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ALT-A Fixed and ARM Loan

VIEWS: 7 PAGES: 32

  • pg 1
									ALT-A        PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                            NC76PP, NC106, NC106PP
                                   NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                   NC76PPIO, NC106IO, NC106PPIO



   ALT-A Fixed and ARM Loan
   “A” Credit, Loan sizes $50,000 - $2,000,000*, featuring Full Doc, SIVA, No Ratio and No Doc.
   * Loan amounts > $1,000,000 require RMI Corporate Approval.
   Full Doc
                                               Owner Occupied Primary Residence
   Purpose        Units       LTV        CLTV               Max Loan                  Credit Score               Max C/O            DTI
  Pur, R/T         1-2        95          95               $500,000                       660                       n/a              45
  Pur, R/T         1-2        90          95               $650,000                       660                       n/a              50
  Pur, R/T         1-4        80          95              $1,000,000                      620                       n/a              50
  Pur, R/T         1-4        75          95              $1,500,000                      620                       n/a              50
  Pur, R/T         1-4        70          95              $2,000,000                      620                       n/a              50
        1
  C/O              1-2        90          95               $650,000                       660                   $200,000             50
        1
  C/O              1-4        80          95              $1,000,000                      620                    unlimited           50
        1
  C/O              1-4        75          95              $1,500,000                      620                    unlimited           50
        1
  C/O              1-4        70          95              $2,000,000                      620                    unlimited           50
                                                     Second/Vacation Home
   Purpose        Units       LTV        CLTV               Max Loan                  Credit Score               Max C/O            DTI
  Pur, R/T          1         95          95               $400,000                       660                       n/a              45
  Pur, R/T          1         90          95               $650,000                       660                       n/a              50
  Pur, R/T          1         80          95              $1,000,000                      620                       n/a              45
  Pur, R/T          1         75          95              $1,500,000                      620                       n/a              50
  C/O               1         90          95               $650,000                       660                   $200,000             50
  C/O               1         80          95              $1,000,000                      620                    unlimited           45
  C/O               1         75          95              $1,500,000                      620                    unlimited           50
                                                       Investment Property
   Purpose        Units       LTV        CLTV               Max Loan                  Credit Score               Max C/O            DTI
  Pur, R/T         1-2        90          90               $650,000                       660                       n/a              50
                                                                                               2
  Pur, R/T         1-4        80          95              $1,000,000                     660                        n/a              45
                                                                                               2
  Pur, R/T         1-4        75          95              $1,500,000                     660                        n/a              45
  C/O              1-2        85          90               $650,000                       660                   $200,000             45
  C/O              1-2        80          90              $1,000,000                      620                    unlimited           45
  C/O              1-2        75          90              $1,500,000                      620                    unlimited           45
    1
      Texas Section 50(a)(6) transactions, Owner Occupied Cash Out Refinance - additional restrictions: A) Max 80% LTV/CLTV; B)1unit only;
      C) Fully amortized only (Interest only not allowed)
    2
      Credit Score 620 if CLTV < 90%




   Alt-A Fixed and Arm Products rev42                                                   03/08/07                                             Page 1 of 32
ALT-A        PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                            NC76PP, NC106, NC106PP
                                    NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                    NC76PPIO, NC106IO, NC106PPIO

    SIVA and No Ratio
                                                Owner Occupied Primary Residence
   Purpose           Units         LTV           CLTV                Max Loan                 Credit Score            Max C/O         DTI
  Pur, R/T           1-2            90             90               $650,000                      660                    n/a           45
  Pur, R/T           1-2            80             95              $1,000,000                     620                    n/a           45
  Pur, R/T           3-4            80             95              $1,000,000                     680                    n/a           45
  Pur, R/T           1-4            70             80              $1,500,000                     660                    n/a           45
  Pur, R/T             1            65             90              $2,000,000                     660                    n/a           45
        1
  C/O                1-2            90             90               $650,000                      660                $200,000          45
        1
  C/O                1-2            80             95              $1,000,000                     620                 unlimited        45
  C/O                3-4            80             90              $1,000,000                     660                 Unlimited        45
        1
  C/O                1-4            70             80              $1,500,000                     660                 unlimited        45
        1
  C/O                  1            65             80              $2,000,000                     660                 unlimited        45
                                                        Second/Vacation Home
   Purpose           Units         LTV           CLTV                Max Loan                 Credit Score            Max C/O         DTI
  Pur, R/T             1            90             90               $500,000                      660                    n/a           45
  Pur, R/T             1            80             95               $650,000                      660                    n/a           45
  Pur, R/T             1            80             90              $1,000,000                     660                    n/a           45
  Pur, R/T             1            70             80              $1,500,000                     660                    n/a           45
  C/O                  1            90             90               $500,000                      660                $200,000          45
  C/O                  1            80             95               $650,000                      660                 unlimited        45
  C/O                  1            80             90              $1,000,000                     660                 unlimited        45
  C/O                  1            70             80              $1,500,000                     660                 unlimited        45
                                                          Investment Property
   Purpose           Units         LTV           CLTV                Max Loan                 Credit Score            Max C/O         DTI
  Pur, R/T           1-2            85             85               $500,000                      660                    n/a           45
  Pur, R/T           1-4            80             80               $600,000                      660                    n/a           45
  Pur, R/T           1-4            75             80              $1,000,000                     660                    n/a           45
  Pur, R/T           1-4            70             80              $1,500,000                     660                    n/a           45
  C/O                1-2            80             80               $600,000                      660                 unlimited        45
  C/O                1-2            75             80              $1,000,000                     660                 unlimited        45
  C/O                1-2            70             80              $1,500,000                     660                 unlimited        45
    1
        Texas Section 50(a)(6) transactions, Owner Occupied Cash Out Refinance - additional restrictions: A) Max 80% LTV/CLTV; B)1unit only;
        C) Fully amortized only (Interest only not allowed)




   Alt-A Fixed and Arm Products rev42                                                     03/08/07                                             Page 2 of 32
ALT-A        PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                            NC76PP, NC106, NC106PP
                                    NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                    NC76PPIO, NC106IO, NC106PPIO


   No Doc
                                                Owner Occupied Primary Residence
   Purpose           Units          LTV            CLTV               Max Loan                  Credit Score           Max C/O        DTI
  Pur, R/T            1-2           90              90                $500,000                       660                  n/a         n/a
  Pur, R/T            1-4            80             80                $650,000                       660                  n/a         n/a
  Pur, R/T            1-4            60             80              $1,500,000                       660                  n/a         n/a
        1
  C/O                  1            80              90                $500,000                       660               unlimited      n/a
        1
  C/O                 1-4            80             80                $650,000                       660               unlimited      n/a
        1
  C/O                 1-4            60             80              $1,500,000                       660               unlimited      n/a
                                                         Second/Vacation Home
   Purpose           Units          LTV            CLTV               Max Loan                  Credit Score           Max C/O        DTI
  Pur, R/T             1             90             90                $500,000                       660                  n/a         n/a
  Pur, R/T             1             80             90                $650,000                       680                  n/a         n/a
  C/O                  1             80             80                $650,000                       680               unlimited      n/a
                                                          Investment Property
   Purpose           Units          LTV            CLTV               Max Loan                  Credit Score           Max C/O        DTI
  Pur, R/T             1             80             85                $500,000                       660                  n/a         n/a
    1
        Texas Section 50(a)(6) transactions, Owner Occupied Cash Out Refinance - additional restrictions: A) Max 80% LTV/CLTV; B)1unit only;
        C) Fully amortized only (Interest only not allowed)




   Alt-A Fixed and Arm Products rev42                                                     03/08/07                                             Page 3 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

   Age of Documents
        Appraisal documentation is effective for 120 days (180 days if new construction) at time of closing.
        An appraisal update is required for all appraisals that are over 120 days (180 days for new
        construction) for a period of up to 1 year after the date of the appraisal. Appraisal updates are valid
        for 4 months. The original appraiser based on an exterior inspection and a current search on listing
        activity should complete the update.
        Asset documentation may be no older than 120 days (180 days if new construction) at time of
        closing.
        Credit documentation may be no older than 120 days (180 days if new construction) at time of
        closing.
        Preliminary Report may be no older than 90 days at time of closing.

   Appraisal
        General Requirements
           Full appraisals on the applicable Fannie Mae/Freddie Mac URAR are required on all loans.
           Schedules and addenda are mandatory if applicable. DU and LP limited scope appraisals are not
           acceptable.
           • Form 1004 Single Family Residential Appraisal Report.
           • Form 1025 the Small Residential Income Property Appraisal Report.
           • Form 1073 the Individual Condominium Units Appraisal Report.
           • Form 1004D Completion Certificate (with photographs) required if the estimate of value is
                “Subject to repairs, alterations or conditions” or “Subject to completion per plans and
                specifications”. The original appraiser should prepare this certificate.
           • Form 216 Operating Income Statement required on all investment properties when rental
                income is being used to qualify the borrower.
           • Form 1007 Single Family Comparable Rent Schedule if rental income is being used to qualify
                the borrower
           Transaction value is greater of the sales price or appraised value
           Appraisals of Unique, Complex or Mixed Use properties require State Certified Appraiser. Trainees
           may provide significant assistance and be identified in the certification, however they may not sign
           the appraisal.
           • Atypical and Unique properties will be considered provided marketability has been
                demonstrated. These transactions are not eligible for maximum financing.
           Appraiser Trainees – Appraisals performed by Trainees must include:
           • An interior and exterior inspection of the subject property by a state certified appraiser and;
           • An exterior inspection of the comparable sales by a state certified appraiser who signs the
                appraisal as the “Supervisory Appraiser”.
           Loan amount > $1,000,000 requires Field Review by a different appraiser/appraisal firm.
           Transaction values < $1,000,000 require one full appraisal by a state licensed appraiser. Interior
           photos are required if loan amount > $650,000.
           Transaction values > $1,000,000 require one full appraisal plus interior photos completed by a
           state certified appraiser. RMI reserves the right to order an AVM, review appraisal or additional
           appraisal to support the value if necessary.
           All appraisals shall conform to the current Uniform Standards of Professional Appraisal Practice
           adopted by the Appraisal Standards Board of the Appraisal Foundation.


