Section 2.01 - Agency Loan Programs

1 **Note: As of April 24, 2020, SunTrust now Truist applied temporary Agency and Government product restrictions based on occupancy type, transaction type, number of units, minimum credit score, maximum LTVs, and maximum DTI ratios. Refer to Bulletin COR20-015. Section June 12, 2020 Agency loan Programs Page 1 of 649 Correspondent Seller Guide Section - Agency loan Programs In This Product Description This product description contains the following topics. Overview .. 6 Product Summary .. 6 Related Bulletins .. 7 loan Terms .. 8 Minimum loan Amount .. 8 Maximum loan Amount .. 8 Agency Maximum LTV/TLTV/ HTLTV Ratio Requirements .. 9 Agency Plus Maximum LTV/TLTV/ HTLTV Ratio Requirements .. 12 ARM Disclosures .. 15 ARM Parameters .. 15 Assumability Provisions .. 17 Interest Only Parameters .. 17 Multiple Financed Properties for the Same Borrower .. 17 Ability-to-Repay and Qualified Mortgage.

2 22 General .. 22 Eligible Transactions .. 22 Calculation of LTV/TLTV/HTLTV Ratios .. 22 Construction Lending Single 26 Construction Lending 32 Fannie Mae s HomeStyle Energy for Improvements on Existing Properties/ Freddie Mac s GreenCHOICE MortgagesSM .. 33 Fannie Mae s HomeStyle Renovation Mortgage / Freddie Mac s CHOICER enovationSM Mortgage .. 44 Installment Land Contract .. 63 Maximum Allowable Points and Fees .. 64 Non-Arm s Length Transactions .. 64 Property Assessed Clean Energy (PACE) Loans .. 65 Purchase Transactions .. 67 Refinance Transactions .. 68 Relocation Mortgages .. 69 Validation of Parties to the Mortgage Transaction .. 73 Refinances .. 75 Continuity of Obligation .. 75 Cash-Out Refinance .. 76 Delayed Financing Cash-Out Refinance .. 78 Home 79 Limited Cash-Out Refinance (LPA Terminology: No Cash-Out Refinance) .. 80 Refinance of a Restructured Mortgage loan .. 85 Spousal/Partner Buy-Out and Inherited Properties.

3 86 Streamline Refinance Program .. 87 Student loan Cash-Out Refinance .. 87 Net Tangible Benefit Form or Appropriate Documentation Required .. 88 Secondary Financing .. 89 General .. 89 Community Seconds (Fannie Mae) / Affordable Seconds (Freddie Mac) .. 95 Home Equity Lines (HELOCS) .. 103 Geographic Restrictions .. 104 Introduction .. 104 Occupancy/Property Types .. 105 Primary Residences .. 105 Second Homes .. 107 Investment Properties .. 109 Occupancy Verification .. 111 Condominiums .. 111 PUDs .. 111 Leasehold Estates .. 112 **Note: As of April 24, 2020, SunTrust now Truist applied temporary Agency and Government product restrictions based on occupancy type, transaction type, number of units, minimum credit score, maximum LTVs, and maximum DTI ratios. Refer to Bulletin COR20-015. Section June 12, 2020 Agency loan Programs Page 2 of 649 Correspondent Seller Guide Manufactured Housing.

4 117 Mixed-Use Properties .. 118 Modular, Prefabricated, Panelized, or Sectional Housing .. 119 Properties Listed For Sale .. 121 Properties Purchased at Auction .. 121 Short Sale Property .. 122 Properties with Private Transfer Fee Covenants .. 123 Properties with Resale Restrictions .. 123 Properties with Solar Panels .. 136 Properties With Two or More Parcels .. 140 Rural Properties .. 141 Group Homes .. 141 Ineligible Properties .. 142 Eligible Borrowers .. 144 Permanent Resident Aliens .. 144 Non-Permanent Resident Aliens .. 145 Homeownership Education and Housing Counseling, (continued) .. 146 Homeownership Education and Housing Counseling, (continued) .. 147 Inter Vivos Revocable Trusts/Living Trust .. 152 Non-Occupant Borrowers .. 156 Land Trusts .. 157 Co-Signers and Guarantors .. 161 Number of Borrowers on loan Application .. 162 Tax Identification Numbers .. 162 Ineligible Borrowers.

5 164 Income .. 165 General Income Information .. 165 General Income Documentation Requirements .. 186 IRS Forms Reference .. 204 Alimony, Child Support and/or Separate Maintenance Payments .. 205 Assets as Qualifying Income / Assets as a Basis for Repayment of Obligations (LPA Terminology) .. 207 Automobile Allowances and Expense Account Payments .. 216 Boarder Income .. 217 Bonus and Overtime Income .. 218 Borrowers Employed by a Family Member or Interested Party to the Transaction .. 219 Borrowers Re-Entering the Workforce .. 219 Capital Gains 220 Commission Income .. 221 Employment Offers or Contracts .. 222 Farmland Income .. 228 Foreign Income .. 229 Foster Care Income .. 230 Gaps in Employment .. 230 Housing or Parsonage 231 Interest and Dividend Income .. 232 Long-Term Disability Income .. 233 Military Income .. 236 Mortgage Credit Certificates .. 237 Mortgage Differential Payments Income.

