Two Home Equity Loan programs described as “Blended” and “Stand Alone” loans.

HOME EQUITY LOAN TYPE A fixed rate closed end second mortgage loan.

A second mortgage loan which is closed simultaneously with a first mortgage for Purchases and Refinances. This product is ideal for borrowers who wish to partner with a first mortgage to avoid mortgage insurance or jumbo loan pricing. Full Documentation and Stated Income options available.

LOAN TERM

• 5 - 20 years; or
• 15 year balloon amortized over 30 years (not allowed for co-ops)

GEOGRAPHIC RESTRICTIONS
Originations are limited to properties located in:
AL, AZ, CA, CO, CT, DE, FL, GA, IA, ID, IL, IN, KY, LA, MA, ME, MD, MI, MN, MO, MS, NC, NE, NH, NJ, NV, NY, OH, OK, OR, PA, RI, SC, TN, TX, UT, VA, WA, WI and Washington, DC

• The minimum loan amount in Arizona is $10,001
• Loans in Texas are restricted to purchase transactions only
• In New Jersey, this is available in the Broker channel as a referral only. Table Funded Blended Loans are not available in NJ. Broker must provide all required forms and disclosures
• No stated income loans permitted in the state of Minnesota and Maine

MAXIMUM LOAN AMOUNT / TOTAL LOAN-TO-VALUE for “FULL DOCUMENTATION and STATED INCOME” information can be discussed in private. Call your mortgage professional at Funding America.

STATED INCOME

• Limited to the amount listed or the First Mortgage maximum, whichever is less
• Due to High Cost loan rate limits, some products are no longer available at different CLTV and FICO scores
• Stated income products are not available in the state of Minnesota and Maine
• Investment properties permitted at a maximum 80% CLTV, maximum 50% DTI, minimum 720 FICO and maximum $200,000
• Investment properties permitted at a maximum 80% CLTV, maximum 45% DTI, minimum 680 FICO and maximum $150,000
• Maximum CLTV is 80% for Jumbo A ARM and Fixed transactions
• All borrowers must be self-employed only. Income from any source(s) other than self employment (i.e. W2, Social Security, Pension, etc) will not be considered unless it is fully documented

MINIMUM LOAN AMOUNT
$10,000 in all states (except Arizona, where the minimum is $10,001)

ELIGIBLE PROPERTY AND OCCUPANCY TYPES

• 1-4 unit detached and attached primary residences
• Condominiums and PUDs. (Per first mortgage program.)
• Cooperatives are restricted to the 5 Boroughs of New York City and Rockland, Westchester, Nassau and Suffolk counties. (Must meet eligible first mortgage project guidelines.)
• 1-4 unit Investment property.
• 1 unit Second Homes

• Leaseholds.
• Commercial property.
• Properties currently listed for sale
• Manufactured homes
• Investment Co-ops
• Land only

• Bridge Loans
• Funds for business usage in excess of $250,000
• Refinance transactions are not permitted in Texas

ACCEPTABLE TRANSACTION TYPES
Blended Purchases and Refinances only – funds are advanced at first mortgage closing (AKA “piggybacks” or “combo” loans). For Refinances, there are no seasoning requirements or cash out limitations
ELIGIBLE FIRST MORTGAGES
Full Documentation - Eligible first mortgages include:

• Fannie Mae/Freddie Mac Fixed Rate and ARMs
• Jumbo A Fixed Rate and ARMs to a maximum TLTV of 80%

• Fannie Mae Stated Income Fixed Rate and Fannie Mae Stated Income ARMs
• Freddie Mac Stated Income Fixed Rate

INELIGIBLE FIRST MORTGAGES
Ineligible first mortgages from some mortgage banks include:

• Freddie Mac A-Minus Fixed Rate and ARMs
• Fannie Mae Expanded Approval Fixed Rate and ARMs
• Streamline Refi programs
• HOME 97
• Government loans
• Freddie Mac Home Possible
• Fannie Mae MyCommunityMortgage
• Jumbo A Fixed Rate and Arms with a CLTV greater than 80%
• Alt A Fixed Rate and ARMs
• Multinational Borrower Fixed Term LIBOR ARMs

UNDERWRITING HIGHLIGHTS
The underwriting parameters follow certain mortgage banks, Fannie Mae or Freddie Mac criteria unless otherwise stated.
Underwriting Options –

• Must follow underwriting method utilized for first mortgage
• MI contract underwriting is not permitted
• Delegated underwriting is not permitted.