   Alt-A Fixed and Arm Products rev42                                    03/08/07                                 Page 4 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

            Each appraisal is to be reviewed in detail for completeness, accuracy and appraising logic in
            accordance with Fannie Mae/Freddie Mac Guidelines.
        Minimum Property Requirements:
            Improved real property
            Designed and available for year-round use
            Complete with kitchen and bathroom facilities
            Heated by continuously-fueled heat source that is permanently affixed (alternative heat source is
            acceptable if acceptable in the market place)
            Property must be in average or better condition
            Use of property must be the highest and best use of the subject
            Property must be free of all health and safety violation. (If security bars on windows, at least one
            window per room must be a release latch)
        Property and Appraisal Analysis
            The appraisal must identify and describe the location of the subject property.
            Provide information about property taxes and special assessments.
            Indicate the name of the current occupant and state whether the property is owner occupied,
            vacant, or a rental.
            Describe the property rights to be appraised.
            Summarize financing data and sales concessions.
            Identify the borrower, the current owner, the client, and the appraiser.
            The appraiser must identify the subject property by its complete physical property address and
            legal description; a post office box number is not acceptable.
            The appraiser should indicate the nearest intersection if a house number is not available. When
            the legal description is lengthy, the appraiser may attach the full description as an addendum to
            the appraisal report, or may refer simply to its location in the public records.
        Neighborhood Analysis
            “A rating of less than twenty-five percent (25%) built up” usually indicates non-residential use,
            and requires more consideration when reviewing the entire appraisal.
            Financing is acceptable when property values are stable or increasing. Financing is not permitted
            in markets experiencing declining values. If the appraisal indicates the property is located in an
            area with declining values, the property is not eligible.
            Maximum financing is not permitted in markets experiencing an oversupply of housing. If the
            appraisal indicates the property is located in an area with oversupply of housing, the LTV/CLTV
            should be reduced by at least 5% below the maximum LTV/CLTV permitted.
            An oversupply of housing is not desirable, and may indicate either a slow market or an
            unmarketable property type. A marketing time of six (6) months or less is preferred.
            The subject property should conform to “predominate occupancy” and “housing price ranges”
            noted in the Property Land Use section.
        Rural Properties
            Rural can pose valuation problems since, by their very nature, comparable sales are hard to find.
             Any property indicated on the appraisal as rural or containing one or more of the following
             characteristics may be considered as a rural property:
             • Neighborhood is less than 25% built-up
             • Area around the subject is zoned agricultural
             • The subject is located on a dirt road
             • Comparables are more than 5 miles away from the subject.
             • Subject is located in a community with a population of less than 25,000.
             • Distance to schools and/or amenities is greater than 25 miles.
   Alt-A Fixed and Arm Products rev42                                     03/08/07                                 Page 5 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

            • Subject property and/or comparables have lot sizes greater than 10 acres.
            • Subject property and/or comparables have outbuilding or large storage sheds.
            • A majority of the properties in the market have well and septic systems.
            Properties classified as rural are restricted as follows:
            • Be common and customary for the area, and supported by comparable sales with a high
                degree of marketability.
            • May not be agricultural in nature. The primary use must be residential, not agricultural, or
                otherwise providing a substantial source of income. Transactions in which the agricultural use
                of the property is minimal in comparison to the site size of the property and the borrower(s)
                receives a minimal source of income from the property in comparison to the borrowers overall
                income may be acceptable on Full Doc transactions.
            • Be limited on Land-to-Value to a maximum of forty percent (40%).
            • Be limited in acreage to a maximum of twenty five (25) acres. Properties exceeding twenty
                five (25) acres and that are common and customary for the area will be considered on a case-
                by-case exception basis.
            • The site size must be typical for surrounding properties with similar uses. If the subject
                contains excess acreage, the loan amount may be adjusted.
            • Be accessible from a publicly maintained road and have adequate sewage, water, and utilities.
            • The subject property must be within reasonable commuting distance to a metropolitan area.
            • The present use must be the “highest and best use” for the property.
            • The condition, quality, and use of outbuildings may be considered in determining the market
                value of the property. If the subject property contains non-residential outbuildings, which
                are not typical amenities, the loan amount may be adjusted.
            • Underwriting reserves the right to reduce the LTV.
            • Property may not be subject to hazards or noxious odors.
        Mixed-Use Properties
            Commercial portion of the property is less than 25% of the total square footage
            Mixed-use properties are limited to single-family, primary residence.
            The appraisal must reflect the “highest & best use” as residential property. Property is residential
             in nature.
             There must be no significant structural changes to the home and the footprint of the home must
             be typical for the neighborhood.
             The mixed use of the property should represent a legal, permissible use of the property under the
             local zoning requirements.
             The borrower is both the owner and operator of the business.
             The market value of the property must be primarily a function of its residential characteristics,
             rather than the business use or any special business-use modifications that were made.
             The mixed use of the property should have minimal affect on the value and marketability of the
             property.
             Careful review of mixed-use neighborhoods must be done to determine the influence investor
             properties have on property values and marketability in the neighborhood.
        Two-Four Unit Properties
             Neighborhood
             • Market rents must be stable or increasing.
             • Appraiser’s statement of market rents must be comparable to the rental properties used for
                 comparison.

   Alt-A Fixed and Arm Products rev42                                    03/08/07                              Page 6 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

             •    Rent controls and the effect of vacancies must be considered as excessive vacancies may
                  reflect a lack of marketability.
             Comparable Rent Data
             • Rental data should be supplied from other similar income producing properties that are
                  similar in number of units, size and room count.
             • Rental comparables must be in close proximity to the subject. Choosing comparables outside
                  the immediate area may reflect a lack of marketability.
             Comparable Market Data
             • The adequacy of the comparable sales will be analyzed by date of sale, proximity to subject,
                  number of adjustments, gross room count and unit count.
        Acreage
             Loans with up to twenty five (25) acres of land are acceptable. Properties exceeding twenty five
             (25) acres and that are common and customary for the area will be considered on a case-by-case
             exception basis. Properties with agricultural use will not be allowed.
        Zoning
             Industrial, commercial and agricultural zoning is unacceptable.
             The appraiser in his or her analysis of the property must compare the existing and potential use of the
             subject property to the zoning regulations. In addition, the appraiser must reflect any adverse effect
             that a non-conforming use has on the value and marketability of the property that is being appraised.
             Zoning alone does not make a property ineligible it is typically the use. Property improvements must
             constitute a legally permissible use of the land based on the zoning ordinance. If the improvements
             represent a legal, non-conforming use of land, a letter from the local building authority or appraiser
             must be obtained to certify the property can be rebuilt “as is” in the event of partial or total
             destruction.
        Water Supply
             Properties using alternative water supplies are acceptable provided the appraiser demonstrates
             that such water supply is typical and acceptable for the immediate area.
        Sewage Systems
             Cesspools and septic tanks are acceptable provided the appraiser demonstrates that such
             systems are common and customary for the area.
        Private Roads
             Private roads require a permanent easement for ingress and egress with provisions for road
             maintenance.
        Description of Improvements
             Improvements must generally conform to the neighborhood in terms of age, type, design and
             materials used for construction. Factory-built homes require special attention to determine the
             appeal of this type of housing and to establish its price range.
        In-Law Units
             Examples of such properties include a house with a unit above a detached garage or a house with
             a guest apartment or basement unit.
             A single-family property that includes an additional unit is acceptable provided it conforms to the
             subject neighborhood and to the market.
             Comparables must include second units.
             Second unit must be incidental to the overall value and to appearance of the property. Accessory
             unit is substantially smaller than the primary unit.
             No rental income may be used to qualify the borrower.
             Unit must not violate zoning laws and/or restrictions in a way that the property could not be rebuilt in
             its current design.

   Alt-A Fixed and Arm Products rev42                                      03/08/07                                     Page 7 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

        Multiple Dwellings
            Multiple Dwellings on one lot must comply with local zoning requirements and be typical and
            common for the area. The Appraiser must provide comparables to support the value of the
            additional units. Properties with more than two additional dwellings are ineligible. Examples of this
            type of property would be two single-family homes on one lot, or a single family home and a two
            unit building on one lot.
        Comments
            Comments regarding the improvements should be carefully analyzed. The appraiser must describe
            repairs required on the property or the impact of any sales concession. Seller concessions,
            whether cash or assets may have a negative effect on the subject property value. Personal
            property cannot be appraised as if it was real property and RMI will reduce the value of the
            property by the amount of any excessive concessions.
        Land Value
            The land value should not exceed forty percent (40%) of the property value. If the land value
            exceeds forty percent (40%), the appraiser must include the reasons, state whether the land
            value is consistent with other homes in the area, and show evidence in the comparable properties.
        Comparable Adjustments
            Gross adjustments should not exceed twenty-five percent (25%) of the sales price of the
            comparable, while net adjustments should not exceed fifteen percent (15%) of the sales price of
            the comparable.
        Proximity to Subject
            The comparable properties should be within a distance that appears reasonable for the area and
            the property type.
        Health & Safety
            The property must be in compliance with all local building codes and health and safety codes.
            If security bars are on windows, at least one window per room must have an interior release latch.

