HECM Underwriting Guidelines

1 Longbridge Financial, LLC. Underwriting Guidelines -1- Table of Contents Address .. - 24 - ADP Codes .. - 24 - Age .. - 25 - Alternate Contact Information .. - 25 - Application .. - 25 - New York .. - 26 - Final and Complete Application Definition .. - 28 - Re-Application Requirements .. - 28 - Good Faith Estimate (GFE) .. - 29 - Origination - 30 - Fee Restrictions in NY .. - 30 - Valid Change of Circumstance (VCC) .. - 31 - Truth-In-Lending - 32 - Asset Verification .. - 32 - Borrowed funds .. - 33 - Unacceptable Sources of Funds .. - 34 - Gift Funds .. - 34 - Sale of Personal - 35 - Sale of Real Estate .. - 36 - Borrower Eligibility.

2 - 36 - Borrower with more than one (1) FHA insured loan .. - 37 - Relocation .. - 37 - Increase in Family Size .. - 37 - Vacating a Jointly Owned Property .. - 37 - Non-Occupying Co-Borrower .. - 37 - CAIVRs (Credit Alert Verification Reporting System) .. - 38 - Commitment Letters .. - 38 - District of Columbia .. - 39 - Illinois .. - 39 - Louisiana .. - 39 - Maryland .. - 39 - -2- Massachusetts .. - 40 - Minnesota .. - 40 - New York .. - 41 - - 42 - Vermont .. - 42 - Counseling Policy .. - 42 - Counseling Waiver HECM Refinance (HECM to HECM) .. - 43 - Counseling Certificate .. - 43 - Disclosures Required Prior to Counseling.

3 - 44 - California .. - 44 - New York .. - 44 - Counseling - 45 - Counseling Delivery Methods .. - 45 - Face-to-Face Counseling .. - 45 - Telephone - 45 - Counseling Prior to Application .. - 46 - Counseling Timing .. - 46 - FHA Connection, Case # Assignment, and Application .. - 46 - Lender and Counselor Interaction - 47 - List of HUD Approved Counseling - 48 - Ordering of Services .. - 48 - Credit Report .. - 49 - - 49 - Credit Scores .. - 49 - Office of Foreign Asset Control (OFAC).. - 49 - Credit - 49 - Delinquent Federal Non-Tax Debt .. - 50 - Delinquent Federal Tax Debt .. - 50 - Deed-In-Lieu/Foreclosure / Short - 51 - Outstanding Mortgages.

4 - 51 - Delinquent Mortgage Payments .. - 52 - Bankruptcy .. - 52 - -3- Fraud Alert .. - 53 - Frozen Credit / Security Freeze .. - 53 - Date of Birth Verification .. - 54 - Death Certificate .. - 54 - Disbursement Limits .. - 54 - Policy and - 54 - Determining and Tracking the Initial Disbursement Limit .. - 55 - Disbursements Included in the First 12 Month Disbursement Limit and Initial MIP Calculations . - 56 - Documentation Requirements .. - 56 - Age of Documentation .. - 57 - No Expiration Date .. - 57 - 60 Day Expiration .. - 57 - 90 Day Expiration .. - 57 - 120 Day Expiration .. - 58 - 180 Day Expiration .. - 58 - Electronic Appraisal Delivery (EAD).

5 - 58 - Electronic Signatures .. - 58 - FHA Case Number .. - 59 - Flood Determination Certificate .. - 60 - Definition/Description .. - 61 - Mapping and Participation .. - 61 - Required Flood Disclosure Notices .. - 61 - Massachusetts .. - 62 - Disputing a Flood Zone .. - 62 - Eligibility for New Construction in SFHAs .. - 63 - Lender discretion on requiring a flood elevation certificate and/or flood insurance .. - 63 - Eligibility for Existing Construction in - 64 - Eligibility for Condominiums in SFHAs .. - 64 - Eligibility for Manufactured Homes in SFHAs .. - 64 - FHA Roster Appraiser Requirements .. - 64 - Flood Zone Requirements Matrix.

