FHA RETAINED PLAZA HOME MORTGAGE, INC. PROGRAM …

FHA RETAINED PROGRAM GUIDELINES

PLAZA HOME MORTGAGE, INC.

FHA Retained rev. 08 12/17/2013

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1 Program Summary

12 Underwriting Method

2 Product Codes

13 Credit

3 Loan Programs

14 Back to Work/Extenuating Cir

4 Program Matrix

15 Income and Employment

5 Occupancy

16 Qualifying Ratios

6 Transactions

17 Down Payment / Gifts

7 Property Flips / Resale

18 Reserves

8 Identity of Interest

19 Interested Party Contributions

9 Loan Limits

20 Property Eligibility

10 Subordinate Financing

21 Appraisal

11 Borrower Eligibility

22 Geographic Restrictions

23 Max Financed Properties 24 Mortgage Insurance Prem 25 Escrow Accounts 26 Repair Escrow 27 ARM Adjustments 28 Temporary Buydowns 29 Prepayment Penalty 30 Other Features 28 Forms - Correspondent

Forms ? Plaza Internal Forms - Wholesale

Section 1

Program Summary

The Plaza Retained FHA program is designed for borrowers who have experienced an extenuating circumstance which has resulted in a credit score that does not meet our standard FHA guidelines.

Loans may also be eligible if qualified under the criteria outlined in Mortgagee Letter 2013-26 addressing Back to Work ? Extenuating Circumstances. Loans qualifying under the provisions of Mortgagee Letter 2013-26 must be coded as RFHA30BTW and must meet all requirements as outlined in Mortgagee Letter 2013-26 and the requirements in these Program Guidelines. Refer to the Back to Work Section of these guidelines for more information.

The information contained in these guidelines is provided for informational purposes only. Direct Endorsement underwriters must refer to the HUD Handbook 4155.1 for details on underwriting FHA loans.

Section 2

Product Codes

Loan Term & Product Codes

Loan Term

Product Name

30-YR 30-YR

FHA 30 Yr Fixed FHA 30 Yr Fixed ? "Back to Work"

Product Code

RFHA30 RFHA30BTW

Section 3

Loan Programs

Section 203(b) ? Mortgage Insurance for One-to-Four Family Homes:

FHA Section 203(b) insures mortgages for the purchase or refinance of 1-4 unit family homes. Downpayment Assistance Programs (DAPs) may be eligible. See Downpayment Assistance.

Section 234(c) ? Condominium Housing Program:

"This document and its subject matter are the sole property of Plaza Home Mortgage, Inc., and is intended for its use only.

Any unauthorized use, dissemination, or distribution of this document or its subject matter is strictly prohibited. Guidelines subject to change without notice"

FHA Retained GD-PGFHA-003 rev. 08

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Revised 12/17/2013

FHA RETAINED PROGRAM GUIDELINES

PLAZA HOME MORTGAGE, INC.

FHA 234(c) insures mortgage for the purchase or refinance of condominium units in FHA-approved condominium projects only. To determine which condominium projects are FHA-approved, refer to the FHA Approved Condominium website.

Section 203(h) ? Mortgage Insurance for Disaster Victims:

FHA Section 203(h) program insures mortgages for victims of major disasters who have lost their homes and are rebuilding or buying another home. It provides relief to borrowers whose previous residence was destroyed by flood, fire, storms, hurricanes, earthquakes or other federally declared natural disasters. Requirements include:

Single family detached homes or units in FHA-approved condo projects in communities declared by the President as disaster areas.

Up to 100% loan-to-value. Evidence to verify that the single-family dwelling was damaged or destroyed to an extent that

reconstruction or replacement is required. Total debt-to-income (DTI) ratio < 45% permitted.

Programs Currently Not Offered on Plaza Retained FHA:

Section 251 Adjustable-Rate Mortgage (ARM) Section 184 Indian Home Loan Guarantee Program Section 203(k) Streamlined

Section 4

Program Matrix

Purchase Max LTV CLTV

96.50% 90% 95% 90%

100% 100% 100% 100%

Credit Score

620 620 580 580

Max DTI 3

AUS Approval

45% 50% FTHB 45% 31/43% 31/43%

Manual Underwrite

31/43% 31/43% 31/43% 31/43%

Minimum Borrower Down Payment

1

Reserves Required 2

3.5%1

2 months 2

3.5% 1

2 months 2

5%1

2 months 2

5%1

2 months 2

1 A minimum down payment from the borrower's own funds is required as follows: 620 Credit Score: LTVs greater than 90%. LTVs of 90% or below, down payment may be gifted. 580 Credit Score: LTVs greater than 75%. LTVs of 75% or below, down payment may be gifted. All LTVs when the borrower's payment shock will be at 100% or greater. All LTVs with borrowers who have been living with family and/or borrowers without a rental payment history.

