(s).
     Reserve requirements per DU Findings.
     Icon limits its exposure to a maximum of 4 loans per borrower with a total aggregate of $2 million.


Mortgage Insurance Coverage

LTVs > 80% require Mortgage Insurance Coverage per FNMA standard coverage amounts. Acceptable MI Companies are
Essent, Genworth, MGIC, and Radian. Reduced coverage is not eligible. All loans with LTV's > 80% must meet the MI
Company's guidelines and loan limitations. Refer to Section 700 of the Lending Guide for specifics.
Eligible MI products:
• Borrower paid mortgage insurance (BPMI) Monthly and single premium.
• Lender paid mortgage insurance (LPMI) Single premium only. Eligible with fixed rate product only.

                                                 LTV
Loan Term                            80.01% - 85%    85.01% – 90%
30 year term                             12%                 25%
15 year term                             6%                  12%

All other requirements are per the Lending Guide.




Icon Lending Guide – Section 600                                                                                       Revised 5/6/11
                                                Portfolio DU Refi Plus

           Primary Residence                             Second Home                                       Investment
             DU Refi Plus                                DU Refi Plus                                     DU Refi Plus

 Purpose     Units      LTV          CLTV      Purpose    Unit      LTV          CLTV         Purpose     Units      LTV          CLTV


    R*       1-4       105%2         N/A          R         1      105%          N/A             R        1-4       105%          N/A

    C*               Not available                C              Not available                   C                Not available
      Minimum Credit Score 620                     Minimum Credit Score 620                          Minimum Credit Score 620


Maximum loan amount - refer to eFannieMae.com or HUDs website https://entp.hud.gov/idapp/html/hicostlook.cfm for eligible
areas and loan limits that may be higher or lower than $625,500.

*Limited Cash-Out Refinance (R), Cash-Out Refinance (C)

NOTE: Loans subject to MI are not eligible.

Appraisals

• Per DU Findings. A fee of $75.00 is required on loans with an appraisal waiver .

Benefit to Borrower

• A reduced monthly mortgage principal and interest payment
• The amortization period is shortened
• The amortization period is extended (e.g. from 15 to 30 years) provided there is a reduction in the principal and interest
  payment.
• The mortgage loan type changes from a fixed rate to an ARM provided there is a reduction the principal and interest
  payment.
• The principal and interest payment is staying the same or increasing provided the borrower is moving to a more stable
  mortgage product (e.g. ARM to fixed).

Credit Score

Minimum credit score 620 regardless of DU Findings.

Desktop Underwriter® Findings

• An Approve/Eligible Finding is required and the loan must be identified as a DU Refi Plus casefile. High Balance Loan
  Requirements:
• Any waivers from Fannie Mae DU Refi Plus documentation variances will not be accepted with the exception of the
  appraisal waiver.
• Loans must meet standard documentation requirements




Icon Lending Guide – Section 600                                                                           Revised 5/6/11
Documentation Types

Income documented per DU Findings

Additional Documentation Requirements

In addition to documentation required as part of the DU recommendation, a Verbal Verification of Employment (VVOE) is
required.

4506-T

Completed and signed 4506-T for all borrowers

DTI

Conforming Loans:
▪ Per DU Findings.

High Balance Loans:
• DTI ratio ≤ 45%
• DTI ratio is ≤ 43% (for borrower), when there is a non-occupying co-borrower

Eligible Borrowers

• An existing borrower may be removed subject to the following:
• The remaining borrower(s) are able to document that they have been making the payments from their own funds for the
  most recent 12 months prior to the application of the new mortgage. The 12- month pay history is not required when a
  borrower was removed due to death.
• The borrower being removed from the loan is also removed from the deed (or evidence of death is provided, if applicable.
• Borrower(s) may be added in the new transaction provided the original borrower(s) remain on the loan.

Eligible Properties

1-4 unit properties, single family residences, warrantable condos, and warrantable PUDs.

Eligible Transactions

• Limited cash- out (rate/term) refinance only. Cash-back to the borrower cannot exceed $250.00.
• Texas Section 50(a)(6) Refer to Texas Section 50(a)(6) topic for specific requirements.

Ineligible Transactions

• Reverse Mortgages
• Second Mortgages.
• Government Mortgages
• Conventional loan secured by a condominium using an FHA project approval.

High Balance Loan Geographical Eligible Areas
Only certain geographic areas and certain loan amounts are eligible for this program. Use the link indicated below to
determine geographic eligibility and maximum loan amount. Note: In order to obtain the correct loan limits for this program,
select "Fannie/Freddie" from the <Limit Type> field and "CY2009" in the <Limit Year> field.
https://entp.hud.gov/idapp/html/hicostlook.cfm

Ineligible Properties
Manufactured homes, non-warrantable condos, investment condos in Florida, condotels & co-ops, non-warrantable PUD's,
working ranches, board and care homes, earth-berm homes, commercial properties, vacant land.



Icon Lending Guide – Section 600                                                                         Revised 5/6/11
LTV/CLTV

• Maximum 105% LTV on all occupancy types
• There is no maximum CLTV. All existing subordinate financing must be re-subordinated. New subordinate financing not
  allowed. Existing purchase money subordinate financing may not be satisfied with the proceeds of the new DU Refi Plus
  loan.

Mortgage History

Per DU Findings

Mortgage Insurance Coverage

Eligible:
• Loans that do not require Mortgage Insurance (MI). This includes scenarios where the original loan being refinanced had an
LTV < 80% and the current loan has an LTV > 80%, but no MI is required per Fannie Mae's MI waiver with this DU Refi Plus
program guidelines.

Not Eligible:
Loans requiring MI.

MLS Seasoning

Properties listed for sale within the last 6 months must have evidence the property is off the market

Properties

• No restriction on the number of properties owned.
• No condo restrictions with condo warranty as per DU findings. Need current insurance policies
• Borrower can have a maximum of four (4) financed properties through Icon.

Refinances

Limited cash-out refinance results in maximum cash to borrower of ≤ $250.00.

Seasoning

• There are no seasoning requirements.
• Existing mortgage being paid off must have closed prior to March 1, 2009.

Texas Section 50(a)(6)

• All Texas Section 50(a)(6) mortgage requirements apply. The more restrictive of Texas Section 50(a)(6) or DU Refi Plus
requirements must
  be met.
• Maximum 80% LTV/CLTV ratio
• Minimum 12 months seasoning
• One unit primary residence only
• A new full appraisal is required
• Title insurance requirements for Texas Section 50(a)(6) loans must be met
• Fixed rate with a 30 year term only.




Icon Lending Guide – Section 600                                                                        Revised 5/6/11
Subordinate Financing

• No new subordinate financing is permitted.
▪ All existing subordinate financing must be re-subordinated.
• The following types of subordinate financing are eligible:
 • Loans with negative amortization.
 • Subordinate financing that does not fully amortize under a level monthly payment plan where the maturity or balloon
   payment date is less than 5 years.
 • Subordinate financing with a prepayment penalty.
• The following type of subordinate financing is ineligible:
 • Subordinate financing with wraparound terms

Eligible Programs
• Fixed rate: fully amortizing with a 15 or 30 year loan term.
• ARM: 5/1 with a 30 year term




Icon Lending Guide – Section 600                                                                        Revised 5/6/11
                                                    Jumbo Program


                                 Primary Residence
                                                     Min        Loan
  Loan Type          Units        LTV        CLTV                          Purpose
                                                    FICO       Amount
                                       1,2
 Fixed & ARM        1-2 units    80%         80%     700     $1,000,000      P, R

                                       1,2
 Fixed & ARM        1-2 units    80%         80%     720     $2,000,000      P,R

                                       1
 Fixed & ARM        3-4-units    70%         70%     700     $1,000,000      P,R
                                       1
 Fixed & ARM        3-4-units,   70%         70%     720     $1,500,000      P,R
                                       1                                         3
 Fixed & ARM        1-2 units    80%         80%     700     $1,000,000      C
                                       1                                         3
 Fixed & ARM        1-2 units    80%         80%     720     $1,500,000      C

Footnotes
1. Maximum LTV/CLTV subject to declining market determination. Properties in a declining market are subject to a 5%-15% LTV/CLTV
   reduction depending on declining market area. Refer to the Program Notes for specifics.
2. A property that received a Declining Market LTV/CLTV mandatory reduction is eligible for an LTV/CLTV upgrade of 5% if the loan meets
   ALL of the criteria below. LTV/CLTV can never exceed program LTV/CLTV maximums.
    • Minimum 720 credit score
    • Maximum DTI 35%
    • Purchase and rate/term only
    • Two full appraisals required
    • Fully amortizing
    • Maximum combined loan amount $2 million
3. Cash-out restrictions as follows:
   • 1-2 units, PUD or Site Condo
   • Maximum cash-out for > 65% and ≤ 80% LTV/CLTV is $250,000
   • Maximum cash-out ≤ 65% LTV/CLTV is $350,000
   • An LTV/CLTV upgrade is ineligible on cash-out transactions.
* Minimum loan amount:
2-units: $533,851
3-units: $645,301
4-units: $801,951
Hawaii: 1-unit: $625,501; 2-units: $800,776; 3-units: $967,951; 4-units: $1,202,926
Available Markets
Eligible in the continental U.S. and Hawaii. Not eligible in the following:
▪ Alaska, Guam, Puerto Rico, and the Virgin Islands
▪ Refer to Section 600 of Icon's Lending Guide for specific state restrictions

Eligible Properties
Single family residence, 2-4 units, PUD, and site condominium (1-unit only)




Icon Lending Guide – Section 600                                                                                 Revised 5/6/11
Ineligible Properties
         Condominium, non-warrantable condo, condotels
         Co-op
         PUD with pending litigation
         Manufactured home, mobile home
         Common interest apartment
         Mixed use property
         Multi-family > 4 units
         Timeshare
         Working farm, ranch or orchard, property with more than 10 acres or unimproved land
         Property without a full kitchen, or full utilities
         Property zoned and used for commercial or industrial purposes
         Property that represents a legal, but non-conforming use
         Property or project with pending structural litigation
         Property that restricts the owner's ability to occupy
         Projects with non-incidental business operations owned or operated by the HOA (i.e. spa, health club, restaurant,
         etc)
         Multi-family condominium dwelling with ownership of > 1-unit evidence by a single deed and mortgage
         Properties located in Hawaii in Lava Zone 1 or 2
         Cantilevered property
         Tax-sheltered syndicate
         Investment securities
         Houseboats
         Assisted living projects.

Eligible Transactions

Owner-occupied purchase, rate and term refinance and cash-out refinances are eligible per program matrix. . Loan amounts
> $1,000,000 require additional underwriting review.

Declining Markets
Properties identified in a declining market as determined by the Market Indicator Portal are subject to the following LTV/CLTV
reductions:
    • B Market: Reduce the maximum LTV/CLTV by 5%
    • C Market: Reduce the maximum LTV/CLTV by 10%
    • D Market: Reduce the maximum LTV/CLTV by 15%

NOTE: If the Market Indicator Portal delivers an "A" market designation, but the appraiser notes in the appraisal report that
      the subject property is located in a declining market, the "A" market must be downgraded to a "B" market reducing
      the LTV/CLTV by 5%. If the appraiser identifies a property that received less than an "A" market designation from
      the Market Indicator Portal as being in a declining market, no further LTV/CLTV is required other than what is
      identified above.

        Declining Market properties that meet the 5% LTV upgrade criteria as detailed on the program matrix (footnote 2) are
        allowed the 5% upgrade, not to exceed the program maximum LTV/CLTV as published on the matrix.

Ineligible Transactions
• Non-arms length transactions may be ineligible. Refer to Icon's Lending Guide Section 641.13 for details.
• Restructured loans are ineligible. A restructured loan is a mortgage loan in which the terms of the original transaction
  have changed resulting in the forgiveness of the mortgage or a restructure of the mortgage either through a modification or
  the origination of a new loan that results in any of the following:




Icon Lending Guide – Section 600                                                                         Revised 5/6/11
       • Forgiveness of a portion of the principal and/or interest on either the first or second lien.
      • Application of a principal curtailment by or on behalf of the investor to simulate forgiveness.
      • Conversion of any portion of the original mortgage debt to a soft subordinate mortgage
      • Conversion of any portion of the original mortgage debt from secured to unsecured.
• Second home and investment properties
• Rate/term or cash-out refinance transactions secured by property located in the state of Texas.
  Higher Priced Mortgage Loans (HPML)

Eligible Borrowers
• U.S. citizen
• Trust Agreements that meet Fannie Mae Revocable Inter-Vivos trust guidelines
• Permanent resident aliens with an Alien Registration Card and social security number
• Non-permanent resident aliens with a valid social security number. The following restrictions:
  • Maximum LTV/CLTV for 1-2 units: 75%
  • A valid unexpired Employment Authorization Document (EAD) issued by the USCIS. If the authorization expires within
    one year of the application date and prior renewals exist, continuation may be assumed. If no prior renewals, the
    likelihood of renewal must be determined based on information from USCIS (for further information see www.uscis.gov)
  • Borrower sponsored by a specific employer do not need an EAD. A valid passport, a letter from the employer/sponsor
     and an I-94 or I-797 form proving they may work in the U.S. are acceptable in lieu of an EAD.

NOTE: A social security number is NOT acceptable evidence of eligibility of employment .

First Time Homebuyer
• Verification of 12 months rental payment required. File must contain 12 months cancelled checks or bank statements.
  Credit report is not acceptable as documentation. Direct written verification of rent is acceptable in lieu of cancelled
  checks when the landlord is a large, professional management company.
• 12 months reserves required
• When all borrowers are living rent free, 12 months reserves required (excluding retirement accounts).

Ineligible Borrowers
▪ Foreign Nationals
• Borrowers with Diplomatic Immunity, Temporary Protected Status, Deferred Enforced Departure or Humanitarian Parole
  are not eligible.
• Borrowers without a valid social security number
▪ Borrowers with no credit score, or who do not meet minimum trade line requirements.
▪ Non-occupying co-borrowers

Documentation Types
Full income documentation required.

Rental/Mortgage Payment History
▪ 0 x 30 mortgage/rental delinquency in previous 12 months
▪ No 60 or greater mortgage/rental delinquency in past 24 months
▪ Subject mortgage must be current

Credit Scores
▪ All borrowers, regardless of whether their income and/or assets are being used to qualify, must meet the minimum credit
  score requirements.
• Borrower must have a minimum of (2) credit scores. If there are (3) credit scores for a borrower, the middle score is used.
   If there are (2) credit scores, the lower of the two scores is used.
• The lowest decision score among all borrowers is used for loan qualification.
• Non-traditional credit is not allowed.

Credit History
▪ No major adverse credit reported in the past 24 months. Isolated accounts with < $500.00 cumulative balance are
  permitted
▪ Tax liens (state, IRS and property tax liens (both subject property and other properties) regardless of seasoning, are
   required to be paid whether or not they currently affect title.



Icon Lending Guide – Section 600                                                                          Revised 5/6/11
▪ All other adverse accounts > 24 months, that do not affect title, are not required to be paid.

Bankruptcy or Foreclosure
No bankruptcy/foreclosure in past 7 years (determined by discharge /dismissal date).

Trade Lines
▪ A minimum 2 year credit history.
• Three (3) non-derogatory trade lines. A non-derogatory trade line is currently < 90 days delinquent and not in collection.
▪ Three (3) trade lines, each rated for 12 months.
▪ One trade line must have a minimum credit limit of $5,000.
▪ At least one active trade line (non-derogatory) in the past six (6) months.
▪ All borrowers must meet minimum trade line requirements.
• Authorized user accounts do not satisfy trade line requirement.

DTI
Maximum DTI is ≤ 45%. No exceptions.

Cash Reserves
Reserves must come from borrower's own funds. Reserves must be verified and must include PITI (inclusive of HOA dues, if
applicable). Cash-out is not allowed to satisfy reserve requirements.
  • Loan amount ≥ $ $1 million:
     • Minimum 12 months liquid reserves (exclusive of business funds other than Schedule C). Maximum of 6 months
       reserves permitted from 401K/SEP account at 50% of full vested amount.
  ▪ Loan amount < $1 million:
    • DTI ≥ 35%: Minimum 12 months liquid reserves (exclusive of business funds other than Schedule C). Maximum of 6
      months reserves permitted from 401K/SEP account at 50% of fully vested amount.
    • DTI < 35%: Minimum 6 months liquid reserves exclusive of 401K/SEP accounts and business assets (other than
      Schedule C).

Ineligible reserve sources include:
  • Cash-out
  • Business assets (other than Schedule C)
  • Bridge loans
  • Loans secured by other assets
  • Proceeds from the sale of non-real estate assets

First Time Homebuyer: 12 months liquid reserves required.