Documentation Options –
DU or LP documentation waivers are acceptable when the loan is partnered with a Fannie Mae/Freddie Mac conforming first mortgage or for a Jumbo A loan where waivers are eligible.
Eligible Borrowers –
Per first mortgage program.
Credit Requirements –
Traditional credit only.
Income Verification –
Full Doc: Per first mortgage program.
Stated Income: Limited to self-employed borrowers only.
Qualification –
Borrower is qualified at the base interest rate for the amortization selected.
For the Balloon Payment Option home equity loan, the borrower is qualified at a 15 year fully amortizing payment.
CLOSING COSTS
The following are the only acceptable fees allowed for this program:

• We encourages one title policy with sufficient coverage to insure both loans, however, we will accept two separate polices
• Borrower pays all flood cert fees, title insurance fees (unless billed under one premium), recording fees and mortgage taxes (where applicable)
• Bank attorney / title agent to charge no more than $250. Attorney must conduct the closing in the states of DE, GA, MA and SC. Attorney must conduct the closing for purchase transactions in NY.

APPRAISAL REQUIREMENTS
Per first mortgage program.
PREPAYMENT PENALTY
None.
RATE LOCK POLICY
Follow first mortgage policy.
REQUIRED FORMS AND DISCLOSURES
In addition to the standard first mortgage file, a separate file for the second mortgage must be submitted and include any required state and federal disclosures:

• The "Key Facts About Nontraditional Home Equity Features" disclosure must be provided to the consumer to assist them with making an informed decision regarding product selection
• Uniform Residential Loan Application (FNMA 1003); the Government Monitoring Information must be completed only if the purpose of the loan is for paying off any and all mortgage liens or to purchase property, or for the purpose of home improvement
• 15 Year Balloon Disclosure Notice (if applicable) – FOD #525
• Home Equity Loan Rate Lock-in Agreement – FOD #519
• In all states, (except AL, KY, LA, ME, OR, RI, TN) Hazard Insurance Disclosure – FOD #530
• In MA – Addendum to Uniform Residential Loan Application – FOD #531
• In AL, OR, TN – Hazard Insurance Designation Form
• In KY, LA, ME, RI– Title and Hazard Insurance Designation Form
• In OK – Title Protection Notice (Purchase Blended only)
• gage Loan Approval Criteria – FOD #538
• Consumer Caution and Home Ownership Counseling Notice – FOD #539
• Borrower’s Bill of Rights Disclosure – FOD #540
• In RI – Rhode Island Choice of Insurance Notice – FOD # 543
• In NV – Commercially Available Means or Mechanism’ worksheet – FOD #315
• Ohio Notice Regarding Laws Against Discrimination – FOD #542
• Wholesale Affiliated Business Arrangement Disclosure Statement
• Title Insurance is required for both transactions. We encourages one title policy with sufficient coverage to insure both home equity loans, however, we will accept two (2) policies billed under one premium amount
• At closing separate HUD-1's are required for each transaction. Each delivery package should include their independent HUD 1's as well as a copy of the HUD-1 used for the corresponding transaction. (ie: The first mortgage file will have its original HUD-1 and a copy of the Home Equity HUD-1. The Blended Home Equityfile will have its original HUD-1 and a copy of the first mortgage HUD-1.)
• Blended Settlement Services Disclosure – FOD #725
• Notification of Potential Assignment, Sale or Transfer of Servicing Disclosure
• Truth in Lending (if a purchase)

A mortgage worksheet can be filled out and submitted for review or you can call the branch manager for a complete mortgage application.