   Assets and Reserves
        Sourcing and Seasoning of Down Payment
            When the borrower is required to make a down payment, the source of assets must be seasoned
            for at least sixty (60) days before the date of the loan application.
            Funds needed for closing must be verified as required by documentation type.
            Verified assets must be reasonable with respect to the stated income for SIVA loanss.
            Acceptable asset documentation includes:
            • Direct written verification completed by the depository or Fannie Mae Form 1006.
            • Two consecutive months account statements from the depository.
            • Statements downloaded from the Internet. These may be utilized only if they provide the
                 name of the institution, the account number, borrower’s name, date, and current balance.
            Source of substantial increases in account balances or funds on deposit less than sixty (60) days
            must be verified.
            For loans with verified assets and a required down payment, the borrower must contribute a
            minimum of five percent (5%) or a minimum of three percent (3%) for 97% LTV of the purchase
            price. Gift funds may be used as noted below for the remaining down payment.
            No borrower down payment contribution is required when gift funds are at least twenty percent
            (20%) of the property value and LTV/CLTV is 80% or less for both primary and second home
            loans.
            No borrower down payment contribution is required when secondary financing is allowed and
            CLTV is one hundred percent (100%).
   Alt-A Fixed and Arm Products rev42                                    03/08/07                               Page 8 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

             Asset documentation must meet requirements outlined in documentation type.
             All earnest money deposits in excess of 2% of the purchase price must be fully documented.
             Acceptable documentation includes:
             • Copy of cancelled check
             • Copy of check not cancelled with bank statement to evidence check cleared
             • Escrow agent/attorney’s letter acknowledging receipt of funds
        Joint Accounts
             Funds held jointly with a non-borrowing spouse can be considered the borrower’s funds. Funds
             held with any other non-borrowing person will only be considered if the non-borrowing person is
             also a titleholder to the subject property.
        Business Funds
             Funds from a borrower’s business are acceptable provided the borrower owns 100% of the
             business and there is evidence (i.e. CPA letter) in the file that the use of these funds will not
             adversely affect the business.
             When the loan amount is greater than or equal to $1,000,000 funds from the business account
             may be used for down payment but not reserves
        Gift Funds
             Funds must come from an immediate family member or other appropriate relation.
             For loans with an LTV/CLTV of eighty percent (80%) or less, the entire down payment may be in
             the form of a gift.
             In all cases, the donor must execute a gift letter stating the donor’s name and address,
             relationship to the borrower, amount of gift and that no repayment is expected.
             Verification of the transfer of gift funds is required.
             Gift funds may not be used to satisfy reserve requirements.
             Gift funds may not be used for investment properties.
        Gift of Equity
             The gift of equity must come from an immediate family member.
             Property must be an owner occupied primary residence.
             The donor must execute a gift letter stating the donor’s name and address, relationship to the
             borrower, amount of equity gift and that no repayment is expected.
             HUD-1 Settlement Statement must reflect the gift of equity.
             On purchase transactions, the contract of sale must also indicate the gift of equity.
             If a free & clear property is gifted within the most recent twelve (12) month period, the maximum
             LTV/CLTV is sixty percent (60%).
        Reserves
             Owner Occupied Primary & Second Home
             • Loan amounts < $1M
                   o   Full and SIVA
                             CLTV < 90% - 2 mos. PITI reserves required
                             CLTV 90.01 - 95.00% - 3 mos. PITI reserves required
                             CLTV 95.01 - 100.00% - 4 mos. PITI reserves required
                   o   No Ratio
                             CLTV < 90% - 3 mos. PITI reserves required
                             CLTV 90.01 - 95.00% - 4 mos. PITI reserves required
             • Loan amounts > $1M
                   o 6 mos. PITI reserves required for all doc types


   Alt-A Fixed and Arm Products rev42                                    03/08/07                             Page 9 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

            Investment Property
                 o    Full and SIVA
                           6 mos. PITI reserves required for all CLTVs
                 o    No Ratio
                           8 mos. PITI reserves required for all CLTVs
            Note: Reserves will be based on Borrower's qualifying payment.
            Reserves must be sourced and seasoned for 60 days
            When multiple Mortgage Loans are made to the same borrower, the borrower must satisfy this
            reserve requirement for all of the Mortgage Loans.
            Gift funds may not be used to satisfy reserve requirements.
            Proceeds from a cash-out refinance used to satisfy the reserve requirements:
            • O/O and 2nd Homes acceptable when CLTV < 80%
            • Not acceptable for O/O and 2nd Homes when CLTV > 80%
            • Not acceptable for NOO properties
            • Cash-out proceeds may not be used to satisfy reserve requirements if the borrower cannot
                 provide a 12 month mortgage or rental history.
        IRS 1031 Exchange
             An IRS 1031 Exchange allows a borrower to place proceeds from the sale of a property into an
             escrow account until they are ready to purchase another like-kind property with the proceeds.
             The following documentation must be provided:
             • New property must be of greater or equal value to the relinquished property
             • HUD-1 from the relinquished property
             • Copy of the exchange agreement
             • Statement from Accommodator verifying the available funds
            1031 Exchanges must be closed under a non-owner occupied product offering.
            1031Exchanges must meet the following requirements:
             • The replacement property purchase price should be equal to or greater than the relinquished
                 property sales price.
             • The replacement property debt (mortgage) should be equal to or greater than the
                 relinquished property debt.
             • There must be an actual exchange of property, real property for real property, not a transfer
                 of property for money only.
             • All net proceeds should be used in accordance with IRS 1031 guidelines
            Under 1031 Exchange rules, both business and investment property qualify. It does not require
            only business property for business property or investment property for investment property.
            The classifications can be mixed. For example, an unimproved property (investment property) can
            be exchanged for a rental property (business property).

   AUS Underwrite
   RMI will accept the recommendation and documentation requirements of Fannie Mae “Desktop
   Underwriter” and Freddie Mac “Loan Prospector” with the following restrictions: NO EXCEPTIONS.
        Maximum loan amount $650,000 (total RMI financing) and/or CLTV/HCLTV less than or equal to 80% for SIVA
        DU and LP Findings will not override a minimum FICO of 620 for all loans
        Maximum debt-to-income ratio may not exceed 50% for Full Doc and may not exceed forty-five
        percent (45%) for SIVA
        Full two (2) years verification of employment and income required on all loans classified as “Full Doc”
        DU and LP Findings cannot waive reserve requirements.
   Alt-A Fixed and Arm Products rev42                                    03/08/07                             Page 10 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

        Full appraisal required as outlined in Appraisal Section regardless of automated underwriting finding
        report.
        DU Approval/Eligible.
        DU Approved/Ineligible (provided the loan is only ineligible for LTV and/or loan amount only).
        LP “Accept” or “Accept Plus.”
        “Reduced” levels of mortgage insurance are not allowed.
        All conditions outlined in the Findings report must be satisfied.
        12 month mortgage or rental history is required and may not be waived.
        DU and LP Findings cannot waive funds to close requirements.
        Loans that do not meet all of the above must be manually underwritten

   Contributions by an Interested Party
        Must be used for closing cost, prepaids, and other financing costs provided the maximum contribution
        does not exceed the limits below.
        Maximum contribution percentage allowed:
            Primary Residence and Second Homes
            • CLTV > 90%, maximum contribution is three percent (3%)
            • CLTV >75% - 90%, maximum contribution is six percent (6%)
            • CLTV < to 75%, maximum contribution is nine percent (9%)
            • Non-arms length transactions maximum contribution is three percent (3%)
            Investment Property
            • Maximum three percent (3%) contribution, regardless of CLTV.

   Credit
        A full RMCR or tri-merged credit report is required to establish a valid representative credit score.
        A valid and usable score is one that is generated based upon credit history and credit patterns that
        accurately reflect the borrower’s history. It should contain at least:
             A minimum of three trade lines at least 2 years old
             Two years (24 months) of payment history
             At least one trade open and active for the prior six months
        Credit Score – Use lower of 2 or middle of 3 to determine each borrower’s representative score. Use
        the score of the primary wage earner (> 50% of combined income) for qualification and pricing. When
        a primary wage earner cannot be determined (i.e., No Ratio and No Doc loans, or when no single
        borrower makes >50% of combined income), the lowest score will be used as the qualifying credit
        score.
        For borrowers who do not use the conventional credit system, alternative credit histories may be used,
        as follows:
             Loan must be approved by RMI Corporate office
             Full Doc only
             Satisfactory verifications should be reported on a non-traditional credit report prepared
             by a credit agency approved by Fannie Mae for DU and Freddie Mac for LP and may come from
             providers of services for which the applicant has had a regular financial obligation.
             A minimum of four alternative sources should be verified directly with the creditor, or with twenty-
             four (24) months cancelled checks showing no late payments over the past twenty-four (24)
             months. Acceptable alternative sources that are used must require the borrower to make periodic
             payments on a regular basis.


   Alt-A Fixed and Arm Products rev42                                    03/08/07                               Page 11 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

             Alternative sources include housing payments, utility payments, insurance, and telephone
             payments.
             Alternative sources that are payroll-deducted are not acceptable.
             Alternative sources cannot be used to offset derogatory credit (i.e., late payments, collection
             accounts, or judgments).
             A borrower with limited or no credit history is not eligible for maximum financing.
             Borrowers who have no credit score will be assigned a 620 score
        All borrowers must meet minimum 620 score.
        The minimum FICO is determined by the documentation type, transaction type and CLTV. Refer to the
        Product Matrices for the required score.
        Mortgage/Rental History
             A verification of Mortgage/Rental history is required on all loans. Current balance, current status
             and payment amount must be verified. Exceptions are not allowed to the mortgage/rental history
             & verification requirements except as follows:
             Borrowers unable to provide a complete twelve month mortgage/rental history are limited to:
             • Owner occupied primary residences only, regardless of documentation type
             • 1-2 unit properties only
             • Minimum credit score of 660
             • Verified reserves must be provided as follows:
                  o CLTV > 90% 6 Months PITI
                  o CLTV < 90% 2 Months PITI
                  o Cash out proceeds from refinance may not be used for reserves
             The mortgage/rental history must reflect 0 x 30 in the previous twelve (12) months.
             In case of a recent refinance or account transfer, a combination of payment performance from
             multiple lenders for the same collateral may be used to complete the twelve-month (12) history
             requirement.
             For a recent purchase, a combination of payment performance from a prior property or rental
             payments may be used to complete the twelve-month (12) history. A gap in mortgage/rental
             payment history of up to 6 months is allowed by obtaining the most recent eighteen-month (18)
             history.
             Mortgage/Rental history must be verified by a third party or credit bureau.
        Mortgage History
             A twelve-month (12) rating stated on the RMCR or merged in-file report.
             Verification of Mortgage completed by the holder of the Mortgage
             Copies (front & back) of twelve (12) months consecutive (one (1) payment per month)
             mortgage payment canceled checks.
             Bank statements or direct payment records showing one (1) payment per month.
             No rolling late.
             Mortgage Loan must be current at the time of closing.
        Rental History
             If the landlord is a management company, the management company must be listed in the local
             telephone directory and the file must contain a copy of the listing. If the listing is not available,
             twelve months’ (12) cancelled checks must be provided.
             If the landlord is a non-related individual, a direct verification is allowed provided proof of
             landlord ownership is established.
             All direct verifications must include the rental amount, payment history, and length of payment
             history.
             If the landlord is related to the borrower, twelve months’ cancelled checks must be provided.
   Alt-A Fixed and Arm Products rev42                                    03/08/07                               Page 12 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