Gift Funds
▪ Borrower must make a minimum 5% down payment from borrower's own funds.
▪ Loan amount ≤ $1 million: Gift funds are acceptable as long as borrower meets down payment requirement.
• Loan amount > $1 million: Gifts not allowed.

MLS
Properties listed for sale within the last 6 months from the application date are ineligible

Seller Contributions
Maximum contribution is 3%




Icon Lending Guide – Section 600                                                                           Revised 5/6/11
Employment/Income
A 2-year employment history with a high probability for continuance of income for 3-years is required.
Wage Earner
  Income documented by most current 30 day paystub with YTD income indicated and W-2 for previous 2-years
  A verbal verification of employment is required within 10 days of the Note.
Self-Employed
  Most recent 2-years personal tax returns with all schedules
  Filed business income tax returns for the previous 2-years (not required for sole proprietorships)
  Verification of the business from a third party (CPA, regulatory agency or applicable licensing bureau) and verification of
  business listing/phone number using the telephone book, internet or directory assistance.

4506-T
A 4506-T must be processed at closing. A new 4506-T is required to be signed with the closing package in addition to the
4506-T that was signed at application and processed prior to close.

Refinance Transactions
FNMA definition of limited cash-out (rate/term) and cash-out refinance apply.
• Rate and Term Refinance
   ▪ No seasoning requirement for the first mortgage
   ▪ If property owned < 12 months the LTV is based on the lower of the appraised value or the original sales price plus the
       cost of any documented improvements. If the value has increased > 15%, photographs of the improvements are
       required.
   • If property owned >12 months the LTV is based on current appraised value. HUD-1 or Deed must be provided to verify
     ownership.
   • Reasonable and customary closing costs, prepaids and seasoned junior liens may be combined into the loan amount.
   • Cash-out cannot exceed the lesser of 1% of the principal loan amount of the new loan or $2,000
   ▪ Second mortgage requires one (1) year seasoning unless documentation is provided to verify the loan was secured for
      the acquisition of the property or for home improvements. This does not apply to draws of 1% or less of the new
      amount or a maximum of $2,000 within the previous 12 month period.
   • Buy-out of a co-owner is allowed (i.e. divorce settlement, buy-out of sibling, etc.) subject to the following:
       • All parties have jointly owned the mortgage for the 12 months preceding the loan application (does not apply to
         inherited properties)
       • All parties must have occupied the property as their primary residence (does not apply to inherited properties)
       • A signed, written agreement must be provided that states the terms of the property transfer and the disposition of the
         proceeds
       • The party who acquires sole ownership may not receive any cash from the transaction and must be able to qualify for
          the loan.
       • Cash-out Refinance
  • All borrowers must have been on title to the subject property for a minimum of 6 months (Note date to application date)
  • If property owned < 12 months the LTV is based on the lower of the appraised value or the original sales price plus the
    cost of any documented improvements. If the value has increased > 15%, photographs of the improvements are required
  • If property owned >12 months the LTV is based on current appraised value. HUD-1 or Deed must be provided to verify
    ownership.




Icon Lending Guide – Section 600                                                                          Revised 5/6/11
Conversion of a Principal Residence to Second Home or Investment Property
Current principal Residence is Pending Sale but the transaction will not be closed (with title transfer to a new owner)
prior to the new transaction closing:
 • Both the current and proposed mortgages payments (PITIA) must be used to qualify the borrower for the new
    transaction.
 • If the borrower provides an executed sales contract for the current residence and it is confirmed that all financing
    contingencies have been cleared the borrower may be qualified on the PITIA payment of the new primary residence
    only.
 • Six (6) months liquid PITIA reserves are required on the current residence
 • The new property is subject to the reserve requirements detailed under the Cash Reserves topic .
Conversion to a Second Home:
  • Both the current and the proposed mortgage payments (PITIA) must be used to qualify the borrower for the new
    transaction
  • Six (6) months of liquid reserves (PITIA) are required on the current residence
  • The new property is subject to the reserve requirements detailed un the Cash Reserves topic.
Conversion to an Investment Property:
  • Single Family Residence:
     • Borrower can be qualified with up to 75% of the rental income being used to offset the mortgage payment if there is
      documented equity of at least 30% in the existing property minus any outstanding liens documented by a 2055 dated
      no more than 60 days prior to the Note date.
    • If 30% equity cannot be documented, the rental income may not be used for qualification.
    • Six (6) months of liquid reserves (PITIA) are required on the current residence
    • The new property is subject to the reserve requirements detailed in the Cash Reserves topic.

2-4 Units Primary Residence:
    • Borrower can be qualified with up to 75% of the rental income being used to offset the mortgage payment if there is
      documented equity of at least 30% in the existing property minus any outstanding lines documented by a 2055 dated
     no more than 60 days prior to the Note date.
    • If 30% equity cannot be documented, the rental income may not be used for qualification.
    • Six (6) months of liquid reserves (PITIA) are required on the current residence
    • The new property is subject to the reserve requirements detailed in the Cash Reserves topic.

Rental income must be documented with:
 • A copy of the fully executed lease agreement
 • The receipt of a security deposit from the tenant and deposit into the borrower’s account.
 • At the Underwriter's discretion, a fair market rent letter may be required.

Appraisals
All appraisals must be ordered through one of Icon's approved appraisal companies.
• Loan amounts < $850,000 one full appraisal required
• Loan amounts ≥ $850,000 two full appraisals required by two independent, separate appraisal firms (same AMC is
  acceptable) with interior photos
• Market Condition Addendum is required on all appraisals
• The appraiser performing the appraisal must be fully licensed and qualified to perform appraisals without oversight or
   supervision.




Icon Lending Guide – Section 600                                                                        Revised 5/6/11
Multiple Properties Owned
• A borrower may own a maximum of 4 properties, regardless of whether properties are financed or owned free and clear.
 Commercial properties, vacant lots and multi-family properties are included in this limitation.
• Financed properties cannot exceed a cumulative loan amount of $2 million.
• Maximum 20% concentration in any one project or subdivision.
• New multiple loans must be underwritten simultaneously.

Subordinate Financing
▪ Subordinate financing cannot have a maturity date or a call option date of less than 5 years
• Payments must be included in housing and debt ratio analysis
▪ Terms must provide for minimum interest only payments, with no negative amortization and provide for scheduled
  payments due on a regular basis.
• Seller carry seconds not permitted.
• Subordinate financing with an interest rate buydown plan, wraparound terms, obtained through Community Second
  Mortgage/Down Payment Assistance Programs are ineligible

Eligible Programs

▪ Fixed rate: 10, 15, 20 and 30 year terms available Qualified at the Note rate using the fully amortized PITI payment.
• ARMs: 5/1, 7/1, 10/1: 30 year term available. LIBOR index. Margin 2.25% Life cap is 5%
     The 5/1 ARM is qualified at the greater of the fully indexed/fully amortizing rate or the Note rate + 2%.
     The 7/1 and 10/1 ARM is qualified at the greater of the fully indexed/fully amortizing rate or the Note rate.

Escrow Waivers

Eligible on 1-unit properties only.




Icon Lending Guide – Section 600                                                                         Revised 5/6/11
Texas Section 50(a)(6) Loans (Texas Cash-out)

                      Standard Fixed Rate
                                          1
                     Primary Residence
  Purpose            Units             LTV                     2
                                                        CLTV
             3
  Cash-out             1               80%               80%


A Texas Section 50(a)(6) mortgage is a mortgage originated under provisions of the Texas constitution which allows a
borrower to take cash-out from a homestead property as long as specific requirements are met.

Footnotes:
1. Property must be classified as a homestead under Texas law.
2. No new subordinate financing allowed.
3. Texas law determines if the mortgage is a Texas Section 50(a)(6) and the Texas definition of a cash-out refinance or a limited cash-out
   refinance may differ from standard agency definitions. Refer to the Program Notes for information.

Minimum 620 credit score and maximum 45% DTI regardless of DU Findings.
Minimum 600 sq ft for all property types

Available Markets
The state of Texas

Eligible Properties
Single family residences, warrantable attached/detached condos and PUDs classified as a homestead under Texas law.
The homestead must have access to and from a public roadway. Maximum 10 acres, no exceptions.

Ineligible Properties
Non-warrantable condos, non-warrantable PUDs, manufactured homes, condotels & co-ops, working ranches, board and
care homes, earth-berm homes, commercial properties, property classified for agriculture use according to the ad valorem
tax designation, properties exceeding 10 acres, vacant land, leased land, unique properties, properties less than 600 sq ft
including units less than 600 sq ft., 2-4 units and properties without access to public roadway.

Eligible Transactions
          Cash-out refinances.
          A DU "Approve/Eligible" Finding is required.

Ineligible Transactions
          Restructured loans are ineligible. A restructured loan is a mortgage loan in which the terms of the original
          transaction have changed resulting in the forgiveness of the mortgage or a restructure of the mortgage either
          through a modification or the origination of a new loan that results in any of the following:
               •   forgiveness of a portion of the principal and/or interest on either the first or second lien.
               •   application of a principal curtailment by or on behalf of the investor to simulate forgiveness.
               •   conversion of any portion of the original mortgage debt to a soft subordinate mortgage
               •   conversion of any portion of the original mortgage debt from secured to unsecured.
     •    Transactions secured by a second home and investment property.
     •    Conventional loan secured by a condominium using an FHA project approval.
     •    ARM products
     •    Interest-Only feature.
     •    Properties held in a trust.
     •    Government loans (FHA/VA)




Icon Lending Guide – Section 600                                                                                     Revised 5/6/11
Eligible Borrowers

•     U.S. Citizens, permanent aliens, non- permanent resident aliens with a valid visa. Acceptable visa types are H-1, H-2A,
      H- 2B, H-3, L-1, E-1 and G series. World Bank employees with a G series visa are ineligible.
•     All borrowers must occupy the subject property.

Ineligible Borrowers
▪    Foreign Nationals or borrowers with diplomatic immunity.
▪    Borrowers with no credit score and/or borrowers with alternative trades to meet credit requirements.
Documentation Types
Full. Income and asset documentation is verified per DU Findings, however at minimum a recent paystub including YTD
income, W2, one-months bank statement and a VVOE is required.
Automated Underwriting
All loans required an Approve/Eligible. A full appraisal is required regardless of DU Findings.
Credit Scores
620 regardless of DU Findings. The lowest decision score among all borrowers is used for loan qualification. Each borrower
must have a minimum of two (2) credit scores.
Rental Mortgage History
Mortgage/rental payment history requirements are determined by DU Findings. Mortgage/rental rating cannot have any 60 or
greater lates in the previous 12 months.
Credit History
Trade line requirements are determined by DU Findings. Borrower must have good re-established credit since the
bankruptcy and/or foreclosure. Foreclosures require a 7 year waiting period from the completion of the foreclosure action.
Refer to Icon's Lending Guide Section 650.14.3 for detailed information regarding bankruptcy/foreclosure/deed-in-lieu of
foreclosure and short sale requirements.
DTI
Maximum DTI 45% regardless of DU Findings.
Employment/Income
A two year employment history with no gaps must be verified. Gaps greater than 30 days require a written explanation from
the borrower.
▪    Wage Earner / Salary Income:
     ▪    A 2 year employment history in the same line of work, as stated on the application, is required.
     ▪    Income documentation requirements are determined by DU. A paystub and W2 are required regardless of DU
          Findings.
     ▪    A verbal verification of employment confirming the length of employment and position is required within 5 days of
          closing.
▪    Self-Employed Income:
       ▪ Income documentation requirements are determined by DU.
      ▪ A verbal verification that the business has been in existence and operation for a minimum of 2 years is required
          within 5 days of closing.
▪    Other sources of Income:
      ▪ Other source of income may be used to qualify. Documentation requirements are determined by DU. Verification of
          length of time received and continuation are verified per DU Findings.
•    All disclosed non-taxable income MUST be grossed up.
•    Royalty income requires a two (2) year history of receipt.
•    Tip income must be documented with most recent 2 years personal income tax returns and all schedules.




Icon Lending Guide – Section 600                                                                            Revised 5/6/11
MLS
•   Properties listed for sale within the last 6 months must have evidence the property is off the market. Borrower must
    provide written confirmation of intent to occupy the property.
•    Maximum LTV for cash-out refinance is 70% when the property was listed for sale in the previous 6 months.
Multiple Properties Owned
    A maximum of four (4) properties may be owned.
      A maximum of four (4) properties may be owned.
    If a property is held in the name of a corporation and borrower is the owner of the corporation, the property will not be
    included in the number of financed properties as long as there is no mortgage rating on the individual's credit report.
    Icon limits its exposure to a maximum of 4 loans per borrower with a total aggregate of $2 million.
4506-T
The 4506-T must be signed at application and again at closing and will be processed for the most recent 2-years.
Assets
▪   Asset verification is required per DU Findings. If a VOD is provided for asset verification, 1 month's bank statement that
    includes all pages is required regardless of DU Findings.
▪   All funds used to close the transaction must be disclosed on the application and input in DU. Funds coming from a
    source other than what is verified and disclosed are required to be re-run through DU and documented per the DU
    Findings.
▪   A copy of all funds used to close the transaction must be in the file at the time of closing/wire. Funds must be from a
    verified source.
Cash Reserves
Per DU Findings

Cash-out Refinance

▪   Texas law determines if the mortgage is a Texas Section 50(a)(6) and their definition of a cash-out refinance or a limited
    cash-out refinance may differ from standard definitions.
▪   6 month title seasoning required for all cash out refinances transactions.
▪   Cash-out refinance transactions use the current appraised value to determine LTV/CLTV, when there is a lien on the
    property, regardless of the length of time the borrower has owned the property. If the property is owned free & clear and
    was purchased within 6 - 12 months prior to the application date, the LTV is based on the lower of the sales
    price/acquisition price, documented by the HUD-1, or the current appraised value. Increase in property value must be
    supported. If the property was purchased within 6 months prior to the underwriting date, the loan is ineligible
    for cash-out.
•   Twelve (12) month seasoning required when the existing loan is a Texas Section 50(a)(6) loan (first or second).
•   If the borrower has an existing Section 50(a)(6) second lien and the new first mortgage will be a cash-out then the
    existing second lien must be paid off.
•   The following are considered cash-out refinance transactions:
    •     Borrower is paying off a first and/or second mortgage that is not a Texas Section 50(a)(6) loan AND getting cash-out
          from the refinance.
    •     Borrower is paying off a first mortgage that is a Texas Section 50(a)(6) loan but is not getting any cash-out AND
          paying off a second lien that is not a Texas Section (50(a)(6) and was not used entirely to purchase the subject
          property or paying off a valid Texas home improvement loan.
     • Paying off a first mortgage that is not a Texas Section 50(a)(6) loan AND is paying off a second lien that is a Texas
          Section 50(a)(6) loan and:
          •   The borrower is getting cash back from the refinance transaction, OR
          •   The borrower is not getting cash-out but is paying off the Texas Section 50(a)(6) second mortgage.




Icon Lending Guide – Section 600                                                                           Revised 5/6/11
Continuity of Obligation
To eligible for a limited cash-out refinance, a continuity of obligation is required.
•   A continuity of obligation exists when:
•   At least one borrower on the existing mortgage is a borrower obligated on the new mortgage.
•   The borrower on title has been on title (but is not on the existing mortgage) and has been occupying the subject property
    for at least 12 months and has paid the mortgage for the previous 12 months (cancelled checks, front and back, are
    required) or can demonstrate a relationship (spouse, relative or domestic partner) with the current obligor.
•   The existing loan being paid off and the title have been held in the name of a natural person or a limited liability company
    (LLC) as long as the borrower was a member of the LLC prior to transfer. Transfer of ownership from or corporation to
    an individual does not meet the continuity of obligation requirement.
•   The borrower recently inherited or was legally awarded the property (divorce/separation settlement).
•   If the borrower is on title (minimum 6 months) but there is no continuity of obligation, as detailed above, the loan will be
     treated as a cash-out refinance. The following applies:
         •     If the property is owned free & clear and was purchased within 6 - 12 months prior to the application date, the
              LTV is based on the lower of the sales price/acquisition price, documented by the HUD-1, or the current
              appraised value.
         •    If the property is owned free & clear and was purchased more than 12 months from the date of application, the
              LTV is based on the current appraised value.
          •    If the property has an existing lien and the borrower has been on title for a minimum of 6 months the maximum
              LTV is 50%, based on the current appraised value
Appraisals
A full appraisal with interior and exterior inspection required regardless of DU Findings.
▪   Form 1004 for SFRs and PUDs,
▪   Form 1073 for condos
•    Unit must be a minimum 600 sq ft.
•   Unit must contain a functional kitchen with a minimum of an oven/range and sink.
•   Market Condition Addendum is required on all appraisals.
•   The appraisal must be dated 90 days from the Note date and ≤ 120 days from the funding date.
•   The appraisal must not include any property other than the homestead. If adjacent land is owned by the borrower, the
    loan file must contain a survey that shows the homestead is a separate parcel that does not exceed 10 acres.
•   Borrower(s) and lender must sign a written acknowledgement as to the fair market value of the property on the date the
    loan funds. A copy of the appraisal must be attached to the acknowledgement.
Subordinate Financing
▪    No new subordinate financing allowed.
▪   Existing subordinate financing that is not a Section 50(a)(6) may be re-subordinated.
Special Requirements and Restrictions
•    The proceeds from a Texas Equity Loan first mortgage must not be used to improve the homestead if a mortgage for
    that purpose could have been made under the authority of Article XVI, Sections 50(a) (1) through (5) of the Texas
    constitution.
•    Only one Section 50(a)(6) loan may be secured by the property at any time.
•   The fees and charges on the loan cannot exceed 3% of the loan amount, The 3% limit excludes prepaid items and YSP.
    Discount points used to reduce the interest rate are not included in the 3% however discount points used for closing
    costs must be included in the 3%. Fees to third parties (e.g. appraisal, credit report, origination, pest control, title
    report, title insurance, third party closing costs, etc.) may be paid by the borrower but are part of the 3% limitation. If
    closing costs are > 3%, fees must be reduced prior to close. Refunds to the borrower are not permitted.
    Premium pricing is allowed if it is disclosed to the borrower at time of initial application.