6 - 65 - HECM Lending Limit .. - 66 - -4- High-Cost Testing .. - 66 - Initial and Annual MIP - 66 - Land Trusts .. - 66 - Attorney Opinion Letter .. - 67 - Anonymous Land Trust .. - 68 - Definitions: .. - 68 - LDP/SAM .. - 68 - Lien Seasoning .. - 69 - Life Estate .. - 70 - Enhanced Life Estate .. - 71 - Beneficiary Deed .. - 72 - Mandatory Obligations .. - 72 - Refinance (Traditional and HECM to HECM) .. - 72 - - 73 - Non-Mandatory Obligations .. - 74 - NMLS .. - 74 - Non-Borrowing Spouse (NBS) .. - 74 - Definitions .. - 74 - Case Query .. - 75 - Credit report for Eligible NBS .. - 75 - Verification of Date of Birth and Social Security - 76 - Required Determination.

7 - 76 - Qualifying Attributes of the Deferral Period for the Eligible NBS .. - 76 - Deferral Period Requirements .. - 76 - Changes to Availability of HECM proceeds .. - 76 - Unaffected Terms of the HECM .. - 77 - Application Requirements .. - 77 - Required Borrower and NBS Certifications at Closing .. - 77 - Changes to Principal Limit .. - 78 - Counseling Requirements .. - 78 - Occupancy .. - 78 - Discrepancies .. - 79 - -5- Documentation .. - 80 - Payment Plans .. - 80 - Fixed - 80 - Adjustable Rate .. - 81 - Payoffs .. - 81 - Photo Identification .. - 82 - Un-expired Photo ID Requirements .. - 82 - Expired Photo ID Requirements (Expired within Five (5) years).

8 - 82 - CIP - 83 - No Photo Identification .. - 83 - Power of Attorney (POA) .. - 83 - Power of Attorney (POA) - 83 - Convenience Power of Attorney .. - 84 - Incapacitated Borrower Power of Attorney .. - 84 - Signing with a - 85 - Power of Attorney Mentally Incompetent Borrower .. - 85 - Power of Attorney used at closing, not at application .. - 86 - Conservatorship/Guardianship .. - 86 - Documentation .. - 86 - Principal Residence .. - 86 - Principal - 87 - Expected Rate Lock In .. - 87 - Principal Limit Protection .. - 87 - Look Up Floor .. - 87 - Purchase Transaction HECM for Purchase Program .. - 88 - Buy and - 88 - Buying Down in Value.

9 - 88 - Borrower Retaining Current Residence .. - 88 - Documenting Monthly Housing Expenses .. - 89 - Additional Requirements .. - 89 - Borrower Selling Current Residence .. - 90 - Maximum Claim Amount - 90 - -6- Contract of Sale .. - 90 - Land Contract .. - 91 - Sales Price .. - 91 - Property Flipping .. - 91 - Counseling Certificate .. - 92 - Inspections .. - 92 - Repairs .. - 92 - Power of - 92 - Non-Arms Length Transaction .. - 93 - Family Sales .. - 93 - Monetary Investment .. - 93 - Source of funds .. - 93 - Verification of Earnest Money Deposit/Down Payment .. - 94 - Ineligible Funding Sources .. - 94 - Purchase Incentives.

10 - 95 - Personal Property .. - 95 - Allowable Fees .. - 95 - New Construction .. - 96 - Late Payments and Current Defaults .. - 96 - Right to Cancel .. - 96 - HECM Refinance HECM to HECM (H2H) .. - 96 - Anti-Churning Disclosure .. - 96 - Benefit Requirements .. - 97 - Other Requirements .. - 97 - Counseling .. - 98 - Counseling Waiver .. - 98 - How do I know if the Anti-Churning shows the 5:1 benefit is met? .. - 99 - Anti-Churning Disclosure 5:1 benefit is not met .. - 99 - Required Documents .. - 100 - Existing HECM was a HECM to HECM Refinance .. - 100 - Ethical Refinancing of HECM Reverse Mortgages .. - 101 - Exceptions.