2 Reserves: Two months PITI cash reserves are required in the following scenarios: 620 Credit Score: LTVs greater than 90% when gift funds are used for down payment and/or closing costs.

"This document and its subject matter are the sole property of Plaza Home Mortgage, Inc., and is intended for its use only.

Any unauthorized use, dissemination, or distribution of this document or its subject matter is strictly prohibited. Guidelines subject to change without notice"

FHA Retained GD-PGFHA-003 rev. 08

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Revised 12/17/2013

FHA RETAINED PROGRAM GUIDELINES

PLAZA HOME MORTGAGE, INC.

580 Credit Score: LTVs greater than 80% when gift funds are used for down payment and/or closing costs.

All LTVs when the borrower's payment shock will be at 100% or greater, including borrowers living rent free.

3 DTI: Compensating factors used to justify approval of mortgage loans with ratios that exceed benchmark guidelines, as defined in HUD Handbook 4155.1, Section 4.F., must be recorded on the Underwriter Comments section of Form HUD-92900-LT, FHA Loan Underwriting, and Transmittal Summary. Any compensating factor used to justify mortgage approval must also be supported by documentation.

Rate/Term Refinance Max LTV CLTV 1

97.75% 90%

97.75% 90%

Minimum Credit Score 620

620

Max DTI 2 AUS 45%

50%

Manual 31/43% 31/43%

Lien Seasoning 6 Months and 6 payments 6 Months and 6 payments

95% 90%

95% 90%

580-619 580-619

31/43% 31/43%

31/43% 31/43%

18 Months

12 Months for LTVs to 75% 18 Months for LTVs > 75%

1 Subordinate financing not allowed. 2 DTI: Compensating factors used to justify approval of mortgage loans with ratios that exceed benchmark guidelines, as defined in HUD Handbook 4155.1, Section 4.F., must be recorded on the Underwriter Comments section of Form HUD-92900-LT, FHA Loan Underwriting, and Transmittal Summary. Any compensating factor used to justify mortgage approval must also be supported by documentation.

Cash-Out Refinance Max LTV CLTV 1

75%

75%

Minimum Credit Score

620

Max DTI 2 AUS 45%

Manual 31/43%

Lien Seasoning 12 months

1 Subordinate financing not allowed. 2 DTI: Compensating factors used to justify approval of mortgage loans with ratios that exceed benchmark guidelines, as defined in HUD Handbook 4155.1, Section 4.F., must be recorded on the Underwriter Comments section of Form HUD-92900-LT, FHA Loan Underwriting, and Transmittal Summary. Any compensating factor used to justify mortgage approval must also be supported by documentation.

Section 5

Occupancy

Primary Residence

A primary residence is a property that will be occupied by the borrower the majority of the calendar year and meets the following criteria:

"This document and its subject matter are the sole property of Plaza Home Mortgage, Inc., and is intended for its use only.

Any unauthorized use, dissemination, or distribution of this document or its subject matter is strictly prohibited. Guidelines subject to change without notice"

FHA Retained GD-PGFHA-003 rev. 08

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Revised 12/17/2013

FHA RETAINED PROGRAM GUIDELINES

PLAZA HOME MORTGAGE, INC.

All borrowers must occupy the property. Non-occupying co-borrowers are not allowed. The borrower must occupy the property within 60 days after the loan closes with continued

occupancy for at least one year. The only exceptions allowed are due to hardship or extenuating circumstances. Military Personnel stationed elsewhere are considered occupant-borrowers and are eligible for maximum financing provided a member of the immediate family will occupy the property as a principal residence.