Icon Lending Guide – Section 600                                                                          Revised 5/6/11
•    The loan cannot close until twelve (12) days after the borrower has received and executed the Notice Concerning
     Extension of Credit. The loan file must contain the Notice Concerning Extension of Credit, individually signed and
     individually dated by all owners of the property and their spouses. The beginning of the 12-day waiting period will never
     begin prior to the following:
     • The receipt of the full credit file, which includes the signed and dated Notice Concerning Extension of Credit.
     NOTE: If the signed a dated copy of the Notice Concerning Extension of Credit is not provided in the credit file, the 12-
           day waiting period will not begin until Icon receives the signed and dated Notice.
•    There is a three (3) day right of rescission on all Section 50(a)(6) loans. The 3-day right of rescission cannot begin until
              the closing date, following the 12-day waiting period. There is no waiver of the rescission period.
•    All individuals on title and their spouses must sign the Texas Home Equity Affidavit and Agreement (FNMA Form 3185).
•    All spouses must execute the mortgage however they are not required to be on the Promissory Note. All individuals on
     title and their spouse must sign all Texas cash-out documents. Only homestead owners can be on title at closing.
•    The borrower(s) must be provided a complete and accurate copy of the final HUD-1 or HUD-1A and closing cannot
     occur less than one (1) business day thereafter. Borrower(s) are required to sign the Borrower's Certification of Receipt
     of Settlement Statement and the Accuracy Thereof at closing. Any changes are made to the HUD-1 after the borrowers
     have signed will require an additional 24 hour waiting period.
•    Borrower(s) must be provided with a copy of all documents signed at closing and are required to sign the Texas Home
     Equity Receipt of Documents.
•    All loans must have a Texas Home Equity Loan Closing Instructions Addendum.
•    A Texas Loan Policy of Title Insurance (Form T-2) is required. The policy must be supplemented by a Restrictions,
     Encroachments, Minerals Endorsement (Form T-19), an Equity Loan Mortgage Endorsement (Form T-42), including the
     optional coverage provided by paragraph 2(f) and a Supplemental Coverage Equity Loan Mortgage Endorsement (Form
     T-42.1). Deletions of the endorsements are not allowed.
•    The loan must be closed by an Icon approved attorney or an Icon approved title company, no exceptions.
•    There are no restrictions on how loan proceeds may be used except as follows:
     •   NO unsecured debt held by GMAC or GMAC affiliated debt or any correspondent affiliated debt may be paid at
         closing (auto loans, credit cards, etc.)
Prepayment Penalty
None
Assumable
No
Eligible Programs
Fixed rate, fully amortizing. 15 or 30 year term. Qualify at the Note rate.




Icon Lending Guide – Section 600                                                                            Revised 5/6/11
                                                                     VA Program
                       Program Type                             LTV/CLTV*          Units          Occupancy

  Purchase                                                          100%             1-4              O/O
  Rate/Term Refinance/Cash-Out Refinance
                                                        1,2
                                                                    90%              1-4              O/O
  IRRRL
             3
                                                                    100%             1-4          O/O, NOO

 Borrower must provide Certificate of Eligibility (COE) to be eligible for all VA loans. (COE not required on the VA IRRRL)

Footnotes:
1. High Balance refinance transactions minimum credit score requirements:
   · > $417,000 to ≤ $700,000 minimum credit score 640
   · >$700,000 to ≤ $1,000,000 minimum credit score of 660
2. Refer to page 1 of the Program Notes for VA's definition of rate/term refinance and cash-out refinance
3. Interest Rate Reduction Refinancing Loan (IRRRL) is a VA-guaranteed loan made to refinance an existing VA-guaranteed loan. Borrower is not
   required to occupy the property however borrower must provide evidence they previously did occupy the property. Refer to the IRRRL
   Specific section on page 3 of the Program Notes for IRRRL requirements.


High Balance Loans – The maximum TOTAL mortgage exceeds maximum loan amounts above.
             Maximum High Balance loan amount cannot exceed the lesser of the VA county loan limits for high-cost counties or $1,000,000. Refer to VA’s
             website at http://www.homeloans.va.gov/loan_limits.htm for VA high-cost county limits.

             Secondary financing not allowed (except on IRRRL’s with an existing second).

Hawaii maximum loan amounts:

1-unit: $625,500
2-units: $800,775
3-units: $967,950
4-units: $1,202,925

Available Markets
 Eligible in all 50 states, except as follows:
 ▪ Alaska, American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the Virgin Islands are ineligible.
 ▪ Refer to Section 600 of Lending Guide for specific state restrictions

Eligible Transactions
• Purchase, rate/term/cash-out refinance, and IRRRLs.
 • Owner-occupied properties only with the exception of an Interest Rate Reduction Refinancing Loan (IRRRL) transactions.

Ineligible Transactions
 • Non-owner/investment with the exception of the IRRRL.
 • Non-arms length transactions may be ineligible.
 • Non-traditional credit
 • VA cash-out refinances with LTV greater than 90%
 • VA Indian Leasehold properties
 • Cash-out refinance loans in the state of Texas.
 • VA loans with any Texas Section 50(a)(6) financing
 • Life estates for Specially Adapted Housing

Maximum Loan Amount
The maximum loan amount cannot exceed $1,000,000 including the VA funding fee.

Maximum LTV/CLTV
 Purchase - 100%
   • The maximum LTV cannot exceed 100% of the VA reasonable value or the purchase price, whichever is less, excluding the VA funding fee. The
   maximum LTV, including the VA funding fee, cannot exceed 103% LTV.
  • Borrower is not required to have a down payment unless the sales price exceeds the reasonable value established by the VA

 Rate/term Refinance/Cash Out Refinance* - 90%
  • The maximum LTV/CLTV cannot exceed 90% of the VA reasonable value, including closing costs, plus the VA funding fee.
  • Allowable fees and charges and discount points may be paid from cash proceeds of the loan as long as total loan proceeds do not exceed
     90% of the reasonable value.




Icon Lending Guide – Section 600                                                                                                   Revised 5/6/11
* VA defines refinance transactions as follows:
   • Rate/term refinance: Defined as "Other Refinancing Loans", detailed in Chapter 6, Section 5-a of the VA Lenders Handbook. VA considers the
     refinance of a construction loan, an installment land sale contract and a loan assumed by veterans at interest rates higher than that for the
     proposed refinance as "Other Refinancing Loans". VA considers all refinance transactions that do not fall into VA's "Other Refinancing Loans"
     category to be a cash-out refinance whether or not the borrower receives cash-to-pocket. This does not include VA IRRRL transactions.
   • Cash-out refinance: Defined in Chapter 6 Section 3-a of the VA Lenders Handbook as a loan that refinances any type of lien or liens against
     the secured property. The liens to be paid off may be current or delinquent and from any source, such as tax or judgment liens or a VA, FHA
     or conventional mortgage. Loan proceeds beyond the amount needed to pay off the lien(s) may be taken as cash by the borrower of any
     purpose acceptable to the lender. The loan must be secured by a first lien on the property

Eligible Properties
 • Single family residences, 1-4-family dwellings, PUDs, attached/ detached condos located in a VA approved project, and rural property are eligible.
    Attached condos, including 2-4 unit projects, require 100% of the insurable replacement cost coverage for the complete condominium (interior &
    exterior). If the HOA Master Policy does not provide coverage for the interiors of the project units, an HO-6 (walls-in) or equivalent policy for the
    individual unit is required. The HO-6 policy must provide coverage in an amount that is no less than 20% of the condominium unit’s appraised value.
• Rural property is limited to 10 acres. The property must be zoned residential or agricultural. Commercial use is not permitted and the property cannot
    be income producing. The land to value ratio should not exceed 30% for rural property.

Ineligible Properties
Non-VA approved condo projects, condo projects with spot approval, condotels & co-ops, manufactured housing, working ranches, board and care homes, earth-
berm homes, commercial properties, vacant land not purchased in conjunction with a construction loan, leaseholds, unique properties, properties in an airport
noise Zone 3, or properties with a resale date ≤ 90 days following the acquisition by the seller

Eligible Borrowers
• Veterans, active duty military, reserve/guard, unmarried surviving spouse.
• Any loan where title to the property will be held by the veteran and any person other than the veteran's spouse requires VA prior approval.
• Requires a Certificate of Eligibility (COE) issued by VA. Acceptable forms: VA Form 26-8320 or VA form 26-8320a. Not required on IRRR
transactions.

Ineligible Borrowers
Any borrower not meeting the criteria required for a Certificate of Eligibility (COE).

Automated Underwriting
Loans require an "Approve/Eligible" Finding. A "Refer" Finding due to bankruptcy and/or foreclosure only is allowed; loan subject to manual underwriting

Documentation Types
Full (with the exception of the VA IRRRL)

Rental/Mortgage Payment History
The mortgage and rental history must be verified and rated.
• Maximum 1x30 in the past 12 months and requires a written explanation from the borrower.
• Private party rental ratings requires 12 months cancelled checks.
High Balance Transactions:
0x30 mortgage lates in previous 12 months (includes all mortgages and rent payments)

Credit Scores/ Credit Report
 Minimum 620 credit score regardless of DU findings. A credit report is required to verify borrower meets minimum credit score requirement.
 If a credit report is not provided by one of Icon's approved credit reporting vendors, Icon will re-pull credit. Refer to Icon's Lending Guide
 Section 650.03 - Credit Reports for a list of Icon approved credit vendors. Individual credit scores are determined as follows:
   • If three valid scores are obtained, the middle score is used.
   • If two valid scores are obtained, the lower score is used.
   • If one valid score is obtained, that score is used.
    • If there is more than one borrower on the loan, the lowest selected credit score for all borrowers is used as the Loan Score.
 High Balance refinance transactions:
• Loan amount >$417,000 to ≤ $700,000 minimum credit score 640
• Loan amount >$700,000 to ≤ $1,000,000 minimum credit score of 660

Credit History
 ▪ Collections and charge-off accounts are generally not required to be paid at close but may be required at underwriter discretion.
▪ Judgments and tax liens are to be paid off prior to closing unless the lien will subordinate to the first TD or the borrower has a repayment plan and is
  making timely payments for a minimum of 6 months.
 ▪ Borrower to provide a letter of explanation for derogatory credit.
 ▪ Borrower to provide a letter of explanation for inquires within the past 90 days.
 · Borrower must explain all collections and judgments in writing.




Icon Lending Guide – Section 600                                                                                                      Revised 5/6/11
Bankruptcy or Foreclosure
▪ Chapter 7 bankruptcy discharged at least 2 years and the borrower has re-established credit.
▪ Chapter 7 bankruptcies less than 2 years but greater than 12 months are allowed provided the borrower can prove the bankruptcy was
   caused by extenuating circumstances beyond the borrower's control and that the event leading to the bankruptcy is not likely to reoccur and the
   applicant or spouse has obtained consumer items on credit subsequent to the bankruptcy and has satisfactorily made payments over a continued
   period.
▪ Chapter 13 bankruptcy is permitted if one year of the payout has occurred and all payments have been made on time. Permission from the court is
 required in order for borrower to obtain a new mortgage. Borrowers who have finished making all payments satisfactorily are considered to have
 reestablished satisfactory credit.
▪ Consumer Credit Counseling is permitted as long as the borrower has been making the payments timely for a minimum of 12 months. Written
   permission from the counseling agency is required in order to obtain a new mortgage.
  ▪ Foreclosure does not disqualify the borrower. If the foreclosure was due to extenuating circumstances beyond the borrower's control (i.e.: loss
  of primary
    wage earner, serious illness, etc), and the borrower has good re-established credit, the file may be eligible. The guidelines for Chapter 7
  bankruptcy are
    applied.
   Note: If the foreclosure was on a VA loan, the borrower may not have full entitlement available for the new loan.
High Balance
• No foreclosure or bankruptcy in last 7 years.

Ratios / Residual Income
≤ 41%. >41% requires additional review and is considered on a case-by-case basis with compensating factors.
VA has specific residual income requirements based on family size, loan amount and region. Refer to VA Lender's Guide for details.

Income
Wage Earners
• Only verified income is acceptable
• A verbal verification of employment (VVOE) is required.
Self-Employed Borrowers
• Generally a 2-year self employment history is required.
• Current financial statements including year-to-date profit and loss statement and current balance sheet.
• Individual signed tax returns plus all applicable schedules for the previous 2-years
• Corporation or partnership requires copies of signed Federal business tax returns for previous 2-years and a list of all stockholders or
 partners showing the interest each holds in the business.

4506-T
• A complete signed and executed 4506-T required on all transactions for each borrower. (not required on the IRRRL)


Assets
• Required to be verified only when the closing costs or points that are the borrower's responsibility are not financed in the loan or a down payment is
 required due to the sales price exceeding the value established by the VA.
• When asset documentation is required, borrower to provide the most recent 60 days bank statements.
• Acceptable sources of liquid assets include checking, savings, money market accounts, CD's, stocks, mutual funds, trust funds, gift funds, cash on
hand.

Gift Funds
Gift funds are allowed but must be from a family member.

Interested Party Contributions
Interested party contributions are allowed to pay fees, charges and/or discount points. Contributions cannot exceed 4% of the established reasonable value or
sales price, whichever is less.

Cash Reserves
• Cash reserves are generally not required, however, the borrower's ability to accumulate cash reserves will be considered by the underwriter.
• When borrower is retaining current principal residence as second home or investment property: 3 months PITI required.
• 3-4 units: 6 months PITI
• Reserves, when required, must be from the borrower's own funds.

Appraisals
A full appraisal from a VA approv ed appraiser is required, if applicable. The property must be eligible for appraisal under VA guidelines.
Refer to the VA Appraisal Request Checklist for eligibility determination.
  ▪ The property must have been appraised/inspected within 6 months of the date of the note. If the appraisal is > 6 months, a new appraisal is
  required.
High Balance
Regardless of loan amount, the VA guaranty plus cash/equity must be equal to at least 25% of the purchase price or Notification of
Value (NOV), whichever is less, on purchases and non-IRRRL refinances.




Icon Lending Guide – Section 600                                                                                                     Revised 5/6/11
Subordinate Financing
Conforming Loan Amounts:
  • Secondary financing is allowed. The source, amount and repayment terms must be disclosed and the loan must be in a subordinate position to
  the VA loan. The funds from a junior lien may not be used to cover any portion of the down payment that is used by the borrower to cover the
  difference between the purchase price and VA's reasonable value.
 ▪ The combined loan amount of the first and second lien cannot exceed 100% of the lesser of the appraised value or sales price including normal
 closing costs, p r e p a i d expenses, and discount points.
• No new subordinate financing allowed on refinance transactions.
High Balance
Secondary financing not allowed.