STAND ALONE HOME EQUITY LOAN

LOAN TYPE
A fixed rate closed end second mortgage loan.
PROGRAM FOCUS
A full documentation or stated income second mortgage home equity loan which is a stand alone financial instrument. This product is most suitable for borrowers who prefer the security of a fixed payment.LOAN TERM
5 - 20 years; or
15 year balloon amortized over 30 years (not allowed for co-ops).

GEOGRAPHIC RESTRICTIONS
Originations are limited to properties located in: AL, AZ, CA, CO, CT, DE, FL, GA, IA, ID, IL, IN, KY, LA, MA, MD, ME, MI, MN, MO, MS, NC, NE, NH, NV, NY, OH, OK, OR, PA, RI, SC, TN, UT, VA, WA, WI and Washington, DC
Minimum home equity loan amount in Arizona is $10,001.
No stated income loans permitted in the state of Minnesota and Maine.
MAXIMUM HOME EQUITY LOAN AMOUNT / TOTAL LOAN-TO-VALUE can be discussed with you in private by your Funding America broker.

• TLTV, Credit Score and loan amount parameters are absolute
• Non-traditional credit is acceptable up to 70% TLTV and $100,000
• Investment properties permitted at a maximum 80% TLTV, maximum 50% DTI, minimum 720 FICO and maximum $200,000
• Investment properties permitted at a maximum 80% TLTV, maximum 45% DTI, minimum 680 FICO and maximum $150,000
• Due to High Cost home equity loan rate limits, some products are no longer available at different TLTV and FICO scores

• Co-ops subject to a maximum TLTV of 80%; refer to Daily Rate Sheets for additional price overlay
• TLTV, credit score and home equity loan amount parameters are absolute
• Investment properties are not eligible
• Stated income products are not available in the state of Minnesota and Maine

MINIMUM LOAN AMOUNT
$10,000 in all states (except for Arizona, where the minimum is $10,001)
ELIGIBLE PROPERTY AND OCCUPANCY TYPES – FULL DOCUMENTATION

• 1-4 unit detached and attached primary residences
• Condominiums and PUDs
• Cooperatives are restricted to the 5 Boroughs of New York City and Rockland, Westchester Nassau and Suffolk counties
• 1-4 unit Investment property
• 1 unit Second Homes.

• 1-2 unit detached and attached primary residences
• Condominiums and PUDs
• Cooperatives are restricted to the 5 Boroughs of New York City and Rockland, Westchester, Nassau and Suffolk Counties
• 1 unit Second Homes

• Leaseholds
• Commercial property
• Properties currently listed for sale
• Manufactured homes
• Investment Co-ops
• Investment property – stated income
• Land only

UNACCEPTABLE USE OF FUNDS
The purpose of the home equity loan must be clearly identified. Unacceptable uses of funds include:
Bridge Loans.
Funds for business usage in excess of $250,000
ACCEPTABLE TRANSACTION TYPES Stand Alone Refinances - no cash out limitations or seasoning requirements.
INELIGIBLE FIRST MORTGAGES
Ineligible first mortgages include any lien which has the potential for negative amortization.
UNDERWRITING HIGHLIGHTS
The underwriting parameters follow certain mortgage banks unless otherwise stated.
Underwriting Options –

• All stand alone loans must be underwritten according to TLTV / CREDIT SCORE / DTI standards in the grids
• DU and LP are not permitted
• Certain low risk home equity loans may be eligible for lesser forms of documentation than the guidelines below

