WHOLESALE LENDING AT-A-GLANCE …

1 WHOLESALE LENDING AT-A-GLANCE EMPLOYMENT/INCOME Broker- glance Employment/Income Page 1 of 9 03/20/2020 DESCRIPTION Each Borrower's employment and income are evaluated for adequacy and stability. Their employment history, opportunities for future advancement, educational background and occupational training determine the Borrower's potential for stable future income. A Borrower who has been working for the same employer for a long period of time will have both stable employment and income even if he or she has held the same position during his/her entire job tenure.

2 ALIMONY / CHILD SUPPORT Alimony and/or child support may be included in the qualifying income when the guidelines below are met: Income Determination The current income is used for qualifying as long as it will not be decreased or discontinued, according to the divorce decree or separation agreement. Continuance Continuance for at least (3) years beyond the loan closing date is required and is verified from the divorce decree or separation agreement. Verification Alimony and/or child support is verified by a copy of the divorce decree or separation agreement specifying the payment award amount and period of time over which it will be received.

3 Separation agreements must be signed by both parties and notarized. Receipt of support income is verified as follows: Copies of deposit slips or bank statements for the previous (12) month period showing payment of support deposited, or Copies of canceled checks for previous (12) month period, or Copies of federal income tax returns (1040s) with supporting schedules for the previous year showing alimony received. (If tax returns are older than (60) days, proof of current receipt via one of the methods above will be required), or Copies of court records, when payments have been received through the court, verifying a minimum (12) months of receipt.

4 ASSET UTILIZATION INCOME Asset Utilization income may be used for Borrowers who meet certain credit, equity and asset requirements. These guidelines also apply on Portfolio Express Refinances. Refer to the eligibility and income calculation guidelines below. ELIGIBILITY ASSETS Reserve Requirements - Borrowers must have the greater or $250,000 in eligible assets or the reserves required for the product/transaction for Asset Utilization to be allowed. These funds may not be included in the Asset Utilization income calculation. Eligible Assets Assets must be unencumbered and titled in the name of the Borrower, the Borrower s Revocable Trust, or a non-operating LLC that is 100% owned by the Borrower.

5 Eligible liquid assets include the following: 100% of the assets in the following types of accounts may be utilized: Checking, savings, Money Market, CDs, cash value of life insurance 70% of the following types of accounts/assets may be utilized (including those held in 401k or other retirement accounts): Stocks, Bonds, Mutual Funds that are widely traded on major exchanges Treasury instruments Investment grade Corporate and Municipal Bonds Equities, REITs, ADRS and exchange traded funds that are widely traded on major exchanges. Note: Funds in 403(b) and 457(b) accounts can only be included as eligible assets if the Borrower is not taking a distribution.

6 WHOLESALE LENDING AT-A-GLANCE EMPLOYMENT/INCOME Broker- glance Employment/Income Page 2 of 9 03/20/2020 ASSET UTILIZATION INCOME (CONTINUED) Retirement Accounts - If the Borrower is less than 59 , 50% the funds in retirement accounts (IRAs, RIRAs, 401Ks) may be used as reserves and/or toward the asset utilization income calculation (Note: No need to apply discounts by asset class). If the Borrower is 59 or older, the funds in retirement accounts may be used for reserves and/or asset utilization (after applying the appropriate discounts by asset class Stocks @ 70%).

7 If Borrower is Taking Distributions from a Retirement Account If the Borrower is taking distributions from an IRA or 401(k) retirement account, funds eligible to be used for Asset Utilization would be the account balance after applying any discount based on asset class, minus the qualifying distribution income over a 3 or 5-year distribution period. If the distribution income represents 50% or less of the qualifying income, then distributions over a (3) year period would need to be deducted from the account before utilizing the account as reserves. If the distribution income represents more than 50% of the qualifying income, then distributions over a (5) year period would need to be deducted from the account before utilizing the account for reserves.

8 Due to the possibility of employer clawbacks, funds from 403(b) and 457 (b) can only be used as a source of income or reserves, but not both. If Borrower is taking deductions, it would be considered as a source of income. Example: Borrower is 65-years old. Distribution income from the retirement account represents 51% of the qualifying income. Account balance is $1,200,000; all invested in Stocks. Qualifying distribution income is $60,000 annually x 5 years = $300,000. Retirement Balance $1,200,000 X 70% = $840,000 Annual Distribution x 5 years ($300,000) Available for Asset Utilization $540,000 Note: If Borrower has reached age 70 , the above treatment must be applied even if the first distribution has not been taken.

9 Ineligible Assets Business accounts, Stock held in privately held Corporations, Stock options, non-vested Restricted Stock, gift funds, cryptocurrency, windfall assets ( proceeds from a lawsuit, lottery winnings), proceeds from a cash-out refinance, non-financial assets (collectibles, stamps, coins, artwork, etc.) assets titled in an Irrevocable Trust, custodial accounts, escrow accounts, 529 accounts, accounts pledged as collateral for a loan, below investment grade Corporate and Municipal Bonds, secured/pledged assets, and foreign assets. Other Accounts Accounts such as Annuities, Trust funds and Hedge funds may be utilized as long as it can be documented that the funds are available to the Borrower and under what condition the funds may be withdrawn.

10 CREDIT Borrowers must meet Standard Credit requirements. Refer to WHOLESALE AT-A-GLANCE Credit. Credit Scores Minimum 700 or 740 credit score required depending on loan amount Refer to Loan Amounts/LTV/TLTV/Minimum Credit Score table below. INCOME CALCULATION Asset Utilization income is calculated using a standard annuitization of verified eligible assets based on the following: Rate of return is updated annually by Credit Policy (currently at ) Source: The FFIEC Uniform Bank Performance Report (UBPR) Call Report. The amortization term is set to be equal to the term of the loan (not less than 15-year 40-years for 40-Year Interest-Only product.)