IRRRL Specific
• Occupancy: Owner-occupied and non-owner occupied. Non-owner occupied, the borrower is required to certify that they previously
    occupied the property as their primary residence if not currently occupying the property.
• The maximum loan amount, including the VA funding fee, can never exceed 95% of the value of the AVM or 100% of the value of the 2055,
    as applicable.
• The maximum LTV cannot exceed 100% of the existing VA loan balance including allowable fees/charges and discount points
     (maximum 2 points) plus the VA funding fee.
 • Maximum loan term is the original term of the loan plus 10 years. Loan term cannot exceed 30 years and 32 days.
• Loan must be current.
• A minimum of a six month payment history on the current mortgage is required. If less than six (6) months, loan must be documented and underwritten
 as a credit qualifying VA IRRRL transaction.
• Loans seasoned ≥12 mos, 0x30 or greater first mortgage lates in the most recent 12 months.
• Loans seasoned < 12 mos. 0x30 or greater lates since the loan inception and 0x30 or greater lates for any other first mortgage loan associated with
 the property and borrower(s) in the most recent 12 mos.
• High Priced (high cost) mortgages are ineligible.
• Subordinate financing allowed only with an existing subordinate lien that will be re-subordinated to the new first mortgage.
• A verbal verification of employment (VVOE) is required.
• If the new monthly PITI payment increases by 20% or more over the previous payment, the lender must verify that the borrower qualifies for the new
 monthly payment and provide a certification of the borrower's qualification
• 4506-T is not required
• A Servicing V E C T O R ™ AVM ordered through RESDirect is allowed on VA IRRRLs subject to the following.
    • Subject property is a detached single family primary residence or second home.
    • LTV is ≤ 95%, and
    • Loan amount is less than or equal to $1 million.
• If a Servicing VECTOR AVM is not provided or is dated more than 30 days from the loan submission date, Icon will order the AVM.
    • If the Servicing VECTOR™ AVM results in an LTV > 95% then a 2055 will be required, or the loan amount must be decreased to an amount
    ≤ 95% LTV based o n the AVM.
• A 2055 appraisal (exterior inspection only) or a 1075 for condominiums, at minimum, is required on the following:
    • Attached properties, 2-4 units or investment properties
    • Loans > 95% LTV.
       • The 2 0 5 5 /1075 must be ordered through one of Icon's approved AMCs which can be located on Icon's website at www.iconwholesale.com
       under the ―Approved Partners" link. The appraised v a l u e must be supported and be equal to or greater than the total loan amount. The
       property condition must be rated "average" or better.
• An AVM or 2055/1075 is not required on any VA IRRRL that is currently serviced by Wells Fargo. The waiver of the valuation requirement
  applies only to Wells Fargo serviced loans.

Re-negotiated Purchase Agreements
Refer to Section 642.01 - Purchase Transactions of Icon's Lending Guide for specific requirements regarding re-negotiated purchase contracts.

Eligible Programs
• Conforming loan amount: Fixed-rate available with a 15 or 30 year term.
• Conforming loan amount: ARM: 5/1 ARM with a 30 year loan term. Caps: 1/1/5. Treasury index.
• High Balance loan amount: Fixed rate with a 30 year term only. ARM not eligible.

Escrows
Required

Interest Only
Not allowed.

VA Guaranty
VA guaranty is subject to the veteran's eligible entitlement as indicated on the Certificate of Eligibility (COE).




Icon Lending Guide – Section 600                                                                                                    Revised 5/6/11
                                                        Freddie Mac Super Conforming


                                       Primary Residence


   Loan Type       Units                LTV            CLTV    Loan Amount    Purpose*

                   1-unit,
                   PUD,                      1,2,3
     Fixed                             90%             90%      <=$625,500      P, R
                          4
                  Condo
                   1-unit,
                   PUD,                       3
     Fixed                              80%            80%      > $625,500      P, R
                          4
                  Condo
                                              3
     Fixed        2-4 units             75%            75%      <=$625,500       P,R

                   1-unit,
                   PUD,                       3
     Fixed                              75%            75%      <= $625,500      C
                          4
                  Condo
                                              3
     Fixed        2-4 units             65%            65%      <= $625,500      C

                   1-unit,
                   PUD,                       3
     Fixed                              65%            65%       >$625,500       C
                          4
                  Condo

                                         Second Home

                                                                   Loan
   Loan Type       Units                LTV            CLTV                   Purpose*
                                                                  Amount
                   1-unit,
                   PUD,                       3
     Fixed                             80%             80%       <=$625,500     P, R
                          4
                  Condo
                   1-unit,
                   PUD,                       3
     Fixed                             70%             70%       >$625,500      P, R
                          4
                  Condo
                   1-unit,
                   PUD,                       3
     Fixed                             65%             65%       <=$625,500       C
                          4
                  Condo
                   1-unit,
                   PUD,                       3
     Fixed                             65%             65%       >$625,500        C
                          4
                  Condo

                                          Investment


     Loan Type          Units                LTV      CLTV    Loan Amount     Purpose*

                        1-unit,
                        PUD,                      3
       Fixed                              80%         80%     <=$625,500         P
                               4
                       Condo
                        1-unit,
                        PUD,                      3
       Fixed                              75%         75%     <=$625,500         R
                               4
                       Condo
                        1-unit,
                        PUD,                      3
       Fixed                              70%         70%      >$625,500        P,R
                               4
                       Condo
                                                  3
       Fixed           2-4 units          70%         70%     <=$625,500        P,R

                                   4              3
       Fixed          1-4 units           65%         65%     <=$625,500         C

                        1-unit,
                        PUD,                      3
       Fixed                              65%         65%      >$625,500         C
                               4
                       Condo

*P = Purchase R = Rate/term C = Cash-out (Refer to page 2 for footnotes)




Icon Lending Guide – Section 600                                                         Revised 5/6/11
** Maximum loan amount- refer to HUD's website at https://entp.hud.gov/idapp/html/hicostlook.cfm for maximum loan amount by county.
   Maximum loan amount can never exceed established limits for the property type and location.


Footnotes:
1. LTV's > 80% are subject to MI company guidelines.
2. Loans > 80% LTV cannot exceed 45% DTI.
3. Transactions with subordinate financing, reduce LTV by 5%.
4. Condominiums in California are ineligible.



Florida condominiums are limited to the following:
   ▪ Primary Residence - 75%/75%
   • Second Home - 70%/70%
   ▪ Investment - Ineligible

Available Markets

Eligible in all 50 states, except as follows:
▪ Alaska, Guam, Puerto Rico, and the Virgin Islands are ineligible.
▪ Refer to Section 600 of Icon's Lending Guide for specific state restrictions

Automated Underwriting

All loans must be run through LP and receive a Risk Class of "Accept" from LP. The LP Feedback Certificate must be issued on or after
December 7, 2008 and LP Findings using 2009 temporary loan limits must be issued on or after May 21, 2009.

Eligible Properties

1-4 unit properties, single family residences, warrantable condos and warrantable PUDs. New condominium projects or condo conversions
located in the state of Florida or Las Vegas, Nevada require a PERS approval.
NOTE: Condominiums located in the state of CA are ineligible.

Ineligible Properties

Manufactured homes, condos, condotels & co-ops, non-warrantable PUD's, working ranches, board and care homes, earth-berm homes,
commercial properties, vacant land. New condominium projects or condo conversions located in the state of Florida or Las Vegas, Nevada
without a PERS approval.

Eligible Transactions

Purchase, rate/term and cash out refinances are eligible per program matrix.


High Balance Loan Geographical Eligible Areas

Only certain geographic areas and certain loan amounts are eligible for this program. Use the link indicated below to determine geographic
eligibility and maximum loan amount. Note: In order to obtain the correct loan limits for this program, select ―Fannie/Freddie" from the <Limit
Type> field and "CY2009" in the <Limit Year> field. https://entp.hud.gov/idapp/html/hicostlook.cfm




Icon Lending Guide – Section 600                                                                                        Revised 5/6/11
Ineligible Transactions

• Non-arms length transactions may be ineligible.
• Restructured loans are ineligible. A restructured loan is a mortgage loan in which the terms of the original transaction have changed
  resulting in the forgiveness of the mortgage or a restructure of the mortgage either through a modification or the origination of a new loan
  that results in any of the following: • forgiveness of a portion of the principal and/or interest on either the first or second lien. • application of
  a principal curtailment by or on behalf of the investor to simulate forgiveness. • conversion of any portion of the original mortgage debt to a
  soft subordinate mortgage • conversion of any portion of the original mortgage debt from secured to unsecured.
• Second home and investment properties that are non-arms length transactions are ineligible.
• Conventional loan secured by a condominium using a FHA project approval.
• Interest-only feature
• Texas Section 50(a)(6) loans
• Alt 97, Home Possible programs, Special Housing Initiatives Loans, Special Purpose Cash-out refinances, Streamlined refinance
• Balloon/Reset Mortgages
• FHA/VA Loans
• Loans secured by a condominium located in the state of California
•Transactions with a loan amount > $1,000,000.

Eligible Borrowers

U.S. Citizens, Permanent Resident Aliens, Non-permanent resident aliens and Fannie Mae Revocable Inter-Vivos trusts are eligible. First-
time homebuyers with a recent 12 month housing payment. See First Time Homebuyer topic and Program Profile for additional information.
Refer to Section 600 of Icon's Lender Guide for eligible visa types for non-permanent resident alien borrowers.

First Time Homebuyer

At Underwriter's discretion, a VOR and/or cancelled rent checks may be required .

Ineligible Borrowers

▪ Foreign Nationals and borrowers with diplomatic immunity
▪ Borrowers with no credit score, or who do not meet minimum trade line requirements.
▪ First-time homebuyers without a 12 month rental/mortgage payment history
▪ Non-occupying co-borrowers

Documentation Types

▪ ≤ 80% - per LP Findings. Income is calculated per Freddie Mac guidelines.
▪ > 80% - Refer to income documentation requirements.

Rental/Mortgage Payment History

▪ ≤ 80% - Verification of mortgage/rental history is per LP Findings. At underwriter's discretion, a VOR or cancelled checks may be required
 ▪ > 80% - Verification of mortgage per Lending Guide. For LTVs > 80%, 0x30 mortgage/rental delinquency in the past 12 months and
  maximum 1x30 in the past 24 month.
▪ Mortgage/rental history must be verified for the previous 24 months if it does not appear on the credit report and is required by LP. Rental
  history can be verified through a legitimate property management company or cancelled checks.
 ▪ First time homebuyer’s rental verification may be required. See FTHB section.


Credit Scores

▪ All borrowers whose income and/or assets are required to qualify must meet the minimum credit score requirements.
• LTVs > 80% are subject to MI company minimum credit score requirements.
• Each borrower must have a minimum of one (1) credit score.
• If there are (3) credit scores for a borrower, the middle score is used. If there are (3) credit scores but two are duplicates, the duplicate is
  used. If there are (2) credit scores, the lower of the two scores is used. If there is (1) credit score, that score is used
• The lowest decision score among all borrowers is used for loan qualification.




Icon Lending Guide – Section 600                                                                                               Revised 5/6/11
Credit History

▪ No major adverse credit reported in the past 24 months
▪ Collection and charge-off accounts, judgments, liens, delinquent property taxes, repossessions, garnishments and accounts showing 90
  days or more delinquent are considered to be major adverse credit. (Note: Adverse accounts over 24 months that do not affect title will not
  be considered in determining if borrower’s credit is acceptable.)
▪ Collections with total aggregate balance of less than $1000, and less than $250 per item are acceptable. Aggregate balance ≥ $1000 must
  be paid prior to close.
▪ Tax liens, judgments or garnishments must be paid off, regardless of age.

4506-T

A completed and signed 4506-T is required on all transactions.


Bankruptcy/Deed-in Lieu/Short Sale

Refer to Icon's Lending Guide Section 650.14.3 for requirements regardless of LP Findings.


Foreclosure

No foreclosure in previous 7 years regardless of LP Findings.

Trade lines


▪ A minimum 2 year credit history.
▪ A minimum of four rated trade lines.
▪ One trade line must have been open and rated at least 24 months prior to application.
▪ The other three trade lines must have been rated for at least 12 months.
▪ All borrowers must meet minimum trade line requirements.


Employment/ Income

A two year employment history, with no gaps, must be verified. Gaps > 30 days require a written explanation from the borrower.


DTI
• Loans ≤ 80% per LP Findings.
• Loans > 80% LTV maximum DTI 41% or 45% as determined by MI guidelines.
• Cash-out transactions - Maximum DTI is 45% regardless of LP Findings.

Cash Reserves

▪ LTV ≤ 80% reserves are per LP Findings
▪ LTV > 80% 2 months reserves required regardless of LP Findings.
  2-4 Unit primary home transactions require 6 months PITI cash reserves, when rental income from the units are used for qualifying.
• Business funds may not count toward required reserves.
▪ Loan proceeds may not count toward required reserves.


Assets

• Asset verification is required per LP Findings.
• All funds used to close the transaction must be disclosed on the application and input in LP. Funds coming from a source other than what is
  verified and disclosed are required to be re-run through LP and documented per LP Findings.
• A copy of all funds used to close the transaction must be in the file at the time of closing/wire. Funds must be from a verified source.

Gift Funds

▪ Borrowers must make the minimum required down payment from their own funds.
▪ Document gift funds per LP Findings.
• Gift funds are ineligible on investment transactions.




Icon Lending Guide – Section 600                                                                                      Revised 5/6/11
MLS

• Properties listed for sale within the last 6 months must have evidence the property is off the market.
• Maximum LTV for cash-out refinance is the lower of 70% or maximum for program/occupancy/property type.


Interested Party Contributions

▪ Primary Residence: 3% regardless of LTV/CLTV
▪ Second Home: 3% regardless of LTV/CLTV
▪ Investment Property: 2%


Refinances

▪ A continuity of obligation is required for limited cash out and cash out transactions. Refer to program profile for details.
▪ 6 month title seasoning and 6 months mortgage payments required for all cash out refinances. 6 months seasoning already required for
  refinances in which the existing lien to be paid off was used for cash out.
▪ Limited cash-out transactions use current appraised value to determine LTV/CLTV, regardless of the length of time the borrower has
  owned the property.


Amended Tax Returns

• Tax returns filed prior to the application date:
   • The original filed tax return and the amended return are required. If the return was amended ≤ 60 days from the application, evidence of
     payment is required.
• Tax returns filed after the application date:
   • Borrower to provide evidence of filing and payment (or ability to pay if the check has not cleared). Borrower must also provide a letter of
     explanation regarding the reason for the amended filing


Conversion or a Principal Residence to Second Home or Investment Property


• Current principal residence is pending sale but the transaction will not be closed (with title transfer to a new owner) prior to the new
  transaction. Both the current and the proposed mortgage payments must be used to qualify the borrower for the new transaction. 6 months
  PITI reserves are required for both properties. 2 months PITI reserves for both properties are permitted provided the borrower has 30%
  equity minus any outstanding liens in the current principal residence documented by a full appraisal or AVM. BPOs are not allowed
• Conversion to a Second Home:
  • Both the current and the proposed mortgage payments must be used to qualify the borrower for the new transaction; and
  • 6 months of PITI for both properties is required to be in reserves. Lender may consider reduced reserves of no less than 2 months for both
    properties if there is documented equity of at least 30 percent in the existing property minus any outstanding liens documented by a full
    appraisal or AVM. BPOs are not allowed.
• Conversion to an Investment Property: Borrower can be qualified with up to 75% of the rental income being used to offset the mortgage
  payment if there is documented equity of at least 30% in the existing property minus any outstanding liens documented by a full appraisal or
  AVM. BPOs are not allowed. ARMs require a full appraisal or 2055. An AVM is not allowed to document equity on an ARM transaction
  when converting a principal residence to an investment property. The rental income must be documented with:
  • A copy of the fully executed lease agreement; and
  • The receipt of a security deposit from the tenant and deposit into the borrower’s account. If the 30% equity in the property cannot be
    documented, rental income may not be used to offset the mortgage payment.
• Both the current and the proposed mortgage payments must be used to qualify the borrower for the new transaction and • 6 months of PITI
  for both properties is required for reserves.




Icon Lending Guide – Section 600                                                                                        Revised 5/6/11
Appraisals

• Full appraisal, with interior and exterior photos, is required by an Icon approved AMC.
• Field review required for:
  ▪ Appraised values ≥ $1mm and LTV/CLTV ≥ 75%
   ▪ Loan amount is > $625,500 and the LTV/CLTV is > 80%
• If the field review results in a different value, the lowest of the appraised value, field review value or sales price must be used to calculate
  the LTV/CLTV ratio.
The following forms are acceptable appraisal forms:
  ▪ Form 1004 for SFRs and PUDs,
  ▪ Form 1073 for condos
  ▪ Form 1007, Market Rent Survey, required for 1-unit investment properties
• Market Condition Addendum is required on all appraisals
• Condominiums: appraiser to provide at least two sales outside of the subject project.
 • The appraiser performing the appraisal must be qualified to perform appraisals without oversight or supervision - NO TRAINEES allowed
.• Attached Condominiums require the appraiser to provide at least two comparable sales from outside the subject project and outside the
  influence of the developer, builder or property seller.
  Note: Property Inspection Waivers are ineligible.


Subordinate Financing

▪ Minimum term for 2nds is 15 years, with no call provision within the first 5 years.
▪ Terms must provide for minimum interest only payments, with no negative amortization.
▪ Seller or financial institution may provide secondary financing. Seconds from other sources not permitted.
• Seller carry seconds not permitted if FSBO.