             If cancelled checks are used, copies (front & back) of twelve (12) month’s consecutive (one (1)
             payment per month) rental payment canceled checks are required.
        Rolling Mortgage/Rental Delinquency
             Mortgage Loans with rolling mortgage/rental delinquencies within the last 12 months and/or
             mortgage loans currently past due are not eligible for purchase under the Alt A program.
        Public Records, Judgments, Liens & Collections
             Borrower must provide satisfactory explanation of any delinquent credit that has a significant
             negative impact on the credit worthiness of the borrower.
             Borrower must pay off all delinquent credit – including delinquent taxes, judgments, charged-off
             accounts, tax liens, and mechanics' or materialmen's liens – that has the potential to affect lien
             position or diminish the borrower's Equity.
             Collection accounts or charged-off accounts do not need to be paid off if the balance of an
             individual account is less than $250.00 or if the total balance of all accounts is $1,000.00 or
             less.
        Bankruptcies and Foreclosures
             Bankruptcies must be discharged three (3) years (loan amounts > $1,000,000 seven years) with
             no late payments or derogatory credit after the bankruptcy. Borrower must have a minimum of
             three (3) active trade lines more than twenty-four (24) months old since the bankruptcy.
             Borrowers with prior bankruptcies that do not meet the re-established criteria are not eligible. ).
             Consumer Credit Counseling (CCC) is considered the same as Chapter 13 bankruptcy.
             The age of the foreclosure is calculated from the date reported or the date of the most recent
             one hundred and twenty (120) day mortgage late. The definition of foreclosure includes: any one
             hundred and twenty (120) day mortgage late, notice of default, settlement on a real estate
             secured trade line, deed-in-lieu, or forbearance agreements. Borrowers with a foreclosure within
             the past three (3) years (loan amounts > $1,000,000 seven years) are not eligible.

   Disclosure and Program Information
        Program Code          Assumable     I/O Period    Caps    Floor       Margin    Prepay    Convertible
            NC15                 No            N/A        N/A      N/A         N/A     6 months      N/A
           NC15PP                No            N/A        N/A      N/A         N/A      3 years      N/A
            NC30                 No            N/A        N/A      N/A         N/A     6 months      N/A
           NC30IO                No            120        N/A      N/A         N/A     6 months      N/A
           NC30PP                No            N/A        N/A      N/A         N/A      3 years      N/A
         NC30PPIO                No            120        N/A      N/A         N/A      3 years      N/A
            NC6L                 Yes           N/A       1/1/6    Margin      2.25     6 months      No
           NC6LIO                Yes           120       1/1/6    Margin      2.25     6 months      No
           NC6LPP                Yes           N/A       1/1/6    Margin      2.25      3 years      No
          NC6LPPIO               Yes           120       1/1/6    Margin      2.25      3 years      No
            NC36                 No            N/A       6/2/6    Margin      2.25     6 months      No
           NC36IO                No            120       6/2/6    Margin      2.25     6 months      No
           NC36PP                No            N/A       6/2/6    Margin      2.25      3 years      No
         NC36PPIO                No            120       6/2/6    Margin      2.25      3 years      No
            NC56                 No            N/A       6/2/6    Margin      2.25     6 months      No
           NC56IO                No            120       6/2/6    Margin      2.25     6 months      No
           NC56PP                No            N/A       6/2/6    Margin      2.25      3 years      No

   Alt-A Fixed and Arm Products rev42                                      03/08/07                             Page 13 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

        NC56PPIO                  No           120       6/2/6    Margin       2.25    3 years         No
          NC76                    No           N/A       6/2/6    Margin       2.25   6 months         No
         NC76IO                   No           120       6/2/6    Margin       2.25   6 months         No
         NC76PP                   No           N/A       6/2/6    Margin       2.25    3 years         No
        NC76PPIO                  No           120       6/2/6    Margin       2.25    3 years         No
          NC106                   No           N/A       6/2/6    Margin       2.25   6 months         No
         NC106IO                  No           120       6/2/6    Margin       2.25   6 months         No
         NC106PP                  No           N/A       6/2/6    Margin       2.25    3 years         No
        NC106PPIO                 No           120       6/2/6    Margin       2.25    3 years         No

   Program Description
        NC 15: 15 year fixed rate loan. 180/180 months.
        NC 30: 30 year fixed rate loan. 360/360 months’ w/6 month prepay
        NC6L: 6 month ARM – fixed for the first 6 months, then adjusts every 6 months thereafter based on the
        movement of a 6-month LIBOR index.
        NC36: 3/6 ARM - fixed for the first 3 years, then adjusts every 6 months thereafter based on the
        movement of a 6-month LIBOR index.
        NC56: 5/6 ARM - fixed for the first 5 years, then adjusts every 6 months based on the movement of the 6-
        month LIBOR index.
        NC76: 7/6 ARM - fixed for the first 7 years, then adjusts every 6 months thereafter based on the
        movement of a 6-month LIBOR index
        NC106: 10/6 ARM - fixed for the first 10 years, then adjusts every 6 months thereafter based on the
        movement of a 6-month LIBOR index
        IO: Interest Only
        PP: 3 year prepayment penalty

   Documentation Requirements
        Our goal is to simplify both underwriting policy and processing documentation. The documentation
        that will be required may be a departure from traditional expectations. However, prudent underwriting
        policy will not be abandoned. Reduced Documentation (SIVA, No Ratio or No Doc) programs do not
        eliminate the necessity to closely review and evaluate all information available in the file to determine
        the reasonableness of the borrower’s ability to repay the mortgage debt.
        Reasonableness will be based on the borrower’s employment history, income source and past credit
        experience which must be commensurate with the loan request. For example, information on the credit
        report should corroborate information on the application. Borrower’s income source must be from a
        source likely to generate sufficient income to repay the debt. Material inconsistencies must be
        investigated. Loan requests for an applicant with atypical characteristics should require full income and
        asset documentation. For example, presence of any of the following characteristics should indicate full
        documentation is required:
             Transactions resulting in significant payment shock (payment more than doubles); or
             Loan request is significantly larger relative to previous mortgage history; or
             Unusually high income for profession; or
             Excessive balances in checking, money market accounts with no stock ownership.
             Inconsistent borrower information between loan applications for current transaction and previous
             transactions.
        Requests for additional information or documentation will be driven by common sense, sound credit
        judgment and loan characteristics. Underwriter must review all information provided. If information is
   Alt-A Fixed and Arm Products rev42                                      03/08/07                            Page 14 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

        inconsistent, i.e., occupancy, employment, income, etc., the underwriter may decline or require full
        income and asset documentation. In addition, information disclosed in the file must also be taken into
        consideration. For example, payroll deposits shown on bank statement, disclosed in a file will be used
        for calculating appropriate gross income.
        All reduced doc files (SIVA, No Ratio or No Doc) must include the completed initial application. When
        the initial application is incomplete or missing from the Submission Package, the loan may not be
        processed using Reduced Documentation. All income sources must be itemized on the signed 1003
        when applicable.
                                             Documentation Requirements
                                                   Employment             Employment
             Doc Type             Income              Salary          Self Employed     Assets
               Full Doc           Verified           Verified               Verified    Verified
                 SIVA              Stated             Verbal              CPA/License   Verified
               No Ratio            None               Verbal              CPA/License   Verified
               No Doc              None               None                   None        None

        RMI accepts new submissions of previously underwritten transactions. However, if the previously submitted
        loan was Full Doc and new submission is Stated, No Ratio or No Doc, RMI will review the previous Full Doc
        loan for consistency with the current information provided. New submission may be declined based on
        prior Full Doc information.
        RMI requires the use of the most current Fannie Mae Residential Loan Application (Form 1003).
        Principal(s)/Owner(s) of the Originating Lender (or RMI approved Broker or Correspondent) are
        eligible for Full Doc transactions only and must provide two years complete 1040’s (and business tax
        returns if applicable)
        Full Doc
             Full Doc loans must meet RMI’s documentation requirements as noted below.
             The following income documentation requirements will supersede any limited documentation
             required of DU/LP Findings.
             Salaried Borrowers:
             • Completed, signed and dated final Fannie Mae 1003 Application
             • Written Verification of Employment (VOE), or most recent pay stub(s), covering a thirty-day
                  (30) period with YTD earnings.
             • W-2’s from all employers for the past two (2) years.
             • Borrowers employed by a relative must provide 2 years 1040’s in addition to their current
                  pay stub
             • Verbal VOE dated within 10 calendar days of closing
             • Written Verification of Deposit (VOD) with two (2) months’ average balance or most recent
                  bank statements covering a two (2) month period
             • Borrowers employed by a relative must provide two years 1040’s and file must contain
                  evidence borrower owns less than 25% interest in family business
             Non-Salaried Borrowers:
             • Completed, signed and dated final Fannie Mae 1003 Application.
             • Two (2) years Federal tax returns, including all schedules. Personal and Business Returns as
                  applicable.
             • Year-to-date P&L statement

   Alt-A Fixed and Arm Products rev42                                       03/08/07                           Page 15 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

             •     Signed IRS Form 4506-T.
             •     Verbal VOE dated within 10 calendar days of closing
             •     Written Verification of Deposit (VOD) with two (2) months’ average balance or most recent
                   bank statements covering a two (2) month period
             •     Business funds can be used as long as the business is a sole proprietorship and a CPA letter is
                   obtained verifying that 100% of the funds can be withdrawn and there will be no negative
                   impact towards the business.
        SIVA
            Completed, signed and dated final Fannie Mae 1003 Application with employment stated and
            income stated.
            Income must be reasonable for employment stated. SIVA provides expedited processing for
            qualified creditworthy borrowers. Not intended as a means to qualify marginal borrowers.
            Borrowers on fixed income are not eligible for reduced doc transactions. (Social Security, Pension,
            Disability, etc.)
            Verbal VOE dated within 10 calendar days of closing.
            Third party verification of existence of business is required for self-employed borrowers.
            CPA Certification or copy of business license for all self-employed borrowers verifying minimum
            two (2) years with the same business entity.
            Written Verification of Deposit (VOD) with two (2) months’ average balance or most recent bank
            statements covering a two (2) month period
            Verified assets must be reasonable with respect to the stated income for all stated income
            programs.
            No 4506 required.
        No Ratio
            Completed, signed and dated final Fannie Mae 1003 Application with employment stated but no
            income stated.
            Employment must be reasonable for repayment of mortgage. No Ratio provides expedited
            processing for qualified creditworthy borrowers. Not intended as a means to qualify marginal
            borrowers.
            Borrowers on fixed income are not eligible for reduced doc transactions. (Social Security, Pension,
            Disability, etc.)
            Verbal VOE dated within 10 calendar days of closing.
            Third party verification of existence of business is required for self-employed borrowers
            CPA Certification or copy of business license for all self-employed borrowers verifying minimum
            two (2) years with the same business entity.
            Written Verification of Deposit (VOD) with two (2) months’ average balance or most recent bank
            statements covering a two-(2) month period.
            No 4506 required.
        No Doc
            Completed, signed and dated final Fannie Mae 1003 Application with no employment stated, no
            income and no assets stated.
            First time homebuyers are not eligible.
            Borrower(s) must have a satisfactory 12 month mortgage rating in last 3 years to be eligible for
            No Doc loan.
            Retention of borrower’s current residence is prohibited on owner occupied purchases. (Borrower
            must sell current residence to be eligible for No Doc)
            Photo ID required for each borrower.