6 239 Non-Occupant Borrower Income .. 240 Notes Receivable .. 241 Part-Time Income .. 241 Public Assistance Income .. 242 Rental 244 Restricted Stock (RS) and Restricted Stock Units (RSU) .. 261 Retirement, Government Annuity, and Pension 263 Royalty Payment Income .. 269 Salaried or Hourly Wage Income .. 270 Schedule K-1 Income (For borrowers with Less than 25% Ownership in Business) .. 272 Seasonal Income / Seasonal Unemployment Income .. 274 Second Job Income .. 275 Section 8 Homeowner-ship Assistance Payments .. 277 Self-Employment Income .. 278 **Note: As of April 24, 2020, SunTrust now Truist applied temporary Agency and Government product restrictions based on occupancy type, transaction type, number of units, minimum credit score, maximum LTVs, and maximum DTI ratios. Refer to Bulletin COR20-015. Section June 12, 2020 Agency loan Programs Page 3 of 649 Correspondent Seller Guide Social Security Income.

7 295 Social Security Income, (continued) .. 296 Tax Exempt Income .. 300 Temporary Leave and Short-term Disability Income .. 301 Tip Income .. 305 Trailing Co-Borrower Income .. 306 Trust Income .. 307 VA Benefits Income .. 308 Verbal Verification of Employment (VVOE) / 10-Day Pre-Closing Verification (PCV) .. 310 Liabilities and Qualifying Ratios .. 315 30 Day Accounts/Open End Accounts .. 315 Alimony, Child Support or Maintenance Payments .. 316 Bridge / Swing Loans .. 317 Business Debt in Borrower s Name / Self-Employed Borrower s Debt Paid by the Borrower s Business .. 318 Debt Paid by Others / Contingent Liabilities .. 319 Court-Assigned Debts .. 321 Deferred Installment Debt .. 322 Federal Tax Installment 323 Garnishments .. 324 Installment Debt .. 324 Job Related Expenses (Unreimbursed Employee Business Expenses) .. 325 Lease Payments .. 326 Loans Secured By Financial Assets .. 327 Mortgage Assumptions/ Property Settlement Buyouts.

8 328 Mortgage Payments on Previous Home .. 329 Non-Applicants Accounts .. 330 Property Taxes, Insurance and HOA Assessments .. 330 Rental Housing Payment .. 331 Revolving Debt .. 332 Student 333 Qualifying Rates .. 334 Qualifying Ratios .. 336 Undisclosed Debts .. 344 Documentation .. 345 Credit Requirements .. 346 General Credit Documentation 346 Bankruptcies, Foreclosures, Deeds-In-Lieu, Short Sales, and Mortgage Charge-Offs .. 347 Collections and/or Non-Mortgage Charge-Offs .. 358 Consumer Credit Counseling (CCC) .. 359 Credit 360 Credit Score Requirements .. 374 Credit Utilization .. 380 Inquiries .. 381 Judgments and/or Liens .. 382 Mortgage Payment History .. 383 Privately Held Mortgages .. 385 Rental/Other Payment History .. 386 Traditional Credit History .. 387 Authorized User Accounts .. 388 Nontraditional Credit History .. 389 Out of Country Addresses .. 401 Past Due Accounts .. 401 Cash Requirements.

9 402 General Asset Information .. 402 General Asset Documentation Requirements .. 407 Minimum Borrower Contribution 412 529 Plans .. 414 1031 Tax Exchange (Also Known As a Like Kind Exchange) .. 414 Borrower s Real Estate Commission .. 415 Bridge Loans in Second Lien 415 Business Assets .. 416 Cash on Hand .. 417 Cash Reserve Requirements .. 418 **Note: As of April 24, 2020, SunTrust now Truist applied temporary Agency and Government product restrictions based on occupancy type, transaction type, number of units, minimum credit score, maximum LTVs, and maximum DTI ratios. Refer to Bulletin COR20-015. Section June 12, 2020 Agency loan Programs Page 4 of 649 Correspondent Seller Guide Checking, Savings Money Market, Certificates of Deposit (CD), or Other Depository Accounts423 Credit Cards .. 424 Deposit on Sales Contract .. 426 Donations From Entities .. 428 Employer Assistance .. 430 Funds Dispersed from a 435 Gifts.

10 436 Gifts of Equity .. 440 Individual Development Accounts (IDAs) .. 441 Large Deposits .. 444 Lender Contributions / Lender Credit .. 447 Life Insurance Cash Value .. 449 Loans / Borrowed Funds Secured by an Asset .. 450 Non-Occupant Borrower Asset Requirements .. 452 Pooled Funds / Community Savings System Accounts .. 453 Rent Credit for Option to Purchase .. 455 Retirement Funds .. 456 Sale of Personal Assets .. 458 Sale of Real Property / Sale or Refinance of Real Property (LPA Terminology) .. 459 Stocks, Stock Options, Bonds, and Mutual Funds .. 461 Sweat Equity .. 463 Trade Equity .. 464 Unsecured Loans .. 465 Financed Permanent Interest Rate Buydowns .. 466 Financed Permanent Interest Rate Buydowns .. 466 Interested Party Contributions (IPCs) .. 468 Interested Party Contributions (IPCs).. 468 Temporary Interest Rate Buydowns .. 475 Mortgage Insurance .. 480 General .. 480 Appraisal Requirements.