Eligible Programs

Fixed rate: 15 and 30 yr terms available


Mortgage Insurance Coverage

LTVs > 80% require Mortgage Insurance Coverage per standard FNMA limits through Essent, Genworth, MGIC and Radian. Standard
coverage and rates apply. Reduced or Custom MI is not eligible. Certain combination of features may be limited by MI Guidelines for
mortgage insurance, including declining market restrictions. Refer to Section 700 of the Lending Guide for details.

                             80.01%-85%          85.01% - 90%

 30 year term                      12%                      25%
 15 year term                       6%                      12%




Icon Lending Guide – Section 600                                                                                           Revised 5/6/11
                           Section 700 – Mortgage Insurance
                                   Table of Contents


700 – Introduction
701 – LTV/CLTV Determination
702 – Certificate Requirements
703 – Effective Date of Mortgage Insurance
704 – Escrows
705 – Types of Eligible MI Coverage
705.01 - Eligible Types of Coverage
705.02 – Ineligible Types of Coverage
706 – Type of Ineligible Coverage
707 – Amount of Coverage
708 – Markets
708.01 Declining Markets
708.02 Non-Declining Market




Icon Lending Guide – Section 700                              Revised 4-15-11
700 - Introduction

Mortgage Insurance (MI) is required on all first trust deed transactions in which the LTV is greater
than 80% unless prohibited by state law. The mortgage insurance must be provided by one of
the following MI Companies:

         Essent: http://www.essent.us/rates.html
         Genworth: http://www.mortgageinsurance.genworth.com/
         MGIC: http://www.mgic.com/
         Radian: http://www.radian.biz/

Each MI Company has its own proprietary guidelines and may have Declining Market List. All
loans with an LTV greater than 80% are subject to MI availability and the MI guidelines, including
DTI limitations, minimum credit score requirements, and declining market reductions. If MI
cannot be obtained from one of the above listed companies, the loan is ineligible for Icon
financing.

701 - LTV/CLTV Determination

The LTV used to determine if MI is required on a transaction is based on the lower of the sales
price or the current appraised value.

702 - Certificate Requirements

The mortgage insurance certificate must be executed and include the borrower’s name, property
address, and loan amount as stated on the note. The certificate cannot be subject to any
conditions.

703 - Effective Date of Mortgage Insurance

Borrower paid mortgage insurance becomes effective the day of loan closing. Premiums are to
be remitted to the MI Company immediately. Each subsequent payment is due on the same day
of the month as the loan closing date.

704 - Escrows

Mortgage insurance must be escrowed. A waiver of the mortgage insurance is not permitted.

705 - Types of Mortgage Insurance Coverage

705.01 – Eligible Types of MI Coverage

Icon accepts the following types of MI:

         Borrower Paid Monthly MI – the monthly MI has coverage for one month. The
         premiums are remitted throughout the life of the loan and collected on a monthly basis as
         a portion of the payment. The servicer forwards the MI payment to the MI Company.




Icon Lending Guide – Section 700                                                      Revised 4-15-11
         Borrower Paid Single Premium – the borrower elects to pay the life of the loan
         mortgage insurance at the time of closing. The single premium is paid from borrower’s
         own funds and cannot be financed into the loan.

         Lender Paid Single Premium MI – the lender pays the life of loan mortgage insurance
         at the time of closing. The borrower pays a slightly higher interest rate and the lender
         pays the MI allowing the borrower a lower down payment.

705.02 – Ineligible Types of MI Coverage

The following types of MI coverage are ineligible:
         Lower Cost or Reduced coverage
         Custom
         Financed
         Declining
         Lender paid with monthly or annual premiums

706 – Amount of Coverage

Icon requires standard MI coverage on all transactions with an LTV greater than 80%.

                                   Standard MI Coverage

                       LTV            Term > 20 years     Terms ≤ 20 years
                      > 95%                35%                   N/A
                  90.01 – 95%              30%                  25%
                  85.01 – 90%              25%                  12%
                  80.01 – 85%              12%                   6%

707 – Markets

707.01 - Declining Markets

Individual MI Companies have their own guidelines which detail LTV reductions, minimum credit
score requirements, eligible transaction types and possibly a Declining Markets List. Clients
encouraged to check MI Company underwriting guidelines and to determine if the subject
property is subject to a prior to submitting to Icon.

The following are some of the ineligible transactions in a declining market:

         Cash out refinance
         2-4 units
         Investment property
         Reduced documentation
         Credit Score less than 620




Icon Lending Guide – Section 700                                                      Revised 4-15-11
         DTI greater than 41% regardless of AUS
         AZ, CA, FL, NV – minimum 720 credit score and max 45% DTI regardless of AUS results
         ARMs with a fixed rate period less than 5 years

707.02 - Non-Declining Market

Standard MI guidelines apply in non-declining markets. The following are some of the ineligible
transaction types in a non-declining market:

         Credit score < 620
         LTV > 95% with score < 700
         LTV greater than 97%
         Investment property
         2-4 units
         Cash out with LTV > 85% and/or score < 720
         DTI greater than 45% regardless of AUS
         Reduced documentation
         ARMs with a fixed rate period less than 5 years




Icon Lending Guide – Section 700                                                    Revised 4-15-11
                                   Section 800 – Rate Lock Policy

Disclaimer
Rate sheets give indications only, as market conditions may cause intra-day changes to pricing. It is the
Client’s responsibility to keep abreast of price changes. The Company reserves the right not to honor the
rate sheet price regardless of prior published indications provided the Client is contacted in a timely
manner. Intraday price changes may occur, due to fluctuating market conditions, and all lock requests
received by Lock Desk after the re-price notice will be subject to the new pricing.

Lock-in Agreement
A lock is an agreement between the Client and the Company. It specifies the number of days for which a
loan's interest rate is guaranteed. Should interest rates rise during that period, the Company is obligated
to honor the committed rate. Should interest rates fall during that period, the Client must honor the lock.
Locking in a rate and price does not guarantee eligibility or approval of the subject loan. Locks are not
transferable.

Lock Periods
Locks are available on a 15, 30, 45 or 60-day basis. The loan package must be submitted and approved
by the Company in order to secure a 15-day lock. A 30, 45 or 60-day lock is available for loans that do not
have an approval.

Jumbo loans ≥$1M require Sr. Management Approval prior to locking;
Jumbo loans <$1M must have underwriter conditional approval before locking for any applicable term.

Lock Requests
Pre-locks are not accepted. The loan must be submitted with an assigned loan number in order to be
locked. Locks can be emailed directly to lockdesk@iconresidential.com M-F 8:00 am to 3:00pm, or locked
online through IconIQ M-F 8:00am to 4:00pm. Lock Desk does not accept fax requests. The Company
requests a complete Lock Request Form with specific information concerning the loan transaction to
secure a lock. An incomplete Lock Request Form will be returned to the Client and is subject to current
market pricing. The loan will not be locked until the Lock Desk receives a complete and correct Lock
Request.

Rate Lock Confirmation
The Client is responsible for printing their Confirmation as evidence of the agreement entered into by the
Company and the Client. It is the Client’s responsibility to report any inconsistencies with the Client’s
understanding of the loan to the Company within 24 hours of the Confirmation Date. If the Company
agrees with the Client’s report of inconsistencies given within that period, the Company will forward the
Broker an amended Confirmation detailing the changes.

Changes in Critical Information
The Client is responsible for tracking any changes to the structure of the loan that affect pricing, and
providing proper notification to the Company. Any changes to the structure of the loan that affect pricing
will be validated by the Lock Desk; however, we are unable to send revised confirmations for all changes.
The Company must be notified immediately if the Client makes any changes to the mortgage loan that
differ from the confirmed pricing structure. Mortgage loans delivered for closing must meet the terms of
the latest Confirmation. The Company and the Client are bound by the lowest price when multiple
confirmations are issued on the same loan. Changes in critical information (including product/program
changes) will be priced off the original lock day, excluding Jumbo product changes.


Icon Lending Guide - Section 800                                                           Revised 4/11/11
Invalid Locks
Once a loan is locked, any changes made to the loan that may affect pricing (e.g. LTV, property address,
debt ratio, etc.) will invalidate the lock. Please email the Lock Desk to validate the lock to reflect the new
terms of the loan.

Lock Cancellation Policy

A full submission package must be received within 10 calendar days of the lock date on 30 day locks, 15
days on 45 day locks and 20 days on 60 day locks. For any locked loan in which a full submission
package is not received within the respective time period following the lock date, the lock will be
automatically cancelled. The loan is eligible to be re-locked at worse case pricing within 30 days of the
lock cancellation date. Re-lock fees apply. Subsequent to 30 days after the lock cancellation date, the
loan may be re-locked at market with no additional cost. Rate-lock cancellations will be accepted from the
Client within the same day the rate is locked. Cancellation of a rate-lock must be submitted before a new
rate sheet has been issued. Any requests to cancel a rate lock that occurs after a new rate sheet has
been issued will be subject to worse case pricing.

For any locked loan that receives a declined decision in underwriting, the lock will automatically be
cancelled. If the decision is reversed, the loan will need to be locked at current market, and is not subject
to the Re-Lock Policy.

Worse Case Pricing
Worse case pricing is calculated by comparing the original base price to the current market base price,
applying the lower price of the two.

Duplicate Lock/Submission
The original lock will be honored if there is a duplicate lock. If the original lock is expired or cancelled, and
the duplicate lock is submitted within 30 days of the original lock expiration date, the loan will be subject
to the re-lock policy.

Max Rebates
Max net YSP for Conforming/Jumbo products is <4.000>.
Max net YSP for Jumbo is <= $1,000,000 = <1.00>, $1,000,000-$1,500,000 = <.75>, >$1,500,000 =
<.50>.

Rate Lock Extensions
The Company will allow a max of 15 days in extensions, with the applicable cost structure applied. All
extension requests must be made before 3pm PST on the lock expiration date. If the loan does not close
prior to the revised expiration date, the loan is subject to the re-lock policy detailed below. Extension
periods are calculated starting from the current lock expiration date.

Locks Expiring on Weekends / Holiday
All Lock Periods are based on calendar days. If the expiration date falls on a weekend or holiday, the
lock will be extended to the next business day at no additional cost.




Icon Lending Guide - Section 800                                                                Revised 4/11/11
Re-lock Policy
A re-lock is a request to lock a loan for a second time. A loan that does not fund by its Lock Expiration
Date and is not extended may be subject to a re-Lock Fee (Please note: Additional restrictions apply to
Jumbo products and may not be eligible under these terms or subject to additional fees, please see the
Lock Desk for further details.):
         Loan must be approved and all PTD conditions have been signed off in order to re-lock.
         The re-lock will be good for a 15 day lock period only. If the re-lock expires, it must be re-locked
         and will be subject to worst case pricing. Max 2 re-locks per loan.
         If a loan is re-locked within 30 days of the original lock expiration or lock cancellation date, the
         loan may be re-locked at worse case pricing, at the term of the original lock. For example (a)
         Current Market Pricing or (b) initial Lock Pricing plus 0.25% re-lock fee.
              o    EXAMPLE: Loan was locked for 30 days at 5.0% paying 101.25.
                       Current market is worse, 5.0% is paying 101.00 (30-day). Loan is re-locked at
                        current market for 15 days 5.0% paying 101.00.
                       Current market is better. Loan is re-locked at original terms less 0.25 fee, 5.0%
                        @ 101.00 for 15 days.
         If the loan is re-locked more than 30 days after the original lock expiration or lock cancellation
         date, it may be re-locked at current market.

Renegotiation/Float down Policy
When the market improves significantly, The Company will allow the broker a one-time renegotiation
under the following policy guidelines (Please note: Additional restrictions apply to Jumbo products and
may not be eligible under these terms or subject to additional fees, please see the Lock Desk for further
details.):
         Renegotiations must lower the rate to the borrower.
         Negotiated all in price can not be better than original all in lock price by more than 25bps.
         Any Client improvement to income is limited at .250% over original price. YSP cannot improve by
         more than .250 over current YSP.
         The Company will honor a ONE-TIME renegotiation at current market less 0.50 for 15 days.
         Previous cost structure of the loan applies (e.g. original lock for 30 days priced at 30 days),
         including any extension fees.
         Renegotiated terms are not eligible for extensions. If the lock expires or the loan does not fund
         within 15 days the loan will be re-locked at worse case pricing of the original lock price and
         current market.
         Loans with outstanding prior-to-docs conditions are not eligible for a renegotiation.
         Loans with docs out will be charged a re-draw fee.
         ARMS are not eligible for renegotiation.




Icon Lending Guide - Section 800                                                               Revised 4/11/11
Broker Compensation Selection Changes
Changes to broker compensation selection type (lender paid vs borrower paid) may change at any time
prior to locking. Changes after the loan has been locked will only be allowed after an original, signed
letter from the borrower has been received requesting the change and detailing the reason for the
change.

Lock Action Cost Structure

       Action                      Cost
       5 day extension             .15
       10 day extension            .30
       15 day extension            .45
       Re-Lock                     .25
       Renegotiation               .50




Icon Lending Guide - Section 800                                                         Revised 4/11/11
                                   Section 900 – Closing

                                      Table of Contents

900 - Documentation Review
900.01 - Alterations to Documents
900.02 - Appraisal Update
900.03 - HUD-I Settlement Statement
900.04 – Document Preparation
900.05 – Loan Document Notarization
900.06 – Power of Attorney
900.07 – Age of Documents

910 - Insurance
910.01 - Flood Insurance
910.02 - Hazard Insurance
910.02.1 Policy Requirements
910.02.2 Coverage Amount
910.02.3 Maximum Deductible
910.03 - Mortgage Insurance
910.04 - Rent Loss Insurance

920 - Title
920.01 - Title Policy/Commitment
920.02 - Closing Protection Letter

930 - Final Docs

940 - Escrows
940.01 - Escrow Waiver
940.02 - Escrow Account Reserves
940.03 - Escrows Reflected on HUD-I

950 – Compliance




Icon Lending Guide - Section 900                           Revised 3/7/11
900 - Documentation Review

Icon will perform a review of the executed closing documents, including but not limited to the
note, deed, all applicable riders, initial disclosures, final disclosures, Lenders Instructions,
signatures, etc.

900.01 - Alterations to Closing Documents

Settlement agents are not to alter or add additional language to documents generated by Icon
without Icon’s prior consent.

Changes/strikeovers must be initialed by the borrower(s). Name corrections only need to be
initialed by the affected signer.

900.02 - Appraisal Update

If the appraisal was completed more than 90 days prior to the date of closing, there must be an
Appraisal Update/Completion Report. A new appraisal is required if the original appraisal is 120
calendar days old from the time of funding.

900.03 - HUD-1 Settlement Statement

A copy of the completed Final HUD-1 is required on all transactions. For purchase transactions,
Icon requires the Final HUD-I executed by both buyer and seller. Any changes to the Final HUD-
1 must be approved by Icon. For purchase transactions, all payoffs greater than $5000
appearing on the seller’s side must be documented if there is no corresponding lien on title.

Each Final HUD-1 will have a “tape” run to determine the total amount of Pre-paid Finance
Charges (PFC) listed verses the PFC’s indicated on the Itemization of Amount Finance. Icon will
not accept any tolerance for under disclosed fees. Icon will allow an over disclosure of $200.00
for all loans over $160,000 and adhere strictly to the one-eighth (0.125%) of one (1.0%) percent
tolerance for loans below this amount.

Purchase transactions will have the seller’s portion reviewed to insure that the cumulative fees
paid by the seller are limited to 8% of the sales price. The cumulative fees are composed of the
real estate sales commission, plus any non-lien related disbursements such as marketing
expenses, finder fees, referral fees, auction fees, consulting fees or assignment of sale fees.

900.04 - Document Preparation

The Itemization of Amount Financed Document will indicate all Settlement/Closing Agent Fees as
individual entries and not allow these fees to be lumped together. The total Pre-paid Finance
Charge (PFC) has an over disclosure tolerance of one-eighth (0.125%) of one (1.0%) percent.
Icon will use a $200.00 pad on all loan amounts over $160,000 and adhere strictly to the 0.125%
tolerance for loans at or below this amount.

The under disclosure of fees at the time of doc preparation will not be allowed. Broker and Title
fees must be confirmed and acknowledged by the submitting party prior to documents being
drawn. After docs have been prepared, any fee changes will require the compliance test to be re-
run prior to authorizing wire/disbursement. If the loan fails compliance, the fees must be lowered
to insure the loan is compliant. In addition, fee changes after docs have been prepared will result




Icon Lending Guide - Section 900                                                         Revised 3/7/11
in a partial redraw. For refinance transactions, the rescission will be re-opened and the funding
will be postponed until the rescission period has ended.

900.05 – Loan Document Notarization

Icon requires that the loan documents be notarized by a disinterested third party. The documents
cannot be notarized by anyone in the broker’s office or by the processor of record.

900.06 – Power of Attorney

Icon allows a Specific Power of Attorney (POA) appointed by the borrower for purchase and
rate/term refinance transactions. A POA is ineligible on cash-out refinance transactions, loans
closing in the name of a trust, and on investment property transactions.