   Alt-A Fixed and Arm Products rev42                                    03/08/07                               Page 16 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

   Eligible Borrowers
        A valid Social Security Number (SSN) is required for all borrowers.
        Borrowers on title but not on the loan – This is acceptable, however, borrowers not on the loan must
        sign all documents required by each state for enforcement of any legal proceedings. (EXAMPLE: Deed,
        TIL and Right to Cancel). Buyers that will be on title but not on the loan may remain on the purchase
        contract provided there is a clear relationship with the borrower(s) disclosed. In all cases a close
        review and understanding of the transaction must be documented. A buyer on title but not on the
        loan may indicate a straw borrower/straw buyer and would therefore be ineligible for financing.
        U.S. Citizens.
        Permanent Resident Aliens
             Lawful resident aliens are eligible for the same financing as U.S. Citizens if they can provide evidence
             of lawful residency and they meet all of the same credit standards as U.S. Citizens.
             A processor’s certification is required to verify review of the acceptable documentation that
             evidences borrower is eligible to lawfully reside in the U.S.
             Files may not contain copies of their identification.
             Borrowers with diplomatic immunity are not eligible.
             Borrower must be employed in the U.S.
             Income must be likely to continue for at least 3 years.
             2-2-2 Rule (2 years Employment, Credit and Residence history in the U.S.).
        Non-permanent Resident Aliens
             Non-permanent resident aliens are eligible for the same financing as U.S. citizens and permanent
             resident aliens if they can provide evidence that the borrowers are lawfully permitted to reside in the
             U.S. and have been granted the right to work in the U.S. They meet all of the same credit standards as
             U.S. citizens.
             Borrowers must have one of the following visa statuses E-1; E-2; H-1A; H-1B; H-2A; L-1; P-1, G
             series and TN
             Borrowers with diplomatic immunity are not eligible.
             Borrowers must be employed in the U.S.
             Files may not contain copies of their identifications.
             File must contain a completed certification of residency, completed by the processor or
             underwriter certifying the borrower’s alien registration information has been reviewed and
             indicating borrower is a lawful temporary resident alien.
             Income must be likely to continue for at least 3 years. If the visa will expire within 6 months from
             the date of application, the applicant must provide a letter explaining their intention to remain in
             the country and a copy of their application for an extension. Employers may provide written
             proof stating the employment contract will continue for 3 years if the visa will be expiring prior to
             the end of 3 years.
             2-2-2 Rule (2 years Employment, Credit and Residence history in the U.S.). Income from
             borrowers or co-borrowers who have not been granted the right to work in the U/S. cannot be
             used.
        Non-Occupying Co-Borrowers
             Acceptable on Full doc transactions only.
             Occupying borrowers’ ratios must not exceed 50%.
             Non-occupying co-borrowers must be immediate family members (spouse, siblings, parents
             and/or children).
             Occupying borrowers must provide 5% of their own funds towards the transaction


   Alt-A Fixed and Arm Products rev42                                    03/08/07                             Page 17 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

            The occupant’s lack of sufficient credit history cannot be compensated by a non-occupant’s
            superior credit history.
        Power of Attorney
            Only specific Powers of Attorney are acceptable.
            If one borrower on transaction a POA would not be allowed. If multiple borrowers at least one
            borrower, not a POA, must sign the loan docs. When using a Power of Attorney the borrower
            must have signed the initial application.
            Title Policy must insure over its use.
            POA not allowed on Texas Section 50(a)(6) transactions.
        Revocable Trusts
            Revocable Trusts are allowed on single unit properties only (O/O, 2nd home, N/O/O).
            A complete certified copy of the trust agreement must be submitted, must meet FNMA guidelines
            and be approved by RMI legal counsel (fee applicable).
            Title policy must assure full title protection and must indicate that title to the property is vested
            in the names of the trustee(s) of the revocable trust. The policy may not list any exceptions to
            the trustee(s) or trust.
            Each trustee of the trust must execute the Note, Deed and any necessary addendum and/or rider.
            If the trustee is both a grantor/trustor/settlor of the trust and an applicant (as in most cases)
            they must sign the required documents similar to the following:
            (Name of Trustee/Individual), individually and as Trustee of the (Name of Trust) Trust under trust
            instrument dated (Date of Trust), for the benefit of (Beneficiary of Trust)

   First Time Homebuyer
        Careful risk analysis should be used when analyzing a borrower who is purchasing a home for the first
        time or does not have history of making housing payments. All borrowers must meet the
        mortgage/rental history requirements.
        First Time Homebuyers are not eligible for No Doc Transactions.
        First Time Homebuyers are eligible for owner occupied transactions only.
        First Time Homebuyer is a borrower who has not owned a home in the last 3 years.

   Income
        Loans should be clear regarding nature of borrower’s work. If not clear on 1003, file should include a
        brief LOE.
        Employment must be disclosed on 1003, covering 2 years in same line of work.
        Employment location must be reasonable distance from primary residence (100 miles)
        Gaps in employment greater than 1 month must be explained with a LOE.
        All income sources must be itemized on the signed 1003.
        Income documentation requirements must meet the requirements per documentation type.
        Income sources and the calculation of income must meet Fannie Mae/Freddie Mac guidelines unless
        restricted based on documentation type.
        Fixed income such as social security, VA benefits, pensions and annuity income, etc. (the non-taxable
        portion) may be grossed-up twenty-five percent (25%).
        Borrowers on fixed income are not eligible for reduced doc transactions. (Social Security, Pension,
        Disability, etc.)
        Borrowers whose income is derived solely from real estate investments must evidence a two-year
        history of managing properties.


   Alt-A Fixed and Arm Products rev42                                    03/08/07                                Page 18 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

        Income for borrowers employed by a relative must be verified with two years 1040’s and a current
        pay stub. The file must also document that the borrower has less than 25% interest in the family
        business. If the borrower’s interest exceeds 25%, the borrower will be considered self-employed for
        qualifying purposes and appropriate documentation must be submitted in the loan file.

   Interest-Only Option
        Available on all products with a 30-year term.
        Payments are interest-only for the first 10 years, and fully amortizing for the remaining 20-year term. No
        negative amortization.
        Borrower is qualified on the interest-only payment.
        The Interest-Only monthly payment is calculated each month based on the current balance. If borrower
        makes voluntary prepayments of principal during Interest-Only Period, the subsequent monthly payments
        will be based on the lower principal balance.
        Not available on Texas Section 50(a)(6) transactions.

   Landlord Experience
        The number of properties a borrower owns and the length of time the properties have been owned
        must be taken into consideration during the underwriting review. Borrowers who demonstrate a rapid
        acquisition (acquired within the most recent 24-month period) of investment property will be
        reviewed cautiously. RMI reserves the right to request documentation to evidence the borrower had
        the funds required to purchase any property and/or sufficient verified assets to provide 6 months
        reserves for the investment portfolio.
        Loans made to borrowers owning multiple investment properties must meet the following guidelines:
             Documented evidence of a minimum two (2) years’ experience managing multiple investment
             properties, or
             Borrower has purchased or is in the process of purchasing a maximum of (including subject
             property) either,
             • Two or less investment properties within the last six (6) months; and /or
             • Four or less investment properties within the last two (2) years.
             All financed 1-4-unit investment properties regardless of the source of financing will be
             considered in the above eligibility.

   LIBOR
        The index rate is the average of interbank offered rates for 6-month U.S. Dollar-denominated deposits
        in the London market as published in the Wall Street Journal.

   Maximum Exposure / Multiple Property Ownership
        Owner occupied primary residence there is no limit on the number of mortgages that the borrower can
        currently be financing
        Second home or investment property, the following limitations apply:
            The borrower may not own more than ten (10) properties (including his or her primary residence)
            that are currently being financed.
            The borrower may not be affiliated with the builder, developer or seller of the property that
            secures any of the mortgages.
            Joint ownership in residential real estate (1-4 units) is considered the same as total ownership of
            an individual property.

   Alt-A Fixed and Arm Products rev42                                    03/08/07                                    Page 19 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

             Ownership in commercial or multi-family (more than 4 units) residential real estate is not included
             in the limitation.
             The limitation applies to the number of mortgages, not the number of units. For example, the
             borrower may own one (1) single family, four (4) 2-unit properties and five (5) 3-4 unit
             properties.
        Overall exposure for a borrower or group of borrowers is limited to $2,000,000 residential financing
        which consists of the total of all mortgage loans to all borrowers including existing and pending
        transactions. If borrower’s 1-4 family mortgage financing will exceed $2,000,000 obtain exception
        from RMI Corporate office.
        Multiple transactions submitted for same borrower(s) are limited to Full Doc or SIVA. No Ratio and No
        Doc are not eligible for multiple Alt-A loans to one borrower or one set of borrowers. When multiple
        Mortgage Loans are made to the same borrower, the borrower must satisfy the reserve requirement
        for all of the Mortgage Loans.

