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					                                                                                CONFORMING 1600 Series

In This Product Description           PROGRAM CODES                         2
To hyperlink to a specific section,   UNDERWRITING                          3
place cursor over the section         LTV/CLTV/HCLTV                        4
heading to the right                 LOAN LIMITS                           6
and Click to follow link.
                                      ADJUSTABLE LOAN FEATURES              7
                                      APPRAISAL                             8
                                      ASSETS/FUNDS TO CLOSE                 11
                                      ASSUMPTIONS                           15
                                      BORROWER ELIGIBILITY                  16
                                      CASH PROCEEDS                         18
                                      CREDIT REQUIREMENTS                   19
                                      DISASTER AREA                         25
                                      DOCUMENTATION                         26
                                      EMPLOYMENT/INCOME                     28
                                      ESCROW/IMPOUNDS                       36
                                      FEES                                  37
                                      GEOGRAPHICAL RESTRICTIONS             38
                                      INSURANCE                             39
                                      OCCUPANCY                             40
                                      PREPAYMENT PENALTY                    42
                                      PROPERTY REQUIREMENTS                 43
                                      QUALIFYING                            48
                                      REFINANCES                            50
                                      RESERVES                              56
                                      SUBORDINATE FINANCING                 57
                                      TEMPORARY BUYDOWNS                    58




         05/27/11                        Page 1 of 58            Guidelines are subject to change without notice
                                                                     CONFORMING 1600 Series

PROGRAM CODES   1600 – 30-Year Fixed
                1620 – 20-Year Fixed
                1615 – 15-Year Fixed
                1610 – 10-Year Fixed

                1600HB – 30-Year Fixed High Balance
                1620HB – 20-Year Fixed High Balance
                1615HB – 15-Year Fixed High Balance
                1610HB – 10-Year Fixed High Balance

                1630 – 3/1 LIBOR ARM
                1650 – 5/1 LIBOR ARM
                1670 – 7/1 LIBOR ARM
                1611 – 10/1 LIBOR ARM

                1630IO – 3/1 LIBOR ARM Interest Only
                1650IO – 5/1 LIBOR ARM Interest Only
                1670IO – 7/1 LIBOR ARM Interest Only
                 1611IO - 10/1 LIBOR ARM Interest Only

                1650HB – 5/1 LIBOR ARM High Balance
                1670HB – 7/1 LIBOR ARM High Balance
                1611HB – 10/1 LIBOR High Balance




     05/27/11                     Page 2 of 58           Guidelines are subject to change without notice
                                                                          CONFORMING 1600 Series

UNDERWRITING    All new submissions require a DU “Approve/Eligible” recommendation. LP or Manual underwriting not
                allowed. DU Refi Plus loans with LTV up to 125% are ineligible. Even if DU gives an approval up to
                125%, Trust One Mortgage will only issue approval up to 105%. The DU Findings Report will determine
                underwriting and documentation requirements, unless otherwise stated in these guidelines. The maximum
                number of AUS submissions is limited to 20.




     05/27/11                     Page 3 of 58               Guidelines are subject to change without notice
                                                                                    CONFORMING 1600 Series

FIXED RATE                  LTV    CLTV    HCLTV           OCC          UNITS
Purchase/                   95%1   95%1    95%1            Primary      1 unit
Rate & term refinance       80%    80%     80%             Primary      2 units
                            75%    75%     75%             Primary      3-4 units

                            90%    90%     90%             Second       1 unit

                            75%    75%     75%             Investment   1 unit
                            75%    75%     75%             Investment   2 unit
                            75%    75%     75%             Investment   3-4 unit

Cash-out refinance          85%    85%     85%             Primary      1 unit
                            75%    75%     75%             Primary      2 units
                            75%    75%     75%             Primary      3-4 units

                            N/A    N/A     N/A             Second

                            N/A    N/A     N/A             Investment
                        1
                         For loans secured by properties located in AZ, MI, or NV the LTV/CLTV/HCLTV is capped at 90%.




HIGH BALANCE                LTV    CLTV    HCLTV           OCC          UNITS
FIXED                       90%    90%     90%             Primary      1 unit
Purchase/                   75%1   75%1    75%1            Primary      2 units
Rate & term refinance
                            65%    65%     65%             Second       1 unit

                            65%    65%     65%             Investment   1 unit

Cash-out refinance          60%    60%     60%             Primary      1 unit

                            N/A    N/A     N/A             Second

                            N/A      N/A       N/A          Investment
                            1
                              Loan amounts > $625,500, the LTV/CLTV/HCLTV is limited to 80%/80%/80% on Rate & Term
                            refinance transactions.




        05/27/11                            Page 4 of 58                Guidelines are subject to change without notice
                                                                                CONFORMING 1600 Series

ARM                     LTV    CLTV    HCLTV           OCC          UNITS
Purchase/               95%1   95%1    95%1            Primary      1 unit
Rate & term refinance   80%    80%     80%             Primary      2 units
                        75%    75%     75%             Primary      3-4 units

                        90%    90%     90%             Second       1 unit

                        75%    75%     75%             Investment   1 unit
                        75%    75%     75%             Investment   2 unit
                        75%    75%     75%             Investment   3-4 unit

Cash-out refinance      85%    85%     85%             Primary      1 unit
                        75%    75%     75%             Primary      2 units
                        75%    75%     75%             Primary      3-4 units

                        N/A    N/A     N/A             Second

                        N/A    N/A     N/A             Investment
                        1
                        For loans secured by properties located in AZ, MI, or NV the LTV/CLTV/HCLTV is capped at 90%.




INTEREST ONLY           LTV    CLTV    HCLTV           OCC          UNITS
ARM                     70%    70%     70%             Primary      1 unit
Purchase/
Rate & term refinance   70%    70%     70%             Second       1 unit

                        N/A    N/A     N/A             Investment




HIGH BALANCE            LTV    CLTV    HCLTV           OCC          UNITS
ARM                     75%    75%     75%             Primary      1 unit
Purchase/               75%    75%     75%             Primary      2 units
Rate & term refinance
                        65%    65%     65%             Second       1 unit

                        60%    60%     60%             Investment   1 unit

Cash-out refinance      60%    60%     60%             Primary      1 unit

                        N/A    N/A     N/A             Second

                        N/A    N/A     N/A             Investment




        05/27/11                        Page 5 of 58                Guidelines are subject to change without notice
                                                                              CONFORMING 1600 Series

LOAN LIMITS     Conforming Loan Limits:
                # of Units    Continental US Hawaii
                1 Unit        $417,000      $625,500
                2 Units       $533,850      $800,775
                3 Units       $645,300      $967,950
                4 Units       $801,950      $1,202,925

                High Balance Loan Limits:
                Loan limits vary by county. For each transaction you must go to the FHFA website to determine if your
                property is eligible for the higher loan limits: http://www.fhfa.gov/Default.aspx?Page=185. The
                temporary high-cost loan limits in Alaska and Hawaii do not apply because these limits are lower than the
                existing maximum potential high-cost area limits. Please note that certain MI Companies have placed
                maximum limits below the published limits.
                Minimum loan limit 1 unit: $417,001
                Minimum loan limits 2-units: $533,851 (eligible for fully amortizing primary residence transactions only).
                The temporary high-cost loan limits are set to expire on September 30, 2011. All loans with temporary
                high-cost loan limits must be closed and delivered by Friday, September 16, 2011.




     05/27/11                      Page 6 of 58                 Guidelines are subject to change without notice
                                                                                  CONFORMING 1600 Series

ADJUSTABLE LOAN   3/1 ARM: The note rate of 3/1 ARM cannot be more than 300 basis points (3%) below the fully indexed
FEATURES          rate (margin plus current index value). There is no such restriction on 5/1, 7/1 and 10/1 ARM.

                  Floor: The margin.

                  Index: The index is the average of Interbank offered rates for one-year U.S. dollar denominated deposits
                  in the London market (LIBOR), as published in the Wall Street Journal.

                  Interest Rate Adjustment: The interest rate is fixed for the initial period and is then subject to change
                  on an annual basis thereafter, using the most recent index figure available 45 days prior to the interest rate
                  adjustment.

                  Interest Rate Caps:
                    3/1 ARM: 2% cap, up or down, on the initial change. 2% cap, up or down, on each annual change
                     thereafter. 6% lifetime cap (over the note rate).
                    5/1 ARM: 5% cap, up or down, on the initial change. 2% cap, up or down, on each annual change
                     thereafter. 5% lifetime cap (over the note rate).

                  Margin: See Rate Sheet.




     05/27/11                         Page 7 of 58                  Guidelines are subject to change without notice
                                                                                CONFORMING 1600 Series

APPRAISAL       Trust One appraisal policy applies. Full appraisal required for LTV > 80%. The March 2009 version of
                the Fannie Mae/Freddie Mac form 1004MC, “Market Conditions Addendum to the Appraisal Report”
                must be included with all conventional (including rural housing) appraisals.

                Appraisal Age Requirements: An appraisal can only be used for a single transaction. Multiple
                transactions which have closed/settled for the same borrower on the same property require a new appraisal
                evaluation. Reuse of an unexpired appraisal when the initial transaction has closed is not permitted per
                Appraisal Independence Requirements. The appraisal report cannot be more than 120 days old prior to the
                Note date. If prepared more than 120 days but less than 365 days prior to the Note date, the original
                appraiser (if available) or a qualified appraiser must inspect the exterior of the property and review current
                market data to determine whether the property has declined in value since the original appraisal date. If
                the appraiser indicates that the property has declined in value, a new appraisal is required. If the appraiser
                indicates that the property has not declined in value, recertification or update to the original appraisal,
                based on the appraiser’s exterior inspection of the property and knowledge of current market conditions, is
                required. The inspection and appraisal update must occur within the 120 days (for existing and new
                construction) that precede the Note date and security instrument. If the loan does not close within 90 days
                of the initial recertification, an additional recertification must be performed along with two (2) new
                comparables. If the appraisal is more than 365 days old, a new one is required.

                Appraiser Independence Requirements (AIR): FNMA, in conjunction with the Federal Housing
                Finance Agency (FHFA), have adopted the Appraiser Independence Requirements (AIR) effective for all
                conventional (conforming and non-conforming) loans. Trust One must represent and warrant that any
                appraisal used in originating a conventional loan conforms to the requirements of FNMA and complies
                with Appraiser Independence Requirements. Please review the additional details and/or guidance found in
                Chapter 28 of the Trust One Program Summary Guide, or on the Trust One website. All appraisals must
                be ordered on-line through an Appraisal Management Company. A listing of eligible Appraisal
                Management Companies can be found in the AIR guidelines in Chapter 28 of the Trust One Program
                Summary Guide or on the Trust One website. Trust One requires ordering an appraisal through LandSafe
                Appraisal Services or Collateral Appraisal Management. Ordering an appraisal through an Appraisal
                Management Company other than LandSafe or Collateral Appraisal Management runs the risk that the
                appraiser may be on the Investor’s Review Appraiser list. Further Field Reviews or second appraisals may
                be necessary. Trust One will not be liable for any lock extensions or additional costs related to this. Field
                reviews or LARA’s do not need to be given to the borrower unless there is change in value. Then,
                documentation of the date and method of delivery of the appraisal to the borrower must be documented in
                the loan file. On lender to lender appraisal transfers, the AIR Compliance Lender Acknowledgement form
                must be executed by Trust One and included in the loan file.

                Appraiser Qualification: Pre-approval of individual appraisers is not required. Trust One may be
                requested to discontinue use of an appraiser whose work is found to be inconsistent with FNMA/FHLMC
                standards despite any designation the appraiser may hold. The appraiser must meet the following
                conditions:
                   be currently licensed and/or certified by the state in which the property is located;
                   have a minimum of one (1) year experience as a residential appraiser;
                   must appraise full-time (at least seventy five (75%) of their income must come from appraising
                    residential properties);
                   be current with the Uniform Standards of Professional Appraisal Practice (USPAP), and those of the
                    secondary market;
                   meet educational and experience criteria required by professional appraisal organizations and/or the
                    qualifications criteria as established by the Appraiser Qualifications board of the Appraisal
                    Foundation;
                   show a track record of continued education to stay abreast of current appraisal standards;
                   carry Errors and Omission Insurance with a minimum of $250,000 coverage (if applicable);
                   have specific appraisal experience that is appropriate for a particular appraisal assignment;
                   must not be listed on any of the following: Freddie Mac’s Exclusionary List, Investor’s Ineligible
                    Appraiser and Appraisal Company List, FHA’s Procurement List, and an Investor’s specific Appraiser
                    Exclusionary List.
                High Balance: May be documented with a full appraisal (i.e., Form 1004 or 1073 if a condominium)
     05/27/11                       Page 8 of 58                  Guidelines are subject to change without notice
                                                                                   CONFORMING 1600 Series

APPRAISAL        with an interior and exterior inspection. A full appraisal (i.e., Form 1004 or 1073 if a condominium) and a
(continued)      field review (i.e., Form 2000) is required if: the property value is ≥ $1,000,000 and the
                 LTV/CLTV/HCLTV is > 75%, or the loan amount is ≥ $625, 500 and the LTV/CLTV/HCLTV is > 80%.
                 If the field review results in a different opinion of value, the lower of the original appraised value, the
                 Field review value, or the sales price (for purchase transactions) should be used to calculate the LTV
                 ratios. For units located in a condominium project, two (2) comparables must be from projects outside the
                 subject project.

                 Ineligible Appraisers: Any appraisers or appraisal companies identified on the Investor’s list of
                 ineligible appraisers are not eligible to perform appraisal assignments, either directly or indirectly. The
                 appraiser’s and supervisory appraiser’s names, if applicable, and company for every loan needs to be
                 checked against this list prior to ordering or accepting an appraisal report. Trust One warrants that no
                 person or company on the Ineligible Appraiser and Appraisal Company List is involved in whole or part in
                 the origination of the loan.

                 Property Flipping: Property flipping is defined as the purchase of an existing property with the
                 intention of quickly reselling the subject property for a considerable profit.
                    For the purposes of these guidelines, “assignments of a contract for sale” are considered to fall under
                     the definition of a property flip. The following resale transactions are not defined as property flips;
                     however, the property seller must be the owner of record in all cases: Property obtained through an
                     inheritance, Property that is part of a settlement in a divorce agreement, Property that is part of an
                     employee relocation program, and Property that is resold by a lender/servicer after acquisition of the
                     property from a foreclosure or deed in lieu of foreclosure. Agents or subsequent owner(s) of the
                     property that acquired the property directly from the lender are not considered the lender.
                    The property seller must be the owner of record. Examples of acceptable documentation, to be placed
                     in the loan file include: the appraisers analysis and conclusions in the appraisal report, a copy of the
                     recorded deed or mortgage, a recent property tax bill or tax assessment notice, a title report, a title
                     commitment or binder, or a property sale history report.
                    A detailed underwriting analysis of the appraisal must be performed that includes: the current contract
                     for sale, including all addendums, for the subject property, the current offering or listing for sale for the
                     subject property, if sold utilizing a realtor, the current ownership of the subject property, and a three
                     (3) year sale (or transfer) history of the subject property and a one (1) year sales history of the
                     comparable sales.
                    If, during the brief period of ownership (six-month quick resale), the seller renovated the subject
                     property resulting in a twenty percent (20%) or twenty thousand dollars ($20,000) increase over the
                     previous sales price, the appraiser must provide interior photographs reflecting the recent
                     improvement(s) described in the appraisal report.
                    It is critical to analyze and review the sales of the subject property and the sale price trend in relation to
                     the appraiser’s opinion of value to confirm that they are reasonable and representative of the market.
                    Resale Less Than or Equal to 90 Days: For properties resold ninety (90) days or less following the date
                     of acquisition by the seller and the sales price has increased by twenty percent (20%), or twenty
                     thousand dollars ($20,000), whichever is higher, a Field Review Appraisal is required. The acquisition
                     date” is defined as the date of settlement on the seller’s purchase of the subject property. The “resale
                     date” is defined as the date of execution of the sales contract, by the buyer.

                 Supervisory or Review Appraiser: A licensed or certified supervisory or review appraiser may sign the
                 appraisal completed by an employee, however, the licensed or certified appraiser must complete the
                 physical inspection of the subject property. When a licensed/certified supervisory or review appraiser
                 signs the appraisal report on the left hand side of the report form as the appraiser, the supervisory/review
                 appraiser must have performed the inspection of the subject property. The licensed/certified supervisory
                 or review appraiser must not be on the Investor’s Ineligible Appraiser and Appraisal Company List.

                 Transfer/Reassignment of Appraisal: An appraisal transferred to Trust One from another lender is
                 unacceptable. Transferred reports will not be eligible. Appraisals must be in the name of the lender who
                 closes the mortgage loan.



      05/27/11                        Page 9 of 58                   Guidelines are subject to change without notice
                                                                               CONFORMING 1600 Series

APPRAISAL        Updated Value/Recertification of Value:
(continued)        An Appraisal Update and/or Completion Report (FNMA 1004D/FHLMC 442) is used by an appraiser
                    to confirm whether conditions of a prior appraisal have been met or to re-certify the value. Conditions
                    of an appraisal are subject to completion for new construction or subject to repairs for existing
                    properties. A re-certification does not change the effective date of the original appraisal report or the
                    value opinion.
                   An Appraisal Update and/or Completion Report (FNMA 1004D/FHLMC 442) is also used when a
                    lender seeks a more current value. This is not an extension of the prior appraisal assignment that has
                    been completed, but is a new request. This occurs when the appraisal report is older than the allowed
                    time frame for the underwriting or closing process and the appraiser must determine if the value of the
                    subject property is unchanged or has declined from the original estimate of value. The same
                    requirements apply when appraising or analyzing a property that was the subject of a prior appraisal
                    assignment.
                   The Appraisal Update and/or Completion Report (FNMA 1004D/FHLMC 442) must contain sufficient
                    information to be meaningful and not misleading. The appraiser must, at a minimum: concur with the
                    original appraisal, perform an exterior inspection of the subject property from at least the street, and
                    research, verify, and analyze current market data in order to determine if the property has declined in
                    value since the effective date of the original appraisal.
                   For new or proposed construction, clear, descriptive photographs (either in black and white or color) of
                    the completed improvements must accompany this report form.
                   Any other data, as an attachment or addendum to the appraisal report form, that is necessary to provide
                    an adequately supported opinion of market value, must also be included.
                   Trust One may experience an increase in the fee charged by an appraiser to issue an update. Trust One
                    may want to inquire prior to the request regarding the fees.
                   If the original appraiser is not available to provide an update of value, a request for an update to a
                    qualified appraiser will constitute a new request and a full appraisal fee may be charged.




      05/27/11                      Page 10 of 58                 Guidelines are subject to change without notice
                                                                                 CONFORMING 1600 Series

ASSETS/FUNDS TO   Age of Documents: If the property is existing, employment, income and credit documentation cannot be
CLOSE             older than 90 days from the Note date. If the property is new construction, employment, income and credit
                  documentation cannot be older than 120 days from the Note date.

                  Business Assets: When business assets are used for down payment and/or closing costs, a letter from the
                  accountant stating that the borrower has access to the funds for withdrawal (i.e., all business owners agree
                  that the borrower has access to the funds) and that withdrawal of the funds will not have a detrimental
                  effect on the business must be provided. The accountant cannot be an interested party to the transaction
                  and cannot be related to the borrower. Business funds cannot be used for meeting cash reserve
                  requirements.

                  Checking and Savings Accounts/Certificates of Deposit: The DU Findings Report will identify the
                  required documentation on depository accounts. Monthly bank statements must be dated within 45 days
                  of the application. Quarterly bank statements must be dated within 90 days of the application (additional
                  verification is required if the borrower states that funds have been withdrawn). Non-AUS guidelines apply
                  to large deposits on statements.

                  Credit Cards: These guidelines must be manually applied outside of DU. Creating a new AUS case
                  number to circumvent the requirements below is not permitted. Credit cards may be used to pay common
                  and customary fees paid outside of closing (POC) such as application fees, closing costs and/or prepaid
                  items under the following conditions: the maximum amount charged is two percent (2%) of the new loan
                  amount, and when fees are charged to the borrower’s credit card, the borrower’s credit card debt must be
                  recalculated taking into account the additional credit card balance and the recalculated debt must be
                  included in the qualifying ratios, or the borrower must have sufficient liquid assets (documentation in file)
                  to pay charged fees, in addition to funds needed for other closing costs, down payment and reserve
                  requirements. Ordering a new credit report identifying the new credit card balance and payment based on
                  the fees charged to the credit card is not required. To recalculate the balance and payment to include in the
                  qualifying ratios, users may add the amount charged to the existing credit card balance. A new credit card
                  payment may be calculated by adding five percent (5%) of the new charged amount to the existing credit
                  card payment being reported. The amount charged is not required to be paid off at or prior to closing.
                  Copy of the charge receipt or authorization must be included in the loan file. The HUD-1 Settlement
                  Statement must reflect a POC credit to the borrower for the amount charged. Debit/check cards may be
                  used to pay common and customary fees paid outside of closing (POC), such as application fees, closing
                  costs and/or prepaid items; however, debit/check cards are not subject to the Credit Card guidelines
                  outlined in this subtopic. The amount placed on the debit/check card to pay POCs is treated and
                  documented the same as if the POCs were paid by check. No one may collect any loan related fee other
                  than the estimated cost of the credit report before the borrowers have received the initial TIL provided by
                  or on behalf of the intended creditor/lender on the transaction.