A signed letter of explanation is required from the borrower as to why the borrower cannot sign
the final documents and is appointing a POA for the transaction

Requirements are as follows:
         The POA cannot be a party to the transaction
         The POA is preferably a family member of the borrower.
         The POS must be specific to the transaction and indicate the property address.
         The POA must be signed and dated on or before the date of the Note.

The POA must be approved by Icon Management prior to docs. The original 1003, original initial
disclosures, and purchase contract (if applicable) signed by the borrower is required.

900.07 – Age of Documents

Icon’s requirements for the age of credit and appraisal documents at time of funding are as
follows.

Document                                           Age at Funding (Disbursement Date)
Asset documentation                                ≤ 60 days
Closing Protection Letter (CPL)                    ≤ 60 days
Credit report                                      ≤ 60 days
Payroll check stubs                                Most recent 30 day period
Title commitment                                   ≤ 120 days
Verbal Verification of Employment (VVOE)           ≤ 5 days
Verification of Mortgage/Rents (VOM/VOR)           ≤ 60 days
Appraisal                                          ≤ 120 days


910 - Insurance

910.01 - Flood Insurance

For properties located in flood zones “A” or “V” as determined by Icon’s Flood Determination
report, flood insurance is required. The one year policy must be in effect prior to close. A copy of
the paid receipt is required.




Icon Lending Guide - Section 900                                                       Revised 3/7/11
If flood insurance is required, but not available because the community does not participate in the
National Flood Insurance Program (NFIP), the loan is ineligible.

For 1-4 unit properties, the flood insurance limits must equal the greater of:

         If the aggregate amount of all loans secured by the property is greater than the full
         replacement cost, then the maximum amount of coverage is $250,000. This is the
         maximum amount of insurance currently sold under National Flood Insurance Program
         (NFIP).
         If the aggregate amount of all loans secured by the property is less than 100% of the
         replacement cost, then use the greater of 80% of the full replacement cost or the
         aggregate amount of all loans secured by the property.

Maximum deductible for 1-4 unit properties:

         The deductible may not exceed the maximum amount allowed under the NFIP, currently
         $5,000.

PUD Projects and Units

         The amount of required flood insurance coverage for a PUD project must be at least
         equal to the lesser of 100% of the insurable value of the facilities or the maximum
         coverage available under the applicable NFIP and must cover any common buildings
         and/or property located in an SFHA.
         The deductible may not exceed the maximum amount under the NFIP, which is $25,000.
         The master insurance policy must include a provision that the premiums are to be paid as
         a common expense.
         Individual PUD units are subject to the same flood insurance requirements as 1-4 unit
         properties.

Condominium Projects

         If a condominium project or any part of the improvements is located in a Special Flood
         Hazard Area, the association must have a master or blanket flood insurance policy in
         place and the policy must cover all common buildings, elements and/or property.
         The amount of coverage must be 100% of the insurable value of each insured building,
         including all common elements.
         The maximum deductible for condominium projects is $25,000. The master policy must
         include a provision that the premiums are to be paid as a common expense.
         If the Condo Project does not have a master policy the condo is ineligible.

High Rise Condominium Projects (5+ units)

The required coverage is subject to the following:
         The building coverage should equal 100% of the insurable value of the common
         elements and property (including machinery and equipment that are part of the building),
         The contents coverage should equal 100% of the insurable value of all contents
         (including machinery and equipment that are not part of the building) that are owned in
         common by the HOA members, and



Icon Lending Guide - Section 900                                                       Revised 3/7/11
         The coverage for each unit should be the lesser of $250,000 or the amount of its
         replacement cost. If this required coverage exceeds the maximum coverage under NFIP,
         coverage equal to the maximum amount available will be acceptable.

910.02 - Hazard Insurance

All loans required evidence of insurance. For loans with escrows, evidence of insurance is
required prior to preparing documents. Applications for insurance are not acceptable
documentation.

The insurance carrier must have an S & P rating of at least BBB+ or a Best rating of B++.

The insurance must protect against loss or damage from fire and other hazards covered by the
standard extended coverage endorsement. The policy must provide coverage equal to or
broader than the coverage extended under an Insurance Services Office homeowner’s form HO-3
for primary residences and DP-3 for second homes or investment properties.

The coverage should allow for claims to be settled on a replacement cost basis. Policies that limit
or exclude coverage that are normally included under extended coverage endorsements (i.e.
windstorm, hurricane, hail damages, etc) are not acceptable unless the borrower is able to obtain
a separate policy or endorsement from another commercial insurer that provides adequate
coverage for the limited or excluded peril.


910.02.1 - Policy Requirements

In addition to the name, address, phone number of the insurance carrier and the agent’s name,
the following is required on the policy:

         The insurance policy must list the borrower(s) as the insured. If the insurance policy is a
         master policy of a condominium project, the association must be listed as the insured
         with the borrower also listed on the policy.
         The property address must match that of the appraisal and title, including the unit
         number, if applicable.
         Icon’s loan number and mortgagee clause must be reflected on the policy.

                                           Carnegie Mortgage, LLC
                                   Its Successors and/or Assigns (ISAOA)
                                         2301 Campus Drive, Ste 100
                                              Irvine, CA 92612

         The premium amount and balance due must reflect on the policy.
         The deductible cannot exceed 5% of the dwelling coverage.
         The effective and expiration date. For purchase transactions, the expiration date should
         be one year from the effective date. On refinance transactions, the policy must have a
         minimum of 90 days from the date of funding remaining. All policies with an outstanding
         balance must be paid in full and will require a copy of the paid receipt.

All policies renewed or purchased for the subject transaction require a copy of the paid receipt.




Icon Lending Guide - Section 900                                                        Revised 3/7/11
910.02.2 - Coverage Amount

The minimum amount of required coverage must be equal to the loan amount, or the replacement
value of the subject property, as established by the insurance provider, whichever is less.

For condominium projects, if the master policy does not provide coverage of the interior of the
unit, the borrower is required to obtain “walls in” coverage, also known as HO-6 policy. The HO-6
policy must provide a minimum coverage of 20% of the unit’s appraised value with a 5%
deductible.

910.02.3 - Maximum Deductible

The maximum deductible for hazard insurance on all property types may not exceed 5% of the
dwelling coverage. The deductible requirement applies to all types of loss (theft, fire, wind, etc.).

Refer to Section 910.01 Flood Insurance for the maximum deductibles on flood insurance

910.03 - Mortgage Insurance

Refer to Section 700 – Mortgage Insurance of the Lending Guide.


910.04 - Rent Loss Insurance

Rent loss insurance covers the borrower for rental income losses when the property is not
rentable due to a direct physical loss (i.e. fire).

Rent loss insurance is required as follows:

         2-4 unit primary properties if rental income is used to qualify the borrower.
         1-4 investment properties if rental income is used to qualify the borrower.
The coverage must be a minimum of six months gross monthly rents and must be in effect as
long as the mortgage is outstanding.

920 - Title

920.01 - Title Policy/Commitment

A full title policy is required on all loans. The policy must be written by a title insurer who has an
acceptable rating from at least one of the national independent rating agencies. If the title insurer
does not have an acceptable rating, the insurer must be fully covered by reinsurance with a
company that does have an acceptable rating.

The title commitment is valid for 90 days prior to docs. Commitments older than 90 days require
a supplement or gap letter verifying no changes. Commitments older than 120 days require a
new policy. Title commitments for construction-to-permanent transactions are valid for 180 days.

The policy is required to contain the following:

         The amount of coverage must be equal to a minimum of the original principal amount of
         the mortgage.



Icon Lending Guide - Section 900                                                         Revised 3/7/11
         Proposed Insured to reflect Carnegie Mortgage, LLC.
         Title must be held in fee simple or leasehold.
         Schedule A stating the legal description.
         Schedule B stating the easements, restrictions, and exceptions to the coverage. Any
         encroachments or restriction violations must have insuring language.
         All applicable endorsements including an environmental protection lien endorsement,
         ALTA Endorsement 8.1 or ALTA 8.
         The appropriate survey endorsement. Survey exceptions are not permitted. Areas that
         do not require a survey will require an ALTA 9 Endorsement or CLTA Endorsement 116.
         If the fee sheet or the HUD-1 reflect a charge for a survey, a copy of the survey must be
         included in the loan file.
         Real Estate taxes must be current. Future taxes must reflect as not yet due and payable.
         A 24 months chain of title.
         Any subordinate liens must be included in the policy and state they are subordinate to
         Icon’s first mortgage lien.
         1992 ALTA loan title insurance policy with the creditor’s rights exclusions.

920.02- Closing Protection Letter

Each loan requires a Closing Protection Letter issued by the insuring title company. The Closing
Protection Letter must reference the borrower’s name, address, and loan number; contain Icon’s
mortgagee clause, the location of the closing, the closing agent’s name, phone number, fax
number, and e-mail address.

The Closing Protection Letter cannot be more than 90 days old at the time of drawing documents.

Icon’s mortgagee clause:
                                       Carnegie Mortgage, LLC
                                   Its Successors and/or Assigns
                                     2301 Campus Dr, Ste. 100
                                          Irvine, CA 92612
930 - Final Docs
All final documents/trailing documents are to be sent to:
                                  Icon Residential Lenders, LLC
                                  Attn: Post Closing Department
                                  2301 Campus Drive, Ste #100
                                         Irvine, CA 92612

940 - Escrows

Icon requires each mortgage loan to have an established escrow account for the payment of
taxes, hazard, flood, private mortgage insurance and special assessments if applicable.




Icon Lending Guide - Section 900                                                        Revised 3/7/11
940.01 - Escrow Waiver

Escrow waivers are available for loans with the following parameters:

         The loan must be a conventional loan.
         The LTV must be ≤ 80% unless state law dictates escrows are not required for
         mortgages with an LTV > 80%. CA does not require escrows unless the LTV is ≥ 90%.
         The borrower must sign the Escrow Waiver.
         A pricing adjustment will apply to waive the escrows.
         There can be no mortgage payments greater than 30 days past due in the previous 12
         months on the current mortgage.
         No portion of the loan proceeds may be used to pay delinquent property taxes when
         escrows are waived.
         If the loan requires mortgage insurance, the MI will be escrowed and cannot be waived.
         If the subject property is located in a Special Flood Hazard Area, the flood insurance
         premium must be escrowed if there are other impounds (e.g. taxes, hazard insurance,
         etc.) If the loan does not have other impounds, and meets the above requirements, the
         flood insurance is not required to be impounded.

NOTE: Escrow waivers are not allowed on FHA loans.


940.02 – Escrow Reserve Account/Cushion

A two month cushion is required for the escrow account with the exception of the following states:

         Nevada – no cushion allowed
         North Dakota – no cushion allowed
         Vermont – 1 month cushion allowed


940.03 - Escrows on the HUD-I

The HUD-I must reflect the actual amount collected from the borrowers that will be deposited into
the escrow account. The figures listed on the HUD-I should match the figures listed on the Initial
Escrow Account Disclosure.

950 - Compliance

Refer to Section 1000 – Compliance of the Lending Guide for specifics.




Icon Lending Guide - Section 900                                                      Revised 3/7/11
Section 1000 – Compliance

Icon Residential Lenders complies with federal, state, and local regulations on all loan files.
Clients are expected to comply with all state and federal laws and regulations that apply to the
mortgage industry. This includes knowledge of customary fees charged for services rendered,
knowledge of the state prohibitive fees, and knowledge of the required state and federal
disclosures.

Upon loan submission, Icon will re-disclose to the borrower based on the fees presented in the
Good Faith Estimate and the Mortgage Broker Fee Agreement (in some states this is referred to
as Mortgage Loan Origination Agreement). Only usual and customary fees are permitted.

Icon does not permit a broker to charge a discount fee. Any discount fee is payable to Icon and
not the broker.

Fees disclosed on the final loan documents will be based on the initial Good Faith Estimate and
Mortgage Broker Disclosure Agreement provided to Icon upon loan submission. All disclosures
must be executed and dated by the borrower within compliance.

1000.01 - Mortgage Disclosure Improvement Act (MDIA)

1000.01.1 - Early Disclosures

Good Faith Estimate (GFE) disclosures must be mailed or given to the borrower no later than 3
business days after receipt of a written application for any consumer-purpose mortgage
transaction subject to the Real Estate Settlement Procedures Act (RESPA) that is secured by the
consumer’s dwelling (including a consumer’s second or vacation home.)

The early disclosures must contain the following statement: “You are not required to complete
this agreement merely because you have received these disclosures or signed a loan
application.” This verbiage is incorporated into the Truth-In-Lending (TIL) document.

1000.01.2 - Restrictions on Fees

MDIA imposes restrictions on the collection of fees associated with taking an application for a
covered loan. These restrictions are:

Neither a creditor (lender) nor any other person may impose a fee on a consumer before the
consumer has received the early disclosures, other than a bona fide, reasonable fee for obtaining
the consumer’s credit history.

If the disclosures are mailed to the consumer, the consumer is considered to have received the
disclosures 3 business days after they are mailed. Receipt of the early disclosures can be
confirmed by Icon by having the borrower sign and fax or email a copy of the early Truth-In-
Lending (TIL) statement. This process will only be accepted if the initial loan application (1003)
has been signed by the borrower – there will be no exceptions to this requirement.

Fees incurred prior to the loan application being submitted to Icon will be acceptable as long as
the submitting lender has canceled or denied the borrower’s application. Assigned appraisals are
ineligible.


Icon Lending Guide Section 1000                                                       Revised 11/19/10
In order to maintain compliance with the MDIA Icon will allow Brokers to order an appraisal report
prior to the borrower’s receipt of the initial Early Disclosures as follows:

         The appraisal must be ordered through one of Icon’s approved Appraisal Management
         Companies (AMC) or through FHA Connection, and
         The Broker must use their own funds to pay for the appraisal, and
         A certification, signed by the Broker or person authorized to contractually bind the
         brokerage, on the Broker’s company letterhead must be provided. The certification must
         read as follows:

         The appraisal ordered for the property located at (insert subject property address)
         is being ordered prior to the borrower’s receipt of the initial Good Faith Estimate
         and TIL Disclosure provided by Carnegie Mortgage LLC. (Insert name of
         brokerage) attests that the borrower’s credit card is not being used to order this
         appraisal nor have funds to pay for this appraisal been collected from the
         borrower.

1000.01.3 - Waiting Periods

Early disclosures must be delivered or placed in the mail not later than the seventh business day
prior to consummation. This allows for a three (3) day mailing period and a three (3) day review
by the borrower. Icon will not waive this 7 business day requirement – no exceptions. Note: A
“business day” means all calendar days except Sunday and legal public holidays.

                                             th
Up front fees can not be collected until the 4 business day following the mailing of the early
disclosures

The appraisal report is required to be delivered to the borrower 3 business days prior to
consummation. If mailed, the waiting period is 6 business days – 3 for mailing and 3 for review.

1000.01.4 - Corrected Disclosures

If the annual percentage rate (APR) at the time of consummation varies from the APR disclosed
                                         th
in the early disclosures by more than 1/8 (.125%) of one (1.00%) percentage point in a regular
                             th
transaction, or more than 1/4 (.25%) of one (1.00%) percentage point in an irregular transaction,
then corrected early disclosures must be re-issued.

NOTE: Corrected disclosures must contain the statement: “You are not required to complete this
      agreement merely because you have received these disclosures or signed a loan
      application.”

Re-issuing of the early disclosures will require an additional three (3) business day mailing period
and an additional three (3) business day review period prior to consummation,




Icon Lending Guide Section 1000                                                       Revised 11/19/10
1000.02 - Compliance Test

Prior to releasing closing documents, Icon will run a compliance test on each loan. If the loan
fails compliance, the broker will be notified and the fees will need to be reduced.

Prior to funding, Icon will review the HUD-I to ensure no additional fees have been added. If
there are additional fees and/or increased fees that Icon was unaware of, the fees will be required
to be removed and not charged. Any increase or fee addition that affects the APR requires a
partial redraw with a charge to the borrower.




Icon Lending Guide Section 1000                                                      Revised 11/19/10
                              Section 1100 – Quality Control

                                    Table of Contents

1100 - General
1101 - Quality Control Reviews
1102 – Discretionary Audits




Icon Lending Guide - Section 1100                              Revised 12/21/09
Section 1100 - Quality Control

1100 - General
Icon Residential Lenders takes a proactive approach to quality control to ensure the integrity of
the loan files.

Icon has a zero tolerance for loan fraud. Icon is continually re-evaluating its procedures to
identify fraud as well as implementing new procedures to prevent fraud as it changes and evolves
within the industry. Icon continues to monitor mortgage fraud within the industry through
mortgagefraud.com, Interthinx, fraud training from Icon’s selected partners, and web research.

