First Mortgage Product Description

MI Buster DU 30 YR FXD LMTD DWN w2nd (FNMA Conventional)

MI Buster DU 30 YR FXD HiBal LMTD DWN w2nd (FNMA Conventional High Balance)

MI Buster HomeReady 30 YR FXD LMTD DWN w2nd (FNMA HomeReady)

MI Buster HomeReady 30 YR FXD HiBal LMTD DWN w2nd (FNMA HomeReady High Balance)

Second Mortgage Product Description

Academy Advantage MI Buster IO 2nd

Occupancy

Units

Maximum LTV4/CLTV/HCLTV

FICO

Maximum DTI

Primary

Residence

1 unit

971,2/1012,3

660

Lessor of AUS or 50%

Topic

Guidelines

AUS

• DU Approve/Eligible is required

• Manual underwriting is not permitted

Age of Documents

• All credit documents must be dated within 120 days of the note date

• Preliminary title policies must be no more than 180 days old on the date the note is signed

Appraisal

Requirements

• Determined by DU findings

• Appraisal Condition rating of C5/C6 or Quality rating of Q6: Not permitted

Asset

Documentation

• Asset documentation must comply with the requirements of DU findings and the Fannie Mae Seller Guide.

• Approved third party suppliers and distributors that generate asset verification reports are permitted for the purpose of verifying assets

Borrower Contribution

• No minimum Borrower contribution

• Follow Fannie Mae Selling Guide requirements

Borrower Eligibility

Acceptable Residency statuses:

• US Citizen(s)

• DACA borrowers are ineligible

• If closing in a Trust, the Trust beneficiaries must meet one of the above residency statuses

• Living Trust Agreement: Permitted in accordance with Fannie Mae guidelines. File must contain clear evidence of compliance.

• Loans to Limited Liability Corporations (LLCs) are not permitted

• Non-occupant Co-Borrower/Co-Signer - not permitted

Condos/PUDs

Refer to Fannie Mae Seller Guide

Credit

• Non-Traditional Credit: not permitted

• Significant Derogatory Credit: Refer to Fannie Mae Seller Guide

Disaster Area Requirements

for requirements pertaining to properties impacted by a disaster in:

• FEMA Major Disaster Declarations with designated counties eligible for individual assistance (IA);

• Areas where FEMA has not made a disaster declaration, but Fannie Mae has determined that there may be an increased risk of loss due to a disaster;

• Areas where there is reason to believe that a property might have been damaged in a disaster

Debt Ratio

• Maximum Debt-to-Income (DTI): Lessor of AUS or 50%

• DTI ratios to be calculated using the interest only payment from the second mortgage.

Employment/

Income Verification

• Employment and income documentation must comply with the requirements of the DU findings and the Fannie Mae Seller Guide

• A 4506-T form is required to be signed at closing for all transactions.

Transcript Requirements:

Topic

Guidelines

• W-2/1099 transcripts will not be required for a borrower when all income for that borrower is derived from W-2 wage earner and/or

• Tax transcripts are required in the following circumstances:

  • When tax returns are used to qualify a borrower. The number of years provided must be based on the DU findings. Income verified via tax returns includes but is not limited to the examples listed below:

    • Self-employment income

    • Rental Income

    • Employment by family members

    • Other income sources (i.e. Dividend Interest, Capital Gains, Alimony, etc.)

  • When a written VOE form 1005 is used as standalone income verification.

1099 fixed income sources.

Escrow/Impound

Accounts

Escrow accounts for property taxes, homeowner’s insurance and flood insurance (if applicable) are required on all loans.

Escrow Holdbacks

• Escrow holdbacks are permitted for outstanding minor repairs for incomplete construction or for alterations and repairs that cannot be completed prior to loan closing provided the subject property is habitable and safe for occupancy at the time of closing

• Follow Fannie Mae guidelines regarding reason, type of improvements, time to complete, quality, disbursements, and post-closing documentation

Financing

Concessions

Refer to Fannie Mae seller Guide as applicable.

First-Time Homebuyer Requirements

• FNMA Conventional LTV > 95% - At least one borrower must be a first-time homebuyer**

• FNMA Conventional LTV ≤ 95% - No first-time homebuyer requirement

• FNMA HomeReady - No first-time homebuyer requirement

• Note: High balance loans are limited to 95% LTV and 99% CLTV

o The income used to qualify the borrower converted to an annual basis must not exceed 80% of area median income (AMI)

** First-Time Homebuyer Definition: At least one buyer must not have owned any residential property in the past three years. In addition, an individual who is a displaced homemaker or single parent will also be considered a first-time homebuyer if he or she had no ownership interest in a principal residence (other than a joint ownership interest with a spouse) during the preceding three year time period. See

Fannie Mae Seller Guide for further information.

Geographic Restrictions

Ineligible States:

Arizona, California, Delaware, DC, Hawaii, Idaho, Maine, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New York, South Carolina, South Dakota, Texas, Washington, West Virginia, Wisconsin, and Wyoming.

Homebuyer Education

Requirements

• Required for all borrowers and must comply with Fannie Mae Home Education Requirements regardless of AUS findings.

• or Framework for the Homebuyer Education Course

Topic

Guidelines

• Post-purchase delinquency counseling not required

HPML/High Cost

• HPML eligible in accordance with Fannie Mae guidelines

• High cost loans are ineligible

Income Limits

FNMA Conventional:

• as applicable.

• The income used to qualify the borrower converted to an annual basis must not exceed 80% of the Fannie Mae Area Median Income (AMI) - refer to Fannie Mae AMI Limits as applicable;

FNMA HomeReady:

Verify all income listed on the Uniform Residential Loan Application. Any discrepancies, including underreported income, must be

corrected and submitted to DU. All reported income that is verified and meets the criteria for stable monthly income must be used to qualify the borrower.

Here is a link to the Area Medium Income (AMI) worksheet located in the Processes and Procedures Knowledge Portal.

Ineligible Product

Types

HomeStyle Renovation

Mortgage Insurance

None required. DU messaging regarding mortgage insurance requirements should be ignored.

Non-Arm’s Length

Transactions

Refer to Fannie Mae Seller Guide

Occupancy

Owner occupied only. Borrowers must occupy as their primary residence within 60 days of closing.

Property Types

Eligible

• Single Family Attached/Detached  Single Family with Accessory Unit

• PUDs o Must be zoned single family

• Condominiums/Townhomes o Subject to all applicable Fannie Mae guidelines

• Manufactured Homes  Working Farms or Ranches

• Cooperatives  Unimproved Land

• Mobile Homes  Community Land Trusts

• Condotels  Land trusts where the beneficiary is an individual

• Hotel Condominiums  Group Homes

• Timeshares

Ineligible

Repayment Terms Second Mortgage

• Interest Only payments will be due monthly

• Due and payable upon the sale, refinance or transfer of the property, or maturity or early payoff of the first mortgage.

Topic

Guidelines

• NOT FORGIVABLE

Subordinate Financing/DPA

• DPA to Homeownership Interest-only 2nd Program Only

• Other down payment/closing cost programs (DPA’s) are not permitted

• No additional financing allowed