                  Down Payment:
                    LTV/CLTVs > 80%: 5% down from borrower’s own cash, with the following exception: A borrower
                     may come up with the minimum required down payment from funds received as a gift from a relative
                     or domestic partner, who has lived with him or her for the past 12 months and will continue to do so,
                     or from a fiancé, or fiancée, as long as both individuals will reside in the home being purchased.
                     Documentation must be provided to verify these requirements.
                    LTV/CLTVs ≤ 80%: no down payment is required from the borrower’s own cash.

                  Employment‐Related Assets as Qualifying Income:
                    If any of the qualifying income is derived from an employment related liquid asset then the following
                     guidelines apply: 70% maximum LTV/CLTV/HCLTV; Minimum 660 credit score (or more restrictive
                     of loan program); Purchase or Rate & Term refinance; Primary residence or second home transactions
                     only.
                    Assets used for monthly income must be owned individually or the co-owner of the asset must be a co-
                     borrower of the subject property.
                    Assets must be liquid and available to the borrower with no penalty.
                    Non-self-employed severance package or non-self-employed lump sum retirement package (i.e., a
                     lump sum distribution) must be documented with a distribution letter from the employer (1099R) and

     05/27/11                        Page 11 of 58                 Guidelines are subject to change without notice
                                                                                     CONFORMING 1600 Series

ASSETS/FUNDS TO        deposited to a verified asset account.
CLOSE (continued)     401(k) or IRA, SEP, KEOGH retirement accounts – the borrower must have unrestricted access
                       without penalty to the accounts and can only use if distribution is not already set up or the distribution
                       amount is not enough to qualify. The account must be documented with the most recent monthly ,
                       quarterly, or annual statement.
                      If the assets are in the form of stocks, bonds, and mutual funds, 70% of the value (remaining after costs
                       for the transaction) may be used to determine the income stream. If the assets are in the form of
                       Retirement accounts, 70% of the value (remaining after costs for the transaction) may be used to
                       determine the income stream.
                      The sum of the eligible documented assets minus discount (if retirement, stocks, bonds, mutual funds)
                       minus any funds that will be used for closing or required for reserves, will be divided by 360 months,
                       regardless of borrower age or loan amortization term. Ineligible assets include non-employment
                       related assets such as stock options, non-vested restricted stock, lawsuits, lottery winnings, sale of real
                       estate, inheritance, divorce proceeds, etc.
                      The guidelines above apply if the income from an employment related liquid asset is used with or
                       without another source of income.
                      Documentation must be obtained to confirm the asset is available to the borrower without penalty.
                      Eligible withdrawals do not include hardship withdrawals.
                      The underwriter is responsible for determining appropriate documentation.
                      If the mortgage loan does not meet the above parameters, employment-related assets may still be
                       eligible under other standard income guidelines, such as “Interest and Dividends,” or “Retirement
                       Income”.

                    Gifts: Gifts are eligible in purchase and refinance transactions of primary residences and second homes
                    only. Gifts may be provided by the borrower’s relative (spouse, child or dependent, or any other person
                    related by blood, marriage, adoption or legal guardianship), domestic partner, or fiancé/fiancée. If the
                    LTV/CLTV is over 80%, the borrower must have a down payment of at least 5% from his/her own cash
                    funds, with the following exception: A borrower may come up with the minimum required down payment
                    from funds received as a gift from a relative or domestic partner, who has lived with him or her for the past
                    12 months and will continue to do so, or from a fiancé, or fiancée, as long as both individuals will reside in
                    the home being purchased. Documentation must be provided to verify these requirements. If the
                    LTV/CLTV is 80% or less, gift funds may be used for the full down payment without any additional
                    conditions. The borrower may use assets received as a gift to supplement his or her own funds, but cannot
                    rely solely on gift assets in satisfying any applicable financial reserve requirement. Gift funds may be
                    used to pay off and/or pay down debt in accordance with the guidelines outlined below: Gift funds may be
                    used to pay off or pay down the borrower’s installment or mortgage debt. Gift funds may be used to pay
                    off a revolving or open-end debt. Gift funds may not be used to paydown revolving or open-end debt.
                    Revolving or open-end debt must be paid off completely and the account must be closed. Gift funds may
                    be used to pay off collection, charge-offs, judgments, garnishments and/or liens. Gift funds may not be
                    used to pay down collections, charge- offs, judgments, garnishments and/or liens. It is acceptable for a
                    borrower to receive a gift for more than what is required on the transaction; however, only the amount of
                    the gift required for the transaction should be entered in DU. The total gift amount must still be verified
                    and it is also acceptable for the gift documentation to show the total gift amount, even though the total gift
                    amount is not being used for the transaction and reflected in DU. If the transfer of the gift occurs at
                    closing, it is also acceptable to show the total amount of the gift funds on the HUD-1 (i.e., in these
                    instances the HUD-1 will show the excess gift funds not required for closing as cash back to the borrower,
                    which would be acceptable due to the total gift documentation provided in the loan file), and Gifts must
                    always be listed separately, even if gift funds have been transferred to the borrower and the bank statement
                    in the loan file reflects the transfer. In this case, gift funds should be deducted from the account balance of
                    the asset, reflected separately, and coded as a gift. The net balance of the asset account is reflected as the
                    value. A gift letter is always required and must contain the following information: donor’s name, donor’s
                    mailing address, subject property address, amount of the gift, establish that the funds are a gift and do not
                    have to be repaid, and donor’s signature. It is not acceptable to notate the loan file/application with the gift
                    donor information in lieu of a gift letter. The transfer of gift funds to the borrower must be documented in
                    one of the following ways: if funds transfer before closing, a copy of the donor’s canceled check or
                    withdrawal slip and a copy of the borrower’s deposit receipt, or if funds transfer at closing, the HUD-1
                    with gift funds reflected on it or a copy of the certified check from the donor.
      05/27/11                          Page 12 of 58                  Guidelines are subject to change without notice
                                                                                   CONFORMING 1600 Series

ASSETS/FUNDS TO
CLOSE (continued)   Interested Party Contributions:
                     CLTV              Up to 75%            75.01% - 90%        90.01% - 95%
                     Primary
                                              9%                   6%                  3%
                     Residence
                     Second
                                              9%                   6%
                     Home
                     Investment
                                              2%                   2%
                     Property
                      Personal Property: The value of personal property (i.e., furniture, decorator items, automobiles or other
                       “giveaways”) must be deducted from the property’s purchase price regardless of the amount of any
                       other contributions. Certain types of personal property may convey with the sale of the subject
                       property. Most built-in appliances (such as stoves, refrigerators or dishwashers), window
                       treatments/coverings, carpeting, or other custom-made items that are affixed to/convey with the
                       property, are considered to be fixtures and no downward adjustment to the purchase price is required.
                       The sales contract should not be changed and should remain at the agreed upon sales price. Any
                       personal property conveying from the seller to the purchaser should be notated on the appraisal by the
                       appraiser. The aggregate value of any personal property may be established by the appraiser. If the
                       appraiser does not include the value of the personal property on the appraisal or is unwilling to provide
                       a value, or determines that the personal property is of no value, an Underwriter must determine the
                       reasonableness of assigning no value to the personal property. If the appraisal report contains
                       photographs of the personal property being conveyed, those photographs may assist the Underwriter in
                       determining the value of the personal property; however, photographs of the personal property are not
                       required to be included in the appraisal.
                      Sales Concessions: Sales concessions are non-realty items and must be deducted from the sale price
                       dollar for dollar for the purposes of calculating LTV/CLTV unless specifically allowed to be excluded
                       by product guideline. The sales contract should not be changed and should remain at the agreed upon
                       price. Certain seller concessions are often given to buyers outside of closing, such as moving
                       expenses, payment of various fees on the buyer’s behalf, “silent” second mortgages held by the
                       property seller, P&I abatements (see section on payment abatements subsequently published in this
                       section), and other contributions not listed on the HUD-1. These are considered undisclosed
                       contributions and are not eligible. Sales concessions include, but are not limited to: cash, furniture, or
                       any personal property being conveyed, that is not considered a fixture, automobiles, decorator
                       allowances, payment abatement, moving costs, condo fees/HOA, vacations, country club
                       memberships, golf packages, “giveaways”, gift cards, job loss insurance, and short sale processing fees
                       (i.e., short sale negotiation fees, buyer discount fees, short sale buyer fees) paid by the borrower and
                       reimbursed by an interested party to the transaction. The short sale processing fee (i.e., short sale
                       negotiation fees, buyer discount fees, short sale buyer fees) is not a common and customary charge to
                       the borrower. If an interested party to the transaction reimburses the borrower any portion of this fee,
                       treat the fee as a sales concession.
                      Seller Contributions: Seller Contributions are fees and/or closing costs paid on the borrower’s behalf
                       and are subject to limits. Fees and/or closing costs that are typically paid by the seller known as
                       common and customary fees or costs are not subject to these limits. Seller contributions may not be
                       used to meet the borrower’s down payment or minimum borrower contribution requirements, or to
                       meet reserve requirements for the transaction. Seller contributions in excess of the limits as identified
                       in the product description will be considered sales concessions and must be deducted from the sales
                       price dollar for dollar when calculating the LTV and CLTV, unless specifically allowed to be excluded
                       by product guidelines. The sales contract should not be changed and will remain at the agreed upon
                       sales price. Seller contributions may consist of the following and are subject to contribution limits:
                       origination fee, discount points, commitment fees, appraisal costs, credit report, application fee, funds
                       to subsidize a temporary or permanent interest rate buydown, prepaid fees, (up to 30 days of interest,
                       real estate taxes and escrow, Credit by the seller for taxes paid in arrears is not considered a seller
                       contribution, hazard nsurance premiums including no more than 14 months escrow accruals, initial
                       and/or renewal mortgage insurance premiums and escrow for borrower purchased mortgage insurance
                       coverage, homeowner association (HOA) dues covering any period after the settlement date limited to
                       no more than 12 months, real estate tax service fee), lender credits (if applied to prepaids are subject to
                       limits), cost of property repairs - are not permitted unless the funds are placed into an escrow account
      05/27/11                         Page 13 of 58                  Guidelines are subject to change without notice
                                                                                   CONFORMING 1600 Series

ASSETS/FUNDS TO        pending the substantiated completion of the proposed improvements or repairs as allowed by the
CLOSE (continued)      applicable loan program guidelines. As noted previously, if the seller pays the following fees and
                       market conditions are such that property sellers pay such fees in all transactions, they are not subject to
                       contribution limits: transfer taxes, tax stamps, attorneys fees, recording fees, survey charges, and title
                       insurance policy premiums or charges.

                    Retirement Funds: Vested funds from individual retirement accounts (IRA/Keogh accounts) and tax-
                    favored retirement savings accounts (401(k) accounts) may be used as the source of funds for the down
                    payment, closing costs and financial reserves. The asset value is calculated as follows: vested amount X
                    80% minus the outstanding balance of any loan(s). The borrower must provide all of the following: a
                    complete copy of the most current retirement account statement identifying the borrower’s vested amount
                    and the terms and conditions for loans or the withdrawal of funds, a copy of the check representing
                    account funds (if funds are used for down payment or closing costs), and a copy of the deposit receipt
                    where funds were deposited into the borrower’s account or a complete copy of the bank statement
                    reflecting the deposit (if funds are used for down payment or closing costs). When funds from these
                    sources are used for the down payment or closing costs, any applicable withdrawal penalties or income tax
                    must be subtracted so that only the “net withdrawal” is counted. When funds from these sources are used
                    for financial reserves, the funds do not have to be actually withdrawn from the account. When a
                    retirement account only allows withdrawals in connection with the borrower’s employment termination,
                    retirement, or death, these funds should not be considered.

                    Stocks, Stock Options, Government Bonds, Mutual Funds or Securities: Only 70% of the current
                    account value may be used towards reserves. The DU Findings will identify the number of account
                    statements required. If sale or liquidation of an asset is needed to complete the transaction, documentation
                    of the borrower’s actual receipt of the funds is required. Stock options and non-vested restricted stock are
                    not eligible for use as reserves.




      05/27/11                         Page 14 of 58                  Guidelines are subject to change without notice
                                                           CONFORMING 1600 Series

ASSUMPTIONS     Not allowed.




     05/27/11                  Page 15 of 58   Guidelines are subject to change without notice
                                                                                  CONFORMING 1600 Series

BORROWER         Co-Signers: A co-signer is defined as a person who signs the note to guaranty a loan; however, is not
ELIGIBILITY      used to qualify for the loan. Co-signers are not eligible borrowers.

                 First Time Homebuyer Tax Credits: With regards to HUD Mortgagee Letter 2009-15, where ARRA
                 provides for as much as an $8,000 tax credit to qualified first-time homebuyers to be used for
                 downpayment, this tax credit IS NOT ELIGIBLE for use on this series of programs.

                 Ineligible Borrowers: Corporations and partnerships, LLCs, Resident aliens (Foreign nationals), Co-
                 signers, Borrowers with diplomatic immunity, and Trailing Co-Borrowers.

                 Non-Arm’s Length Transactions:
                   A non-arm’s length transaction occurs when a direct personal, business or financial relationship exists
                    between the borrower and another interested party to the loan transaction that could potentially
                    influence a decision with regards to price or costs for closing the loan. Interested parties to the loan
                    transaction could include, but are not limited to the following: builder, developer, seller, lender,
                    mortgage broker, real estate broker/realtor, appraiser/appraisal company, closing attorney/settlement
                    agent/settlement company, employee, or employer. This relationship may add additional risk by
                    masking or misrepresenting the terms of the loan and may require additional review and
                    documentation.
                   At times, the relationship between the borrower and another interested party to the transaction are not
                    the only relationships of concern. Any party to the transaction who has a direct or indirect personal,
                    business, or financial relationship could represent a conflict-of-interest, because this relationship may
                    influence the transaction. Conflict-of-interest relationships include, but are not limited to the following:
                    The realtor or Trust One is the seller of the property, the property builder is the real estate
                    broker/realtor, the real estate broker/realtor is acting as the listing and/or selling agent for a property
                    they own, Trust One is the mortgage holder, the borrower is employed by Trust One, Trust One is
                    providing second mortgage financing behind an Investor first mortgage, the closing agent or agency
                    has a business, personal, or ownership interest/stake/joint venture/partnership with Trust One,
                    borrower, realtor, builder, or seller, the transaction involves a vendor (such as an appraiser, settlement
                    agency or title company) who is involved in the lending process of the subject property, an employee
                    of Trust One (loan officer, processor, underwriter, etc.) is the seller, or is related to, or associated with,
                    the seller of the property. Employees of Trust One may not be directly involved in the underwriting of
                    a loan for an immediate family member(s), and/or Investor guidelines prohibit individuals with an
                    interest in the property or transaction (whether direct or indirect, financial or otherwise) from
                    influencing the selection or engagement of the appraiser. Investor employees are prohibited from
                    financing any properties with Trust One.
                   Factors may be present that could indicate possible non-arm’s length or conflict-of-interest
                    transactions. They include, but are not limited to, the following examples: Parties related by blood,
                    marriage or domestic partner; Parties related by a business relationship; An employee is purchasing a
                    property from their employer; Mortgagors employed in the real estate or construction trades who are
                    involved in the construction, financing or sale of the subject property; The subcontractor is purchasing
                    the home from the builder or developer; A short sale transaction evidenced by a recent Notice of
                    Default or a purchase price insufficient to fully satisfy existing lien(s), and, borrower has at one time or
                    another occupied the subject property; Property flipping transactions; Property purchased at auction.
                    The following transactions are usually considered “arm’s length” even though they are between family
                    members: Spousal buyout - evidence that both parties are currently on title must be documented;
                    Interest buyout of inherited property - evidence of estate, death, recent transfer of ownership must be
                    documented Gift of Equity.
                   Investment Properties ineligible.
                   Family sales and transfers are ineligible.

                 Non-Occupant Co-Borrower: Maximum LTV/CLTV = 95%. If the LTV/CLTV is greater than 80%,
                 the occupant borrower must have at least 5% of his/her own funds for closing costs and down payment.
                 The occupant borrower is considered to be the “primary” borrower and must provide some level of income
                 and assets to the transaction. If the occupant borrower does not meet this requirement, the transaction will
                 be considered an investment property transaction for the non-occupying borrowers. DU handles non-
                 occupant borrower data as follows: liquid assets are added in closing cost and reserves funds, information

      05/27/11                       Page 16 of 58                  Guidelines are subject to change without notice
                                                                                CONFORMING 1600 Series

BORROWER         on income and employment is considered in analysis, income is not considered in the ratio calculation,
ELIGIBILITY      debts are not counted in ratios, and credit history is considered. For refinance transactions, the occupant
(continued)      borrower must currently be obligated on all mortgage loans included in the transaction. A separate
                 application and individual credit report is required for the non-occupant borrower.

                 Non-Permanent Resident Alien: All non-permanent resident aliens must have a valid social security
                 number and provide evidence of a valid passport with an acceptable visa classification. The acceptable visa
                 classifications are as follows: A-1, A-2, A-3, E-1, E-2, E-3, G-1, G-2, G-3, G-4, G-5, H-1b, H-1c, H-2, H-
                 3, H-4, L-1A, L-1B, L-2, NATO 1-6, O-1, TN-1, TN-2.

                 Number of Borrowers: The number of borrowers on a loan application is limited to four (4).

                 Permanent Resident Alien: A permanent resident alien is an individual who is lawfully accorded the
                 privilege of residing permanently in the United States. The following documentation is acceptable: INS
                 Form I-551, Alien Registration Receipt (“green card”), with an unexpired date on the front; INS Form I-
                 551, Conditional Alien Registration Receipt, with an unexpired INS I-751; Unexpired passport with
                 unexpired stamp reading “Processed for I-551. Temporary Evidence of Lawful Admission for Permanent
                 Residence. Valid until [date]. Employment authorized.” Refugees and others seeking political asylum
                 who are immigrating to and seeking permanent residency in, the United States are also classified as a
                 permanent resident alien. Typically, these types of borrowers are not able to produce the standard
                 permanent resident alien documentation outlined above. Therefore, documentation requirements for
                 refugee (or others seeking political asylum) include the following: the borrower must have an acceptable 2
                 year credit, 2 year employment and 2 year residency history in the U.S., and written documentation must
                 be provided evidencing the borrower is legally allowed to work in the U.S.

                 Social Security Number Requirements: DU will issue a verification message requiring Trust One to
                 verify the borrower’s social security number directly with the Social Security Administration, or another
                 third party direct provider, when the borrower’s social security number appears to be invalid to Fannie
                 Mae. If DU issues a social security number verification message, the following workflow guidance should
                 be followed:
                    Verify the borrower’s social security number has been correctly entered into the DU system. If the
                     borrower’s social security number was entered incorrectly, correct the borrower’s social security
                     number and resubmit the transaction to DU. If the borrower’s social security number was entered
                     correctly, proceed to the next step.
                    For loans underwritten by Trust One, the borrower’s social security number must be verified using
                     either: Social Security Administration Authorization for the Social Security Administration (SSA) To
                     Release Social Security Number (SSN) Verification (Form SSA-89), or Rapid Reporting.
                    Documentation of the borrower’s social security number must be retained with the loan file.
                    The Correspondent Fraud Prevention Certification must identify the steps taken and source used to
                     verify the borrower’s social security number.
                    Special Feature Code 162 must be captured in MLCS.




      05/27/11                      Page 17 of 58                  Guidelines are subject to change without notice
                                                                                   CONFORMING 1600 Series

CASH PROCEEDS   The borrower may not receive any cash back through a purchase money transaction, other than an amount
                representing: a reimbursement for the borrower in advance (i.e. earnest money deposit, appraisal, and
                credit report fees, etc.), or a legitimate pro-rated real estate tax credit in locales where real estate taxes are
                paid in arrears. If the borrower receives cash back for a permissible purpose (as outlined above), it must
                be confirmed that the minimum borrower contribution requirement associated with the selected mortgage
                product, if any, has been meet.




     05/27/11                        Page 18 of 58                  Guidelines are subject to change without notice
                                                                                CONFORMING 1600 Series

CREDIT          Unpaid charge-offs, collection accounts and past due accounts must be paid in full at or before loan
REQUIREMENTS    closing.

                Age of Documents: Copies and/or fax copies of documentation may be provided directly from the
                borrower to Trust One with written certification from the borrower that the copies are true and correct
                copies of the original documents. If the property is existing, credit documentation cannot be older than 90
                days from the Note date. If the property is new construction, credit documentation cannot be older than
                120 days from the Note date.

                Authorized User: When a credit account owner permits another person to have access to and use an
                account, the user is referred to as an authorized user of the account. If an authorized user account is
                identified on the credit report, DU rates the tradeline into consideration as part of the DU credit risk
                assessment and will issue a message providing the name of the creditor and account number for each
                identified authorized user tradeline. No further review of the authorized user account is required if the
                authorized user tradeline belongs to the borrower’s spouse and the spouse is not a borrower in the
                mortgage transaction. If the authorized user tradeline belongs to another borrower on the mortgage loan,
                no further investigation is required. Using prudent underwriting judgment, the credit report must be
                reviewed to ensure the authorized user tradelines are an accurate reflection of the borrower’s credit history,
                the following guidelines must be used: Establish the relationship of the borrower to the owner of the
                account. Establish if the borrower uses the account. Establish if the borrower makes the payment on the
                account. If it is believed the authorized user tradelines are not an accurate reflection of the borrower’s
                credit history then the borrower’s credit history must be evaluated without the benefit of the authorized
                user tradelines and use prudent underwriting judgment to make a final underwriting decision. If it is
                confirmed that the borrower is not responsible for the payment for the authorized user account, then the
                payment may be omitted from the borrower’s total debt.