   Mortgage Insurance
        Mortgage Insurance is required on all loans with an LTV greater than 80.00%.
        Reduced MI per DU/LP Findings is not eligible
        Required Coverage             30 Year             15 Year
           LTV >80% - 85%             12%                 6%
           LTV >85% - 90%             25 %                12%
           LTV >90% - 95%             30%                 25%
           LTV >95%                   35%                 30%

   Non-Arms Length Transactions
        A non-arms length transaction occurs when there is a direct relationship between the Borrower and
        any party to the transaction, including, but not limited to:
            Property seller
            Builder
            Developer
            Employer
            Originating lender (owner, employees or family members)
            Real estate broker
            Closing agent
            Appraiser
            Renters buying from landlord
            Property trades with seller
            Employed by family member – Must be Full Doc only and provide 2 years 1040’s
        The following restrictions apply to all non-arms length transactions:
            Allowed on owner occupied transactions only
            Full Doc or SIVA only – Not eligible for No Ratio and No Doc Transactions.
            Borrower must have own verified reserves on cash out refinance.
            Maximum third party contributions is limited to 3%
            1-2 unit properties only. No 3-4 unit properties allowed.
            Loans made to employees of the originating lender or service provider (appraiser, settlement
            agent, title agent, etc.) cannot directly or indirectly provide these services on their own property.



   Alt-A Fixed and Arm Products rev42                                    03/08/07                               Page 20 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

             Principal(s)/Owner(s) of the Originating Lender (or RMI approved Broker or Correspondent) are
             eligible for Full Doc only. Two years complete 1040’s (and business tax returns if applicable) are
             required.
             Relationships must be disclosed on the initial loan submission
             Additional risk factors are not present. Examples include, but are not limited to distressed sales,
             high amount of seller contributions and selling assets for down payment.
             In the case of a family transfer, a twelve-month (12) history of mortgage payments is required to
             ensure the loan is not a foreclosure bailout.

   Occupancy
        Owner Occupied/Primary Residence
            The property is occupied by the borrower as the primary residence. At least one of the borrowers
            must occupy and take title to the property and execute the note and the security instrument.
            Retention of borrower’s current residence is prohibited on purchases on No Doc loans. (Borrower
            must sell current residence to be eligible for No Doc)
            Non-Occupying Co-Borrowers
            • Acceptable on Full doc transactions only.
            • Occupying borrowers’ ratios must not exceed 50%.
            • Non-occupying co-borrowers must be immediate family members
            • Occupying borrowers must provide 5% of their own funds towards the transaction.
            • The occupant’s lack of sufficient credit history cannot be compensated by a non-occupant’s
                superior credit history.
        Second Home
            Second home occupancy is a single-family dwelling (2-4 family properties are not allowed) that the
             borrower occupies in addition to his or her primary residence. A typical second home will meet the
             following criteria:
             • Located in a resort area or where the applicant regularly conducts business affairs.
             • Should be a remote distance from the borrower’s primary residence.
             • The property must be suitable for year-round occupancy.
             • Property must be available for borrower’s exclusive use and enjoyment. May not be subject to any
                  timesharing arrangements, rental pools or other agreements that require the borrower to rent the
                  property or otherwise give control of the property to a management firm.
             •     Rental income may not be derived from a second home.
             •     Non-Arms Length transactions are not eligible.
             •     Typically, a borrower may have only one second home.
             •     Transactions where occupancy is questionable will be treated as Non-Owner Occupied
                   transactions.
        Investment Property (Non-owner occupied)
            Borrower must own their current residence to be eligible for financings on Investment properties.
            (Borrowers who are currently renting are not eligible.)
            The property is not occupied by the borrower as a primary or second home and is owned for the
            purpose of generating positive net cash flow.
             Non-Arms Length transactions are not eligible.
             Full/Alt Doc
             • Rental income not used to qualify borrower
                  o No Form 216 and 1007 are required
                  o Borrower is qualified with PITI

   Alt-A Fixed and Arm Products rev42                                    03/08/07                               Page 21 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

             •  Rental income used to qualify borrower
                o Form 216 and 1007 (if SFR) are required
                o Actual Rents are established by Lease Agreement or IRS 1040/Schedule E
                o Market Rents are established by Form 216 – Operating Income Statement supplied by
                     appraiser
                o Cash flow calculated as follows:
                          Purchase – Use a) 75% of market rent
                          Refinance owned < 1 year – Use a) 75% of actual rents, or b) 75% of market rents,
                          whichever is less.
                          Refinance owned = 1 year – Use the net rental income as documented by IRS
                          1040/Schedule E, or if tax returns are not available, use 75% of the actual rents as
                          evidenced by lease agreements.
            SIVA
            • Rental income not used to qualify borrower
                o No Form 216 or 1007 are required
                o Borrower is qualified with PITI
            • Rental income used to qualify borrower
                o Form 216 and 1007 (if SFR) are required
                o Market Rents are established by Form 216 – Operating Income Statement supplied by
                     appraiser
                o Cash flow calculated at 75% of market rent
            No Ratio and No Doc
            • Rental income not provided due to no income verified doc type
            • No Form 216 required
        Landlord Experience
            The number of properties a borrower owns and the length of time the properties have been
            owned must be taken into consideration during the underwriting review. Borrowers who
            demonstrate a rapid acquisition (acquired within the most recent 24-month period) of investment
            property will be reviewed cautiously. RMI reserves the right to request documentation to evidence
            the borrower had the funds required to purchase any property and/or sufficient verified assets to
            provide 6 months reserves for the investment portfolio.
            Loans made to borrowers owning multiple investment properties must meet the following
            guidelines:
            • Documented evidence of a minimum two (2) years’ experience managing multiple investment
                properties, or
            • Borrower has purchased or is in the process of purchasing a maximum of (including subject
                property) either,
                o     Two or less investment properties within the last six (6) months; and /or
                o     Four or less investment properties within the last two (2) years.
            • All financed 1-4-unit investment properties regardless of the source of financing will be
                considered in the above eligibility.

   Ownership History (Minimum 24 months)
        All files must contain a 24-month title history provided by an acceptable source, as well as all required
        documentation to satisfactorily verify ownership: Scenarios: If purchased less than 24 months, and the
        value increase is substantial or the reason for value increase is not supported by documented
        improvements – the original transfer value will be used.

   Alt-A Fixed and Arm Products rev42                                    03/08/07                              Page 22 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

             Acceptable Sources
             • Preliminary Title Commitments
             • Copies of recorded title-transfer deeds
             • Credit report mortgage histories and HUD-1’s showing transfers of ownership in the last 24-
                 months
             Unacceptable Source
             • Appraisal

   Prepayment Penalty
        6-month term hard prepayment penalty required on all programs unless loan will close with 3 year
        prepay.
        3 year prepay option is a hard prepay for first 12 months, soft prepay for the remaining 24 months.
        Prohibited on Texas section 50(a)(6) transactions.
        Prepayment penalty charges vary by state and will close in accordance with state-specific
        requirements.

   Property
        Eligible
             Single family attached and detached
             2-4 unit
             Warrantable condominiums
             Non-warrantable condominiums (High rise condos will be reviewed on a case-by-case basis)
             PUD
             Modular homes
             Rural
             Mixed-use properties
        Ineligible
             Properties in areas of declining values as stated on the appraisal report
             Properties with square footage less than six hundred (600) square feet
             Condotels
             Cooperative Loans
             Manufactured Homes
             Log homes
             Unimproved land
             Mobile homes
             Kiddy condos
             Unique properties
             Tax-sheltered Syndications
             Timeshare units
             Multi-Family dwellings containing more than four (4) units
             Working farms
             Ranches and orchards
             Any residential properties zoned commercial
             Refinanced transactions on properties currently listed for sale or listed for sale within six (6)
             months prior to the loan application date.
             Rehab properties owned less than twelve (12) months


   Alt-A Fixed and Arm Products rev42                                     03/08/07                               Page 23 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                  NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                  NC76PPIO, NC106IO, NC106PPIO

        Condominium
           General Requirements
           • Project must be located in an area where condominium ownership is readily acceptable.
           • FNMA Insurance requirements must be met.
           • Studio apartments that are typical and common in the subject’s market area are eligible.
           • Ineligible projects include, but are not limited to, projects with: time shares, manufactured
               homes, projects with multi-unit condominiums (properties where single ownership includes
               more than 1 unit).
           • Subject unit must have at least 600 square feet of living space.
           • Commercial use of project may not exceed 25%.
           • All projects must be in compliance with all applicable state or local laws. Homeowner’s
               Association must be incorporated in the state in which it is located.
           • Projects involved in litigation will be closely reviewed and may be ineligible for financing.
               Projects involved in litigation that would impact marketability, such as construction defects to
               units and/or common areas and facilities or loss of amenities (such as an attempt to convert
               green belt into a parking lot), are not acceptable.
           • Comparable sales may all be from within the subject project if the project is an existing
               condominium project. For new condominium projects, at least 1 comparable from outside the
               subject project will be required. Additionally, all comparables for new condominium projects
               must be re-sales. If the project consists of 12 or fewer units outside comparables will be
               allowed for all comparables as long as the comparables are from like sized projects.
           • The Homeowner Association Questionnaire must be completed by a representative from the
               HOA and must evidence that the subject property meets all condominium requirements.
           • Exposure is limited to 20% of the total project
           Warrantable Condominiums
           • Review type must be designated on the Transmittal Summary (1008) as outlined per FNMA
               Guidelines. Complete details may be found by visiting FNMA’s website at www.efannie.com or
               through AllRegs at www.allregs.com.

