MEMO #2016­30 CMG FINANCIAL CREDIT POLICY AND …

1 MEMO #2016 30TO: Wholesale Broker & Select Partner ClientsRE: CMG CREDIT POLICY and Guideline UpdatesDATE: July 26, 2016 EFFECTIVE: As noted belowCMG FINANCIAL CREDIT POLICY AND GUIDELINE UPDATEST opics Covered in this Announcement: All ChannelsNew Product Release: 6600 Series Jumbo Program Available 8/1/2016 Retirement of Gold Series High Balance ProgramReminder: Number of Paystubs/Bank StatementsProperties Subject to Obligations FHA/VANEW PRODUCT RELEASE: 6600 SERIES JUMBO PROGRAM AVAILABLE 8/1/2016 Summary: We are pleased to announce a new Jumbo Program that will be available on Monday,8/1/2016.

2 The 6600 Series Jumbo Mortgage Program is a QM Jumbo program that is similar to the 6200 Series Jumbo but with expanded/enhanced parameters. Refer to full guidelines for completerequirements below are a few program highlights. Eligible Borrowers: US Citizen, Permanent Resident Alien, Non Permanent Resident Alien. Non occupant borrowers permitted subject to restrictions. First Time Homebuyers Types: Primary Residence, Second Home, and Investment Properties. 1 4 unit properties, Non Warrantable Condos and Condotels are permitted.

3 Maximum Loan Amount: Up to $2,000,000. Refer to loan eligibility matrix in guidelines for maximumloan amount based on LTV/CLTV, transaction type, occupancy, fico, loan amount, and number of & Eligibility Matrix: Primary residence purchase or rate/term up to 90% LTV with nomortgage insurance. CREDIT Standards661 minimum FICODebt to Income Ratios Fixed Rate & ARM: Occupant Co Borrowers with Blended Ratios over 80%: : CMG Select Partner Transactions not Date: Final guidelines and pricing will be available and posted beginning August 1, 2016 Link to draft guidelines for preview purposes: 6600 Series RETIREMENT OF GOLD SERIES HIGH BALANCES ummary: CMG is retiring the Gold Series High Balance loan program.

4 The last day to lock is 8/1/2016. Pricing for this program will no longer be available as of 8/2/2016 and guidelines will be retired once thelocked pipeline is clear. Loans not locked by 8/1/2016 can be switched over to the standard Agency HighBalance Product Code: 101 HB NPB, 102 HB NPB, 101 NPBLPM & 102 NPBLPMI Effective Date: 08/01/2016 REMINDER: NUMBER OF PAYSTUBS/BANK STATEMENTSS ummary: In regards to minimum number of bank statements and paystubs, CMG Corporate Creditdoes not impose an overlay. For loans underwritten via an AUS, automated underwriting systems willindicate the minimum verification documentation necessary for CMG to process the loan transaction.

5 Thislevel of documentation may not be adequate for every borrower and every situation. The underwriter mustdetermine whether additional documentation is warranted, but in all cases the minimum for the financingtype/program must be obtained. Reminder: As a CMG overlay, VODs & VOEs are not permitted as standalone SUBJECT TO OBLIGATIONS FHA/VASummary: Certain energy retrofit lending programs, often referred to as Property Assessed CleanEnergy (PACE) programs, are made by localities to finance residential energy improvements and aregenerally repaid through the homeowner s real estate tax bill.

6 These loans typically have automatic firstlien priority over previously recorded mortgages. CMG prohibits loans that have senior lien status to amortgage. With HERO financing, the repayment of the financing is included in the property tax bill, which isdelivered and collected by the County. At this time, although the program may allow for the transfer of thefinancing to a new homeowner, limited subordination agreements do not meet eligibility requirements. Unless the terms of the PACE loan program do not provide for lien priority over first mortgage liens, theseloans with PACE/HERO assessments are ineligible.

7 This applies to all financing and loan types. FHA and VA have just issued guidance in reference to eligibility of properties subject to PropertyAssessed Clean Energy (PACE) obligations. Both have reiterated that the subject loan must have firstlien position. CMG aligns with FHA and VA and full requirements are as noted in the Mortgagee Letterand VA circular. (see links below). However, with this alignment, please note that certain programs suchas the HERO program continue to be ineligible, as they do not fully subordinate and provide first lienposition for the subject loan regulations at 24 CFR (a) require, in part, that with certain exceptions, at the time themortgage is offered for insurance, the property must be free and clear of any liens other than theFHA insured mortgage.

8 In addition, FHA regulations at 24 CFR (c)(2) require that anyrestrictions on conveyance automatically terminate if title to the mortgaged property is transferredby foreclosure or deed in lieu of foreclosure, or if the FHA insured mortgage is assigned to theSecretary. See Mortgagee Letter 2016 11 for full FHA release and links to HUD Handbook to 38 3703(d)(3)(A), a VA guaranteed loan must be secured by a first lien onthe realty. Lenders are responsible for properly securing the first lien position of a VA guaranteedloan.

9 See VA Circular 26 16 18 for VA s guidance and eligibility : Mortgagee Letter 2016 11VA Circular 26 16 18 Fannie Mae Selling Guide ReferenceContact your Account Executive or Account Manager for full details3160 Crow Canyon Road, Suite 400, San Ramon, CA. 94583 | | NMLS #1820 | 2016 CMG FINANCIAL , All Rights Reserved. CMG FINANCIAL is a registered trade name of CMG Mortgage, Inc., NMLS #1820 in most, but notall states. CMG Mortgage, Inc. is an equal opportunity lender, licensed by the Department of Business Oversight under the CaliforniaResidential Mortgage Lending Act No.

10 4150025, California Finance Lenders Law No. 6053674. Offer of CREDIT is subject to creditapproval. For information about our company, please visit us at To verify our complete list of state licenses, pleasevisit For more information on State licenses, please visit Notintended to serve as a business solicitation for residents in Massachusetts.