                Bankruptcy:
                  If “Approve/Eligible” the following applies: The minimum allowable time period between the file date
                   of the bankruptcy and the date of the credit report is 48 months. Loans which include a borrower with
                   a bankruptcy filed within 48 months prior to the credit report date are therefore not eligible. If DU is
                   not able to determine when the bankruptcy was filed, it must be confirmed that the bankruptcy was not
                   filed within 48 months prior to the credit report date and that the bankruptcy complies with the DU
                   bankruptcy guidelines. All bankruptcies must be satisfied prior to the date of the application in order
                   for the mortgage to be eligible. Extenuating circumstances for bankruptcy actions are not eligible for
                   DU processed loans. If a trade line is reported in bankruptcy status (payment code of “7”), a
                   bankruptcy is reported in the public records, and the DU Findings Report reflects the bankruptcy, no
                   additional underwriting is required. High Balance loans must re-establish credit, see Re-established
                   Credit below.
                  If the DU Findings Report does not address the bankruptcy, the loan must be traditionally
                   underwritten. Generally, bankruptcies (except Chapter 13) must be discharged or dismissed at least
                   four (4) years before loan application. Chapter 13 bankruptcies must be: discharged at least two (2)
                   years before loan application, or dismissed at least four (4) years before loan application. A shorter
                   time of two (2) years from the bankruptcy discharge or dismissal date may be considered if extenuating
                   circumstances existed, as defined: extenuating circumstances are created by non-recurring events out
                   of the borrower’s control that cause a reduction in income or increase in liabilities and are not defined
                   solely by an event (i.e., a job layoff or divorce is not acceptable by itself without an explanation and
                   documentation of the lack of reasonable options), and there must be an interrelationship between the
                   event, the severity of the hardship and the borrower’s efforts to resolve the situation. No exceptions
                   are permitted to the two (2) year time period after a Chapter 13 discharge. For borrowers with multiple
                   bankruptcy filings, the following applies: A five (5) year time period from the most recent dismissal or
                   discharge date is required for borrowers with more than one (1) bankruptcy filing within the past seven
                   (7) years. A shorter time period of three (3) years from the most recent discharge or dismissal date
                   may be considered if extenuating circumstances existed. The most recent bankruptcy filing must have
                   been the result of extenuating circumstances. Borrowers with a bankruptcy that has been discharged or
                   dismissed for four (4) years or more, as evidenced by the credit report, are not required to provide a
                   complete copy of the bankruptcy documents. If the discharge or dismissal is less than four (4) years
                   (i.e., in the case of a Chapter 13 bankruptcy or when extenuating circumstances existed), the borrower
     05/27/11                       Page 19 of 58                 Guidelines are subject to change without notice
                                                                                 CONFORMING 1600 Series

CREDIT             must provide a copy of the bankruptcy documents or a complete copy of documentation to establish
REQUIREMENTS       the date of the bankruptcy, written explanation, and documentation to support claim of any extenuating
(continued)        circumstances. The borrower must show a re-established satisfactory credit history, see Re-established
                   Credit below.

                Consumer Credit Counseling: DU Approve/Eligible no additional underwriting is required.

                Credit History: When a traditional credit history is used to assess credit risk, the borrower’s established
                credit needs to consist only of the amount of credit that is sufficient to produce a credit score. As long as
                the borrower’s credit file includes complete and accurate information to assure the validity of the credit
                score, no further evaluation of the borrower’s creditworthiness is required. DU uses a merged in-file credit
                report from three (3) repositories. Disputed tradelines are not included in DU’s credit risk assessment. As
                a result, Trust One is required to confirm the accuracy of disputed tradeline(s) reported on the borrower’s
                credit report. If the tradeline does not belong to the borrower and the reported payment history is
                inaccurate, document the loan file to evidence that the reported payment history is accurate. 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. To ensure it is considered in the credit risk assessment: obtain
                a new credit report with the tradeline no longer reported as disputed and resubmit the loan casefile to DU,
                or manually underwrite the loan file. If the loan file is manually underwritten, the DU underwriting
                findings may not be used and the entire file must meet all non-AUS guidelines. Provided there is no
                impact on the borrower’s ability to qualify, no research or explanations are required for trade lines that
                have not been reported by the creditor in one year or more.
                   Additional High Balance requirements: The credit report must contain a minimum number of
                    tradelines, sufficient seasoning and the minimum required credit score applicable to the product. An
                    acceptable credit report must satisfy one of the following options: Option 1: The credit report contains
                    a total of at least three (3) open non-disputed tradelines; one (1) of which must be non-disputed
                    installment or mortgage tradeline, each of the three (3) tradelines must be for at least 24 months, and
                    each of the three (3) tradelines must be updated with the last six (6) months. Option 2: The borrower
                    must have a credit history of at least five (5) years, the credit report must contain at least five (5) non-
                    disputed tradelines (open, paid or closed): one (1) of which must be non-disputed installment or
                    mortgage tradeline (open, paid or closed), individual tradelines may be established for less than a (5)
                    year period, and each of the five (5) tradelines being evaluated in Option 2 have had activity within the
                    most recent five (5) year period. Authorized user accounts may not be used to meet the minimum
                    tradeline requirements.

                Credit Report Fees: The Equal Credit Opportunity Act (ECOA) prohibits creditors from discriminating
                against an applicant based on marital status. Charges for tri-merged credit reports on a joint application
                may not vary based on whether the applicant(s) are married or unmarried. For example, a joint report may
                cost $25.00 and an individual report $12.50. If there are two unmarried borrowers, the cost of the credit
                report charged to each borrower must be exactly half of what a joint report would cost for married
                borrowers. It is potentially discriminatory to charge individual, unmarried borrowers more than half of
                what a joint report would cost married borrowers. A refund will be required prior to purchasing any loan
                where the charge for unmarried joint applicants’ credit reports is more when compared to married joint
                applicants.

                Credit Score Requirements: When credit scores are used to assess credit risk, the borrower’s
                established credit needs to consist only of the amount of credit that is sufficient to produce a credit score.
                As long as the borrower’s credit file includes complete and accurate information to assure the validity of
                the credit score, no further evaluation of the borrower’s creditworthiness is required. All borrowers on the
                loan must have at least one (1) credit score. The use of a credit score from a foreign country is not
                permitted. The following minimum credit score requirements apply for all borrowers, regardless of the
                DU approval. The minimum credit score must be based on the LTV, as applicable.




     05/27/11                       Page 20 of 58                  Guidelines are subject to change without notice
                                                                               CONFORMING 1600 Series

CREDIT          FIXED
REQUIREMENTS     Transaction                          LTV              Minimum Credit Score
(continued)      Primary Residence – Standard
                 Purchase and Rate & Term refi           ≤ 95%             660
                                                         ≤ 80%             660
                 Cash-Out refi
                                                          80%             680
                 Transaction                             LTV               Minimum Credit Score
                 Primary Residence – Interest Only
                 Purchase and Rate & Term refi           ≤ 70%             720
                 Cash-Out refi                             ot e igible
                 S cond Home St ndard
                 Purchase and Rate & Term refi           ≤ 90%             660
                 Cash-out refi                           No eligible
                 Second Homes - I terest Only
                 Purchase and Rate & Term refi           ≤ 70%             720
                 Cash-Out refi                           Not eligible
                 Transaction                             LTV               Minimum Credit Score
                 Investment Property – Stand rd
                 Purch se nd Rate & Term refi ≤ 75%                        660
                 Cash-Out refi                           Not eligi le
                 • 0999 999, or 9999 re NOT acce table credit scores.
                HIGH BALANCE
                    Occupancy              Fully Amortizing FICO
                 Primary Residence         1 unit properties:
                                             Purchase and Rate & Term refi
                                             720 for LTV/CLTV/HCLTV - 80.01 – 90%.
                                             700 for LTV/CLTV/HCLTV - 75.01 – 80%.
                                             660 for LTV/CLTV/HCLTV ≤ 75%.
                                             The minimum credit score for ARMs is 680 for LTV/CLTV/HCLTV ≤ 75%.
                                             Cash-Out Refinance – 740.
                                             2- unit Properties (all transaction types) - 740
                 Second Home                 Purc ase and L mit d Cash-Out Refinance – 740.
                 Investment                  Purchase and Limited Cash-Out Refinance – 740.
                 Properties
                    The minimum credit score must be based on the highest of the LTV/CLTV/HCLTV, as applicable.
                    Each individual borrower must meet the minimum credit score requirements outlined above.
                    The borrower’s credit file must include complete and accurate information to assure the validity of
                     the credit score.
                    The borrower’s qualifying credit score is determined using standard Agency non-AUS guidelines: if
                     there are three (3) scores, the middle score is used, if there are two (2) scores, the lowest score is
                     used, or if there is one score, that score is used.

                Deed-in-Lieu of Foreclosure: Extenuating circumstances for deeds-in-lieu of foreclosure are not
                eligible for DU processed loans. The waiting period for a borrower to be eligible for a mortgage loan after
                a deed-in-lieu of foreclosure is outlined in the table below. The waiting period begins on the completion
                date (date deed-in-lieu is executed), ends on the application date of the new loan and will vary based on the
                maximum allowable LTV/CLTV/HCLTV.
                 Waiting Period                      Max LTV/CLTV/HCLTV
                 2 years but less than 4 years       80% LTV/CLTV/HCLTV
                 4 years but less than 7 years       90% LTV/CLTV/HCLTV; LTV > 80%, then MI guidelines apply.
                 7 years                             Max LTV/CLTV/HCLTV per product guidelines; LTV > 80%, then
                                                     MI guidelines apply.
                 The maximum LTV/CLTV/HCLTV ratio is limited to the lesser of the LTV/CLTV/HCLTV as outlined
                 in the table above or the maximum LTV/CLTV/HCLTV for the specific product based on the
                 transaction type.

     05/27/11                      Page 21 of 58                 Guidelines are subject to change without notice
                                                                                CONFORMING 1600 Series

CREDIT          The borrower must show a re-established satisfactory credit history, see Re-established Credit below.
REQUIREMENTS
(continued)     Foreclosure: Extenuating circumstances for foreclosures are not eligible for DU processed loans.
                Generally, a seven (7) year waiting period is required for a borrower to be eligible for a mortgage loan
                after a foreclosure. The waiting period begins on the completion date of the foreclosure and ends on the
                application date of the new loan. If not clearly identified on the credit report, the borrower must provide a
                complete copy of the foreclosure documents to establish the completion date of the foreclosure. The
                borrower must show a re-established satisfactory credit history, see Re-established Credit below.

                Judgments/Garnishments/Liens: All judgments, garnishments and/or liens must be paid in full at or
                prior to closing. The borrower must provide a satisfactory explanation letter with payoff documentation.
                The borrower must have reestablished credit, as reflected on the credit report in the file.

                Late Payments: Explanation of late payments is not required.

                Mortgage/Rental History: Loan casefiles in which the borrower’s credit report contains a mortgage
                tradeline that was reported within the last six (6) months and was 60 or more days past due when the
                account was last reported will not receive an “Ineligible” recommendation. No late payments on the
                current mortgage for cash-out transactions in the last six months prior to loan application. If the mortgage
                tradeline was not 60 days or more past due when the account was last reported (i.e., loan was current when
                last reported), but has been 60 days or more past due in the last 12 months, the loan casefile will receive an
                “Ineligible” recommendation. If an account is reported on the credit report as a non-mortgage trade line,
                and yet the account is listed on the loan application as a mortgage, DU will analyze the credit history of the
                trade line as a mortgage. Any late payments in the credit report will be treated by DU as delinquent
                mortgage payments. If there is a mortgage that (i) is not rated on the credit report, (i.e., if the current
                account status or manner of payment code/MOP code is “U”); (ii) was not reported within 90 days of the
                credit report date; or (iii) is disclosed on the loan application but not reported on the credit report,
                documentation must be provided to confirm that the account is not two or more payments past-due as of
                the date of the application. It is not acceptable for borrowers to bring past due mortgage accounts current
                prior to closing to circumvent guidelines. If the DU Findings Report does not address a mortgage trade
                line that is 60 or more days past-due within the last 12 months, that appears on the credit report, the loan
                must be traditionally underwritten to non-AUS guidelines.
                   Additional High Balance requirements: If a mortgage/rental payment history exists, the borrower’s
                     payment history must reflect 0X30 on all housing debts (including all mortgage and rental payments)
                     for the last 12 months. If the payment history is seasoned less than 12 months, the borrower’s payment
                     history must reflect 0X30 over the life of the loan/rental period.

                Non-Traditional Credit: Ineligible.

                Privately Held Mortgage: A “privately held mortgage” is a mortgage or trust deed which is granted to a
                borrower with private monies and is between an individual investor, partnership, LLC, trust, etc., who has
                interest in the property and/or the person who purchased the property. If a borrower is refinancing a
                privately held mortgage, the following payment verification requirements apply: At a minimum at least six
                (6) months mortgage payments on the current privately held mortgage must be verified. The privately held
                mortgage payments must be verified with either cancelled checks or bank statements (if the payment is
                automatically withdrawn from the borrower’s account). If less than the minimum six (6) month payment
                history on the current privately held mortgage are verified and the property is a one (1) unit primary
                residence, then the following applies: The borrower’s previous mortgage or rental payments may be used
                to supplement the required six (6) month payment history, but may not be used solely to satisfy the
                required payment history. If previous mortgage or rental payments are used to supplement the required six
                (6) month payment history, then the previous mortgage or rental history must reflect 0x30 late in the six
                (6) months preceding the current mortgage date. The borrower’s previous rental payment history may be
                used to supplement the six (6) month history only if the rental payments are consistent with or within 20%
                of the total proposed PITIA mortgage payment. If unable to verify a mortgage payment history for the
                current privately held mortgage, then non-AUS guidelines for ratios and reserves. If the transaction is a 2-
                4 unit primary residence, or second home or 1-4 unit investment property transaction, the minimum six (6)
                month mortgage payment history on the current privately held mortgage must be verified, no exceptions.

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                                                                                CONFORMING 1600 Series

CREDIT          Verification documentation must be included in the loan file that the lien being paid off is a current
REQUIREMENTS    recorded lien against the subject property. All other Agency credit history requirements apply.
(continued)
                Re-established Credit: The borrower must show a re-established satisfactory credit history as follows:
                minimum three (3) credit references, three (3) credit references must have been active 24 months before
                application and all accounts must be current as of loan application, no more than 2x30 day lates on
                installment or revolving debt in the 24 month before loan application, no 60+ day lates on installment or
                revolving debt since discharge or dismissal, no past due housing payments since discharge or dismissal,
                no new public records for bankruptcies, foreclosures, deeds-in-lieu, unpaid judgments, unpaid collections,
                garnishments, liens, etc. since discharge or dismissal, minimal usage of revolving accounts, including
                accounts with high balances-to-limits (i.e., balances should not typically be more than 50% of the limits),
                the credit score for the LTV/CLTV/HCLTV and loan amount combination is required for all borrowers,
                the waiting period and related requirement outlined above are met, the loan meets the established
                eligibility requirements, and non-traditional credit or “thin files” are not used.

                Restructured Mortgage Loan Credit History: A restructured mortgage loan is sometimes referred to
                as a “short pay loan” or “short pay refinance” and is defined as a mortgage loan in which the terms of the
                original transaction have been changed resulting in either absolute forgiveness of the debt or a restructure
                of the debt through either a modification of the original loan or origination of a new loan that results in
                forgiveness of a portion of principal and/or interest on either the first or second mortgage, application of a
                principal curtailment by or on behalf of the investor to simulate principal forgiveness, conversion of any
                portion of the original mortgage debt from secured to unsecured, or conversion of any portion of the
                original mortgage debt to a “soft” subordinate mortgage. A “soft” subordinate mortgage is defined as a
                mortgage that is fully forgiven over a period of time or due upon the sale of the subject property.
                Typically there are no regularly scheduled payments required for a “soft” subordinate mortgage. If the
                transaction involves refinancing of an outside lender’s mortgage that has previously been restructured, as
                defined above, the mortgage is NOT ELIGIBLE. If the transaction involves the refinancing of an
                Investor’s mortgage that has previously been restructured or is currently being processed or serviced by the
                Investor, the refinance is eligible to proceed provided that transaction meets the specific loan program
                guidelines. Cash-out refinance transactions are not eligible if the existing mortgage is a restructured
                mortgage. Indicators that may be disclosed that would identify a prior restructure of a mortgage include,
                but are not limited to: tax returns that indicate income from a 1099C from the mortgage lender, mortgage
                insurance company or third party investor, loan payoff amount is significantly less than the credit report
                balance or the current monthly payment disclosed on the 1003 varies from the payment reported on the
                credit report, or the borrower’s credit report indicates wording such as, “Settled for less than amount
                owed,” or “PIF” (Paid In Full) - not as agreed.

                Short Sale Credit History: A short sale, sometimes referred to as a short payoff or a preforeclosure
                sale, is defined as a transaction wherein a mortgage lender agrees to accept a lesser amount than is
                currently owed to satisfy an existing mortgage. Indicators that may be disclosed that would identify a
                short sale/short payoff include, but are not limited to: a 1099-C from the mortgage lender, mortgage
                insurance company or third party investor, or the borrower’s credit report indicates wording such as,
                “Settled for less than amount owed,” or “PIF” (Paid In Full) - not as agreed. Once a short sale is
                completed, the loan balance is charged off. Depending on state law or the mortgage legal documents, the
                lender or the investor may have a right to file a deficiency judgment after the completion of the short sale,
                to collect the losses incurred. The following combined time elapse since a short sale and
                LTV/CLTV/HCLTV guidelines apply:
                   Two (2) years but less than four (4) years, the maximum LTV/CLTV/HCLTV is 80%.
                   Four (4) years but less than seven (7) years, the maximum LTV/CLTV/HCLTV is 90%.
                   Seven (7) years or greater than the maximum LTV/CLTV/HCLTV is per product guidelines.
                   If the LTV is greater than 80%, MI guidelines apply.
                   The maximum LTV/CLTV/HCLTV is limited to the lesser of the LTV/CLTV/HCLTV as outlined
                    above or the maximum LTV/CLTV/HCLTV for the specific product based on the transaction type.
                Extenuating circumstances are created by non-recurring events out of the borrower’s control that cause a
                reduction in income or increase in liabilities and are not defined solely by an event (i.e. a job layoff or
                divorce is not acceptable by itself without an explanation and documentation of the lack of reasonable
                options), and there must be an interrelationship between the event, the severity of the hardship and the

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                                                                                CONFORMING 1600 Series

CREDIT          borrower’s efforts to resolve the situation. If Extenuating circumstances contributed to the borrower’s
REQUIREMENTS    financial hardship causing one of the above events to occur then combined time elapse since a short sale
(continued)     and LTV/CLTV/HCLTV guidelines apply:
                   Two (2) years, the maximum LTV/CLTV/HCLTV is 90%.
                   If the LTV is greater than 80%, MI guidelines apply.
                   The maximum LTV/CLTV/HCLTV is limited to the lesser of the LTV/CLTV/HCLTV as outlined
                     above or the maximum LTV/CLTV/HCLTV for the specific product based on the transaction type.
                After a short sale the borrower’s credit will be considered re-established if all of the following are met:
                Minimum three (3) credit references; Three (3) credit references must have been active 24 months before
                application; All accounts must be current as of the loan application date; No more than 2x30 day lates on
                installment or revolving debt in the 24 months prior to loan application; No 60+ day lates on installment or
                revolving debt since the occurrence; No past due housing payments since the occurrence; No new public
                records since the occurrence; Minimal usage of revolving accounts, including accounts with high balances-
                to-limits (i.e., balance should not typically be more than 50% of the limits; The credit score for the
                LTV/CLTV/HCLTV loan amount combination is required for all borrowers; The waiting period and the
                related requirements above are met; The loan receives an “Approve/Eligible” recommendation from DU;
                Nontraditional credit or “thin files” are not acceptable.
                If there is evidence of a deficiency judgment by the lender, mortgage insurance company or investor
                against the borrower for the charged-off amount and there is a secured or unsecured promissory note for
                the deficiency balance, the payment must be included in the debt ratio calculation.

                Undisclosed Liabilities: If any new debt is confirmed or disclosed by the borrower, the debt must be
                included as a liability on the 1003 and the loan must be resubmitted to DU to confirm the AUS findings are
                still valid. If Trust One’s process includes pulling new credit or credit is pulled in error, prior to closing,
                the loan must be reevaluated by DU. Information disclosed on the loan application must be accurate and
                current through loan closing. This information includes (but is not limited to) any additional credit applied
                for or incurred during the application process and through loan closing. The final loan application (1003)
                must accurately reflect all liabilities at the time of closing.




     05/27/11                       Page 24 of 58                 Guidelines are subject to change without notice
                                                                                 CONFORMING 1600 Series

DISASTER AREAS   It is Trust One’s responsibility to determine those areas declared disaster areas and to take the appropriate
                 action as published in these procedures to ensure subject properties or economic conditions have not been
                 adversely affected. Communication regarding any additional requirements will be released as soon as it is
                 available. FEMA maintains a current list of all federally declared disaster areas on the FEMA website. If
                 the FEMA website is not available, FEMA may be contacted at (202) 646-4600 or (800) 621-FEMA
                 (3362) for the listing. State and local governments may also announce state of emergencies for specific
                 localities declared by either the governor or the state department of homeland security and emergency
                 management. Properties in any designated disaster area, regardless of who declared the state of emergency
                 must follow these guidelines as outlined in this document.