Examples of loan fraud are:

     •    Submission or knowledge of inaccurate information including false statements on loan
          applications
     •    Falsification of credit, employment, deposit, and asset documentation.
     •    Incorrect statements regarding current occupancy or intent to maintain minimum
          continuing occupancy as stated in the security instrument.
     •    Knowledge and/or willful omission of pertinent information that is not disclosed.
     •    Inaccurate information by the appraiser, inappropriate omission of information, alteration
          of information on the original appraisal report by a third party.
     •    Simultaneous or consecutive processing of a multiple owner-occupied loans from one
          applicant and supplying different information on each application.
     •    Identity theft
     •    Straw borrowers

1101 – Quality Control Reviews

Icon’s quality control reviews are performed pre-funding as well as post closing.

The pre-funding review is completed at the time of underwriting. Icon performs a thorough quality
control audit on every loan. The internal audit includes but is not limited to re-verification of the
borrower’s identity, income, assets, the validity of the employer(s) and the banking institution(s),
validation of the appraisal and appraised value, OFAC and exclusionary list searches for all
parties interested in the transaction, searches for undisclosed real estate, and searches for non-
arms length transactions.

Icon utilizes several tools to perform the QC Audit on each loan.

    •    CoreLogic is utilized to verify the borrower’s identity (Identity Pro) as well as provide the
         underwriter with a neighborhood analysis of the subject property (History Pro).
    •    MERS is utilized to verify the borrower does not have any undisclosed properties.
    •    Internet research is performed to verify the validity of employers and licensing.
    •    4506-Ts are processed to verify income documentation.
    •    Depository institutions are contacted to re-verify assets.



Icon Lending Guide - Section 1100                                                        Revised 12/21/09
Icon does not tolerate mortgage fraud. Discrepancies found in loan files can result in the file
being declined and the broker terminated from Icon.

The post-closing review, investigation, analysis and reporting is performed monthly by an outside
audit firm and our company’s internal management. This process is supervised by senior
management and remains totally independent of loan processing and underwriting functions.

A random selection will be made monthly of no less than 15% of all loans closed by retail
branches, third party originators and correspondents. Regardless of the percentage of loans
being reviewed, selections of FHA loans will be structured to comply with all requirements stated
in FHA 4060.1 Chapter 7 section 7-6 and will include all FHA loan programs.

Rejected loans will have a random selection of no less than 10% of all denied loans performed by
an outside audit firm. The reasons for rejection will be reviewed, validated and ensure the
requirements of the Equal Credit Opportunity Act (ECOA) have been met.

1102 – Discretionary Audits

Discretionary selections will be used to assure that the following areas are given additional
review:

    •    Loans that have exhibited Early Payment Default (EPD)

    •    FHA Loans – (Third party originations will be reviewed at 100%)

    •    Loans closed on properties located in the states of Florida and Nevada – 25% selection

    •    Newly approved Third Party Originators will have 100% of the first 5 loans reviewed




Icon Lending Guide - Section 1100                                                     Revised 12/21/09
Section 1200 – Forms/Exhibits

Forms

1.    4506-T
2.    Broker Application – contact your Icon Account Executive
3.    Broker Branch Addition
4.    Broker Owned Escrow Application
5.    Broker Recertification
6.    Condo/PUD Warranty
7.    Doc Request/Fee Sheet
8.    Icon IQ User Request
9.    Lock Request
10.   National Benefit to Borrower Checklist
11.   Pre-Funding QC Certification
12.   Self-employed Income Analysis
13.   State required Worksheets
      •   Connecticut Nonprime Home Loan Test
      •   Massachusetts Net Tangible Benefit & Borrower’s Interest Worksheet
      •   Nevada Worksheet
      •   North Carolina Rate Spread Loan Worksheet
    • Virginia Anti-Flipping Worksheet
14. Submission Form with stacking order
15. Verbal Verification of Employment

Exhibits

1. Fixed Rate Note
2. ARM Note




Icon Lending Guide - Section 1200                                              Revised 12/22/09
                                          BRANCH OFFICE ADDITION


                                                                             Icon Account Executive: _____________________________

                                                                                      Icon Broker ID:_____________________________



CORPORATE LOCATION INFORMATION


Corporate Location Company Name: ______________________________________________________ Tax ID: __________________________


Corporate Location Address: _______________________________________City: ____________________________State: _______Zip: _______




BRANCH LOCATION INFORMATION


Branch Location Name/ DBA: _____________________________________________________________________________________________


Branch Location Address: _________________________________________City: ___________________________State: ________Zip: _______


Branch Manager Name: ________________________________________________e-mail: ____________________________________________


  Telephone No.: (          ) __________ –– ___________ Ext: __________          Fax No.: (        ) __________ –– ___________


FHA Originator Branch ID: ____________________________
*** Required prior to submitting FHA loans***




This completed form and the supporting documents listed below are required prior to the funding of any loans submitted by a branch
location.


           Mortgage Broker, Mortgage Lender Branch License or Exemption Letter –– If exempt from licensing, please provide an
           explanation:
           __________________________________________________________________________________________________________

           Branch Manager’s Professional Resume



Icon Branch Add
Rev. 1/28/2010
                          BROKER OWNED ESCROW APPLICATION
Broker Company Information:

Broker ID: ___________________________________

Company Name: _____________________________________________________________________________________________

Address: ____________________________________________________________________________________________________

City: ________________________________________________ State:____________________ Zip: _________________________


Escrow Company/ Division Information:

Business
Name:____________________________________________________________________________________________________
*Name to which settlement fees will be marked payable on the HUD-1.

Escrow Manager/ Officer Information:

Name: ___________________________________________________ Phone: _______________________________

e-mail:___________________________________________________


Escrow Services are performed by (please select one):

     A D.O.C Licensed Escrow Company separate but affiliated           A DRE licensed broker company with the separate division
with the brokerage.                                                within the company.

Please submit the following documentation with this application:   Please submit the following documentation with this application:

        •    Most Recent Audited Financials                            •   E & O Insurance and Fidelity Bond
        •    E.A.F.C. Member Letter and Bond Declaration Page          •   Copy of D.R.E. license
        •    Escrow company’s Articles of Incorporation or
             Organization
        •    Copy of D.O.C. license

    Virtual Escrow: Please submit the following
        • Copy of the agreement between the Title company and the Broker.


Broker of Record
or Officer Name: _______________________________ Date: _________________________________________________

Signature: __________________________________________________

Please send this completed form and supporting documentation to Client Administration via fax (949) 315-3805 or
Brokerapps@iconresidential.com for processing and approval.


Icon Broker Owned Escrow Company Application
Rev. 4/1/2009
                               BROKER RECERTIFICATION APPLICATION
   Fax completed form to Client Administration (949) 315-3805 or send to brokerapps@iconresidential.com


Company Name____________________________________________________________________________Tax ID Number ______________________

Address _________________________________________________City_______________________________________State________Zip___________

Phone # ____________________________________________________ Fax # ____________________________________________________________

  Corporate Location             Branch Location

Form of Organization:                      Corporation          Sole Owner                    Limited Liability Company
(check one)                                Bank Charter         Partnership                   Limited Liability Partnership



List owners showing ownership percentage, position/ title:
Name__________________________________________________Position/ Title_________________________Ownership % ______________________

Name__________________________________________________Position/ Title_________________________Ownership % ______________________

Name__________________________________________________Position/ Title_________________________Ownership % ______________________

Broker of
Record______________________________________________________________________________________________________________


Please provide contact information for the following contact types:

Primary Contact: _______________________________________________e-mail Address: ________________________________________________
Telephone No._________________________________________________________                     Fax No.______________________________________________
Guideline/Product Update:_______________________________________e-mail Address: _________________________________________________
Telephone No._________________________________________________________                     Fax No.______________________________________________
Legal Contact: _________________________________________________e-mail Address: _________________________________________________
Telephone No._________________________________________________________                     Fax No.______________________________________________


I hereby certify the information contained in this application is true and correct in all respects. I hereby authorize Icon Residential Lenders LLC (“Icon”),
First Line Data and their affiliates to obtain verification of the above information from any source named herein, from any credit reporting agency, and
from any other source appropriate in evaluating my fitness (and that of the business identified herein) as a Wholesale Mortgage Broker and as part of any
subsequent review required by Icon as part of our continuing acceptability as a Wholesale Mortgage Broker.


Icon and its affiliates agree that any financial information provided by the Applicant will be treated as confidential and will not be released to any third
party. Unless otherwise instructed by Applicant, Applicant agrees by signing below to allow Icon to use the address, phone numbers, fax numbers and the
e-mail address as provided herein to communicate information to the Applicant related to Icon’s products and services. This will include but not be limited
to marketing materials and rate sheets.


__________________________________________________                   _________________________________________ Date: _______________________
Principal Officer Signature                                        Printed Name

__________________________________________________                 _________________________________________              Date: _______________________
Broker of Record’s Signature (if not principal)                    Printed Name


  Icon Recertification Application
  Rev.4/1/2009
                                 IQ ADMINISTRATOR SET UP FORM

LOCATION
Please indicate below the location where access to the system is required:

 Broker ID__________________________________________________

 Company Name: ____________________________________________________________________________________________

 Address: __________________________________________________________________________________________________

 City: ___________________________________________________________ State: ________________Zip: _________________

         Phone No: ( ________) _______- ____________                    Fax No: ( ________) _______- ____________


ADMINISTRATOR

  Icon requests that you establish at least one Administrator within your company who will be responsible for assigning individual
  employees and/or agents (”Users”) their User ID, password and access options to the IQ system.

  This Administrator will be capable of establishing User access to the branch indicated above only.

         Administrator Name                                    e-mail Address

  _________________________________________________            _____________________________________________________

  _________________________________________________            _____________________________________________________


AUTHORIZATION

  I herewith acknowledge that I have been authorized by the above-named company (“Company”) to act on its behalf and that said
  authorization has been provided to Icon. Maintenance and dissemination of the IQ User IDs and passwords will be in accordance
  with the Company’s own internal policies and procedures. The Company agrees to hold Icon harmless from any unauthorized use
  of the IQ’s User ID and passwords.


  Date: ______________________________       Authorized Signature: ___________________________________________________


  Printed Name/ Title: ___________________________________________________________________________________________




         If this form is completed post broker approval, please send it via fax to Icon’s IQ Helpdesk at (949) 315-3879.


***Please contact your Account Representative or the IQ Helpdesk at (888) 706-4483 IconIQ@IconResidential.com technical
support.***




Icon IQ User Access Form
Rev 4/1/2009
                           National Benefit to Borrower Checklist

Applicant Name:                                                   Loan Number:

The loan must meet at least one of the following borrower benefits (Refinance/Title Transaction; Financial
Improvement, Product Change, or Loan Proceeds. Season Benefit applies to loans in MA & RI).

Refinance/Title Transactions
    Refinance Title Benefit 1 – Remove/Buy-out Co-Borrower
        Removal or buyout of co-borrower from title with court order or evidence that the co-borrower no longer
        resides at the subject property.

Financial Improvement
    Financial Improvement Benefit 1 – Mortgage Payment Reduction
        Refinance that lowers the borrower’s monthly mortgage payment, which includes principal and interest and
        mortgage insurance (MI) by at least $100 and recoups closing costs as disclosed on the GFE via the
        monthly mortgage payment savings within 36 months. If borrower is refinancing an interest only, negative
        amortization or an Adjustable Rate Mortgage loan and the payment rest will occur within 90 days of closing,
        the payment after rest may be used to satisfy the benefit.

         Note: Refinance of a fully amortizing loan into an interest only loan is only allowed if using the fully indexed
         fully amortized payment.
    Financial Improvement Benefit 2 – Total Monthly Payment Reduction
        Lowering the borrower’s total monthly payments for all debts, including all mortgages, by at least $100 and
        recoups closing costs as disclosed on the GFE via the monthly mortgage payment savings within 36
        months. If borrower is refinancing an interest only, negative amortization or an Adjustable Rate Mortgage
        loan and the payment reset will occur within 90 days of closing, the payment after reset may be used to
        satisfy the benefit.

         Note: Refinance of a fully amortizing loan into an interest only loan is only allowed if using the fully indexed
         fully amortized payment.
     Financial Improvement Benefit 3 – Reduced Rate
        Reduction in current interest rate paid on the largest outstanding mortgage debt being refinanced by .25%
        (25 bps) or more, regardless of the transaction type (Fixed to Fixed, Fixed to ARM, ARM to ARM, ARM to
        Fixed) and if an ARM, the first adjustment period must be greater than 24 months and recoups closing costs
        as disclosed on the GFE vial the monthly mortgage payment savings within 36 months. If the borrower is
        refinancing an interest only, negative amortization or an Adjustable Rate Mortgage loan and the rate reset
        will occur within 90 days of closing, the rate after reset may be used to satisfy the benefit.

     Financial Improvement Benefit 4 – Term Reduction
        Total payments on the new loan must be less than total payments remaining on the old loan. Difference
        must exceed closing costs.

         Note: Prepaids are not considered closing costs.
    Financial Improvement Benefit 5 – Lien Consolidation (must meet BOTH A & B)
    Refinance to combine subordinate liens(s) into one mortgage. Must meet both A and B.
        A) Subordinate lien(s) value must meet or exceed total loan closing costs as disclosed on the GFE by 3x
            OR $10,000 and
        B) Subordinate lien(s) must have an adjustable rate OR a fixed rate greater than the rate on the new loan.

    Note: Prepaids are not considered closing costs.




                                                   Page 1 of 2                                     Revised 12-30-10
    Financial Improvement Benefit 6 – No Closing Costs (must meet ALL A & B & C)
        A) New loan has NO closing costs (i.e. borrower pays no non-recurring closing costs) and
        B) New loan has at least a 5 year fixed term and
        C) Rate is reduced by a minimum of .125%.
    Financial Improvement Benefit 7 – Cash to Pocket
    Borrower received cash in hand.

Product Change
     Product Change Benefit 1 – ARM to Fully Amortized or Interest Only Fixed Rate
        Refinance of an ARM into a fully amortizing fixed rate mortgage or interest only fixed rate mortgage. Rate
        may not exceed lifetime cap of the current ARM loan. This applies to the largest mortgage being refinanced
        on the subject property.
    Product Change Benefit 2 – Balloon to Fully Amortizing or Interest Only Loan
        Refinance of a balloon into a fully amortizing mortgage or interest only mortgage (including construction
        loans that are maturing). This applies to the largest mortgage being refinanced on the subject property. A
        balloon is not considered a fully amortizing mortgage.
    Product Change Benefit 3 – Construction to Perm Loan
        Construction to Permanent loan.
    Product Change Benefit 4 – Extend the Fixed Term of an ARM
        Refinance to extend the fixed term of an ARM by a minimum of 30 months. Current loan must be a
        minimum of 12 months old or rate adjusts annually or more frequently. This applies to the largest mortgage
        being refinanced on the subject property. If there is a pre-payment penalty on the current loan, it must
        expire prior to close to meet this benefit.

Loan Proceeds
     Loan Proceeds Benefit 1 – Loan Proceeds Exceed GFE by 3X
        New loan proceeds meet or exceed total loan closing costs as disclosed on the GFE by 3 times. Prepaids,
        i.e. prepaid interest and escrow for taxes and insurance are not considered closing costs. New loan
        proceeds from a simultaneously closed second mortgage and proceeds used to payoff installment, revolving
        debt, judgments and liens at closing are included. Loans in TX are ineligible for this option.

    Loan Proceeds Benefit 2 – Loan Proceeds Greater than or equal to $10,000
       New loan proceeds meet or exceed total loan closing costs as disclosed on the GFE by $10,000. Prepaids,
       i.e. prepaid interest and escrow for taxes and insurance are not considered closing costs. New loan
       proceeds from a simultaneously closed second mortgage and proceeds used to payoff installment, revolving
       debt, judgments and liens at closing are included.

Additional Benefit Tests
If the subject property is located in MA or RI, the following applies:
    Season Benefit 1 - > 60 months Loan Seasoning – MA & RI

        MA and RI require a 60 month seasoning requirement (length of time the existing mortgage has been in
        effect) to pass the Benefit to Borrower test.


_________________________________                                        Date
Icon Underwriter




                                                Page 2 of 2                                   Revised 12-30-10
                              Pre-Funding QC Certification


Important Note: Completion of this checklist is mandatory. The checklist must be
permanently maintained in the file for future QC review/reference.



New Loan Set-up:

_____ Icon Residential Lenders’ exclusionary list has been checked to ensure that the submitting
      broker does not appear on the list.


_____________________________            _____________________________            ___________________
New Loan Set-up Name                     Confirmation Signature                   Date



Underwriting:
_____ Funds being used for closing have been verified as being seasoned for at least 60 days, unless
      investor guidelines dictate otherwise.

_____ Icon Residential Lenders’ exclusionary list has been checked to ensure that none of the
      parties to the transaction appear on these lists.

