KINECTA FEDERAL CREDIT UNION CORRESPONDENT …

1 1440 Rosecrans Beach, CA lending PROGRAMCORRESPONDENTLENDINGKFCUW8677H-03 /121 KINECTA FEDERAL CREDIT UNIONCORRESPONDENT LENDINGSELLERS GUIDE8677H - 03/121440 Rosecrans Beach, CA lending PROGRAMCORRESPONDENTLENDINGKFCUW8677H-03 OVERVIEW .. Key lending Policies .. anti - predatory lending Policy .. Fee Policy .. Escrow Waivers .. Quality Control .. Prepayment Penalty Options .. State Specific Requirements & Licensing .. Appraisal Ordering Process .. Website Information .. Using KINECTA Website .. KINECTA Web Administrative Functions .. User Functions .. Loan Status Definitions .. PRICING AND LOCK INFORMATION .. Lock Desk and Pricing .. Rate Lock Programs .. PRODUCTS .. KINECTA Product Matrices .. Fannie Mae Guidelines .. ELIGIBLE TRANSACTIONS .. Borrower(s) Eligibility .. Borrower Occupancy .. Loan Purpose .. Loan Amounts .. Ratios .. Documentation Types .. Eligible Properties .. Rural Properties .. Special Housing Types .. Condominium Projects.

2 PUD Projects .. Ineligible Properties .. Geographic Restrictions ..261440 Rosecrans Beach, CA lending PROGRAMCORRESPONDENTLENDINGKFCUW8677H-03 UNDERWRITING POLICIES AND PROCEDURES .. Automated Underwriting .. CREDIT Package Submission Minimum Standards .. CREDIT Package Submission Tracking Loan Status on Website .. Conditional Mortgage Insurance .. Fannie Mae LQI Checks .. Clear to Close .. CLOSING POLICIES AND PROCEDURES .. Closed Loan Requirements .. Membership Requirements .. Escrow Holdback Policy .. Impound/Escrow Accounts .. Requirements for Trust Closings .. Insurance Requirements .. Property Insurance .. Flood Insurance .. Hazard Policy Ratings .. Title Insurance .. Pest Inspections .. SUBMISSION OF CLOSED LOAN FILE .. Submission Process .. Requirements for Closed Loan File .. POST PURCHASE REQUIREMENTS .. Seller Document Responsibilities .. Post Purchase Documentation .. Seller Transfer Responsibilities .. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS (MERS ).

3 Creating a Mortgage Identification Number (MIN) .. MERS as the Registering a Loan with MERS .. Transfer of Servicing and Beneficial Rights .. Assigning a Mortgage to MERS ..401440 Rosecrans Beach, CA lending PROGRAMCORRESPONDENTLENDINGKFCUW8677H-03 OVERVIEWK inecta FEDERAL CREDIT UNION s CORRESPONDENT lending program is designed specifically for and is open to banks and CREDIT unions. This Sellers Guide is designed to assist Sellers with doing business with KINECTA FEDERAL CREDIT UNION efficiently and this Sellers Guide, the following terms or abbreviations will be used as appropriate. The associated meaning follows each term. When more than one agency is included for loan terms and only one applies, the single agency will be stated in that instance. Otherwise the text applies generically to FEDERAL CREDIT UnionSellerInstitution delivering loans to KinectaAgreementCorrespondent lending AgreementAgencyFannie Mae and Freddie MacGovtFHA loansUSDAR ural Housing, also known as RD, RHSCSRK inecta Client Services RepAEKinecta Account Executive for SellerWebsite AdminSeller employee responsible for user maintenanceRevision Date and UpdatesAll material in this Sellers Guide reflects the latest information through December 28, changes will be identified by a newer revision date at the bottom left corner of each page with revised should always refer to the website and the product matrices for the latest information until such information is included in the revision of the Sellers Guide.

4 KINECTA s CORRESPONDENT lending TeamSeller satisfaction is key to KINECTA s CORRESPONDENT lending program. KINECTA s support begins with the Account Executive ( AE ) assigned to each institution. The AE is a knowledgeable, experienced representative who will be the primary contact for all questions related to the Seller relationship with Client Services Rep ( CSR ) is the support person within the organization for all questions and issues that arise surrounding loans that are submitted to KINECTA for underwriting and purchase. KINECTA CSRs will work directly with Sellers to assure loans are handled quickly and efficiently as they progress through the underwriting and purchase process. CSRs will review the loan documents as they are received and will contact the appropriate person at the Seller with any questions or need for follow-up documents such as underwriting conditions. KINECTA Post-Closing group will receive all trailing documents and will be the contact for those questions related to LoanKinection, KINECTA has a dedicated help desk support organization that will provide support to the Seller s own Website Admin, the individual within the Seller institution who will be the first level of support on all technical issues and questions related to website Rosecrans Beach, CA lending PROGRAMCORRESPONDENTLENDINGKFCUW8677H-03 /125 KINECTA Contact InformationCorrespondent OperationsToll Free: option 4 Lock Email: option 3 Mailing AddressKinecta FEDERAL CREDIT UnionAttn: CORRESPONDENT lending Department2100 Park PlaceEl Segundo, CA 90245 Transbox # RD0720 Bailee Letter & Note DeliverySend to Mailing Address above, Attn: CORRESPONDENT Operations ManagerMortgagee ClauseKinecta FEDERAL CREDIT UNION , ISAOAAttn: Loan Servicing Box 25506 Fort Worth, TX 76124 Insurance EndorsementsKinecta FEDERAL CREDIT UNION , ISAOAAttn.