                 Appraisal: The appraisal guidelines shown below must be followed for 180 days following the incident
                 period ending date. If the incident period end date is not clear, loans should follow these guidelines for 180
                 days following the date of the disaster occurrence.
                   For loans locked before the incident period dates of the disaster occurrence: If appraisal has been
                     performed the original appraiser, another licensed appraiser or a licensed real estate professional must
                     perform and complete the Property Condition Certification. If damage is evident the property must be
                     repaired and re-inspected by an appraiser. The appraiser must complete and provide an Appraisal
                     Update And/Or Completion Report (Fannie Mae Form 1004D) and certify that there had been no
                     decline in value. If PIW/PFW/PIA is received, per aus findings, a licensed real estate professional, or
                     another eligible source (i.e., appraiser, general contractor, or home inspector) must perform and
                     complete Property Condition Certification, and if damage is evident, the PIW/PFW/PIA is not allowed
                     and the minimum level of property fieldwork, as specified on the AUS findings, must be obtained.
                   Loans locked during or after the incident period dates and loan has not closed: If an appraisal is
                     ordered the appraiser must comment on any damage to the property and impact to value/marketability.
                     If damage is evident the property must be repaired, re-inspected by an appraiser. The appraiser must
                     complete and provide an Appraisal Update And/Or Completion Report (Fannie Mae Form 1004D), and
                     certified that there had been no decline in value. If PIW/PFW/PIA is received, per AUS findings a
                     licensed real estate professional, or another eligible source (i.e., appraiser, general contractor, or home
                     inspector) must perform and complete the Property Condition Certification, and if damage is evident,
                     the PIW/PFW/PIA is not allowed and the minimum level of property fieldwork as specified on the
                     AUS findings must be obtained.

                 Re-verification of Employment: As a reminder, Trust One must verbally verify employment within
                 five (5) business days (salaried)/fifteen (15) business days (self-employed), prior to closing (Note date), as
                 published. If a disaster incident occurs after the Verbal Verification of Employment (VVOE), Trust One
                 must obtain an additional VVOE to ensure the borrower is still employed and that they are continuing to
                 receive the same amount of income stated on the loan application). If at the time of closing, the borrower
                 is no longer employed or the qualifying income has been reduced, this information must be reported to the
                 underwriter for evaluation and re-approval prior to closing the loan.




     05/27/11                        Page 25 of 58                 Guidelines are subject to change without notice
                                                                               CONFORMING 1600 Series

DOCUMENTATION   Anti-Steering Requirements: Applies to all production channels and products, including any
                investment properties. In connection with a consumer credit transaction secured by a dwelling, a loan
                originator may not “direct or steer” a consumer to consummate a transaction based on the fact that the loan
                originator will receive greater compensation from the creditor in that transaction than in other transactions
                the originator offered or could have offered to the consumer, unless the consummated transaction is “in the
                consumer’s interest”. The Rule provides a safe harbor to promote compliance with the prohibition on
                steering. To ensure consumers are not steered, the Rule specifies that loan originators will be deemed in
                compliance if the consumer is provided, for each type of transaction in which the consumer expressed an
                interest (i.e. a fixed-rate, adjustable rate, or reverse mortgage), loan options that include a loan with the
                lowest interest rate, a loan with the lowest total dollar amount for origination points or fees and discount
                points, and a loan with no risky features, such as a pre-payment penalty, negative amortization, or a
                balloon payment in the first seven years. Further, the loan options presented to the consumer are obtained
                by the loan originator from a significant number of the creditors with whom the loan originator regularly
                does business and the loan originator believes in good faith that the consumer likely qualifies for the loan
                options presented to the consumer. Effective with applications taken on and after April 1, 2011, for any
                transaction where the anti-steering “safe harbor” liability protection is applicable, an anti-steering loan
                options disclosure must be used and evidenced in the loan file, including the borrower’s signature
                acknowledging receipt. At a minimum, an anti-steering loan options disclosure is to be included in any
                TPO lender paid transaction involving loans originated or table funded by a mortgage broker. The basis for
                determining the need for a disclosure will be a closed loan file delivered to us where the lender’s name on
                the application and/or the lender’s name on the note is a name that is neither our approved lender’s name
                nor one of our approved lender’s DBAs.

                Fraud Prevention: The Investor’s Correspondent Fraud Prevention Certification is required on all loan
                products regardless of DU findings and/or recommendations, documentation type, income type or
                origination source. All supporting documentation, as a result of meeting the requirements of the
                Correspondent Fraud Prevention Certification, must be attached to the document. Files submitted for
                purchase without the Correspondent Fraud Prevention Certification and the supporting documentation will
                be pended. The Correspondent Fraud Prevention Certification covers the following topics: Social Security
                Validation, 4506-T Requirement at Application and at Closing, Processing of the IRS Form 4506-T for all
                borrowers, MERS Fraud Tools, Ineligible Settlement Agents and Settlement Agent Companies, Ineligible
                Appraiser and Appraisal Company List.

                HUD1: A final HUD-1 Settlement Statement (or HUD-1A if applicable), must be signed by all parties to
                the transaction at closing (i.e. both borrowers and sellers on a purchase transaction, or all borrowers on a
                refinance transaction), and an original or certified copy must be included in the loan file.
                   Escrow States: In lieu of a final HUD-1 (or HUD-1A if applicable) signed by borrowers/sellers, an
                    estimated HUD-1, escrow instructions or other settlement statements that evidence the final fees and
                    costs for the transaction may be used. In this case, the final HUD-1 (or HUD-1A if applicable) may be
                    signed by the escrow officer only. The original or certified copy of the final signed document(s) must
                    be included in the loan file.
                   Non-Escrow States: In non-escrow states, a final HUD is still required to be signed by the borrower
                    and property seller (if applicable) and submitted with the loan file.
                   HUD REOs: In a HUD foreclosure transaction (HUD is the seller), HUD may not provide distinct
                    closing instructions for the HUD-1 Settlement Statement. If a fully executed HUD-1 is not available on
                    a HUD REO transaction, the final HUD-1 or other settlement statement may be signed by the
                    Borrower only.
                   Notes: It is acceptable for borrowers and sellers to sign separate copies of the applicable documents, as
                    long as the documents are identical. In this case, an original or certified copy of each signed document
                    must be included in the loan file. Any change made to the final settlement statement(s) by one party
                    that impacts the other party after the document(s) are signed is considered a material change and
                    requires the impacted party(s) to resign the applicable document(s). For example: Material changes
                    would include, but are not limited to, changes to interested-party contributions that would affect the
                    eligibility of the loan, increases to marketing and/or commission fees, and additional disbursements not
                    previously disclosed on the estimated HUD-1; Nonmaterial changes are changes to the total amount of
                    per diem interest being collected or minimal changes to fees previously disclosed. The fees on the final
                    HUD-1 must be consistent with the other documentation in the file, such as the Good Faith Estimate,
     05/27/11                      Page 26 of 58                 Guidelines are subject to change without notice
                                                                                CONFORMING 1600 Series

DOCUMENTATION      the sales contract, the appraisal, and the Promissory Note.
(continued)       In addition, if the final HUD-1 is reissued due to a refund of fees to the borrower (i.e. fees collected in
                   excess of those permitted under RESPA), signatures of all parties are not required if there is
                   documentation to explain the reissued document and all parties signed the original HUD-1. Clients
                   should ensure that the reissued HUD-1: Is clearly labeled as a reissued document; Includes the date it
                   was reissued; Outlines the result or reason for the reissue (refund to the borrower).
                  Limited appraisals ineligible. Property Inspection Report 2075 ineligible.

                Short Sale Property Purchase: Borrowers may pay additional fees and payments in connection with
                purchasing a short sale property that are typically the responsibility of the seller. Examples of short sale
                fees and payments include, but are not limited to, the following: short sale processing fee (i.e., short sale
                negotiation fees, buyer discount fees, short sale buyer fees; The short sale processing fee is not a common
                and customary charge and must be treated as a sales concession if any portion is reimbursed by an
                interested party to the transaction), negotiated short payoff to a subordinate lien holder, and payment of
                delinquent taxes or delinquent homeowner association (HOA) dues. The above referenced fees are non-
                GFE fees. These fees and payments cannot be financed into the loan amount and must be included on the
                HUD-1 settlement statement. Borrowers must fund the cost of the additional fees and payments with their
                own funds. The additional funds to complete the transaction must be documented. The sales contract will
                identify if the property being purchased is a short sale property. The transaction must be an arm’s length
                transaction (i.e., all parties are unaffiliated and unrelated). Purchase transactions where the Investor or
                another lender is the servicer, who is agreeing to the short sale, are eligible provided the transaction meets
                the guidelines outlined in this document. Trust One must diligently review these purchase transactions for
                unusual fees, payments, and other possible red flags that could indicate fraudulent activity related to the
                short sale. The following documentation must be included in the loan file:
                   full appraisal based on an interior/exterior inspection of the subject property, (Reduced appraisals,
                    property inspection reports (i.e., Form 2075, Form 2070), Fannie Mae’s Property Inspection Waiver
                    (PIW) and Freddie Mac’s Property Inspection Alternative (PIA) are not eligible),
                   the sales contract executed by all parties with details of the additional fees and payments,
                   a copy of the executed arm’s length affidavit(s) verifying all parties (borrower, seller, Listing and
                    Buying Agents) are unaffiliated and unrelated,
                   the HUD-1 Settlement Statement that includes all borrower paid short sale fees and payments, and
                   source of client’s funds used to cover the short sale fees and payments.

                Uniform Instruments Requirement: The FNMA/FHLMC tagline, which contains the agency form
                name and number in the footer of the document, must be present on each page of the FNMA/FHLMC
                Uniform Instruments. Under no circumstances should the tagline be removed or altered.

                Validation of Qualified Parties: For all transactions, it must be confirmed that certain parties to the
                mortgage transaction are not found on the HUD Limited Denial of Participation List (LDP) and the
                General Services Administration (GSA) Excluded Party List by accessing the following websites: General
                Services Administration (GSA) Excluded Party List: https://www.epls.gov/epls/search.do, or HUD
                Limited Denial of Participation List (LDP) https://www5.hud.gov/ecpcis/main/ECPCIS_List.jsp. Trust
                One must either manually check the LDP/GSA lists or utilize a service to check the lists on the applicable
                website for each of the following parties to the mortgage transaction: Borrower; Seller; Listing/Selling
                Agents; Listing/Selling Agents’ Companies; Builder; Loan Officer; Correspondent Company, in addition
                to the following individuals, Loan Officer, Processor, Underwriter, and Closer; Title Agent/Title
                Company; Closing Attorney/Settlement Agent/Settlement Company; Appraiser/Appraisal company. The
                Investor requires that the LDP/GSA lists be checked for all name variations (AKAs) including maiden
                names, etc. shown on the credit report, in addition to the borrower’s name shown on the application. This
                requirement applies for all borrowers on the loan. Note: It is acceptable to check multiple name variations
                per search. For example, the GSA search allows a user to search up to six (6) different name variations per
                search request. Trust One is required to check and initial the certification on the Investor’s Correspondent
                Fraud Prevention Certification to represent and warrant that the LDP and GSA lists have been reviewed
                and none of the above referenced parties to the mortgage transaction are found on the lists. Regardless of
                the reason, if any of the applicable parties are found to be suspended or debarred on the list, the loan is not
                eligible.


     05/27/11                       Page 27 of 58                  Guidelines are subject to change without notice
                                                                               CONFORMING 1600 Series

EMPLOYMENT/     All loan files must include documentation of the income calculation method used for underwriting the loan
INCOME          file. Internet on-line payroll advices are acceptable if it clearly identifies the employer’s name and source
                of information (i.e., URL is reflected on document). Copies and/or fax copies of documentation may be
                provided directly from the borrower to Trust One. The documents may be certified by Trust One that the
                copies are true and correct copies of original documents. Documents must clearly identify the employer’s
                name and source of information (i.e., fax header is reflected on document). Generally, the documents must
                be computer generated or typed by the borrower’s employer(s). Borrower(s) must provide a two (2) year
                history of receipt of income used to qualify, in most instances. Generally, a three (3) year continuance
                after loan application must be established for the income used to qualify. Determining continuance of
                income should focus on the borrower’s occupation, tenure, past employment history, probability of
                consistent receipt. If income source has less than a two (2) year history, document, explain and justify the
                stability of the income used to qualify the borrower. A written VOE in lieu of receiving pay stubs and W-
                2s is acceptable provided a fully executed (i.e., signed by all borrowers) IRS Form 4506-T is obtained and
                the signed IRS Form 4506-T is processed.

                1099 Income: A borrower with 1099 income is considered self-employed if the following applies: the
                borrower files a Schedule C with a Federal tax return, the borrower owns 25% or more of the company
                that issued the 1099, and/or the borrower owns 25% or more of the partnership that issued the 1099. If
                1099 income reflects income earned from commissions, and the borrower files a 2106 with a Federal tax
                return, the income is handled under the guidelines for commission income and the borrower is not
                considered self-employed.

                Age of Documents: If the property is existing, employment, income and credit documentation cannot be
                older than 90 days from the Note date. If the property is new construction, employment, income and credit
                documentation cannot be older than 120 days from the Note date.

                Alimony/Child Support Income: Three (3) months of bank statements or canceled checks, and a copy
                of the complete divorce decree or complete separation agreement to verify income continuance for at least
                three (3) years after loan application. Other acceptable documentation includes: receipt for the last 12
                months (i.e., canceled checks, bank statements, etc.). Income may be used if received for 6 to 12 months
                and it is not more than 30% of the borrower’s total gross monthly income used for qualifying purposes.
                The following is acceptable in lieu of a divorce decree or separation agreement: copy of complete written
                legal agreement or complete court order describing the payment terms, or copy of a state law requiring
                alimony and/or child support payment and specifies payment conditions. If the payor has been obligated
                to make payments for less than six (6) months, if the payments are not for the full amount or are not
                received on a consistent basis, the income must not be considered for qualifying.

                Boarder Income: Rental income from boarders in a one-family property that is also the borrower’s
                primary residence or second home may be considered as acceptable stable income only if the following
                guidelines are met: The boarder is a live-in aide of a borrower with disabilities (whether or not the
                individual is a relative of the borrower) (Live-in aides typically receive room and board payments through
                Medicaid Waiver Funds, from which rental payments are made to the borrower. When that is the case,
                these rental payments may be considered as acceptable stable income in an amount up to 30% of the total
                gross income that is used to qualify the borrower; the boarder has lived with (and will continue to do so)
                and has satisfactory paid rent to the borrower for the last 12 consecutive months; Documentation in the file
                reflects a history of shared residency (such as a copy of a driver’s license, bill, bank statement, etc. that
                shows the boarder’s address as being the same as the borrower’s address) and 12 months of rent payments
                (such as canceled checks); The income does not exceed 30% of total gross qualifying income.

                Bonus/Overtime Income: Bonus and overtime income = YTD bonus and/or overtime income divided
                by 12 (regardless of the months reflected on the pay stub). If the borrower needs more income than
                calculated from a pay stub, additional income may only be used if traditional documentation is provided,
                bonus or overtime is averaged and the income is consistent or increasing. The DU Findings Report will
                identify the documentation requirements, if any. Note: A written VOE in lieu of receiving pay stubs and
                W-2s is acceptable provided a fully executed (i.e., signed by all borrowers) IRS Form 4506-T is obtained
                and the signed IRS Form 4506-T is processed.
                Commission: All federal income tax return schedules are required with at least six (6) months of
                commission earnings on them. If DU requires two (2) years of federal tax returns but the borrower has
     05/27/11                      Page 28 of 58                  Guidelines are subject to change without notice
                                                                              CONFORMING 1600 Series

EMPLOYMENT/     only received commission income for a year, a 24-month average is used to calculate income. If the loan
INCOME          is originated between January 1 and April 15 and the borrower has not filed his/her prior year tax return,
(continued)     the borrower must provide 1099s or W-2s for the prior year with a current pay stub to support 1099
                income, in addition to tax returns. Income is calculated for the prior year from the documentation, based
                on the number of months represented in the returns.

                Furloughed Borrowers:
                  Employee furloughs are mandatory time off from work with no pay. Used as an alternative to a layoff,
                   employee furloughs can occur in both public and private sector organizations. In mandatory employee
                   furloughs, employees take unpaid or partially paid time off of work for periods of time. The employees
                   generally have either scheduled time off or call back rights and expectations.
                  Borrowers on mandatory furlough and are not working at all must return to work prior to the closing of
                   the mortgage loan in order to use the employment income for qualifying purposes.
                  Borrowers on mandatory furlough who are working adjusted and/or reduced schedules and receiving
                   reduced pay may be considered if qualifying employment income can be determined and verified with
                   a likelihood of continuance.
                  Verification documentation may include, but is not limited to the following:
                               satisfactory written or verbal VOEs,
                               satisfactory letters from employers, and/or
                               satisfactory payroll documents (i.e., paystubs/payroll ledgers, etc.).
                  In all cases, the terms of the furlough must be documented in the loan file.

                IRS 4506-T: Is required to be executed (i.e. signed by all borrowers) at application and again at closing.
                A fully executed 4506-T is required on all loans regardless of DU/LP findings, documentation type,
                income type, or origination source. The IRS Form 4506-T may be processed at the discretion of the
                Investor prior to funding. Both signed copies of the IRS Form 4506-T must be included in the file upon
                delivery. The 4506-% transcripts may not be used in lieu of obtaining any other required income or
                employment documentation.
                                                                                           To Validate the Income
                                                        Income Documentation to
                  If Borrower is                                                           Documentation Request via
                                                        request from Borrower
                                                                                           4506-%
                  Salaried, including                   Documentation as required by       1040 Transcript for 1 or 2 Years
                   Commission 25% or more              AUS/Underwriter
                   Received Paystub
                   Receives W-2 or 1099
                  Self-Employed                         Documentation as required by       1040 Transcript for 1 or 2 Years
                   Sole Proprietor                     AUS/Underwriter
                  Self-Employed                         Documentation as required by       1040 Transcript for 1 or 2
                   LLC, LLP, Corporation,              AUS/Underwriter                      Years
                     Partnership                                                           May require valid
                                                                                             corporate/partnership 1040 (at
                                                                                             the discretion of the
                                                                                             underwriter)
                  Pension, Social                       Documentation as required by       1040 Transcript for 1 or 2 Years
                  Security/Disability Borrower          AUS/Underwriter
                  All other income (alimony, child Documentation as required by            1040 Transcript
                  support, dividend and/or              AUS/Underwriter
                  interest, etc.)
                  If non-taxable income is the only source of income, and cannot be validated through the 4506-T
                  process, then alternative validation documentation must be obtained, such as 1099 transcripts, award
                  letters or bank statements. In cases where borrowers have filed taxes jointly, it may be necessary to
                  request W-2 transcripts via the 4506-T, in addition to the 1040 transcripts, in order to determine an
                  individual’s income.
                If a loan is originated after January 1 and the most recent year’s income documentation is not available
                from the IRS, Trust One must request the applicable transcript by using the 4506-T from the prior year to
                the most recent year and compare to the income documentation that was provided by the borrower. If year-
                end or year-to-date P&L statements were used to calculate income for the borrower, those documents are
     05/27/11                         Page 29 of 58                Guidelines are subject to change without notice
                                                                               CONFORMING 1600 Series

EMPLOYMENT/     attached to this Certification. Qualifying income sources that are too new to be reported on the most
INCOME          current year tax transcripts may still be eligible to be used for qualifying purposes, as long as acceptable
(continued)     alternative validation methods are used. If non taxable income is the only source of income and cannot be
                validated through the 4506-T process, then alternative validation documentation must be obtained, such as
                1099 transcripts, award letters or bank statements. Upon reviewing the 1040 transcript, if there appear to
                be “red flags” that require additional validation, the 4506-T may need to be reprocessed for W-2 or 1099
                transcripts.
                   Recently Filed 2010 Tax Returns: If the loan transaction involves a self-employed borrower or a 1099
                    borrower who has recently filed a 2010 tax return and the 2010 transcript is not available from the
                    IRS), the client must provide the following: 2009 - 1040 transcripts, and an IRS stamped received copy
                    of their 2010 tax returns. If the 2009 transcripts and the 2010 tax returns show earning trends as stable
                    or increasing, clients may use an average of the 2009 and 2010 earnings to qualify the borrower. If the
                    self-employed borrower cannot provide a copy of their recently filed and stamped 2010 tax returns,
                    then the client must either, wait for the 2010 transcripts from the IRS, or obtain the 2009 transcripts,
                    and a 2010 year-end profit and loss (P&L) statement, and a 2011 year-to-date P&L to evaluate the
                    earnings trend. If 2009 transcripts, 2010 year-end P&L and 2011 YTD P&L are used to evaluate
                    earnings trends, Trust One must follow the guidelines outlined below: If 2009 transcripts, 2010 year-
                    end P&L and 2011 YTD P&L show earnings trends are stable or increasing, then use average of 2009,
                    2010 and 2011 to qualify. If 2009 and 2010 show a decrease in the earnings trend and 2011 reflects an
                    increase in earnings, then use average of 2009 and 2010 to qualify.
                   Tax Returns Have Not Been Filed for 2010: If a borrower has filed an extension, the following is
                    required: Evidence that the extension was filed; Processed 4506-T showing “No Record Found” for
                    current tax year; and
                     For salaried borrowers: The previous year’s 1040 transcript, a current pay stub and previous year’s
                       W-2;
                     For self-employed borrowers: The previous year’s 1040 transcript and previous year-end P&L and
                       current year-to-date P&L (i.e., 2009 transcripts, 2010 year-end P&L, and 2011 year-to-date P&L). If
                       2009 transcripts, 2010 year-end P&L and 2011 YTD P&L are used to evaluate earnings trends,
                       clients must follow the guidelines outlined below: If 2009 transcripts, 2010 year-end P&L and 2011
                       YTD P&L show earnings trends are stable or increasing, then use average of 2009, 2010 and 2011 to
                       qualify. If 2009 and 2010 show a decrease in the earnings trend and 2011 reflects an increase in
                       earnings, then use average of 2009 and 2010 to qualify.
                    In situations where the borrower has not filed an extension with the IRS and previous 1 or 2 years’
                    transcripts are unavailable, Trust One must obtain one of the following notices, in addition to
                    requesting the W-2 or 1099 transcripts for the tax year not filed: CP 120 – Letter requesting tax
                    exemption, or Letter 1615 – Overdue Tax Return, or Letter 2050 – Overdue Taxes or Tax Return, or
                    Letter 4903 – No Record of Filing or Receiving Returns.

