MORTGAGE PROGRAM POLICY AND PROCEDURES FOR …

1 Effective January 24, 2022 MORTGAGE PROGRAM POLICY AND PROCEDURES FOR PARTICIPATING LENDERS Revised Nov. 2021/Eff. Jan. 24, 2022 Table of Contents Chapter/Section No. Title Page INTRO INTRODUCTION Intro DEF/ROC DEFINITIONS AND RULES OF CONSTRUCTION Definitions i Rules of Construction x Chapter 1 PARTICIPATING LENDER RELATIONSHIP Sec. 1-1 Initial Qualifications 1-1 Sec. 1-2 Participating Lender Approval Process 1-3 Sec. 1-3 Maintaining Participating Lender Approval Status 1-3 Sec. 1-4 Delegated Participating Lender Qualifications 1-6 Sec.

2 1-5 Loan Origination Responsibilities, Process and Requirements 1-7 Sec. 1-6 Participating Lender Compensation/Fees 1-15 Chapter 2 PARTICIPATING LENDER REPRESENTATIONS AND WARRANTIES Sec. 2-1 Participating Lender, Representations, Warranties and Covenants 2-1 Sec. 2-2 Participating Lender Integrity, Responsibility and Nondiscrimination 2-5 Chapter 3 FIRST MORTGAGE PRODUCTS Sec. 3-1 NJHMFA-Specific Guidelines Applicable to All Products 3-1 Sec. 3-2 NJHMFA First-Time Homebuyer PROGRAM 3-3 Sec. 3-3 NJHMFA Homeward Bound PROGRAM 3-8 Sec.

3 3-4 NJHMFA Stay at Home PROGRAM 3-9 Sec. 3-5 Police and Firemen s Retirement System (PFRS) MORTGAGE Loan PROGRAM 3-11 Sec. 3-6 NJHMFA 100% Financing PROGRAM 3-16 Sec. 3-7 NJHMFA HFA Advantage Loan PROGRAM 3-19 Chapter 4 ASSISTANCE PROGRAMS Sec. 4-1 Smart Start PROGRAM 4-1 Chapter 5 AGENCY UNDERWRITING PARAMETERS Sec. 5-1 Participating Lender s General Underwriting Requirements 5-1 Sec. 5-2 Credit Underwriting Guidelines 5-3 TOC - 1 TOC - 2 Revised Nov. 2021/Eff. Jan. 24, 2022 Sec. 5-3 Credit Report 5-8 Sec.

4 5-4 Citizenship, Permanent and Non-Permanent Residents 5-9 Sec. 5-5 PROGRAM Specific Underwriting Requirements 5-9 Chapter 6 RATE LOCK POLICY AND PIPELINE MANAGEMENT Sec. 6-1 Loan Reservation POLICY 6-1 A. Requirements 6-1 B. MORTGAGE Loan Reservation Process 6-2 C. MORTGAGE Loan Reservations - Confirmations 6-3 D. Price Guaranty Options 6-4 E. Loan Reservation Options 6-4 F. POLICY for Extending MORTGAGE Loan Reservation Options and/or Repricing Options 6-5 Sec. 6-2 Loan Reservation Pipeline Management 6-6 Chapter 7 PROPERTY GUIDELINES: STANDARDS, CLASSIFICATIONS, REPORTS, CERTIFICATIONS AND INSPECTIONS Sec.

5 7-1 Applicability 7-1 Sec. 7-2 General Property Standards 7-1 Sec. 7-3 Appraisal Reports and Requirements 7-3 Sec. 7-4 Property Types and Classifications 7-5 Sec. 7-5 Property Certifications, Inspections, Testing and Reports: General Overview 7-10 Sec. 7-6 Property Certifications, Inspections, Testing and Reports - Requirements 7-11 Chapter 8 INSURANCE REQUIREMENTS Sec. 8-1 MORTGAGE Insurance 8-1 Sec. 8-2 Title Insurance 8-1 Sec. 8-3 Property Insurance 8-6 Sec. 8-4 General Property Insurance Coverage 8-7 Sec.