                       FNMA Code                      Project Acceptance Review Type
                          P              Limited Review - New Project
                          Q              Limited Review - Established Project
                          R              Expedited Review - New Project (CPM Required)
                                         Expedited Review - Established Project
                                         Project may be manually warranted or warranted through
                              S          FNMA's CPM. In all cases, the condo questionnaire
                                         source document used for the project warranty must be
                                         delivered, regardless of manual or CPM project warranty.
                                         Fannie Mae Review - Provide Form 1028 and all
                              T          conditions.
                              U          FHA- Approved Project - Not Eligible




   Alt-A Fixed and Arm Products rev42                                      03/08/07                           Page 24 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

             FNMA Limited Review
             • To qualify for a Limited Project Review the following criteria must be met. Otherwise full
                project documentation is required.
                        Occupancy                DU Approve          Manual Underwrite
                     Owner Occupied            All LTVs/CLTVs        <80% LTV/CLTV
                       Second Home            <75% LTV/CLTV           <75% LTV/CLTV
                  Investment Property         <75% LTV/CLTV             Not allowed
             Warrantable Condominiums < 5 Units
             • HOA by-laws must contain a binding arbitration agreement.
             • HOA must maintain a minimum of $1,000,000 in liability insurance.
             • The architectural style of the project must be typical for the area with architectural controls
                  included in the legal documents.
             • Each unit must be separately metered for gas, water and electric service, if applicable.
             • Two-unit projects allowed on a resale or “spot” loan basis only. The project must be
                  completed and the HOA in control for two (2) years with one hundred percent (100%)
                  presale.
             Site Condominiums (Detached Condo)
             • A project that consists only of detached one-unit (1) dwellings and does not include
                  manufactured or mobile housing units may be treated as a single family home for underwriting
                  purposes (i.e. no project analysis is required for O/O and Second Home transactions)
             • Non-owner occupied properties require project warranty
             • The Mortgage must be covered by a title insurance policy that includes an ALTA 4,
                  condominium endorsement, and complies with all other title insurance requirements.
             • All required hazard, liability and flood insurance, as applicable, in acceptable form must cover
                  subject property. Note: Individual or master hazard insurance policy is acceptable.
             Non-Warrantable Condominiums
             • Common areas must be 100% complete prior to closing
             • A total of fifty percent (50%) or more of the total available units must have been sold or
                  under contract for sale.
             • A maximum 50% investor concentration is allowed based upon the total number of units sold
                  or under contract for sale.
             • RMI’s total exposure is limited to 20% of the total project.
             • No single entity (individual, corporation, investor group, etc.) may own more than ten
                  percent (10%) of the total units sold in the project, except for the developer during the
                  initial sales phase.
             • The units within the project must have separate and individual gas and water meters.
             • Insurance coverage must meet or exceed Fannie Mae/Freddie Mac requirements. The bylaws
                  must contain a binding arbitration agreement and must not be involved in pending litigation.
             • A letter from the condominium association must verify the above information.
             • High Rise condos will be reviewed on a case-by-case basis.
             • Project is limited to 10 units or more. Properties with fewer than 10 units must meet
                  additional requirements noted below.
                  o Underwriting exposure is limited to:
                                 1 unit in projects with < 8 units
                                 2 units in projects with > 8 units
   Alt-A Fixed and Arm Products rev42                                    03/08/07                            Page 25 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

                                In projects < 5 units, property must be primary or second home
                   o  Investor concentration limited to:
                                1 unit in projects with > 5 units
                                None if project has 4 or less units
                 o New projects or conversions within last 3 years
                                100% of the project must be sold or under contract to sell
            Condominium Conversions within last 3 years
            • All units, common elements and facilities within the project must be fully completed.
            • A total of fifty percent (50%) or more of the total available units must have been sold or
                 under contract for sale.
            • A maximum 50% investor concentration is allowed based upon the total number of units sold
                 or under contract for sale.
            • Primary residences or second home purchases or rate/term refinances only.
            • No single entity (individual, corporation, investor group, etc.) may own more than ten
                 percent (10%) of the total units sold in the project.
            • The units must be owned free and clear in fee simple (leaseholds are not acceptable).
            • Unit owners must have the sole ownership, interest in and rights to use all project facilities
                 and common elements.
            • The project must be covered by all applicable insurance coverage – hazard, flood, liability and
                 fidelity – that is generally required for condominium projects.
            • All rehab work involved in the conversion must be completed in a workmanlike manner.
            • The project must be well managed. If professionally managed, the management contract must
                 be of a reasonable term and the termination provision must not require the payment of any
                 penalty or an advance notice of more than ninety (90) days.
            • File should contain a copy of the engineer’s or architect’s report/certification which must
                 comment favorably on the quality of construction; compliance with code requirements;
                 adequacy of mechanic systems; condition of major project components (roof, elevators,
                 heating systems, etc.); soil characteristics, foundation design and drainage; sound
                 transmission.
            • Two of the comparable sales used in the subject’s appraisal report must come from the
                 subject property’s project, and the third from a competing completed condo conversion.
            • Interior photos of the unit are required.
            • Marketing time for available units should not exceed 3-6 months.
            • The project’s operating budget must be consistent with the nature of the project and must
                 provide for adequate replacement reserves based on the project’s age and remaining life.
            • RMI’s total exposure is limited to 20% of the total project.
        Disaster Area
            Refer to Disaster Area Policy for procedures and current Declared Disaster Areas.
        Environmental Hazards
            Properties located adjacent to or containing environmental hazards are ineligible for financing.
            Environmental hazards include but are not limited to: Evidence of radon above EPA safety levels,
            properties built on or near toxic waste dumps or clean up sites, and properties subject to noxious
            odors such as from landfills, composting facilities, toxic molds and herbicides, and insecticides
            used for agriculture.
            For properties subject to noxious odors, the underwriter may proceed if the appraiser documents
            that there is no buyer resistance, that the value and marketability of the subject is not affected
            and the comps have the same influence.
   Alt-A Fixed and Arm Products rev42                                    03/08/07                            Page 26 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

        Modular/Prefab homes
           Factory-Built Housing must conform with the standards of the Council of American Building
           Officials (CABO) and the local building codes in the area in which it is permanently located
           Must be on a permanent foundation system that is appropriate for the soil conditions of the site
           and designed to meet local and state codes
           Appraisal must include like comparables that support marketability.
           Must assume characteristics of site built housing.
           Legally classified as real property.
           Must have sufficient square footage and room count for subject market area.

   Property Listed for Sale
        Properties currently listed for sale or within the past 6 months are not eligible for refinance.
        LOE is required on all loans after the 6-month period up to 1 year.

   Qualifying
        Arm plans with initial adjustment periods > 2 years will qualify at the note rate:
        (NC36, NC56, NC76, NC106)
        Arm plans with initial adjustment periods < 2 years will qualify at the note rate plus 2%:
        (NC6L)
        Interest only loans qualify at the interest only payments based on the qualifying rate above.
        Liabilities
             Installment Debt
             • Installment debts are included as monthly obligations if more than ten (10) payments remain.
                   However, an installment debt with ten or fewer monthly payments remaining should also be
                   considered as a recurring monthly debt obligation if it significantly affects the borrower’s
                   ability to meet his or her credit obligations.
             • All car lease payments are included as a monthly obligation regardless of the number of
                   payments remaining on the lease.
             • Deferred loans must be included in ratio calculation (i.e. student loans)
             • Debts secured by a financial asset are not included as a monthly payment (401(k), Keogh,
                   etc.).
             • Accounts must be current at the time of closing.
             • Co-signed debts may be excluded if:
                   o Account has been paid timely for the last 6 months (Delinquent credit will be used in
                        ratio calculation); and
                   o Evidence that account is being paid by someone else; and
                   o Evidence borrower is truly a Co-signer and not only obligor.
                   o Delinquent credit that belongs to an ex-spouse may be excluded from the credit
                        evaluation when the File contains a copy of the divorce decree or separation agreement,
                        which shows the derogatory accounts belong solely to the ex-spouse; and the late
                        payments occurred after the date of the divorce or separation.
             Revolving Debt
             • Included as monthly obligation regardless of the number of payments remaining
             • The monthly payment verified on the credit report may be used as the payment in calculating
                   the total debt ratio.


   Alt-A Fixed and Arm Products rev42                                     03/08/07                           Page 27 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

             •  If the payment amount is not verified on the credit report, the payment disclosed by the
                borrower or five percent (5%) of outstanding balance can be used
           • Accounts must be current at the time of closing.
           • Payoff of debt to qualify is allowed and no minimum payment for these debts will be included
                in the DTI.
           HELOC Loan Payment Calculation
           • For borrowers with a HELOC loan debt, the greater of 1% of the current balance or the
                payment reflected on the credit report will be used for qualifying purposes.
        Debt-to-Income Ratio
           The total debt-to-income ratio (DTI) may not exceed the maximum stated on the Program Matrix
           for manually underwritten Full Doc and SIVA loans. For loans approved by AUS the max DTI is
           50% for Full Doc and 45% for SIVA.
           Debt-to-income ratio must include monthly escrow payment (taxes and insurance) regardless of
           whether escrows are waived or not.
        Payment Shock
           Prudent underwriting requires this risk factor to be taken into consideration when analyzing the
           loan.
           The borrower’s ability to meet a larger monthly housing debt must be taken into account and
           combined with other risk elements such as FICO, CLTV, asset base, length of employment and
           property value.
           Payment shock is applicable to O/O residences only
           For Loan Amounts < $1,000,000
           • Full No Ratio and SIVA
                o No payment shock will be imposed
           • No Doc
                o Max payment shock is 2 x
           For Loan Amounts > $1,000,000
           • Full
                o No payment shock will be imposed regardless of FICO score or CLTV
           • No Ratio and SIVA
                o > 75% CLTV - Max payment shock is 2 x
           • No Doc
                o Max payment shock is 2 x
           Payment Shock example
           • Proposed housing divided by current housing equals payment shock
           • Proposed Housing payment $1,600.00 / Current Housing payment $ 800.00= 2 Times
                payment shock

   Section 32/High-Cost Loans
        Reunion Mortgage does not allow High-Cost loans. High-Cost testing will be performed on all loans
        to determine loan is not a high-cost loan as defined by section 32 and/or lender regulations and
        requirements. Please see points and fees matrix for % of fees allowed and fees included and excluded
        for calculation.