                Paystubs: Use the borrower’s paystubs to verify the employer and borrower name and monthly income
                with year-to-date figures. Paystubs must be dated within 30 days of application and include YTD income
                for at least 30 days.

                Rental Income: Rental income received for a one-family investment property or a two-to-four-family
                property is acceptable stable income, even when the borrower occupies one of the units of a multiple-unit
                property, as long as the likelihood of the continuance of the income can be established. An Operating
                Income Statement (Fannie Mae Form 216) is not required, regardless of the type of property. However,
                since Trust One must report the gross monthly rent at delivery, Trust One has the option of obtaining an
                Operating income Statement (Fannie Mae Form 216) to meet this requirement. Additionally, a Single-
                Family Comparable Rent Schedule (Form 1007) or a Small Residential Income Property Appraisal Report
                (Form 1025) may also be relied on to obtain the gross income that should be used in determining the
                income-producing ability of the property. The documentation that is used to support a borrower’s
                continued receipt of rental income and the calculation of such income depends on whether the rental
                income is received in connection with the security property for the mortgage being underwritten or in
                connection with other properties the borrower owns.
                   Rental Income Received From the Subject Property: When rental income from the subject property is
                    being used to qualify and the subject property is a 2-4 unit primary residence or a 1-4 unit investment
                    property, the borrower must obtain rent loss insurance to cover at least six (6) months of gross monthly

     05/27/11                      Page 30 of 58                 Guidelines are subject to change without notice
                                                                                CONFORMING 1600 Series

EMPLOYMENT/        rent. Rent loss insurance is not required if rental income from the subject property is not being used to
INCOME             qualify. Rent loss coverage must be included as a part of the hazard insurance policy as an
(continued)        endorsement. The yearly hazard insurance premium must include the additional premium the borrower
                   must pay for this coverage. The rent loss coverage provided in the hazard insurance policy must cover
                   a minimum of six (6) months of gross monthly rent. If the insurance company will not issue an
                   endorsement to the hazard insurance policy for the rent loss coverage, the acceptance of a separate
                   insurance policy will be considered on a case-by-case basis. Current published hazard insurance
                   policy requirements (i.e., policy term, policy prepayment, escrow collection, etc.) will apply for the
                   separate policy. Rent loss insurance covers rental losses that are incurred during the period that a
                   property is being rehabilitated following a casualty. If the borrower has no history of receiving rental
                   income from the subject property, rental income may be documented as follows: 1 Unit Investment
                   Property, obtain an appraiser's opinion of market rent (Single-Family Comparable Rent Schedule –
                   Form 1007). If applicable, copies of the current lease agreement should be obtained. Calculate the net
                   cash flow on the subject property by subtracting the proposed monthly payment (PITI) from 75% of
                   the lesser of the market rent or actual rent received on the property; 2-4 Unit Primary Residence or 2-4
                   Unit Investment Property: A Small Residential Income Property Appraisal Report – Form 1025 must
                   be obtained. If applicable, copies of the current lease agreement should be obtained. Gross rent less
                   the proposed PITI. The gross rental income from the property will be equal to the lesser of the market
                   rent established by the appraiser or the current rent based on the existing lease agreement(s). Net
                   rental income will equal 75% of the proposed PITI. If the borrower has a history of receiving rental
                   income from the subject property, rental income may be documented by obtaining copies of pages 1
                   and 2 of the most recent year's signed federal income tax return, including Schedule E. The underwriter
                   should analyze the borrower's rental cash flow and calculate the subject net rental income (or loss)
                   making sure that depreciation or any interest, taxes, or insurance expenses were added back to the
                   borrower's cash flow analysis. If the borrower has a history of receiving rental income from the
                   subject property, rental income may be documented by obtaining copies of pages 1 and 2 of the most
                   recent year's signed federal income tax return, including Schedule E. The underwriter should analyze
                   the borrower's rental cash flow and calculate the subject net rental income (or loss) making sure that
                   depreciation or any interest, taxes, or insurance expenses were added back to the borrower's cash flow
                   analysis. A copy of the current lease agreement may be used only if the property is not on the
                   Schedule E because it was acquired subsequent to filing the tax return.
                  Rental Income Received From Properties OTHER than the Subject Property: If the borrower has no
                   history of receiving rental income for the rental property, rental income may be documented by
                   obtaining copies of the current lease agreement(s). If there is no current lease, the underwriter may
                   rely on an appraiser's opinion of market rent (Single-Family Comparable Rent Schedule – Form 1007)
                   or a Small Residential Income Property Appraisal Report -- Form 1025. Net rental income will equal
                   75% of the gross rental income less the proposed PITI. A copy of the current lease agreement may be
                   used only if the property is not on the Schedule E because it was acquired subsequent to filing the tax
                   return. If the borrower has a history of receiving rental income for the rental property, rental income
                   may be documented by obtaining pages 1 and 2 of the most recent year's signed federal income tax
                   return, including Schedule E. The underwriter should analyze the borrower's rental cash flow and
                   calculate the net rental income (or loss), making sure that depreciation or any interest, taxes, or
                   insurance expenses were added back to the borrower's cash flow analysis.

                Retirement Income: The borrower must document regular and continued receipt of the income and
                must provide one (1) of the following: letter from organization providing the income, copies of retirement
                awards letter(s), copies of signed Federal tax returns filed with the IRS, IRS W-2s, or 1099 forms, or
                copies of two (2) months most recent bank statements reflecting regular deposits. If retirement income is
                paid in the form of a monthly distribution from a 401(k), IRA, or Keogh retirement account, it must be
                expected to continue for at least three (3) years after the date of the mortgage application. If the borrower
                has recently retired and set up an account for income draws, income from the principal balance may only
                be used if a payment schedule has been set up. In all cases where funds are distributed from an eligible
                retirement asset, verify there is a sufficient balance to allow income payments to continue for at least three
                (3) years.

                Salaried/Hourly Employed Borrowers: Trust One must verify that the Employer exists and that the
                borrower is actively employed. The VVOE must be completed by Trust One within ten (10) business days

     05/27/11                       Page 31 of 58                 Guidelines are subject to change without notice
                                                                                CONFORMING 1600 Series

EMPLOYMENT/     prior to the date of the Note. If the loan does not close within ten (10) business days of performing the
INCOME          VVOE, the verification steps must be repeated and documented on Trust One’s VVOE. In situations when
(continued)     utilizing the independently verified phone number and the Employer’s representative provides another
                number for verification of the borrower’s employment, such as the direct line for the Employer’s personnel
                department, the newly obtained number should also be recorded on the VVOE form; however, it is not
                necessary to independently verify as it was supplied by the Employer. In situations when the Employer’s
                Human Resources, Personnel or Payroll Department is unwilling/unable to provide verbal verification of
                the borrower’s employment, the following steps are provided as alternate methods for verifying active
                employment: Utilize vendor tools specific to employment verification, including but not limited to, The
                Work Number. Utilize the independently verified phone number to contact the employer and ask to speak
                to the borrower. If transferred to the borrower’s voice mail, exit out and continue to ask for the borrower as
                a voice mail recording is not sufficient verification that the borrower is actively employed by this
                employer. Not all employer/employment validation tools are typically used on all loan files; however, in
                some cases it may be necessary to utilize a combination of validation tools to verify the borrower is
                actively employed or the existence of the business. When using The Work Number (or other similar
                vendor tools specific to employment verification), the ten (10) business days prior to close is measured
                from the date the verification is obtained. The “as of” data on the verification should be no more than 35
                calendar days old from the date the verification was obtained. If the “as of” data is older than 35 calendar
                days, utilize the independently verified phone number for the employer and ask for the Human Resources,
                Personnel or Payroll Department. If the Human Resources, Personnel or Payroll Department is unwilling
                or unable to provide verification of employment, re-dial the same phone number and ask to speak directly
                to the borrower. If transferred to voice mail, exit out and continue to ask for the borrower as a voice mail
                recording is not sufficient verification that the borrower is actively employed by this employer. It is
                acceptable for the employer to provide an emailed VVOE as long it is completed and received within ten
                (10) business days prior to closing (Note date). Utilizing the independently verified Employer’s
                information, the person performing the VVOE must review the emailed VVOE thoroughly to determine
                that it was completed by an appropriate source, such as Human Resources, Personnel or Payroll
                Department, the borrower’s superior, upper management of the firm or owner of the company. If there is
                any reason to doubt the validity of the emailed VVOE, dial the independently verified phone number for
                the employer and ask to speak to the employee that sent the email. An emailed VVOE may require
                additional steps above and beyond the standard workflow process in order to confirm that the email was
                sent from a legitimate source affiliated with the company. If the existence of the employer cannot be
                verified, the loan is ineligible. If a verbal verification of employment on a borrower, who is currently
                employed by the military, is not be able to be completed, Trust One may use an Alive and Well
                Certification process as outlined: At the time of closing, Trust One must verify that the veteran is alive and
                not missing in action. The following certification must be made by the client: “The undersigned client
                certifies that a statement from the borrower’s commanding officer (including person authorized to act for
                said officer), affirmatively indicated that the veteran was alive and not missing in action status on (date),
                was examined by the undersigned and that the said date is subsequent to the date the note and security
                instruments were executed.” E-mail verification is acceptable if the e-mail is identifiable as having come
                from a military installation, ship, etc. Trust One is expected to make an attempt to obtain information to
                make the certification; however, if a deployed veteran is cut off from communications, documentation of
                Trust One’s efforts may be submitted instead. Documentation must demonstrate that Trust One made a
                good faith, bona fide effort (i.e., contacted home base of employed veteran, copy of returned e-mail, etc.).
                It is not sufficient for a client to only notate that “the veteran’s spouse said they cannot contact the
                veteran.”

                Salary and Hourly Income: Pay stubs must be dated within 30 days before application and include
                YTD income for at least 30 days. If DU requires a pay stub and W-2, the pay stub must be from the
                current job with W-2s from all jobs held in the prior year. IRS W-2 forms must identify clearly the
                borrower as the employee. Pay stubs and payroll earnings statements must identify clearly the borrower as
                the employee and show the borrower’s year-to-date income covering a period of at least 30 days.
                Generally, the documents must be computer-generated or typed by the borrower’s employer(s), although
                pay stubs and earnings statements that the borrower downloads from the internet are also acceptable. A
                written VOE in lieu of receiving pay stubs and W-2s is acceptable provided a fully executed (i.e., signed
                by all borrowers) IRS Form 4506-T is obtained and the signed IRS Form 4506-T is processed. For hourly
                wage earners, income is calculated on the lesser of a 30- day average or the hourly rate multiplied by the
                average work hours. If a pay stub is required without any W-2s, the minimum length of time required in
     05/27/11                      Page 32 of 58                  Guidelines are subject to change without notice
                                                                               CONFORMING 1600 Series

EMPLOYMENT/     the full time position is 30 days. If the borrower is employed by a relative, documentation is required to
INCOME          verify if the borrower has any ownership in the company.
(continued)
                Self-Employed: Trust One must verify that the Self-Employment business exists and that the business is
                active. In the case of a Self-Employed borrower, an actual verbal verification of employment will not be
                involved; however, the following apply and must be documented on the VVOE form: The VVOE must be
                completed within thirty (30) calendar days prior to closing (i.e. Note date). If the loan does not close
                within thirty (30) calendar days of performing the VVOE, the verification steps must be repeated and fully
                documented on Trust One’s VVOE. The existence of the borrower’s business must be verified by a third
                party, such as a CPA, regulatory agency, or the applicable bureau if possible. The borrower’s business
                address and phone number must be independently verified (i.e. FastData, directory assistance, telephone
                book, Corporate websites, Search Systems, Useful Websites tools, etc.). In situations where the business
                does not have a verifiable business address, phone number or business listing (i.e. 123 Street LLC for
                property ownership/management of earned income), the following are provided as alternate methods for
                verifying the business (in addition to obtaining 4506T processed IRS Tax Transcripts): Third party
                verification of the Articles of Incorporation, Limited Liability Company (LLC), etc. registrations with the
                appropriate regulatory agency, such as the Secretary of State, Department of Revenue, Department of
                Taxation, etc. or Third party verification of business license/permit with the appropriate regulatory
                agency, or CPA (Certified Public Accountant) letter, business listing for CPA firm and third party
                verification of an active CPA license or Obtain borrower’s business Bank Statements that confirm regular,
                consecutive deposits consistent with the level of income indicated on the loan application (1003) and
                4506T IRS Tax Transcripts. Review 4506T IRS Tax Transcripts to determine a verifiable history between
                the borrower/business and the CPA. Caution should be taken when using the CPA letter approach because
                of the personal relationship between the borrower and the CPA. If none of the above (i.e., the borrower is
                not required to be licensed, SC registration is not required, no verifiable business address or phone number
                and the borrower prepares their own taxes), then the loan file is ineligible.

                Self-Employed Income: If a borrower is self-employed for at least one year, a minimum of six (6)
                months’ self-employment income must be reported on federal tax returns. Borrowers self-employed for
                less than 12 months must be employed in the same line of work and must provide all of the following
                documentation: federal tax returns as required on the DU Findings Report, and a market feasibility study
                (from a marketing company; an accountant who can identify demand and success of such a business
                through demographic information; or the borrower from census data, information from the local or state
                bureau of commerce or business and/or current demographic information obtained from sources such as
                the Internet) with a pro-forma financial statement (from an accountant or accounting firm with projected
                history of company performance over a one year period). If a loan is originated between January 1 and
                April 15, income is determined from available tax returns for the number of years indicated on the DU
                Findings Report. For example, if loan application is on January 10, 2010 and DU requires two (2) years tax
                returns, the borrower must provide returns for 2007 and 2008. When current year taxes have been filed,
                proof of filing may be required (i.e., canceled checks or IRS stamp on the tax return). Audited P&L
                statements are required to increase the borrower’s qualifying income when the average documented
                income is insufficient and may be used if it is consistent with previous years’ earnings. If the DU Findings
                Report requires corporate tax returns, the corporate tax returns may be waived if non-AUS guidelines
                concerning such waiver are met. If a self-employed borrower is not using self-employment income to
                qualify, it is not necessary to code the borrower in DU as self-employed nor is it necessary to obtain page
                one of the borrower’s federal tax return.

                Social Security Income: Social security benefits that have defined expiration dates must have a
                remaining term of at least three (3) years from the date of the mortgage application to be considered stable
                income. If a borrower who receives social security retirement benefits has reached 62 or 65 years of age, it
                can be assumed that the income will continue for three (3) years. Acceptable verification of social security
                income includes a photocopy of the Social Security Administration’s award letter, copies of signed federal
                income tax returns that were filed with the IRS, copy of current 1099, or copies of the borrower’s recent
                bank statements (to confirm receipt of social security income).

                Tax Exempt Income: Tax-exempt income may be grossed up by 25% if income is tax-exempt (i.e.,
                child support payments, social security benefits, disability retirement payments, workers’ compensation
                benefits, certain types of public assistance programs, food stamps, etc.).
     05/27/11                        Page 33 of 58                 Guidelines are subject to change without notice
                                                                              CONFORMING 1600 Series

EMPLOYMENT/
INCOME          Tip Income: Tip income must have been received for at least the most recent two (2) years.
(continued)     Documentation that the current employer expects the tip income to continue is required. Tip income
                should be averaged over the past two (2) years to determine the amount of income that may be considered
                in qualifying the borrower. A written VOE in lieu of receiving pay stubs and W-2s is acceptable provided
                a fully executed (i.e., signed by all borrowers) IRS Form 4506-T is obtained and the signed IRS Form
                4506-T is processed.

                Trailing Co-Borrower Income: Ineligible.

                VVOE: A verbal verification of employment (VVOE) is required on all loan transactions for all
                borrowers in order to verify that the borrower’s employer or self employed business exists and that the
                borrower is actively employed as of the date of performing the VVOE. A VVOE must be completed up to
                ten (10) business days for salaried borrowers prior to the closing date. A VVOE must be completed up to
                thirty (30) calendar days for self employed borrowers prior to the closing date. Every effort must be made
                to perform the verbal VOE as close to the closing date (Note date) as possible. Cases where the VVOE is
                performed beyond ten (10) business days prior to closing (Note date) should only occur in such instances
                when a borrower’s employer is closed for an extended period of time. A verbal VOE is not acceptable
                when completed during the rescission period on a refinance. The verbal VOE must be completed prior to
                the loan closing (Note date). There are no exceptions to this policy. The requirement for a verbal VOE is
                not waived in cases when a borrower’s employer is closed for an extended period of time. As an example,
                when schools are closed (i.e., summer break), it is important to remember that many school systems have
                staff members working during the extended closures that would be authorized to complete a VVOE. In the
                event that a VVOE cannot be completed, the following steps are provided as alternate methods for
                verifying active employment:
                   Contact the administration office and ask to speak to the borrower (by name); or
                   Require a copy of the current year’s employment contract; and
                   Require most recent pay stub. Compare date of pay stub to contract pay dates to ensure the most recent
                     information has been received; and
                   Require most recent bank statement and compare for payroll deposits consistent with submitted pay
                     stub and/or salary.
                   Use the school’s website as it may provide contact information for the staff (i.e. borrower’s email
                     address), screen print all contact information.
                The VVOE form must:
                   Be completed and included in the loan file for all borrowers whose income is being used to qualify;
                     and
                   Be completed in its entirety, must be legible, and include the following information: The name of the
                     employer or self employed business, The telephone number of the employer or self employed business,
                     The source used to verify the name of the employer or self employed business, The 4506-T results for
                     self employed borrowers, Salaried/hourly Verbal Employee Verifications (Name and title of the
                     individual contacted for the verification, Date of hire for the employee, Position of the employee,
                     Confirmation the employee is currently employed, Signature, title of the client’s representative and
                     completion date, and Confirmation of the probability of continued employment, If it is against the
                     employer’s policy to provide the “probability of continued employment,” then Trust One must check
                     the appropriate box on the VVOE and supporting documentation must be attached.
                   All steps taken to complete the VVOE must be clearly documented on the VVOE form and supporting
                     information must be attached. These steps may include, but are not limited to, the fully completed
                     VVOE form, printed documentation supporting the independently verified employer/self-employed
                     business, direct contact information to a referred employee or department qualified to complete the
                     VVOE (from the initial independently verified employer/self-employed business), web pages
                     supporting the employer/self-employed business, etc. If documentation was sent for verification, the
                     verified documents should also be included the supporting documentation.
                   When the only available telephone number for the Employer or Self Employed Business is a cellular
                     phone, the following additional workflow is provided: Confirm the cellular phone number is issued in
                     the name of the Employer or Self Employed Business (i.e., via FastData or phone records; If the
                     cellular phone is issued to an individual, the individual should be the business owner); or Complete a
                     reverse business look-up using the business name; or Complete a reverse cellular phone number look-
     05/27/11                      Page 34 of 58                 Guidelines are subject to change without notice
                                                                  CONFORMING 1600 Series

EMPLOYMENT/     up using the cellular phone number.
INCOME
(continued)




     05/27/11                  Page 35 of 58          Guidelines are subject to change without notice
                                                                            CONFORMING 1600 Series

ESCROWS/        Escrows for mortgage insurance may not be waived, no exceptions. Escrows for taxes and hazard
IMPOUNDS        insurance may not be waived if the loan has MI, except in the State of California. For the state of
                California, taxes and hazard insurance may be waived on loans with mortgage insurance; however, an
                escrow must be established for the mortgage insurance.




     05/27/11                     Page 36 of 58                Guidelines are subject to change without notice
                                                                                 CONFORMING 1600 Series

FEES              Fees:
                    For loan amounts ≤ to $20,000, points and fees charged to the borrower may not exceed $1,000.
                    For loan amounts > $20,000, points and fees charged to the borrower may not exceed 5% of the loan
                     amount.
                    Points and fees include origination fees, underwriting fees, broker fees, finder’s fees, and charges that
                     the lender imposes as a condition for making the loan – whether they are paid to the lender or a third
                     party.
                    Points and fees that do not have to be counted against this limitation include bona fide discount points,
                     as well as fees paid for actual services rendered in connection with the origination of the mortgage,
                     such as: attorney’s fees, notary’s fees, and fees paid for property appraisals, credit reports, surveys,
                     title examinations and extracts, flood certifications, tax certifications and home inspections; state and
                     local transfer taxes or fees; escrow deposits for the future payment of taxes and insurance premiums;
                     mortgage insurance fees or credit risk price adjustments; the costs of title, hazard and flood insurance
                     policies; and other miscellaneous fees and charges that, in total, do not exceed one-quarter percent of
                     the loan amount.