Mortgagors Who Will Re-Occupy a Former Investment Property (ML2011-11):

When the subject property is a former investment property that the borrowers are now re-occupying:

Seasoning is calculated based on the loan application date Maximum financing is allowed when 12 months or more occupancy seasoning exists When < 12 months occupancy seasoning exists:

o Maximum LTV/CLTV 85% for a rate/term transaction

Retaining Current Residence (ML 2008-25):

Borrowers who are purchasing a new primary residence and will be retaining their current residence are not eligible for this program.

Section 6

Transactions

Purchase Rate/Term Refinance Cash-Out Refinance

Refinance Lien Seasoning:

Refer to the Program Matrices for Lien Seasoning requirements.

Rate and Term Refinance:

All proceeds are used to pay existing liens and costs associated with the transaction. Cash back to the borrower is not allowed with the exception of minor adjustments at closing, provided the amount does not exceed $500.

The maximum mortgage amount is the lower of the LTV or the existing debt calculation described below, and may never exceed the FHA loan limit except by the amount of any new up-front MIP.

For properties listed for sale in the last six months refer to the Property Eligibility section.

Equity Line of Credit:

If any portion of the funds of an equity line of credit in excess of $1,000 was advanced within the past 12 months and was used for purposes other than repairs and rehabilitation of the property, the line of credit is not eligible for inclusion in a no cash-out refinance.

Existing Debt:

"This document and its subject matter are the sole property of Plaza Home Mortgage, Inc., and is intended for its use only.

Any unauthorized use, dissemination, or distribution of this document or its subject matter is strictly prohibited. Guidelines subject to change without notice"

FHA Retained GD-PGFHA-003 rev. 08

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Revised 12/17/2013

FHA RETAINED PROGRAM GUIDELINES

PLAZA HOME MORTGAGE, INC.

Add together the amount of the existing first lien, any purchase money second mortgage, any junior liens over 12 months old, borrower-paid closing costs, prepaid expenses, borrower paid repairs required by the appraisal, discount points, and then subtract any refund of UFMIP.

Existing Mortgage:

The amount of the existing first mortgage may include the interest charged by the servicing lender when the payoff will not likely be received on the first day of the month (as is typically assessed on FHA-insured mortgages). The amount also may include any prepayment penalties assessed on a conventional mortgage.

The amount of the existing first mortgage may not include delinquent interest.

Prepaid expense may include the per-diem interest to the end of the month on the new loan, hazard insurance premium deposits, mortgage insurance premium and any real estate tax deposits needed to establish the escrow account.

Buy Out Co-Mortgagor Equity:

If the new loan is used to refinance an existing mortgage to buy out an ex-spouse's or other co-mortgagor equity, the specified equity to be paid is considered property-related indebtedness and is eligible for inclusion in calculating the new mortgage. The divorce decree, settlement agreement, or other equity agreement must be provided to document the equity awarded to the ex-spouse or co-mortgagor.

Non-FHA to FHA:

If the property was acquired less than one year before the loan application and is not already FHAinsured, the original sales price of the property (rather than the appraised value) must be used in determining the maximum mortgage amount.

With conclusive documentation, expenditures for repairs and rehabilitation incurred after the purchase of the property may be added to the original sales price when calculating the mortgage amount.

Cash-Out Refinances:

A cash-out is a first lien in which the loan proceeds may include the funds required to pay off any existing liens, related prepaid items, closing costs, and the disbursement of cash to the borrower.

Cash out refinance transactions are only eligible after a borrower has made 12 regularly scheduled monthly payments on the existing mortgage.

If the property was acquired less than one year before the loan application it is not eligible on this program.

Discount points and prepaid expenses may not be included with closing costs nor otherwise added to the property's appraised value.

For properties listed for sale in the last six months refer to the Property Eligibility section.

Ineligible Transactions - Restructured or short payoff loan, a.k.a., short refinances are not eligible.

A restructured or short payoff loan, a.k.a., short refinance, is a mortgage in which the terms of the original transaction have been changed, resulting in either the absolute forgiveness of debt or a restructure of debt through either a modification of the original loan or origination of a new loan.

"This document and its subject matter are the sole property of Plaza Home Mortgage, Inc., and is intended for its use only.

Any unauthorized use, dissemination, or distribution of this document or its subject matter is strictly prohibited. Guidelines subject to change without notice"

FHA Retained GD-PGFHA-003 rev. 08

Page 5 of 28

Revised 12/17/2013

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