6 8-5 Coverage for Units in Project Developments 8-9 Sec. 8-6 Evidence of Property Insurance 8-13 Sec. 8-7 Flood Insurance 8-14 Sec. 8-8 Mortgagee Clause 8-17 Chapter 9 CLOSING THE MORTGAGE LOAN Sec. 9-1 General Information 9-1 TOC - 3 Revised Nov. 2021/Eff. Jan. 24, 2022 Sec. 9-2 Limitations on Cash Back 9-2 Sec. 9-3 Title Insurance 9-2 Sec. 9-4 MORTGAGE Instrument(s) and Assignment 9-2 Sec. 9-5 MORTGAGE Note 9-3 Sec. 9-6 Consistency of Borrower Names 9-4 Sec. 9-7 Co-Signers 9-5 Sec. 9-8 Non Liable Co-Occupants 9-5 Sec.

7 9-9 Power of Attorney 9-7 Sec. 9-10 Homeowner s Insurance POLICY 9-8 Sec. 9-11 MORTGAGE Insurance Premiums 9-8 Sec. 9-12 Taxes 9-8 Sec. 9-13 Transfer of Servicing 9-9 Sec. 9-14 1098 Reporting 9-9 Sec. 9-15 Possession of a MORTGAGE Loan File by Participating Lender/Servicer and/or Subservicer 9-9 Chapter 10 SELLING THE MORTGAGE LOAN TO NJHMFA Sec. 10-1 Performance Standards 10-1 Sec. 10-2 Submitting the Purchase Package 10-1 Sec. 10-3 Servicing PROCEDURES and Documents 10-2 Sec. 10-4 Summary Reports 10-4 Sec.

8 10-5 Purchase and Sale of MORTGAGE Loan 10-4 Sec. 10-6 Conditions to Purchase 10-5 Sec. 10-7 MORTGAGE Loan Benchmarks 10-6 Chapter 11 COLLATERAL DOCUMENT SUBMISSIONS Sec. 11-1 Delivery Deadline 11-1 Sec. 11-2 Delivery 11-1 Sec. 11-3 Collateral Document File 11-1 Sec. 11-4 Missing Documents Report 11-2 Chapter 12 PARTICIPATING LENDER NON-COMPLIANCE: BREACH, REMEDIES AND REPURCHASE Sec. 12-1 Participating Lender Non-compliance That May Lead to Fees 12-1 Sec. 12-2 Participating Lender Non-compliance That May Lead to Repurchase 12-1 Sec.

9 12-3 Participating Lender Non-compliance That May Result in Termination 12-4 TOC - 4 Revised Nov. 2021/Eff. Jan. 24, 2022 Sec. 12-4 Additional Agency Remedies 12-7 Chapter 13 MISCELLANEOUS 13-1 Waivers 13-1 13-2 Advertising Standards 13-1 Appendix I APPENDIX OF MORTGAGE LOAN FORMS Apx I-1 Appendix II APPENDIX OF APPLICABLE LAWS Apx II-1 Summary SUMMARY OF ADDRESSES, CLAUSES AND CONTACTS S-1 Eff. January 24, 2022 January 2022 Introduction The New Jersey Housing and MORTGAGE Finance Agency s MORTGAGE PROGRAM POLICY and PROCEDURES for Participating Lenders is a handy reference manual which details the proper way to do business with NJHMFA.

10 Topics cover the requirements a lender must satisfy to become an NJHMFA-Approved Lender of residential MORTGAGE loans and how to maintain that approved status. As a member of our exclusive group of loan professionals, you are asked to comply with specific PROGRAM requirements in the following areas: Loan programs, loan file submission, underwriting, property stipulations, insurance guidelines, closing and funding PROCEDURES , purchasing PROCEDURES and, of course, the legal and regulatory requirements.