                  Real Estate Commission: The aggregate of sales incentives such as real estate commissions, bonuses,
                  and/or finder’s fees as disclosed in the sales contract and/or on the HUD-1, is limited to eight percent
                  (8.00%) of the property’s sales price. All excessive sales incentives (those greater than eight percent (8%))
                  must be subtracted from the sales price dollar for dollar when calculating the LTV and CLTV.




       05/27/11                      Page 37 of 58                  Guidelines are subject to change without notice
                                                                              CONFORMING 1600 Series

GEOGRAPHICAL    Eligible states: AK, AZ, CA, CO, CT, GA, ID, IN, MD, MI, MO, NV, NM, OK, OR, TX (Cash out refi
RESTRICTIONS    ineligible, 2nd TD not allowed, 50(a) (6) Homestead properties ineligible), UT, VA, WA, WY.

                Arizona: For loans secured by properties located in this state the LTV/CLTV/HCLTV is capped at 90%.

                Georgia: Georgia Power leasehold properties are not eligible.

                Maryland: As a result of state legislation, the following guidelines apply for residence and second
                homes:
                  AUS processed loans where only a verbal VOE is required will be acceptable only if documented as
                   follows: for salaried borrowers, a verbal VOE and a current pay stub supporting current income is
                   obtained, and for self-employed borrowers, one (1) year current signed 1040 Federal Income Tax
                   return supporting current income is obtained.
                  Fully amortizing ARM loans will be acceptable only if the following credit overlays are applied: for all
                   AUS processed fully amortizing ARMs, the greater of the product qualifying rate or the fully
                   amortizing, fully indexed rate must be input into DU as the note erate for qualifying purposes.

                Michigan: For loans secured by properties located in this state the LTV/CLTV/HCLTV is capped at
                90%.

                Nevada: As a result of state legislation, AUS processed loans where only a verbal VOE is required, are
                not eligible for all occupancy types. For loans secured by properties located in this state the
                LTV/CLTV/HCLTV is capped at 90%.

                New Mexico: As a result of state legislation, all ARM loans must be qualified at the more restrictive of
                the product qualifying rate or the fully indexed (index + margin), fully amortizing rate.




     05/27/11                      Page 38 of 58                 Guidelines are subject to change without notice
                                                                               CONFORMING 1600 Series

INSURANCE       Hazard Insurance: Must obtain documentation from the insurer of a) insurable value and b) how
                insurable value was determined. Typically insurance companies use the Marshall & Swift / Boeckh
                (MS/B) guide to determine values based on input describing size, baths, type of construction, etc.
                Insurable value must be documented with one of the following:
                   Guaranteed replacement cost policy endorsement to the policy, OR
                   Written evidence from the insurer that the coverage equals the insured value and how the insured value
                    was determined; OR
                   Documentation from the appraiser of the replacement cost of the improvements.
                   Condominium Requirements: Insurance should cover 100% of the insurable replacement cost of the
                    project improvements, including the individual units in a condominium project.
                   Coverage does not need to include land, foundations, excavations, or other items that are usually
                    excluded from insurance coverage.
                An insurance policy that includes either of the following endorsements will assure full insurable value
                replacement cost coverage:
                   Guaranteed Replacement Cost Endorsement (under which the insurer agrees to replace the insurable
                    property regardless of the cost) and, if the policy includes a coinsurance clause, an Agreed Amount
                    Endorsement (which waives the requirement for coinsurance); OR
                   Replacement Cost Endorsement (under which the insurer agrees to pay up to 100% of the property's
                    insurable replacement cost, but no more) and, if the policy includes a coinsurance clause, an Agreed
                    Amount Endorsement (which waives the requirement for coinsurance).
                Follow these rules for coverage requirements:
                                 If total of all liens is:                             Required Coverage is:
                  Greater than 100% of insurable value                                 100% of insurable value
                  From 80% to 100% of insurable value                                      Total of all liens
                  Less than 80% of insurable value                                     80% of insurable value
                The maximum ever required is 100% of insurable value. The minimum ever required is 80% of insurable
                value. Require total of all liens if that is greater than 80% of insurable value and less than 100% of
                insurable value.
                   Examples of required coverage:                          Insurable Value is:         Required Coverage
                                                                                                       is:
                  Total of all liens is $330,000                                  $200,000                    $200,000
                  Total of all liens is $185,000                                  $200,000                    $185,000
                  Total of all liens is $100,000 (less than 80% of                $200,000                    $160,000
                  Ins Val)
                  Replacement cost from Appraisal is $250,000                     $200,000                    $200,000
                  Guaranteed Replacement Cost Endorsement                         $200,000                Whatever policy is.

                Mortgage Insurance: Mortgage insurance is required on all standard products with LTVs greater than
                80%. High Balance: Financed MI is not allowed. Reduced MI coverage options are not acceptable.
                Lower cost/minimum coverage options are not acceptable. The highest percentage of coverage per the
                AUS findings is reflective of the standard coverage requirement. Escrows for mortgage insurance may not
                be waived, no exceptions. Escrows for taxes and hazard insurance may not be waived if the loan has MI,
                except in the State of California. For the state of California, taxes and hazard insurance may be waived on
                loans with mortgage insurance; however, an escrow must be established for the mortgage insurance.
                                     Standard Mortgage Insurance Coverage
                       LTV Ranges                    ≤ 15-Year                       >20-Year
                  90.01% - 95.00%                        25%                           30%
                  85.01% - 90.00%                        12%                           25%
                  80.01% – 85.00%                        6%                            12%




     05/27/11                      Page 39 of 58                  Guidelines are subject to change without notice
                                                                                CONFORMING 1600 Series

OCCUPANCY       Primary Residence: 3-4 unit High Balance loans ineligible. A primary residence is a property occupied
                by the borrower for a major portion of the year and that possesses the physical characteristics to
                accommodate the borrower’s immediate family. The occupancy type may be considered a primary
                residence in the following situations with acceptable documentation: parents who are applying for a
                mortgage to provide housing for a physically handicapped or developmentally disabled adult child who is
                unable to work or has insufficient income to qualify for a mortgage, or children who are applying for a
                mortgage to provide housing for elderly parents who are unable to work or have insufficient income to
                qualify for a mortgage. If parents are financing for a disabled child or children financing for elderly
                parents, the following applies: the disabled child or elderly parents are not required to be on title or on the
                mortgage loan, “elderly parents” are defined as parents who are not able to work or have insufficient
                income to afford a home on their own (no minimum age requirement), the loans are eligible as Purchases,
                Rate & Term refinances and Cash-out refinances, and acceptable documentation will be determined by
                underwriting discretion on individual situations. When rental income from the subject property is being
                used to qualify and the subject property is a 2-4 unit primary residence, the borrower must obtain rent loss
                insurance to cover at least six (6) months of gross monthly rent. The gross monthly rent for each non-
                owner occupied unit in a 2-4 unit primary residence must be identified, even when the borrower is NOT
                utilizing rental income to qualify. When rental income is NOT being used to qualify the borrower, the
                gross monthly rental income must be documented with one of the following: Operating Income Statement
                (Fannie Mae Form 216/Freddie Mac Form 998), Single Family Comparable Rent Schedule (Fannie Mae
                Form 1007/Freddie Mac Form 1000), Small Residential Income Property Appraisal Report (Fannie Mae
                Form 1025/Freddie Mac Form 72), or lease agreement(s).

                2nd/Vacation Home: Only one unit properties are allowed. The borrower must occupy the property a
                portion of the year. The property must be a reasonable distance from the borrower’s primary residence.
                Typically, the property is located in either a resort or vacation area or, for convenience, in a city where the
                borrower works when the primary residence is in a distant suburb. Second homes not suitable for year
                round occupancy may be considered if typical for the area. Rental income and expenses on Schedule E of
                the borrower’s personal tax return(s) must not be significant. Rental income from a second home cannot
                be used to qualify the borrower. The borrower must have exclusive use of the property at all times;
                management agreements cannot contain blackout dates. The property cannot be subject to timeshares or
                other shared ownership arrangements/agreements. The property cannot be subject to rental pool or subject
                to inclusion in a mandatory rental pool. The property cannot be subject to revenue sharing between
                owners and the developer or another party. If the subject property is a second home, the borrower cannot
                be affiliated with the builder or developer.

                Investment Property: 2-4 unit High Balance ineligible. Investment properties must be typical and
                customary. The borrower cannot be affiliated with the builder, developer or property seller. Borrowers
                purchasing their first investment property or borrowers with no history of long-distance property
                management must reside in the same state as the investment property, or within a 100 miles radius of the
                investment property located in a different state. If the subject investment property is located outside of the
                state in which the borrower resides and over a 100-mile radius of the borrower's primary residence, the
                following requirements apply:
                   On a limited cash-out (rate/term) refinance, the borrower must own the property as an investment for at
                    least 12-months with 0x30-day late payments in the last 12-months.
                   On a purchase transaction, the borrower’s must have a 24-month prior experience owning and
                    managing a long distance investment, or through a management company. The 24-month history must
                    be within the last five years.
                   Borrowers must document the most recent experience of owning and managing an investment property
                    with at least one year of filed federal tax returns. It is not acceptable to use only lease.
                agreements to document the experience of owning and managing an investment property
                Cash-out refinance transactions are not eligible. These guidelines must be evaluated outside of DU. When
                rental income from the subject property is being used to qualify and the subject property is an investment
                property, the borrower must obtain rent loss insurance to cover at least six (6) months of gross monthly
                rent. Interest only fixed rate and interest only adjustable rate mortgages are not eligible. The gross
                monthly rent for each unit in a 1-4 unit investment property must be identified, even when the borrower is
                not utilizing rental income to qualify. When rental income is not being used to qualify the borrower, the
                gross monthly rental income must be documented with one of the following: Operating Income Statement
     05/27/11                       Page 40 of 58                 Guidelines are subject to change without notice
                                                                                  CONFORMING 1600 Series

OCCUPANCY        (Fannie Mae Form 216), Single Family Comparable Rent
(continued)      Schedule (Fannie Mae Form 1007), Small Residential Income Property Appraisal Report (Fannie Mae
                 Form 1025), or lease agreement(s). Condo ineligible.

                 Occupancy Verification: Underwriters are responsible for determining if the occupancy type submitted
                 for a loan transaction is reasonable based on the application and supporting documentation submitted. At
                 the underwriter’s discretion, one or more of the following documents may be acceptable to determine that
                 the subject property is the borrower’s current primary residence: tax returns, bank statements, tax
                 assessment, utility bill, and/or homeowner’s insurance policy. Other documentation may be acceptable at
                 the underwriter’s discretion. If during the refinance loan process, mail is sent to the borrower’s primary
                 residence and is returned to the Trust One, documentation must be obtained from the borrower to prove the
                 subject property is the borrower’s primary residence. If Trust One is unable to determine the borrower’s
                 intent to occupy the subject property as a primary residence, the loan is not eligible. If it is determined that
                 the Investor, or another lender has provided a loan to the borrower as an owner occupied residence, and the
                 borrower has since returned to purchase a new owner occupied property within a twelve (12) month period
                 from the Note date of the previous transaction then: the borrower must sign an occupancy statement to
                 confirm their intent to occupy the new property as their primary residence, and the borrower must provide
                 a written explanation for the new owner occupied transaction. The explanation must include reason and/or
                 circumstances for the new transaction (i.e., job change, move up, etc.) and the intent or disposition of the
                 previous property. Documentation may be required to support the explanation, such as a rental agreement
                 or listing agreement. DU will issue an occupancy verification message when it appears that the loan case
                 file may not be the borrower’s true primary residence, because: the subject property address does not
                 match the borrower’s current residence address, or Fannie Mae has recently purchased a loan for the
                 borrower that was secured by a property that was identified as their primary residence.




      05/27/11                       Page 41 of 58                  Guidelines are subject to change without notice
                                                           CONFORMING 1600 Series

PREPAYMENT
                Not allowed.
PENALTY




     05/27/11                  Page 42 of 58   Guidelines are subject to change without notice
                                                                                CONFORMING 1600 Series

PROPERTY        Eligible:
REQUIREMENTS      SFRs
                  PUDs.
                  Condos. Investment Property ineligible.
                  Rural properties eligible in California only.
                  Mixed Use properties.

                Ineligible:
                  Factory Built Housing (includes modular, panelized, and prefabricated); Non-Warrantable Condos.
                  Manufactured housing and mobile homes.
                  Any condominium or PUD project for which the owner’s association is named a party to current
                   litigation or, for any project that has not been turned over to the association, for which the project
                   sponsor or developer is named as a party to current litigation that relates to the project.
                  Condominium hotels or condotels. A condominium hotel or condotel is any project that is operated as
                   a hotel, resort, motel, inn or lodge and, therefore, is not a residential project, even though the units are
                   owned individually. A project with any one or more of the following characteristics is considered to be
                   a condotel: rental pooling agreements, either mandatory or voluntary, that allow or require the unit
                   owners to either rent their units or give a management firm control over the occupancy of the units;
                   maid service; room service; shared revenue. Shared Revenue equals total income from rental of all the
                   units in the condominium (condotel) less the total amount of expenses then divided by percentage
                   interest. In short, units are rented by the management company on site, money collected on site and
                   expenses subtracted including the HOA fee, then at the end of the year all money is divided. If shared
                   revenue exists, then the property is considered a condotel. The revenues are produced from the rental
                   pool, some are mandatory rentals others are voluntary; units that do not contain full-sized kitchen
                   appliances; nightly/daily occupancy units (in conjunction with one of the other characteristics outlined
                   in this section); marketed as a hotel including, but not limited to, projects with units that are available
                   to be rented on a daily basis or projects with the names that include the words “hotel,”, “resort,”
                   “motel, ”inn” or “lodge,” • advertising of rental rates; zoned commercial/residential, when the square
                   footage of a unit is less than 600, it should be reviewed in detail to ensure that the property is a
                   condominium versus a condotel,; reservation services desk, if not part of commercial space; declarant
                   control of the condotel exceeds 10 years; central key systems; franchise agreements; units that are
                   marketed for sale based on the availability of short term rental rates; a significant level of hotel-type
                   services; may restrict the owner’s ability to occupy the unit; restrictions on interior decorating; non-
                   incidental business operations owned or operated by the owner’s association such as, but not limited
                   to, a restaurant,; interconnecting phone system.
                  Co-ops.
                  Georgia Power Leasehold Properties.
                  Timeshare projects.
                  Projects with legal non-conforming use.
                  Properties subject to an unexpired redemption period with title defect.

                Condominium: Units in site condominiums must be coded as “condo” in DU, regardless of how the
                property appears (i.e., single family detached or unit in building). The required minimum square footage
                for condominiums is 600 square feet. Exterior-only condominium appraisal report (form 1075) is not
                eligible.
                   Insurance: HO-6 (walls-in) insurance policies are required on all condominium loans where the master
                    HOA policy does not provide coverage of the interior of the unit. HO-6 policies must cover the
                    fixtures, equipment, and replacement of improvements and provide betterment coverage to include any
                    improvements that the borrower may have made. If required, the HO-6 insurance policy must provide
                    minimum coverage of 20% of the unit’s appraised value. Impounding HO-6 policies on conforming
                    loans is required per standard impound LTV requirements.
                   Limited Project Review: FNMA classifies established and two-unit to four-unit projects warranted
                    under the Limited Project Review process as a “Type Q” condominium project. Attached units in new
                    condominium projects, investment properties are not eligible for the Limited Project Review Process.
                    The following two (2) Limited Project Review processes exist: Limited Project Review for Attached
                    Condominium Units, and Limited Project Review for Detached Condominium Units. Attached Condo:
                    Max LTV/CLTV Primary Residence, 90%; Max LTV/CLTV Second Home, 75%. Units, common
     05/27/11                       Page 43 of 58                  Guidelines are subject to change without notice
                                                                                 CONFORMING 1600 Series

PROPERTY           areas and facilities must be 100% complete. The project must be cover by the required hazard, flood
REQUIREMENTS       (if applicable), liability and fidelity insurance.
(continued)       Non-Warrantable Condos ineligible.
                  Investment Property Condo ineligible.

                Conversion of Principal Residence: DU will determine the level of reserves for each loan.
                  If the current primary residence is a pending sale but the transaction will not be closed (with title
                   transfer to a new owner) prior to the new transaction, the mortgage payment on the borrower’s current
                   primary residence does not have to be used to qualify the borrower if the following guidelines are met:
                   the borrower provides a complete copy of the executed sales contract (that has no sales contingencies
                   such as sale of previous property) for the current residence, and the borrower provides confirmation
                   that any financing contingencies have been cleared, and the borrower has at least six (6) months
                   reserves for both properties.
                  If the current primary residence is being converted to a second home, the following applies: BOTH the
                   current and proposed mortgage payments must be used to qualify the borrower for the new transaction,
                   and six (6) months PITIA reserves for BOTH properties are required.
                  If the current primary residence is being converted to an investment property, the following applies:
                   Up to 75% of the rental income may be used to offset the mortgage payment in qualifying the borrower
                   only if there is documented equity of at least 30% in the existing property (derived from a current,
                   dated within 60 days of the Note date for the new transaction, full (i.e., 1004) or 2055 appraisal). For
                   borrowers with a current two to four (2-4) unit primary residence that will be converted to an
                   investment property, Federal tax returns must reflect a 2-year history of managing investment
                   properties. Borrowers with a current two to four (2-4) unit primary residence that will be converted to
                   an investment property are required to meet the thirty percent (30%) required equity position to utilize
                   the rental income from any of the property’s units, regardless if the units were previously occupied by
                   the borrower or not. If there is an existing HELOC on the current primary residence, then the total
                   line amount (total available credit line) of the HELOC must be utilized when calculating the 30%
                   equity. 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
                   and the following guidelines will apply: both the current and proposed mortgage payments must be
                   used to qualify the borrower for the new transaction, and six (6) months PITIA reserves for both
                   properties are required. AVM/BPO not allowed.

                Inspections:
                  Termite/Pest Inspection:
                    Purchase: A termite report is always required if the appraiser notes damage or possible infestation on
                     the appraisal. This requirement cannot be waived. A termite report is always required if called for
                     in the purchase contract. This requirement cannot be waived unless the purchase contract is modified
                     to eliminate requirement for termite report. A termite report is required on all other purchase
                     transactions in areas of “very heavy” probability and “moderate to heavy” probability of termite
                     infestation. This requirement can be waived by the Underwriter. A termite report is at the discretion
                     of the underwriter for purchase transactions in “slight to moderate” or “moderate to none”
                     probability areas. All requests to waive termite report must be made prior to docs. The request for
                     waiver must be signed by the borrower(s) and notarized with loan docs. When Underwriter
                     conditions for a termite report, only the Underwriter or Underwriting Manage can waive the termite
                     report.
                    Refinance: A termite report is always required if the appraiser notes damage or possible infestation
                     on the appraisal. This requirement cannot be waived.

                Multiple Properties: Maximum number of financed properties with any lender is (4). Joint or total
                ownership of a property held in the name of LLC or corporation, is subject to the maximum number of
                financed properties limitations. Maximum of (4) total properties held in Investor portfolio. Maximum
                total exposure of $2.5 million dollars on all Investor loan products.

                Mixed Use: Mortgages secured by properties that have a business use in addition to their residential use
                (such as a property with space set aside for a day care facility, a beauty or barber shop, a doctor’s office, a

     05/27/11                       Page 44 of 58                  Guidelines are subject to change without notice
                                                                               CONFORMING 1600 Series

PROPERTY        small neighborhood grocery or specialty store, etc.) are acceptable under the following guidelines: the
REQUIREMENTS    property must be a one-family dwelling that the borrower occupies as a principal residence; the mixed use
(continued)     of the property must represent a legal, permissible use of the property under the local zoning requirements;
                the borrower must be both the owner and the operator of the business; the property must be primarily
                residential in nature; the market value of the property must be primarily a function of its residential
                characteristics, rather than of the business use or any special business-use modifications that were made.
                A full appraisal is required and the appraiser must provide an adequate description of the mixed-use
                characteristics of the subject property in the appraisal report. These characteristics must be considered in
                the underwriting analysis of the loan.