_____ MERs report has been analyzed to look for undisclosed properties.

_____ CoreLogic LoanSafe report has been ran and analyzed.


_____________________________            _____________________________            ___________________
Underwriter Name                         Confirmation Signature                   Date



Closing:
_____ Both the seller and buyer columns of the HUD-1 Settlement State have been reviewed prior to
      funding for uncommon contributions and/or unusual payouts to individuals or corporations that
      are not noted as lien holders on the title commitment.

_____ The processed 4506-T transcripts are included with the closing package.

_____ The title commitment, sales/purchase contract, and the appraisal have been compared for all
      purchase money loans to ensure the owner of record in the commitment/binder matches the
      seller on the sales/purchase contract and the owner on the appraisal.

_____ Icon Residential Lenders’ exclusionary list has been checked to ensure that none of the
      parties to the transactions appear on the lists.

_____ A verbal VOE using Directory Assistance (or similar third party phone number validation service)
      has been completed for the loan file, including the specific third party information source to obtain
      the phone number of the employer. If online source used, a copy of the verification document is
      attached. Exception: if the borrower is self-employed, a copy of the business license has been
      obtained wherever applicable.


_____________________________            _____________________________            ___________________
Closer/Funder Name                       Confirmation Signature                   Date




Rev 07.31.09
CONNECTICUT NONPRIME HOME LOAN TEST

Borrower Name:_______________________________


Prepared By:__________________________________


Loan#:________________________                       Date:___________________________


Connecticut Nonprime Home Loan Yes                     No     (circle one)

The nonprime home loan test must be completed on first and subordinate mortgage
loans of owner-occupied primary residences, with loan amounts equal to or less than
$417,000.

For a “home loan” to be a “nonprime home loan” as defined by Connecticut, the
loan’s APR must fail BOTH test below in Part I and Part II.

PART I. CONNECTICUT RATE TEST

The selection of the appropriate comparable maturity US Treasury Securities as of
the 15th day of the month prior to the application date.

FOR FIRST LOANS ONLY

Enter the Annual Percentage Rate (APR) per TIL disclosure:                            _________% (A)

Enter the appropriate Treasury Rate___________ plus 3%                                _________%(B)

(use comparable maturity US Treasury Securities published by the Fed Reserve System in the statistical
release H.15 as of the 15th day preceding the application received date)


FOR SUBORDINATE LOANS ONLY

Enter the Annual Percentage Rate (APR) per TIL disclosure:                              ________% (A)

Enter the appropriate Treasury Rate ________________ plus 5%                            ________% (B)

(use comparable maturity US Treasury Securities published by the Fed Reserve System in the statistical
release H.15 as of the 15th day preceding the application received date)



        •    If the rate on line A is EQUAL TO OR GREATER than the rate on line
             B, you must complete Part II. Conventional Mortgage Rate Test.



                                              Page 1 of 2
PART II. CONVENTIONAL MORTGAGE RATE TEST

The selection of the appropriate Conventional Mortgage rate is based upon the rate
locked in date.

FOR FIRT LOANS ONLY

Enter the Annual Percentage Rate (APR) per TIL disclosure:                            _________% (A)

Enter the appropriate Conventional Mortgage Rate___________ plus 1.75%                  ________% (B)
(the conventional mortgage rate published by the Federal Reserve System in the statistical release H.15
during the week the interest rate is set)



FOR SUBORDINATE LOANS ONLY

Enter the Annual Percentage Rate (APR) per TIL disclosure:                            _________% (A)

Enter the appropriate Conventional Mortgage Rate___________ plus 3.75%                  ________% (B)
(the conventional mortgage rate published by the Federal Reserve System in the statistical release H.15
during the week the interest rate is set)



        •    If the rate on line A is EQUAL TO OR GREATER than the rate on line
             B, THIS LOAN IS A CONNECTICUT ‘NONPRIME HOME LOAN’
             and YOU MUST COMPY WITH THE NONPRIME HOME LOAN
             REQUIREMENTS AND PROHIBITIONS.

        •    If the rate on line A is LOWER than the rate on line B, this loan is NOT a
             “Nonprime Home Loan”.




                                              Page 2 of 2
                                      Massachusetts
        Borrower’s Interest (Tangible Net Benefit) Worksheet for Refinanced Loans


Borrower(s): ___________________________________Application Date: ___________________________

Property Address: _______________________________________________________________________


Part I. EXEMPTION TEST. If the answer to any of the following questions is “yes,” the loan is not subject to
the Borrower’s Interest (Tangible Net Benefit) requirement and you do not have to complete the remainder of
this worksheet. If the answer to all of the following questions is “no,” complete the remainder of this
worksheet.

             1.        The loan is a reverse mortgage transaction.                           Yes     No
             2.        The loan is a bridge loan (loan connected with the acquisition of a   Yes     No
                       dwelling intended to become the Borrower’s principal dwelling,
                       with a maturity of less than one year).
             3.        The debt is incurred primarily for business or investment             Yes     No
                       purposes.
             4.        The property is designed for occupancy of more than four families.    Yes     No
             5.        The property will not be occupied, in whole or in part, by the        Yes     No
                       Borrower as his or her principal residence or as a second home.
             6.        The proceeds of the new loan pays off all or part of an existing      Yes     No
                       loan that was consummated more than 60 months prior to the new
                       loan’s Application Date.

Part II. SAFE HARBOR TEST. Check all that apply.

                  Loan is guaranteed, originated or funded by the Federal Housing Administration, the
                  Department of Veterans Affairs, Mass. Housing or another State or federal housing
                  finance agency.
                  The annual percentage rate of the loan at consummation does not exceed by more
                  than two and one half (2.50) percentage points for closed-end first-lien home loans, or
                  by more than three and one half (3.50) percentage points for closed-end subordinate-
                  lien home loans, the applicable reference rate.
                  a. APR of Closed-End Home Loan at Consummation:
                  b. Month Lender Received Application:
                  c.    Immediately Preceding Month:
                  d. Yield on U.S. Treasuries with Comparable Maturity on 15th of Month in c., above:
                         __________________________________________________________________
                  e. For first-lien loans, add 2.50 to amount in d., above:
                  f.    For subordinate-lien loans, add 3.50 to amount in d., above:
                  The loan is an open-end home loan and the annual percentage rate under the
                  agreement will not exceed at any time the Prime rate index as published in the Wall
                  Street Journal plus a margin of one percentage point.
                  a. Maximum Possible APR of Open-End Home Loan:

                  b. Prime Rate Index From Wall Street Journal:

                  c.    Add one to the amount in b., above:




                                                      1                                        Form 103
                                      Massachusetts
        Borrower’s Interest (Tangible Net Benefit) Worksheet for Refinanced Loans

   Part II. SAFE HARBOR TEST(cont.)

               Borrower(s) will be able to recoup the costs of refinancing Borrower(s) prior loan within
               two years, taking into account the costs and fees, and the interest rate on the new loan
               is reduced without increasing the amortization period of the new loan compared to the
               original amortization term of the loan being refinanced.
                            EXISTING LOAN                                      NEW LOAN
               a.   Interest Rate                             d.    Interest Rate

               b.   Amortization Period                       e.    Amortization Period
               c.   Monthly Principal & Interest              f.    Monthly Principal & Interest
                                g. Difference in Monthly Principal & Interest
                                   (f minus c)____________________________
                                   ____
                                h. Total costs and fees to
                                   refinance_______________
                                i.   h divided by g_____________(must be less
                                     than 24)


If any of the boxes are checked, your home mortgage loan is deemed in compliance with the Borrower’s
interest determination pursuant to 209 CMR 53.04 and you do not have to complete the remainder of this
form.

Part III. LOAN INFORMATION. Provide the following information for both the prior loan and the new loan
before proceeding to Part IV.

                                                OLD LOAN                            NEW LOAN
   LOAN DATE
   LOAN AMOUNT
   LOAN TERM
   TYPE OF LOAN
                                      Fixed            ARM                Fixed        ARM
   (Circle One)
                                      Balloon                             Balloon
   BLENDED LOAN RATE
   PAYMENT AMOUNT
   PREPAYMENT PENALTY
   PROVISION
   LOAN TO VALUE                                       N/A
   DEBT TO INCOME LEVEL                                N/A
   LOAN PURPOSE
   (Rate/Term, Cash out, Debt                          N/A
   Consolidation)

Part IV. TANGIBLE NET BENEFIT QUESTIONS. Complete all questions.

   1. Loan Term Reduction: The term for the loan you are originating must be at least 60 months
   shorter than the original term of the old loan AND the borrower must recoup all closing costs in
   the first 36 months.

   Old Term:        _______________                     New Term:       ______________

   Months to Recover Costs:      ________________. (Costs and prepay = Y.                   Old payment
   minus new payment = X. Y divided by X = number of months to recover costs.)

   2. Loan Program Change – ARM to Fixed: The old loan must have been an ARM, the loan
   you are originating must be a Fixed Rate (fully amortizing) loan AND the interest rate for the
   Fixed Rate loan must be lower than the maximum possible interest rate for the ARM loan.

   Old Loan:        _______________                     New Loan:       ________________

   Old Max. Rate: ______________                        New Fixed Rate: ________________

   3. Loan Program Change – Balloon to Fixed: The old loan must have been a Balloon and the
   loan you are originating must be a Fixed Rate (fully amortizing) loan.

   Old Loan:        _______________                     New Loan:       ________________




                                                   2                                               Form 103
                                        Massachusetts
          Borrower’s Interest (Tangible Net Benefit) Worksheet for Refinanced Loans

   4. Refinance - Cash out to Borrower: The cash out (cash in hand) to the borrower must be
   twice as much as the closing costs. Also, if the DTI is between 45% and 50%, and the borrower’s
   FICO score is less than 660, the new monthly payment amount must not increase by more than
   50%.

   DTI:      _______________       FICO: _______________

   Cash to Borrower:       _______________         Closing Costs: _______________

   Cash to Borrower/Closing Cost Ratio: _______________

   New Payment minus Old Payment:           _________________

   Divide the Difference by the Old Payment Amount (must be less than 50%): _______________

   5. Debt Consolidation: The total monthly consumer debt (principal, interest, taxes, insurance
   and other consumer debt (PITICD)) must be reduced AND the borrower must recoup all closing
   costs in the first 36 months.

   Old PITICD:     _________________               New PITICD:     _________________

   Amount of Reduction:    _______________

   Months to Recover Costs: ________________. (Costs and prepay = Y. Old payment minus
   new payment = X. Y divided by X = number of months to recover costs.)

   6. Refinancing a Contract for Deed or Buying out Co-Owners (excluding spouse): The
   settlement charges to the borrower, excluding prepaid interest, insurance, taxes and escrows,
   must not to exceed 6% of the loan amount.

   Settlement Charges = ______________% of loan amount.

   7. Bona Fide Personal Need: The loan is necessary to pay a tax lien or respond to an Order of
   a Court of competent jurisdiction.

   Describe need arising because of tax lien or Court Order:
   _____________________________________________________________________________
   _____________________________________________________________________________
   _____________________________________________________________________________
   _____________________________________________________________________________




Signed: ______________________________________________ Date: ______________________
        Lender Authorized Representative




                                              3                                           Form 103
                                          EXHIBIT “A”

      “COMMERCIALLY REASONABLE MEANS OR MECHANISM” WORKSHEET

Date: _______________

Borrower: ____________________                Property Address: _____________________
Borrower: ____________________                                  _____________________
Borrower: ____________________                                  _____________________

To the Borrower: Commencing October 1, 2007 Nevada Revised Statute 598D.100 requires the
mortgage broker or mortgage banker named below to use any “commercially reasonable means
or mechanism” to verify that you have the ability to repay the home loan for which you are
applying. There is no requirement that you enter into any proposed loan transaction even though
you may have submitted an application to the broker/banker. Be sure that all of the terms set
forth below are accurate and that you agree to them.

To be completed by Borrower [complete as applicable]:

The purpose of this loan is to _____ purchase a home or _____ refinance a current home loan.
The loan is a _____ fixed rate or _____ adjustable interest rate loan.

My monthly pre-tax income is $____________.             I _____have or _____have not submitted
pay stubs or tax returns to the mortgage broker/banker as proof of this income.

The mortgage broker/mortgage banker has discussed with me:

_____ My overall economic situation
_____ My employment, including length of time on job and prospects for its continuation in the
      future
_____ My credit history and credit score
_____ My current sources and amounts of income and assets, and the likelihood of any of these
      items changing [up or down] in the reasonably foreseeable future
_____ The information required on my loan application
_____ That if I have applied for an adjustable rate loan, the interest rate may increase and my
      monthly payments may go up substantially on and after the first change date
_____ Other: List ______________________________________________________

I certify under penalty of perjury that I have the financial ability to repay the loan I have applied
for. I have carefully reviewed any and all rate loan disclosures that have been provided to me,
and agree that even if the interest rate on my adjustable rate loan increases and my monthly
payments increase as result, I can still afford to repay the loan.

_____________________          _____________________        ______________________
Borrower Signature/Date        Borrower Signature/Date       Borrower Signature/Date
To be completed by mortgage broker/mortgage banker:

This is a:

_____ Full document loan
_____ Low document loan
_____ No document loan
_____ Stated income loan
_____ Other [describe]_________________________________

I have verified the income amount provided by the Borrower by:

_____ Salary.com

_____ U.S. Department of Labor

_____ Other: specify [i.e. VOE, pay stubs] ________________________________

I have also discussed with the Borrower the items s/he has checked above, and have given
him/her a completed copy of this worksheet.

I certify under penalty of perjury that the above is true and correct.

Name of Mortgage Broker/Banker: ____________________
License Number:                 ____________________
By:




Signature                              Date
NORTH CAROLINA RATE SPREAD HOME LOAN TEST

Borrower Name:_______________________


Prepared By:______________________


Loan#:___________                  Date:___________


North Carolina Rate Spread Home Loan Yes                      No     (circle one)

The rate spread home loan test must be completed on first and subordinate
mortgage loans of owner-occupied primary residences, with loan amounts equal to
or less than $417,000.

For a “home loan” to be a “rate spread home loan” as defined by North Carolina,
the loan’s APR must fail BOTH test below in Part I and Part II.

PART I. NORTH CAROLINA RATE TEST

The selection of the appropriate comparable maturity US Treasury Securities as of
the 15th day of the month prior to the application date.

FOR FIRST MORTGAGE LOANS ONLY

Enter the Annual Percentage Rate (APR) per TIL disclosure:                           ______% (A)

Enter the appropriate Treasury Rate________ plus 3%                                  _______% (B)

(use comparable maturity US Treasury Securities published by the Fed Reserve System in the statistical
release H.15 as of the 15th day preceding the application received date.
http://www.federalreserve.gov/releases/h15/20080317/)




FOR SUBORDINATE MORTGAGE LOANS ONLY

Enter the Annual Percentage Rate (APR) per TIL disclosure:                              ________% (A)

Enter the appropriate Treasury Rate ________________ plus 5%                            ________% (B)

(use comparable maturity US Treasury Securities published by the Fed Reserve System in the statistical
release H.15 as of the 15th day preceding the application received date.
http://www.federalreserve.gov/releases/h15/20080317/)




                                              Page 1 of 2
        •    If the rate on line A is EQUAL TO OR GREATER than the rate on line
             B, you must complete Part II. Conventional Mortgage Rate Test.

PART II. CONVENTIONAL MORTGAGE RATE TEST

The selection of the appropriate Conventional Mortgage rate is based upon the rate
locked in date.

FOR FIRT MORTGAGE LOANS ONLY

Enter the Annual Percentage Rate (APR) per TIL disclosure:                             ______% (A)

Enter the appropriate Conventional Mortgage Rate_______ plus 1.75%                 _______% (B) (use the
conventional mortgage rate published by the Federal Reserve System in the statistical release H.15 during
the week preceding the week in which the interest rate is set.
http://www.federalreserve.gov/releases/h15/20080317/)




FOR SUBORDINATE MORTGAGE LOANS ONLY

Enter the Annual Percentage Rate (APR) per TIL disclosure:                             _________% (A)

Enter the appropriate Conventional Mortgage Rate_____ plus 3.75%                        ________% (B)
(use the conventional mortgage rate published by the Federal Reserve System in the statistical release H.15
during the week preceding the week in which the interest rate is set.
http://www.federalreserve.gov/releases/h15/20080317/)




        •    If the rate on line A is EQUAL TO OR GREATER than the rate on line
             B, THIS LOAN IS A NORTH CAROLINA “RATE SPREAD HOME
             LOAN”. YOU MUST REDUCE THE RATE AND/OR POINTS
             BEFORE YOU CAN PROCEED WITH THE LOAN.

        •    If the rate on line A is LOWER than the rate on line B, this loan is NOT a
             “RATE SPREAD HOME LOAN”.




                                               Page 2 of 2

								
To top