• All Borrowers must reside in the United States
• U.S. Citizens.
• Permanent Resident Aliens
• A Non-Permanent Resident Alien is eligible as a co-borrower at standard guidelines if they apply with a U.S. citizen or permanent resident alien. If all borrowers are non-permanent resident aliens, the subject property must be a primary residence and the TLTV is restricted to 89.99%. The visa status of all non-permanent resident aliens must be documented. Refer to Exhibit 400 for acceptable classifications
• Living Trusts are eligible. Refer to Section 200 for details
• Non-Occupant Co-Borrowers and Co-Signers are NOT permitted

• Full Doc
• Traditional credit.
• Non-traditional credit is eligible at certain levels only. Non-traditional credit also must adhere to Fannie Mae Tier I guidelines. A minimum of 4 Tier I references with no late payments must be evident. The rental rating must be from a professional management company or the most recent 12 months cancelled checks evidencing timely payment must be obtained from the borrower
• If a payment for a revolving account is not disclosed on the credit report, 3% of the outstanding balance is used for qualification purposes
• To not be counted toward the DTI ratio, installment debts may be paid down to 10 or less payments
• No previous in-house losses are allowed with documented charge-offs, bankruptcies and foreclosures
• For Full Documentation loans, the middle score of the primary wage earner is to be utilized

Stated Income
For Stated Income loans, the lowest selected credit score among all borrowers is used for home equity loan qualification.
Non Traditional Credit is not permitted for Stated Income Loans.
2 year credit history must be established
Income Verification
Full Documentation:

• For salaried borrowers, the most recent paystub and W-2 statement are required
• For self-employed borrowers, the most recent two (2) years Personal tax returns are required for all loan amounts. Two (2) years Corporate tax returns are required for loan amounts greater than $100,000
• For analyzing rental income on investment property and/or documentation requirements, please call your broker

• Income is stated but not verified
• All borrowers must be self-employed. Income from any source(s) other than self employment (i.e. W2, Social Security, Pension, etc) will not be considered unless it is fully documented
• Self-employed borrowers must have a minimum of two (2) years of continuous employment in the same business as stated on the loan application
• The borrower’s income must pass the “reasonability” test in relation to their credit profile and line of work. IRS Form 4506 is NOT required

Qualification

• Borrower is qualified at the base interest rate for the amortization selected.
• For the Balloon Option heloan, the borrower is qualified at a 15 year fully amortizing payment. Refer to Home Equity Loan and Home Equity Payment Factors for payment factor table

• 1 unit only, Primary or Second Home. (Second home not permitted on Stated Income)
• Maximum 89.99% TLTV
• Minimum 10 units in project
• Minimum 70% presale

CLOSING COSTS/EARLY TERMINATION POLICY AND CLOSING REQUIREMENTS

• Borrowers pay NO closing costs or any other fees. If the home equity loan is repaid prior to its 3 year anniversary, the borrower must reimburse an early termination fee plus mortgage-like taxes in NY, FL, GA, MN, OK, and TN. The early termination fee is $500 in all states, except California and Virginia where the early termination fee is $750
• A Wholesale Account may receive from the customer a fee of up to 1% of the approved loan amount, up to a maximum of $5,000
• No other fees are allowed to be charged by the Wholesale Account to the customer for this transaction
• This fee is not required by or paid and is not subject to the early termination policy outlined above
• This fee must be paid from the proceeds of the loan at closing
• If this fee results in a high-cost loan, the Wholesale Account will be required to reduce the fee to bring the rate under the maximum level
• Attorney must conduct the closing in the states of DE, GA, MA and SC. An approved attorney must conduct the closing for all purchase transactions and Co-op’s in first lien position in NY
• All appraisals (unless the Wholesale Account has provided an appraisal dated within 120 days of application), title searches, title insurance and closing/settlement agents will be selected/ordered.

APPRAISAL REQUIREMENTS
All home equity doc types- Single Family Owner Occupied loans, including PUDs, Condos, excluding Coops $150,000 or less, an Automated Valuation Model (AVM), Appraiser Assisted AVM (AAA), a Form 2055 (exterior), Form 70 (URAR), OR Condo Forms.

For any questions, you can contact us here.

1.347.294.4200