                Properties Purchased at Auction: This policy applies to any transaction in which the borrower is
                purchasing a property by auction method, either through an online auction, live on-site auction, or
                commissioner’s sale (foreclosure auction or courthouse steps auction.) The policy does not apply to
                properties purchased by investment/management companies then resold to the borrower. Guidelines not
                addressed in this policy will follow the applicable first mortgage program guidelines.
                   Maximum Loan-to-Value: The auction terms must be included as part of the purchase contract
                    provided to the appraiser for review. The underwriter or MLC should review the purchase contract to
                    ensure the buyer’s premium or auction fee is clearly disclosed and not greater than 10% of the sales
                    price. The LTV for auctioned properties must meet the specific first mortgage program requirements.
                    For all eligible loan programs, if the subject property is located in a declining market, the maximum
                    LTV must be reduced by 5%. The LTV is calculated by using the lesser of the “Final Purchase Price”
                    or the current appraised value. The “Final Purchase Price” is the total of the amount of the bid (“Bid
                    Price”) plus the Buyer’s Premium (typically 5-10% of the bid price). Any fees paid by the borrower
                    (i.e. commission fees), including the buyer’s premium, must be added to the purchase price and
                    reflected on the sales contract for a final purchase price. Fees paid by the borrower in addition to the
                    final purchase price are not acceptable.
                   Eligible Transactions: Eligible for purchase transactions (traditionally underwritten and AUS
                    processed) only. At the conclusion of the auction, the borrower pays a percentage (typically 5%) of
                    the final purchase price as earnest money deposit. This policy only applies to properties purchased by
                    our borrower at auction and is not applicable to properties purchased in bulk by an
                    investment/management company then resold to the borrower.
                   Buyer’s Premium Paid by Seller: In addition to the commission paid by the Seller to an Auction
                    Company for the sale of their property, a “Buyer’s Premium” may be imposed. The amount of the
                    “Buyer’s Premium” is calculated as a percentage, set by the auction company, of the “Final Bid
                    Price.” The Buyer’s Premium is added to the “Final Bid Price” creating the “Purchase Price” that
                    appears on the sales contract. Because the “Buyer’s Premium” is financed by the Purchaser/Borrower,
                    the amount owed to the Auction Company may be deducted from the proceeds of the sale being paid
                    to the Seller at closing as reflected on the HUD-1.
                   Ineligible Transactions:
                         Refinance transactions.
                         Construction lending (One-time and two-time closings).
                         Rehabilitation lending.
                   Eligible Loan Programs: Except as outlined below, all full documentation first mortgage loan
                    programs are eligible in conjunction with auctioned property transactions. All transactions involving
                    auctioned properties are subject to Declining Markets Policy.
                   Secondary Financing: Secondary financing is not allowed in conjunction with auctioned property
                    transactions.
                   Eligible Occupancy/ Property Types: All eligible occupancy/property types must meet the specific
                    first mortgage program eligibility guidelines. Eligible occupancy/property types in conjunction with
                    auctioned property transactions include:
                     Primary residences.
                     Second Homes.
                     Investment properties. Investment property transactions have the following additional requirements:
                       Minimum credit score is the more restrictive of specific loan program or 740; The borrower must
                       demonstrate a 24-month history of managing rental property within the last 5 years: and Maximum
                       financing LTV is reduced by 5%.
                     Single family dwellings (attached and detached).

     05/27/11                      Page 45 of 58                 Guidelines are subject to change without notice
                                                                              CONFORMING 1600 Series

PROPERTY            2-4 unit properties.
REQUIREMENTS        PUDs, and
(continued)         Condominiums, including condo conversions. Condominiums purchased at auction must meet the
                      following additional requirements: Eligible Occupancy types are Primary residences and Second
                      Homes only; The condominium must be warrantable; The auction sales price must be at least half
                      of the last known listing price of the subject property; If the Developer is selling the property at
                      auction, the sales contract must contain an adjustment clause that provides for price reduction based
                      on values established at subsequent auctions for all transactions where the loan closing is pending.
                  Ineligible Occupancy/ Property Type:
                   Condotels
                   Cooperatives
                  Appraisal Requirements:
                    A full appraisal (i.e., 1004) is required, regardless of the appraisal report form indicated on the AUS
                      Findings/Feedback report.
                    The property must meet the specific first mortgage program guidelines regarding minimum
                      property standards.
                    The appraiser must indicate the following conditions of the property: the property must be in livable
                      condition (not subject to extensive renovations or rehabilitation), and utilities must be turned on and
                      functioning.
                    The appraiser must notate if any comparables used were sold by the auction method.
                    The appraisal should not use only comparables sold by the auction method.
                    Mortgage Electronic Registration System (MERS) must be pulled on the subject property within 15
                      days of closing to verify history of ownership and document lien activity against the subject
                      property.
                    If MERS is not pulled within 15 days of closing, it must be pulled again prior to closing with
                      satisfactory results.
                    The CoreLogic HistoryPro Report should be closely evaluated to determine market volatility and
                      any trends on the subject property, such as flipping. In the event of a foreclosure auction, be aware
                      that CoreLogic could potentially fire a “Prior 3 year Sale Gain” indicating an alert of a possible flip
                      within the last three (3) years because the property may have been deeded back to the original
                      mortgage company, then could be deeded to a trustee before the auction takes place. In this
                      situation, the flip alert should be acceptable.
                    All transactions involving auctioned properties are subject to SunTrust’s Declining Markets Policy.
                  Cash Reserve Requirements: The borrower must meet the specific first mortgage program reserve
                   requirements following traditional underwriting (non-AUS) guidelines, regardless if the transaction is
                   processed through an AU system. Loan programs that are only eligible for AUS processing will
                   follow the cash reserve requirements as evidenced on the AUS findings/feedback.
                  Auction Company Requirements: The auction company representing the subject property must be
                   licensed, bonded and insured if required by state law. A copy of the auctioneer’s license and insurance
                   documentation must be included in the loan file. In states where an auctioneer’s license is not
                   required, the auction company must meet the licensing requirements for real estate professionals in
                   that state and evidence must be in the file. The auction company may not hold any funds in escrow on
                   behalf of the borrower. The auction company or auctioneer cannot have ownership interest in the
                   subject property, the seller may not work for the auction company, and the purchase contract must be
                   reviewed and the requirements for all parties must be reasonable and in line with industry standards,
                   including but not limited to:
                    Services rendered and fees charged must be reasonable and standard for the transaction.
                    If it is determined that fees and charges are not reasonable and standard, or if Trust One is not able
                      to determine if the fees and charges are reasonable and standard, sthe loan must be referred to an
                      Underwriting Manager, for review.
                    If the fees and charges are not reasonable and standard, the loan is not eligible for financing and no
                      price guarantee is allowed aside from establishment of a minimum bid or reserve price, and parties
                      named on the contract must match supporting documentation such as the appraisal, title, etc.
                 Documentation Requirements: In addition to the documentation required by the specific first mortgage
                  program, all auctioned property transaction loan files must contain the following:
                   a full appraisal (i.e., 1004),
                   a copy of the report of sale (Real Estate Purchase Agreement or sales contract),

     05/27/11                     Page 46 of 58                  Guidelines are subject to change without notice
                                                                               CONFORMING 1600 Series

PROPERTY            a copy of the title binder,
REQUIREMENTS        a copy of the warranty deed with full title insurance (short form title policy is NOT acceptable), and
(continued)         a closing protection letter.
                    Bargain and Sale and Quit Claim deeds are not acceptable for auctioned property transactions.
                   The title binder must be reviewed by Trust One prior to closing to ensure all outstanding liens are
                   released. Trust One must review the HUD-1 in accordance with the Real Estate Purchase Agreement
                   (sales contract) and the final underwriting approval.

                PUD: A Planned Unit Development (PUD) is a real estate project in which each unit owner holds title to
                a lot and the improvements on the lot. All common facilities within the project are owned by the master
                homeowners’ association in exchange for the rights to use the common facilities. Unit owners in the
                project must pay mandatory assessment fees to the homeowners association to maintain the Common
                Elements for their benefit. This differs from the condominium ownership in that the owner holds title to
                the unit along with an undivided ownership interest in the project’s Common Elements. The following key
                indicators may be useful in identifying a PUD: The legal description on the appraisal or title reports
                includes ownership of a lot number and or reference to a “Planned Unit Development”; The appraiser
                identifies the subject as part of a PUD; The appraisal shows a low to minimal monthly dues amount on
                page one (1). For PUD transactions with no appraisal, confirm the HOA fee with third party
                documentation, such as, but not limited to, a recent HOA letter, a dues billing statement, or in the case of
                an attached PUD use the Condominium/PUD Questionnaire

                Rural Property: The highest and best use of the property must be residential and not agricultural or
                ranching. If the improvements’ value is less than 50-70% of the loan, close evaluation is required. The
                site must be typical to residential properties in the market, as supported by comparables with similar sites.
                There should not be significant income producing farming or ranching activity on the property, no more
                than 2 to 3 outbuildings, and no more than 8 to 10 acres of crop land or actively used pasture land. Lack of
                farm-related income does not mean that a property is not agricultural or made up of excess vacant land.
                The determination is made on the nature of the property and not on the source of the borrower’s income.




     05/27/11                      Page 47 of 58                 Guidelines are subject to change without notice
                                                                                CONFORMING 1600 Series

QUALIFYING      A maximum debt-to-income ratio of 45% is permitted, regardless of the DU “Approve/Eligible” findings.
                Regardless of the funds used (borrower’s own funds or gift funds), it is acceptable to pay off or pay down
                debt and have the payment excluded from the qualifying ratio.

                Fixed-Rate: Qualify at the Note Rate.

                3/1 ARM and 5/1 ARM (1630/1630IO/1650/1650IO/150HB): Qualify at the greater of the note rate +
                2% or the fully indexed (index +margin) rate.

                7/1 ARM and 10/1 ARM (1670/170HB/1611/111HB): Qualify at the Note.

                Interest Only 7/1 ARM and 10/1 ARM (1670IO/1611IO): Qualify at the greater of the fully
                amortizing note rate or the fully amortizing, fully indexed (index+margin) rate.

                Alimony/Child Support/Maintenance Payments: Alimony and/or child support payments are not
                counted in the total debt ratio if there are 10 or less payments remaining. The borrower must provide a
                complete copy of the divorce decree or complete separation agreement to verify the payment amount.

                Co-Signed Obligations: Generally, it is recommended that co-signed debt be included in the borrower’s
                liabilities to limit the amount of file documentation. If Refer, due to high debt ratio, co-signed debt
                should be deleted (or omitted) and the loan re-submitted to DU. If Approve/Eligible, and a borrower has
                co-signed a debt but is not making the payments, it is not included in the debt ratio if the following applies:
                the account does not reflect late payments in the last 12 months, and the borrower provides 12 months of
                canceled checks to identify who is making the payments.

                Installment Debts: All loans must have a payment, even if the account has a deferred payment option,
                such as student loans or retail purchase accounts. Installment debt payments are not counted in the total
                debt ratio if there are no more than ten (10) remaining payments. Regardless of the funds used (borrower’s
                own funds or gift funds), it is acceptable to pay off and/or pay down installment debt and have the
                payment excluded from the qualifying ratio if there are no more than ten (10) remaining payments. If the
                loan is secured by a financial asset that may be liquidated to pay off the debt (i.e., 401K, certificate of
                deposit, mutual funds or stocks), the payment may be excluded in qualifying ratios, but must be included
                on the loan application. In addition, the asset value must be reduced by the loan balance before adding it
                to the borrower’s total liquid assets.

                Lease Payments: Lease payments are included in the debt ratio, regardless of remaining payments.

                Paystubs: Review the borrower’s paystubs for deductions for additional liabilities not disclosed by the
                borrower.

                Property Taxes, Insurance HOA Assessments: The taxes, insurance and HOA assessments, if
                applicable, due on a property by a borrower must always be considered in the borrower’s debt to income
                ratios, including properties that are currently owned free and clear. Generally, it is assumed that, if the
                mortgage has been reported to the credit repositories, the payment includes taxes and insurance. This
                assumption also includes mortgages that are not on the credit report and other verification has been
                provided. If the mortgage is with a private individual, it is assumed that the payment does NOT include
                taxes and insurance. If the borrower discloses that the mortgage payment does not include taxes and/or
                insurance or the mortgage is with a private individual, or the property is owned free and clear the
                following applies: the borrower must provide the amount of taxes and/or insurance (translated into a
                monthly figure), the monthly taxes and/or insurance must be treated as a liability, and types of acceptable
                documentation of taxes and/or insurance is determined by underwriter discretion. Verification can include,
                but is not limited to: property taxes, using a recent tax bill, homeowner’s insurance, using a current
                insurance declaration page, or HOA fees, using a recent HOA statement. Other properties owned by the
                borrower identified on the loan application as a condominium, PUD, or townhouse must document HOA
                fees, even if the mortgage payment reflects on the credit report.

                Revolving Debts: If a payment for a revolving debt is not included in the online loan application, DU
                will calculate an estimated payment to be used in the total monthly expense payment. This payment will
     05/27/11                        Page 48 of 58               Guidelines are subject to change without notice
                                                                                 CONFORMING 1600 Series

QUALIFYING       be the greater of $10 or 5% of the outstanding balance. Monthly payments on revolving or open-end
(continued)      accounts, regardless of balance, must be included in the borrower’s monthly debt payment. Regardless of
                 the funds used (borrower’s own funds or gift funds), it is acceptable to payoff revolving or open-end debt
                 and have the payment excluded from the qualifying ratio. Revolving or open-end debt may not be paid
                 down to qualify, accounts must be paid in full and the account must be closed. If an account on the credit
                 report has not been updated within 75 days, an update to the credit report is required or written verification
                 of the account status must be obtained.

                 Unreimbursed Business Expenses: When unreimbursed business expenses are on the tax returns, or
                 when the executed tax transcripts reflect unreimbursed expenses (Schedule 2106), deduct these expenses
                 from qualifying income.




      05/27/11                       Page 49 of 58                 Guidelines are subject to change without notice
                                                                               CONFORMING 1600 Series

REFINANCES      Cash Out:
                  Borrower must be on title for a minimum of six (6) months prior to loan application, since the date of
                   purchase, with 0 x 30 day late payments. The six (6) months minimum seasoning is based on the date
                   the borrower took title and the current loan application date. The title must have been held in the name
                   of a natural person or an LLC (as long as the borrower was a member of the LLC prior to transfer). In
                   addition, a six (6) month history of ownership between the LLC and the natural person must be
                   documented. Transfer of ownership from a corporation to an individual does not meet this requirement.
                   If the property was purchased for cash, then the borrower must document property ownership for a
                   minimum six (6) months prior to loan application. Cash-out transactions are not permitted to pay off
                   another lender’s interim construction loan. Cash-out transactions are permitted to payoff a
                   construction one-time closing loan where six (6) permanent mortgage payments have been made.
                   Cash-out refinance transactions are not eligible if the existing mortgage is a “restructured mortgage”.
                  Generally, the LTV is determined on current appraised value; however, when the borrower is unable to
                   demonstrate an acceptable continuity of obligation or there is no outstanding lien against the property,
                   additional restrictions may apply. The transaction must meet all applicable seasoning and continuity of
                   obligation requirements.
                  There is no maximum cash-out limitation.
                  Cash-out refinance transactions on second homes, investment properties, or properties located in TX
                   are not eligible.
                  No late payments on the current mortgage in the last six months prior to loan application.
                  Refinances of subordinate liens that were not used in whole to purchase the subject property,
                   regardless of seasoning (including home improvement, HELOC, and second mortgages obtained for
                   the purpose of taking equity out of the property) MUST be considered a cash-out refinance.
                  If a portion of a HELOC was used to purchase the subject property, the LESSER of the existing
                   HELOC balance or the original draw amount used to purchase the subject property can be paid off and
                   be considered a Rate & Term refinance transaction. Any additional outstanding balance must be re-
                   subordinated or if the intent is to pay off the additional outstanding balance as a part of the first
                   mortgage transaction, then the entire transaction MUST be considered a cash-out refinance.
                  Additional High Balance requirements: Cash-out refinances are only eligible on fully amortizing
                   primary residence transactions. There is no maximum cash-out limitation. Standard Agency non-AUS
                   guidelines apply for cash-out refinance transactions, with the following exception: Cash-out funds
                   may not be used toward the reserve requirements. The LTV is determined based on the current
                   appraised value. The transaction must meet all applicable continuity of obligation and seasoning
                   requirements.

                Continuity of Obligation: The objective of the continuity of obligation requirement is to address
                refinance transactions that include a borrower that is on title, but not obligated on the original mortgage
                note being satisfied. An acceptable continuity of obligation (assuming that there is an outstanding lien
                against the property) exists when: there is at least one borrower obligated on the new loan who was also a
                borrower obligated on the existing loan being refinanced, OR the borrower has been on title for at least 12
                months (but not obligated on the existing loan being refinanced) AND residing in the property for at least
                12 months AND has either: paid the mortgage for the last 12 months (including the payments for any
                secondary financing), OR can demonstrate a relationship (relative, domestic partner, etc.) with the current
                obligor. Note: The existing loan being refinanced and the title must have been held in the name of a
                natural person or an LLC (as long as the borrower was a member of the LLC prior to transfer). In addition,
                a six (6) month history of ownership between the LLC and the natural person must be documented.
                Transfer of ownership from a corporation to an individual does not meet this requirement. The continuity
                of obligation guidelines do NOT apply for properties recently inherited, spousal/partner buyouts,
                installment land contract transactions or properties owned free and clear. Loans with an acceptable
                continuity of obligation may be underwritten and priced as either a limited cash-out (rate/term) or a cash-
                out refinance based on standard definitions. If the borrower is currently on title but is unable to
                demonstrate an acceptable continuity of obligation, or there is no outstanding lien against the property, the
                loan must be underwritten and priced as a cash-out refinance transaction with these additional limitations.
                If there are no outstanding mortgage liens (i.e., purchased for cash or previous mortgage has been paid off)
                against the property, the following applies:
                   The borrower must have been on title for a minimum of six (6) months prior to loan application.
                   If the property was purchased within the six (6) to 12 month period prior to the application date for the
     05/27/11                      Page 50 of 58                  Guidelines are subject to change without notice
                                                                               CONFORMING 1600 Series

REFINANCES          new financing, the LTV/CLTV/HCLTV ratios will be based on the lesser of the original sales price
(continued)         /acquisition cost (documented by the HUD-1 Settlement Statement) or the current appraised value.
                   If the property was purchased more than 12 months prior to the application date for new financing, the
                    current appraised value may be used to calculate the LTV/CLTV/HCLTV ratios.
                   If the property was acquired through a gift, the LTV/CLTV/HCLTV ratios are calculated based on the
                    current appraised value.
                   If there is currently an outstanding mortgage lien on the subject property the borrower must be on title
                    for a minimum of six (6) months prior to loan application, and the maximum LTV/CLTV/HCLTV
                    ratio will be limited to 50% based on the current appraised value.

                 DU Refi Plus: Guidelines not addressed in this product description will follow standard DU guidelines.
                 The existing mortgage must be a Fannie Mae owned or guaranteed first lien mortgage. The existing
                 mortgage must have been delivered to Fannie Mae prior to June 1, 2009. All loans must be processed
                 through DU and receive an “Approve/Eligible” recommendation. The maximum number of DU
                 submissions for the DU Refi Plus loan program is limited to fifteen (15). Written
                 documentation/justification must be provided in the loan file for underwriter review/approval when the
                 number of DU submissions exceeds fifteen (15).
                   Primary Residence LTV/CLTV/HCLTV
                                                                             Non-Investor to          Non-Investor to
                                                                             Investor                 Investor
                   Transaction             Units     Investor to Investor
                                                                             MI not required on       MI required on
                                                                             original loan            original loan
                   Standard Fixed and 1-4            105% /no limit/no                         2
                                                                                95%/95%/95%              80%/95%/95%2
                   ARM                     units     limit2
                   High Balance            1 unit    105% /no limit/no          90%/90%/90%1             80%/95%/95%1
                                                           2
                   Fixed                   2 units   limit                       75%/75%/75%             75%/75%/75%
                   High Balance            1-2       105% /no limit/no
                                                                                 75%/75%/75%             75%/75%/75%
                   ARM                     units     limit2
                   1
                    For loan amounts > $625,500, the LTV/CLTV/HCLTV is limited to 80%/80%/80%.
                   2
                     Properties located in AZ, MI, and NV are limited to a maximum LTV/CLTV/HCLTV of 90%.
                   Second Home LTV/CLTV/HCLTV
                                                                             Non-Investor to          Non-Investor to
                                                                             Investor                 Investor
                   Transaction             Units     Investor to Investor
                                                                             MI not required on       MI required on
                                                                             original loan            original loan
                   Standard Fixed and 1unit          105% /no limit/no
                                                                                 90%/90%/90%             80%/90%/90%
                   ARM                               limit1
                   High Balance                      105% /no limit/no
                                           1 unit                                65%/65%/65%             65%/65%/65%
                   Fixed and ARM                     limit1
                   1
                    Properties located in AZ, MI, and NV are limited to a maximum LTV/CLTV/HCLTV of 90%.
                   Investment Property LTV/CLTV/HCLTV
                                                                             Non-Investor to          Non-Investor to
                                                                             Investor                 Investor
                   Transaction             Units     Investor to Investor
                                                                             MI not required on       MI required on
                                                                             original loan            original loan
                   Standard Fixed and units
                                                        75%/75%/75%              75%/75%/75%             75%/75%/75%
                   ARM
                   High Balance
                                           1 unit       75%/75%/75%              65%/65%/65%             65%/65%/65%
                   Fixed and ARM
                    Appraisal: Investor to Investor follow DU recommendations. A DU Refi Plus Property Inspection
                      Waiver (PIW) or waivers for appraisals or exterior only property inspections are not eligible.
                    Borrower Eligibility: If DU is unable to recognize a borrower, DU will issue a message that the social
                      security number (SSN) on the FNMA loan associated with the subject property does not match and
                      require Trust One to confirm the borrowers on the loan casefile match all borrowers on the FNMA
                      loan, except in cases where a borrower is being added or removed due to death or divorce. A borrower
                      may be added to (including non-occupant co-borrowers) or removed from the new loan provided at
                      least one borrower from the existing mortgage remains on the new mortgage. Borrowers may be
      05/27/11                        Page 51 of 58                Guidelines are subject to change without notice
                                                                                CONFORMING 1600 Series