5 Loan Servicing Box 25506 Fort Worth, TX 76124 ID Numbers MERS Org ID: Key lending PoliciesThis section of the Sellers Guide provides an overview of KINECTA s general policies related to the CORRESPONDENT lending program. Sellers will follow Fannie Mae Guidelines and find product-specific requirements and guidelines in the Product Matrices located on the KINECTA CORRESPONDENT lending Compliance Policy KINECTA purchases loans eligible for sale in the secondary market, meeting established product guidelines. Product requirements and restrictions, product features, and required documentation apply consistently to all mortgagors. Specifically, KINECTA purchases loans without regard to the borrower s race, color, national origin, religion, sex, marital 1440 Rosecrans Beach, CA lending PROGRAMCORRESPONDENTLENDINGKFCUW8677H-03 /126status, handicap, age (provided the applicant has the legal capacity to enter into a binding contract), the fact that all or part of an applicant s income is derived from any public assistance program, the applicant has exercised any rights under any FEDERAL or state consumer CREDIT protection act, or on the basis of any other consideration prohibited by law or regulation for real estate lending and loan Seller must be aware of, and in full compliance with, all FEDERAL , state, and local laws that apply to any use of its origination or selling practices or other business practices (including the use of technology).

6 Among other things, this means that the Seller must comply with any applicable law that addresses fair housing, fair lending , equal CREDIT opportunity, truth-in- lending , wrongful discrimination, appraisals, real estate settlement procedures, borrower privacy, data security, escrow account administration, mortgage insurance cancellation, electronic signatures or transactions, predatory lending , terrorist activity, or the enforcement of any of the terms of the anti - predatory lending PolicyKinecta does not purchase mortgage loans that are subject to the Home Ownership and Equity Protection Act of 1994 (HOEPA), as described in Section 32 of Regulation Z, In addition, KINECTA does not purchase loans meeting the definition of residential mortgage transaction, as defined under the Truth-in- lending Act (a purchase-money loan secured by borrower s principal residence), that have either an annual percentage rate (APR) or total points and fees payable by the borrower that exceed the applicable thresholds under HOEPA.

7 KINECTA does not purchase mortgage loans that meet the definition of high cost, high risk, covered, subprime, or any similar designation under state or local law, regardless of whether any provision of such state law is preempted by FEDERAL law with respect to a particular loan or for a particular requires the Seller to provide documentation that each mortgage loan meets applicable Net Tangible Benefit requirements, including disclosures required by the state in which the subject property is Fee PolicyThe Seller must provide loan applicants with all required disclosures. Fees charged must be in compliance with all applicable laws and regulations, including those governing permissible fees, maximum fee amounts, timing, and disclosures. KINECTA will charge certain fees to Sellers on all loans purchased. Fees are published on KINECTA s rate KINECTA by policy does not purchase loans that are considered to be high-rate or high fee, loans subject to HOEPA or any state or local high cost law, or loans that would be predatory in the jurisdiction where the property is located, as part of the purchase process KINECTA will run an audit of the fees charged on the loan.

8 KINECTA will provide a notification if the fees are in excess of the allowable amounts, but any testing performed by KINECTA does not reduce or eliminate each Seller s obligations under the agreement should there be a subsequent finding that the loan is a high cost Escrow Waivers KINECTA requires that escrow (impound) accounts be established for each loan, subject to the following state-specific exceptions: CA Escrow account required if LTV > 90%. If LTV is less than or equal to 90%, an escrow account is not required. IL Escrow account requirement waived if LTV 65%. If LTV is < 65%, an escrow account is not all other states, KINECTA will allow a borrower-requested waiver of the escrow account requirements (if permitted by 1440 Rosecrans Beach, CA lending PROGRAMCORRESPONDENTLENDINGKFCUW8677H-03 /127the applicable investor) for conventional loans on primary residences with an LTV less than or equal to 80%. The pricing for loans with borrower-requested escrow waivers may include an increase to rate and/or pricing, as noted on the applicable product Quality Control KINECTA will apply its Quality Control Policy and Procedures to loans originated by Sellers and will report findings as appropriate to Sellers for their use in prevention of similar occurrences.

9 KINECTA requires that Sellers perform quality control procedures, as specified in the plan submitted to KINECTA , to ensure the quality of the originations submitted to KINECTA for underwriting and purchase. If any irregularities or discrepancies are discovered during KINECTA s routine review, KINECTA will expand the scope of the quality control reviews on Seller s loans to ensure all problem areas are identified. KINECTA will provide quarterly reports to Sellers. Sellers will be required to respond to any findings of moderate risk or greater or to any indications of trends toward risk findings. Sellers should investigate and respond with their results and what actions will be taken to correct the issues with quality and/or material findings trends or failure to respond to the report findings can result in termination of the Seller s approval with Prepayment Penalty OptionsKinecta does not purchase loans with prepayment State Specific Requirements & LicensingThe Seller and Mortgage Loan Originator must meet all licensing/registration requirements for the state in which the subject property is located, unless exempt from such states and some local municipalities have passed laws regarding mortgage lending activities.

10 Sellers must follow all the laws in effect where the subject property is located, and are responsible for all required documentation related to state specific requirements. Appraisal Ordering ProcessFannie Mae and Freddie Mac issued Appraiser Independence Requirements (AIR) that were effective on October 15, 2010. Each Seller that sells loans to KINECTA must ensure that its origination appraisal practices are in compliance with the AIR and represents and warrants to KINECTA that any appraisal and all appraisal practices used in origination of a loan (Conventional or Government) conform to the requirements of Fannie Mae and Freddie Mac and comply with must order appraisals using one of three processes. The appraisal must either be ordered thru the KINECTA Appraisal Department, thru an AMC that is AIR compliant, or via the correspondents own AIR compliant process. Loans with appraisals that do not conform to the following guidelines are not eligible for purchase under the CORRESPONDENT lending Program.