   State Restrictions / Requirements
        Refer to State Loan Matrix

   Alt-A Fixed and Arm Products rev42                                    03/08/07                            Page 28 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

        Texas Cash-Out Refinance
            Texas Home Equity (Cash-out Refinance Section 50(a)(6)) loans on homestead properties are
            eligible. A Texas Home Equity (Cash-Out Refinance Section 50(a)(6)) loan for a homestead
            property is based on Texas statute and not based on Fannie Mae definition.
            Texas Refinance - Due to the strict Homestead Laws in the State of Texas, refinance transactions
            for all occupancies will be subject to the following restrictions:
            Primary Residence – Texas Properties
            • Refer to Texas Refinance Policy
            Second Home or Non-Owner Occupied – Texas Properties
            • Cash Out and Rate/Term refinance transactions are eligible
            • Notarized homeowner’s affidavit prepared by the closing attorney and signed by all
                 borrowers which indicates the following:
                 o     Occupancy of the subject.
                 o     Address of the borrower’s primary residence.
                 o     Certification from the borrower that the current primary residence is their homestead as
                       of the date of the closing on the loan for the new property.
            • A copy of the subject property’s tax bill showing the property is not a homestead property
                 will be required.

   Subordinate Financing
        Institutional subordinate financing only. No private party or seller carry subordinate financing. No city or
        county subordinate financing.
        For employer financing – Repayment terms may not require the borrower to pay-in-full in the event the
        borrower no longer works for the employer. All other terms mentioned below must also be followed. An
        employer loan can be unsecured or a mortgage.
        Terms of subordinate lien - No balloon in 5 years; payment must be sufficient to cover interest due; interest
        rate and payment may not change more than once a year.
        A copy of the second lien note is required.
        HELOC product is acceptable.
        Payment calculation for new HELOC - Actual payment may be used, Interest-Only acceptable. Must have
        final copy of the HELOC Line Agreement/Note.

   Transactions
        Purchase
             A copy of the fully executed purchase contract and all attachments or amendments will be
             required.
        Limited Cash-Out Refinances
             Fannie Mae/Freddie Mac Conforming Loan Balances
             • The pay-off of the outstanding principal balance of an existing first Mortgage Loan
             • The pay-off of the outstanding principal balance of any existing subordinate Mortgage Loan
                 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 greater than the lesser of two percent (2%) of
                 the balance of the new refinance Mortgage Loan or $2,000.00.
             • Appraised Value is based on current appraisal.
             Non-Conforming Loan Balances:
             • The loan balance exceeds Fannie Mae/Freddie Mac loan limits, as updated from time to time.

   Alt-A Fixed and Arm Products rev42                                     03/08/07                                 Page 29 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

             •    The pay-off of the outstanding principal balance of an existing first mortgage loan.
             •    The pay-off of the outstanding principal balance of any existing subordinate Mortgage Loan
                  that was used in whole to acquire the subject property
            • The pay-off of the outstanding principal balance of any existing subordinate mortgage loan
                  that is more than one (1) year old, as of the date of the new Refinanced Mortgage Loan.
            • The pay-off of a documented equity interest buy-out of an ex-spouse or ex-mortgagor,
                  pursuant to a divorce decree or other legally binding written agreement (executed payoff
                  statement stating they will release their interest in the property in exchange for X amount of
                  dollars). This must also be documented on the HUD-1.
            • The pay-off of a subordinate lien where proceeds were used for property improvements
                  within the most recent 12 months. (File must document work performed and costs.)
            • Draws on equity lines within the last 12 months of less than $2000 per draw up to a
                  maximum of $2000 for the 12 month period.
            • The financing of closing costs (including prepaid expenses).
            • Cash back to the borrower in an amount no greater than the lesser of two percent (2%) of
                  the balance of the new Refinanced Mortgage Loan or $2,000.00.
            • Appraised Value is based on current appraisal.
            Properties purchased for cash may be eligible for refinancing under the rate/term program
            provided the following conditions are met:
            • The application for the loan is made within 30 days of the acquisition of the property.
            • The value of the property will be based upon the lesser of:
                  o Current appraised value or
                  o Original purchase price of the property
            • The file must contain the following documentation:
                  o HUD1/Closing statement evidencing the cash purchase of the property
                  o Evidence that the borrower had the liquid cash funds to purchase the property
        Cash-out Refinance
            Texas Owner Occupied Cash Out – Section 50(a)(6)
            •     Refer to Texas Refinance policy
            A Mortgage Loan that may include the unpaid principal balance of the existing first Mortgage
            Loan, closing costs, points, the amount to satisfy any outstanding subordinate mortgage liens of
            any age, and additional cash that the borrower may use for any purpose.
            If the property has been owned less than twelve (12) months and the CLTV > 75%, the lesser of
            current appraised value or the original purchase price plus documented cost of improvement is
            used to calculate value. If the CLTV < 75%, the current appraisal value will be used to determine
            value.
            Cash out amount is unlimited when LTV < 80.00%.
            Cash out is limited to $200,000 if LTV > 80%.
        Continuity of Obligation
            If individuals hold title, continuity of obligation must be established on the part of at least one of
            the borrowers.
            If the current title is vested in a company name, the continuity of the obligation must be
            established for all borrowers.
            “Owned >12 months” means the borrower is to have been on title and solely making payments
            for minimum of 12 months. A copy of the recorded deed and 12 months-cancelled checks verifies
            this obligation.


   Alt-A Fixed and Arm Products rev42                                    03/08/07                               Page 30 of 32
ALT-A       PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                           NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

               The following chart is intended as a guideline regarding the acceptability of proposed borrowers
               on refinance transactions and RMI’s requirements for each.

    Borrowers on Current Loan                  Proposed Borrowers on New Loan              Doc Type
    Co-owners/husband and wife/life          Co-owners/Husband and wife/life               All
    partners                                 partners
    Co-owners/husband and wife/life          One of the current owners                     Owned < 12 months – Full
    partners                                                                               Owned > 12 months - All
    Property owned free and clear by         One of the current owners                     Owned < 12 months – Full
    co-owners                                                                              Owned > 12 months - All
    Company or LLC owned by one              Owner (Individual) *                          All
    person
    Company, partnership or LLC              One of the owners (individual) *              Owned < 12 months – Full
                                                                                           Owned > 12 months - All
    Company, partnership or LLC              All corporate owners (as individuals) *       All

        * Title must be taken in the borrower's name, not the company name.
          Construction / Permanent Loans
              Allowed as either a purchase or a refinance when permanent financing replaces the construction
              financing within one hundred and eighty (180) days after property completion
              Allowed as a refinance if conversion occurs more than one hundred and eighty (180) days after
              property completion.
              Refinance Transaction
              • Cash out LTV/CLTV limits apply.
              • Construction financing is paid-off.
              • The borrower must be the primary obligor of the construction financing.
              • The LTV is based on the current appraised value if the borrower has owned the lot for twelve
                   (12) or more months prior to application of construction financing.
              • The LTV is based on the lesser of the current appraised value or the total acquisition costs if
                   the lot has been owned by the borrower for less than twelve (12) months.
              Purchase Transaction
              • The LTV will be subject to the limitations for purchase money transactions.
              • The LTV will be based on the lesser of the documented acquisition cost or current appraised
                   value.
              • The borrower should not receive any cash back at settlement.
          Contract for Deed/Land Contracts
              A mortgage loan that pays off a contract for deed is treated as a refinance transaction.
              Twelve (12) months of ownership seasoning is required and the LTV is based on the appraised
              value.
              Twelve (12) months of cancelled checks are required.
          Lease with an Option to Purchase
              If the contract is less than twelve (12) months old, use the lesser of appraised value and purchase
              price to calculate the LTV.
              If the borrower has occupied the property and paid on the contract for twelve (12) months or
              more, use the appraised value to calculate the LTV.
              Cash-out to the borrower is not permitted.
               Rent credit from the seller for part of the down payment and closing costs requires the following
               documentation:

   Alt-A Fixed and Arm Products rev42                                           03/08/07                              Page 31 of 32
ALT-A      PROGRAM CODES: NC15, NC15PP, NC30, NC30PP, NC6L, NC6LPP, NC36, NC36PP, NC56, NC56PP, NC76,
                          NC76PP, NC106, NC106PP
                                 NC30IO, NC30PPIO, NC6LIO, NC6LPPIO, NC36IO, NC36PPIO, NC56IO, NC56PPIO, NC76IO,
                                 NC76PPIO, NC106IO, NC106PPIO

             • The appraiser must provide evidence of Fair Market Rents
             • Rental credit must appear on HUD-1
             • Cancelled rent checks or bank statements to verify rental payment history
             • NLOTE: Unsupported rental credits will be treated as a reduction in sales price
        Inherited Properties
             If a mortgaged property was inherited within the last twelve (12) months, the following
             restrictions apply:
             • The owner must have clear title.
             • Title cannot be held in probate.
             • Percentage of ownership by heirs must be demonstrated and must be paid through escrow.
             • If paying off existing mortgage loans and heirs and with no cash to the borrower or debt
                  consolidation, the maximum LTV ratio will be established by the product matrix.
             • Maximum LTV ratio on cash-out refinances of inherited properties is 70% (subject to any
                  other program restrictions).
        Ineligible Transactions
             Builder/Seller Bailout
             Life Estates
             Property/Land Flip Transactions
             • Defined as properties re-sold within a short period of time of acquisition or when the title to
                  a property with high appreciation values has changed within a short period of time from
                  acquisition (a.k.a. Property Flips). Mortgage transactions where a property has been sold
                  more than once within the most recent 24-month period or title to a property has changed is
                  a warning sign for a possible property flip and will receive an additional review by
                  underwriting.

   Underwriting
        Manual Underwrite allowed for all loans.
        AUS allowed if loan amount <=$650,000 for Full Doc and SIVA. Refer to AUS Underwrite section for
        requirements.
        All loans must undergo prudent underwriting.
        Fannie Mae guidelines should be used if Alt-A guidelines do not address an issue.
        Use most restrictive guidelines when closing concurrently with a Reunion Mortgage Second loan
        product

   Value for LTV/CLTV calculation
        Purchase
            Use lesser of purchase price or current appraised value to calculate LTV/CLTV.
        Rate/Term Refinance
            Use current appraised value to calculate LTV/CLTV. Taking into consideration any large increase
            exceeding 15% if property owned less than 24 months.
        Cash Out Refinance
            LTV > 75% and property owned < 12 months, use lesser of current appraised value or acquisition
            cost plus cost of documented home improvements to calculate LTV/CLTV.
            LTV < 75% and/or property owned > 12 months, use current appraised value to calculate
            LTV/CLTV.
        Rehab property loans must have at least twelve (12) months of seasoning before any refinance.

   Alt-A Fixed and Arm Products rev42                                    03/08/07                            Page 32 of 32

								
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