REFINANCES           removed from the new loan. The following requirements will apply: The borrower(s) being removed
(continued)          from the loan must also be removed from the deed (i.e., title); Evidence must be provided that the
                     remaining borrower(s) have been making the payments from his or her own funds for 12 consecutive
                     months prior to the origination of the new mortgage; The 12 month payment history may not be
                     satisfied using multiple consecutive loans within the borrower’s credit history; 12 months cancelled
                     checks or bank statements (if automatic draft) must be documented in the loan file; The account being
                     used to document the 12 month payments must reflect the remaining borrower(s) as the owner of the
                     account. If a borrower is being removed due to death then the following applies: 12 month payment
                     history is not required; Documentation to evidence the borrower’s death must be obtained. Adding or
                     removing a borrower is allowed when subordinating an Investor second mortgage. The Investor second
                     mortgage cannot be modified, regardless of whether borrower(s) are added to, or removed from, the
                     first mortgage, and borrower(s) currently obligated on the second mortgage must remain. If the
                     remaining borrower cannot meet the requirements but the loan is eligible for the DU Refi Plus loan
                     program as indicated by the DU Findings report, then the following applies: The loan may not close as
                     a DU Refi Plus transaction, and the loan must be processed as a standard Agency or High Balance Rate
                     & Term refinance (rate/term) transaction. In order for DU to properly assess the loan as a standard
                     Agency or High Balance Rate & Term refinance (rate/term) transaction the DU Opt Out Option must
                     be exercised.
                    Cash back to Borrower: The borrower may receive up to $250 cash back at closing. If there is ever
                     excess cash back greater than $250, the loan amount must be recalculated, the loan must be re-
                     approved, and new documents must be drawn. Principal curtailments are not allowed regardless of the
                     amount.
                    Credit History: Investor to Investor - As of the date of the application, the borrower must be current on
                     the mortgage being refinanced; The borrower’s payment history must reflect 0X60 on all housing debts
                     for the last 12 months; If the payment history is seasoned less than 12 months, the borrower’s payment
                     history must reflect 0X60 over the life of the loan period. Non-Investor to Investor - As of the date of
                     the application, the borrower must be current on the mortgage being refinanced; The borrower’s
                     payment history must reflect 0X30 on all housing debts for the last 12 months; If the payment history
                     is seasoned less than 12 months, the borrower’s payment history must reflect 0X30 over the life of the
                     loan period.
                    Income: A verbal verification of employment must be completed within three (3) business days prior
                     to closing. Salaried/Hourly/Bonus/Overtime - Income must be documented with pay stub(s) dated
                     within 30 days before application and include YTD income for at least 30 days and a verbal
                     verification of employment (VOE). Self-employed/Commission Investor to Investor – Income must be
                     documented with one years’ (most recent) federal income tax return. Self-employed/Commission
                     Non-Investor to Investor – Income must be documented following standard DU guidelines. Rental
                     income – If rental income is being used for qualification, standard DU guidelines apply.
                    Ineligible Existing Mortgages: Ineligible existing mortgages include the following: Loans delivered to
                     Fannie Mae on or after March 1, 2009; Mortgage loans that are subject to any credit enhancement (i.e.,
                     full or partial recourse) other than borrower paid mortgage insurance; Mortgage loans that are currently
                     subject to any outstanding repurchase request from Fannie Mae; Loan with Lender Paid Mortgage
                     Insurance; Loans with Pool Insurance; Reverse mortgage loans; Second mortgage loans; Government
                     mortgage loans; Rural Development Guaranteed Rural Housing loans; Texas 50(a)(6).
                    Interest Only: Ineligible.
                    Mortgage Insurance: Mortgage insurance is not required for transactions where the original LTV was
                     80% or less. MI is available for borrowers who are refinancing an existing Investor first mortgage only
                     (Investor to Investor transactions). If the new loan requires mortgage insurance, the loan is not eligible
                     for purchase. If the original LTV of the existing loan was ≤ 80% or if the LTV was > 80% and the
                     existing loan does not have mortgage insurance (MI previously canceled or terminated), then MI
                     coverage is not required on the new loan. If the original LTV of the existing loan was > 80% and the
                     existing loan does have MI and MI is required for the new loan, the loan is not eligible for the DU Refi
                     Plus program. If the original LTV of the existing loan was > 80% and the existing loan does have MI
                     and MI is not required for the new loan, the loan is eligible for the DU Refi Plus program. Existing
                     loans with lender paid mortgage insurance (LPMI) are also not eligible.




      05/27/11                       Page 52 of 58                 Guidelines are subject to change without notice
                                                                              CONFORMING 1600 Series

REFINANCES        Minimum Credit Score:
(continued)                     Investor to Investor                                  Non-Investor to Investor
                  Fixed – 660 for all borrowers                          Fixed – 660 for all borrowers
                  High Balance – 660 for all borrowers                   High Balance – Primary Residence 1 unit
                                                                          80.01% - 90% 720 for all borrowers;
                                                                          75.01% - 80% 700 for all borrowers;
                                                                          ≤ 75% 660 for all borrowers.
                                                                         High Balance – Primary Residence ARMS
                                                                          1 unit: 680 for all borrowers;
                                                                          2-units: 740 for all borrowers.
                                                                         High Balance – Second Homes
                                                                          740 for all borrowers.
                                                                         High Balance – Investment Properties
                                                                             40 for all b rrowers.
                  Minimum Loan Amount: Standard - None. High Balance - $417,001 for one (1) unit properties;
                   $533,851 for two (2) unit properties. Two unit properties eligible for Primary Residence only.
                  Occupancy: 1-4 unit Primary Residences (attached or detached); 1-unit Second Homes (attached or
                   detached); 1-4 unit Investment Properties (attached or detached) for Standard loans; 1-unit Investment
                   Properties (attached or detached) for High Balance loans; Condominiums and units in a PUD.
                   Borrowers financing an investment property must reside in the state where the subject investment
                   property is located, except when the property is located within a 100 mile radius of the borrower’s
                   primary residence. If the subject property is located outside the borrower’s state of residence but
                   within a 100 mile radius of the borrower’s primary residence, supporting documentation to document
                   the distance must be provided. It is acceptable if the occupancy type on the new loan is not the same
                   as the occupancy type on the original loan.
                  Qualifying Ratios: Investor to Investor – The maximum debt to income ratio is 50.00% (regardless of
                   the LTV). If the borrower’s proposed mortgage P&I payment increases by more than 20% of the
                   current mortgage P&I (or Interest Only) payment, then the maximum qualifying ratios are 31/45%.
                   Additional MI company credit overlays may apply if the borrower’s proposed mortgage P&I payment
                   increases. In all cases, the more restrictive of the MI company guidelines or the guidelines outlined in
                   this product description will apply. Non-Investor to Investor – The maximum debt to income ratio is
                   45.00%. If the borrower’s proposed mortgage P&I payment increases by more than 20% of the current
                   mortgage P&I (or Interest Only) payment, then the maximum qualifying ratios are 31/45%. All High
                   Balance - The maximum debt to income ratio is 45.00%. If the borrower’s proposed mortgage P&I
                   payment increases by more than 20% of the current mortgage P&I (or Interest Only) payment, then the
                   maximum qualifying ratios are 31/45%.
                  Reserves:
                                 Investor to Investor                                 Non-Investor to Investor
                  Primary Residence 1-4 units: Per DU.                   Primary Residence 1-4 units: Per DU.
                  Second Home 1 unit: Per DU.                            Second Home 1 unit: 2 months PITI. Two
                                                                         months of reserves are required on each
                                                                         additional financed Second Home and/or
                                                                         Investment Property.
                  Investment Property                                    Investment Property 1-4 units: 6 months PITI.
                     1 unit: 2 months PITI                              Two months of reserves are required on each
                     2-4 units: 6 months PITI                           additional financed Second Home and/or
                                                                         Investment Property.
                  High Balance Primary Residence 1-2 units: Per          High Balance Primary Residence
                  DU                                                      LTV ≤ 80%, then 4 months PITI.
                                                                          LTV > 80%, then 6 months PITI.
                  High Balance Second Home 1 unit: Per DU                High Balance Second Home: 4 months PITI.
                                                                         Two months of reserves are required on each
                                                                         additional financed Second Home and/or
                                                                         Investment Property.



      05/27/11                    Page 53 of 58                 Guidelines are subject to change without notice
                                                                                  CONFORMING 1600 Series

REFINANCES                       Investor t Investor                                  Non-Investor to Investor
(continued)         High Balance Investment Property 1 unit: 2            High Balance Investment Property: 4 months
                    months PITI.                                          PITI. Two months of reserves are required on
                                                                          each additional financed Second Home and/or
                                                                          Investment Property.
                   Subordinate Financing: Existing subordinate financing must be re-subordinated to maintain the first
                    lien priority of the new DU Refi Plus mortgage loan. Subordinate financing may not be paid off with
                    the proceeds of the DU Refi Plus loan, regardless if the subordinate financing is a purchase money
                    second. New subordinate financing is not permitted in conjunction with the DU Refi Plus loan
                    program. When processing the new first mortgage through DU, the payment information for all
                    existing subordinate financing must be input into DU to ensure that the CLTV/HCLTV and other risk
                    factors are considered in the final AUS recommendation. A copy of the second mortgage note (or
                    financing agreement terms if the second is a HELOC) is required for the loan file to confirm that the
                    terms of the secondary financing meets DU Refi Plus requirements. In lieu of the second mortgage
                    note (or financing agreement) a letter from the lender, on their letterhead, may be obtained only if the
                    subordinate lien is reported on the credit report. The letter must disclose the terms of secondary
                    financing and confirm if the second lien is subject to a prepayment penalty and if so, outline the terms
                    (i.e., prepayment period). The existing secondary financing may be a Community Second.
                    Subordinate financing that does not fully amortize under a level monthly payment plan where the
                    maturity or balloon payment date is less than five (5) years is acceptable. Subordinate financing that is
                    subject to a pre-payment penalty is acceptable. Secondary financing cannot be subject to wraparound
                    terms. Acceptable title evidence must be obtained showing all secondary financing recorded and
                    clearly subordinate to the first lien. Subordinate secondary financing may be subject to negative
                    amortization.
                   Tangible Net Benefits: A “Tangible Net Benefit” form must be completed on all DU Refi Plus
                    transactions in order to document that the borrower is receiving a benefit in the form of either a
                    reduced monthly mortgage principal and interest payment, or a more stable mortgage product (i.e.,
                    refinancing from an ARM to a fixed rate mortgage; refinancing from an interest only to a fully
                    amortizing mortgage, decreasing the borrower’s remaining amortization period, etc.).

                 Properties Listed for Sale: The appraiser must note on the appraisal if a property was listed for sale in
                 the last 12 months. If the property is currently listed for sale when the appraisal is completed, the
                 appraiser must note that it is currently listed for sale. If a property was listed for sale in the last 12 months
                 and the borrower was the owner of the property at the time it was listed for sale, the following applies:
                    Rate & Term refinance: the property must be taken off the market on or prior to the application (i.e.,
                     1003) date. For primary residence transactions, the borrowers must confirm in writing their intent to
                     occupy the subject property. In addition, the current maximum LTV/CLTV/HCLTV ratios for the
                     transaction would apply. If at the time of application, the property is currently listed for sale, it must
                     be taken off the market at application and documentation must be provided that the listing agreement is
                     terminated (it is NOT ok just to take the "For Sale" sign down).
                    Cash-out refinance: the property must have been taken off the market for at least 90 days prior to loan
                     application. If the property was listed for sale within the six (6) months preceding the application (i.e.,
                     1003) date, the maximum LTV/CLTV/HCLTV is limited to 70%.

                 Rate/Term Refinance: No minimum seasoning requirement. LTV is determined on current appraised
                 value. The transaction must meet all applicable seasoning and continuity of obligation requirements. A
                 Rate & Term refinance transaction includes the following:
                    The pay off of the outstanding principal balance of an existing first mortgage.
                    The pay off of the outstanding principal balance of any existing subordinate mortgage (regardless of
                     seasoning) that was used in whole to acquire the subject property.
                    The financing of closing costs (including prepaid expenses).
                    Cash back to the borrower in an amount no more than the lesser of 2% of the balance of the new
                     refinance mortgage or $2,000.
                 Refinance mortgages that involve the refinance of subordinate liens that were not used in whole to
                 purchase the subject property, regardless of seasoning, (including home improvement, HELOC, and
                 second mortgages obtained for the purpose of taking equity out of the property) will be considered cash-
                 out refinances. If a portion of a HELOC was used to purchase the subject property, the lesser of the
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                                                                                 CONFORMING 1600 Series

REFINANCES       existing HELOC balance or the original draw amount used to purchase the subject property can be paid off
(continued)      and be considered a Rate & Term refinance transaction. Any additional outstanding balance must be re-
                 subordinated or if the intent is to pay off the additional outstanding balance as a part of the first mortgage
                 transaction, then the entire transaction must be considered a cash-out refinance. A complete copy of the
                 HUD-1 from the original purchase money transaction must be obtained and maintained in the mortgage
                 file to provide confirmation that all of the proceeds of an existing subordinate lien were used to fund part
                 of the purchase price of the subject property in order to treat the transaction as a Rate & Term refinance.
                 A 6-month seasoning, based on the date the borrower took title and the current loan application date, is
                 required when the loan being paid off was originated as a Cash Out refinance.
                    Additional High Balance requirements: Standard Agency non-AUS guidelines apply for Rate & Term
                      refinance transactions, with the following exception: up to $2,000 cash back to the borrower is
                      permitted. The LTV is determined based on the current appraised value. The transaction must meet
                      all applicable continuity of obligation and seasoning requirements as outlined in the Agency product
                      description.

                 Section 32: Not Allowed.

                 Spousal/Partner Buyout and Inherited Properties: Temporary buydowns are not eligible for loans
                 that involve spousal buyouts. Refinancing that results from a divorce settlement in which one spouse is
                 required to “buy out” the interests of the other spouse or any other refinancing in which an owner “buys
                 out” the interests of another owner may be treated as a Rate & Term refinance transaction if the following
                 conditions are satisfied:.
                    The property is a 1-4 unit primary residence. (Parties who inherit an interest in the property do not
                     have to satisfy this requirement.)
                    The property must have been jointly owned by all parties for at least 12 months preceding the date of
                     the mortgage application. (Parties who inherit an interest in the property do not have to satisfy this
                     requirement.)
                    All parties must be able to demonstrate that they occupied the property as their primary residence, by
                     providing an acceptable source of verification – such as a driver’s license, bank statement, credit card
                     bill, utility bill, etc. that was mailed to the individual at the address of the subject property. (Parties
                     who inherit an interest in the property do not have to satisfy this requirement.)
                    All parties must sign a written agreement that states the terms of the property transfer and the proposed
                     disposition of the proceeds from the refinancing transaction. (The borrower who acquires sole
                     ownership of the property may not receive any of the proceeds of the refinancing.)
                    The party who is “buying out” the other parties interest must be able to qualify for the mortgage under
                     standard underwriting guidelines.
                    Purchase money seconds as well as non-purchase money seconds may be paid off through this
                     transaction and remain a Rate & Term refinance.




      05/27/11                       Page 55 of 58                 Guidelines are subject to change without notice
                                                                               CONFORMING 1600 Series

RESERVES        Generally, the DU Findings Report will identify the amount of assets to be verified (which may be less
                than the actual amount input into DU), including any reserves necessary to the DU recommendation. Cash
                reserves must include the following components of the monthly housing expense (PITIA): principal and
                interest, hazard, flood and mortgage insurance premiums, real estate taxes, ground rent, special
                assessments, HOA dues (excluding any utility charges that apply to the individual unit), monthly
                cooperative corporation fee (less the pro rata share of the master utility charges for servicing individual
                units that is attributable to the borrower’s unit), and subordinate financing payments. Cash reserves for all
                transactions are based on the fully amortizing PITIA payment at the qualifying rate. If the subject property
                is a second home or investment property and/or the Investor is financing multiple investment properties at
                the same time for the same borrower(s), the following cash reserves apply for fully amortizing
                transactions: two (2) months for second homes, and six (6) months for investment properties. The above
                referenced reserve requirements must be manually calculated outside of DU. When a borrower has
                multiple financed properties and is financing (or refinancing) a second home or investment property, in
                addition to the reserve requirements outlined above, the following cash reserve requirements apply for
                each additional financed second home and investment property the borrower owns: two (2) months of
                reserves on each additional financed second home or investment property. For all interest only
                transactions, a minimum of 24 months of reserves (based on the fully amortizing PITIA) is required. If the
                transaction involves a cash-out refinance, cash received by the borrower at closing is not considered
                “reserves” or an asset. The borrower may use assets received as a gift to supplement his or her own funds,
                but cannot rely solely on gift assets in satisfying any applicable financial reserve requirement.
                   High Balance requirements:
                      Primary Residence, fully amortizing: If LTV </=80%, then four (4) months of reserves required. If
                       LTV > 80%, then six (6) months of reserves required.
                      Second Home, fully amortizing: If LTV </=80%, then four (4) months of reserves required. Two (2)
                       months of reserves required on each additional financed second home and/or investment property.
                      Investment Property, fully amortizing: Six (6) months of reserves required. Two (2) months of
                       reserves required on each additional financed second home and/or investment property.




     05/27/11                      Page 56 of 58                 Guidelines are subject to change without notice
                                                                                CONFORMING 1600 Series

SUBORDINATE       In all cases, the first mortgage data must include secondary financing data so that the accurate CLTV is
FINANCING          evaluated.
                  CLTV is the “total loan-to-value” of the first AND second mortgage to the sales price/value of the
                   property (if second is HELOC, the outstanding balance is used to calculate CLTV). HCLTV is the
                   “HELOC total loan-to-value” of the first AND HELOC second mortgage to the sales price/value of the
                   property (the total available credit line is used to calculate HCLTV).
                  Institutional, privately held and seller held seconds are permitted.
                  The terms of secondary financing must be fully disclosed in writing for each transaction and must
                   comply with the secondary financing guidelines outlined below.
                  A copy of the second mortgage note (or financing agreement terms if the second is a HELOC) is
                   required for the loan file to confirm that the terms of the secondary financing meets Agency
                   requirements. Note: In lieu of the second mortgage note (or financing agreement) a letter from the
                   lender, on their letterhead, may be obtained only if the subordinate lien is reported on the credit report.
                   The letter must disclose the terms of the secondary financing and confirm if the second lien is subject
                   to a prepayment penalty and if so, outline the terms (i.e., prepayment period).
                  Secondary financing payments are included in the housing ratio. If the secondary financing will not
                   fully amortize under a level monthly payment plan, the loan may not have a maturity or balloon
                   payment date of less than five (5) years after the note date of the first lien. This guideline applies to all
                   secondary financing (HELOCs and closed end seconds).
                  Secondary financing cannot be subject to wraparound terms.
                  Secondary financing (new or existing) which could impose a penalty for prepayment is not acceptable
                   unless: the subordinate loan is a home equity line of credit (HELOC), and the amount of the
                   prepayment penalty, prepayment fee, account closure fee, account termination fee, etc. does not exceed
                   $500.00 or the subordinate loan is a home equity line of credit (HELOC), or closed-end second
                   mortgage where the lender paid for some or all of the borrower’s closing costs and allows the lender to
                   recoup the closing costs if the borrower pays the HELOC or closed-end second mortgage off early, or
                   the prepayment penalty clause has lapsed.
                  A Home Equity Loan subject to prepayment penalty is NOT acceptable secondary financing unless the
                   prepayment penalty clause has lapsed.
                  The HELOC must be in compliance with all federal, state, and local laws.
                  Recouped fees may be deemed a prepayment penalty under state laws, in which was the second
                   loan/line would not be eligible for subordination.
                  Trust One is responsible for knowing state laws regarding prepayment penalties.
                  Acceptable title evidence must be obtained showing all secondary financing recorded and clearly
                   subordinate to the first lien.
                  Monthly payments must, at a minimum, meet the interest due so that negative amortization will not
                   occur. If the rate is variable, payments must be constant every 12 months.
                  Secondary financing subject to negative amortization is not acceptable.
                  Variable payments are acceptable if one or more of the following applies: the first mortgage is a fixed
                   rate; the first mortgage is an ARM (regardless of the initial fixed rate period); the second mortgage is
                   provided by the borrower’s employer under an employer-assisted housing program; the second
                   mortgage is a HELOC.

                HELOC: The underwriter must calculate the HCLTV outside of DU and note it on the DU Findings
                Report. Standard secondary financing guidelines apply, except as outlined below:
                  The CLTV calculation is based on the outstanding HELOC balance when the first mortgage is closed
                   and must meet LTV/CLTV guidelines.
                  The HCLTV calculation is based on the maximum HELOC credit available and must meet HCLTV
                   guidelines.
                  If the HELOC only requires an interest only payment, the monthly interest amount is used as the
                   payment when calculating debt ratios (do not calculate a P&I payment).
                  If there is no balance on the HELOC, no payment is counted against the borrower.




     05/27/11                      Page 57 of 58                  Guidelines are subject to change without notice
                                                         CONFORMING 1600 Series

TEMPORARY
               Ineligible.
BUYDOWNS




    05/27/11                 Page 58 of 58   Guidelines are subject to change without notice

				
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