FHA Fixed Rate With Jumbo Addendum

CONDOSIf a project is no longer approved or does not meet Lender Certification criteria, then onlyan FHA-to-FHA streamline refinance is permitted, with the exception of HUD REOProperties. (CONTINUED)Ineligible Condominium Projects Projects where more than 25% of the total space is used for non-residential purposes; Live/work units where more than 25% of the total project or unit square footage is usedfor nonresidential purposes; Condominium Hotel or “Condotels”; Projects located within a designated coastal barrier; Projects where the Developer retains ownership of the common areas or amenities oncetransfer of control has been turned over to the homeowner’s association.CONSTRUCTION-TOPERMANENTCREDIT HISTORYRefer to Appraisal Standards and Guidelines Chapter for requirements. Acceptable Credit History:TOTAL SCORECARD: Per AUSManual Downgrade/AUS Refer: Defined per FHA Handbook 4000.1 Chapter 5.a as:o All housing and installment debts payments have been made on time in the previoustwelve (12) months; ando No more than two (2) 30-day late mortgage or installment payments in the previous24 months; ando No major derogatory credit on any revolving accounts in the previous 12 months,defined as: Any payments made more than 90 days after the due date, or Three (3) or more payments more than 60 days after the due date. Bankruptcies (Chapter 7 or 13): Refer to FHA Handbook 4000.1, Chapters 4.a and 5.aCollections and Judgments: Refer to FHA Handbook 4000.1, Chapters 4.a and 5.aDisputed Accounts: Refer to FHA Handbook 4000.1, Chapters 4.a and 5.aForeclosure and Deed in Lieu of Foreclosure/Short Sale: Refer to FHA Handbook 4000.1 Chapters 4.a and 5.aShort Payoffs: Citizens will not permit a refinance transaction where the payoff statement from theexisting lender reflects any curtailments of principal and/or interest (short payoffs) or anycharges associated with default/forbearance.Forbearance:TOTAL Scorecard A borrower who was granted a mortgage payment forbearance and continues to makepayments as agreed under the terms of the original Note is not considered delinquent orlate and shall be treated as if not in forbearance provided the forbearance plan isterminated at or prior to closing.A mortgage that has been granted forbearance must utilize the payment history inaccordance with the forbearance plan for the time period of forbearance in determininglate housing payments. Where any mortgage in forbearance will remain open after theclosing of the new FHA insured mortgage, the forbearance plan must be terminated ator prior to closing.o Any borrower who is granted a forbearance and is otherwise performing underthe terms of the forbearance plan is not considered to be delinquent for purposesof credit M7300,JUM7302FHA Fixed Rate with Jumbo AddendumFor Correspondent Lenders OnlyPage 4 of 27

CREDIT HISTORY(CONTINUED)Transaction TypeGuidance The borrower must have made 3 or more consecutive timely,Purchasepayments since the completion of the forbearance plan.Rate and Term Refinanceo If less than 3 consecutive, timely payments have beenSimple Refinancemade, the loan must be manually downgraded. The borrower has made 12 or more consecutive, timely,payments since the completion of the forbearance plan.Cash-Out Refinanceo If less than 12 consecutive, timely payments have beenmade, the loan must be manually downgraded.Manual Underwriting (Applies to AUS “Refer” recommendation and Manual Downgrades) All credit history manual underwriting requirements must be met.A borrower who was granted a housing/mortgage payment forbearance and continues tomake payments as agreed under the terms of the original note is not considereddelinquent or late and shall be treated as if not in forbearance provided theforbearance is terminated at or prior to closing.A mortgage that was subject to mortgage payment forbearance must utilize themortgage payment history in accordance with the forbearance plan for the time periodof the Forbearance in determining late housing payments.o Any borrower who is granted a forbearance and is otherwise performing underthe terms of the forbearance plan is not considered to be delinquent for purposesof credit underwriting.Transaction TypeGuidancePurchaseThe borrower must have made 3 or more consecutive, timely,Rate and Term Refinancepayments since the completion of the forbearance plan.Simple Refinance Streamline RefinanceNon-Credit Qualifying Streamline RefinanceCredit Qualifying Cash-Out 0,JUM7302 A borrower who was granted mortgage payment forbearance onthe subject property is eligible for a Non-Credit QualifyingStreamline Refinance and considered to have acceptablemortgage payment history provided that, at the time of casenumber assignment, the borrower has:o Completed the forbearance plan on the subjectproperty; ando Made at least three consecutive monthly mortgagepayments within the month due on the mortgage sincecompleting the forbearance plan.Deferred monthly payments must not be counted towards theseasoning requirements.Primary Residence: Deferred payments, escrow shortages, andlate charges may be eligible to be included in the maximummortgage calculation.A borrower who is still in mortgage payment forbearance at thetime of case number assignment or has made less than threeconsecutive monthly mortgage payments within the month duesince completing the forbearance plan, is eligible for a CreditQualifying Streamline Refinance provided the borrower:o Made all mortgage payments within the month due forthe six months prior to forbearance; ando Had no more than one 30-Day late payment for theprevious six months.Deferred monthly payments must not be counted towards theseasoning requirements.Primary Residence: Deferred payments, escrow shortages, andlate charges may be eligible to be included in the maximummortgage calculation.The borrower must have made 12 or more consecutive, timely,payments since the completion of the forbearance plan.FHA Fixed Rate with Jumbo AddendumFor Correspondent Lenders OnlyPage 5 of 27

CREDIT HISTORY(CONTINUED) Documentation Requirements – TOTAL and Manual Underwriting (All transaction types)When the mortgage reflects payments under a Modification or Forbearance Plan within the12 months prior to case number assignment, the following must be provided:o Copy of the Modification or Forbearance Plan; ando Evidence of the payment amount and date of payments during the agreementterm.Note: A Forbearance Plan is not required if it is confirmed that the forbearance was due tothe impacts of COVID-19.Mortgage Payment History Requirements:Purchases Per TOTAL Scorecardo Refer to Acceptable Credit History - Manual Downgrade/AUS Refer section above forrequirements.RefinancesOn all refinances, the borrowers must be current for the month due. The borrower must maketheir current payment prior to or at closing. Rate/Term and Simple Refinance:o Per TOTAL Scorecard Refer to Acceptable Credit History - Manual Downgrade/AUS Refer sectionabove for requirements. Streamlines:o Non-Credit Qualifying: 0 x 30 in the last 6 months prior to case number dateo Credit Qualifying:0 x 30 in last 6 months prior to case assignment AND no more than1 x 30 in previous 6 months if greater than 6 months payment historyo Loans seasoned less than 6 months since the first payment due date or 210 daysfrom the Note Date to case number assignment are not permitted. Minimum of 6consecutive payments required. Cash-out:o 0 x 30 in last 12 monthso Cash-out Refinance Transactions must be downgraded to a “refer” and manuallyunderwritten if any mortgage trade line (property where any borrower has anownership interest), including mortgage line-of-credit payments: Is currently delinquent. (A mortgage payment is considered delinquent ifnot paid within the month due.) Has had any mortgage delinquencies (not paid within the month due) forthe previous twelve (12) month period, or since the borrower obtained theloan, whichever is less.o Refer to Cash-Out - Seasoning Requirements for additional requirements.o Properties owned free and clear may be refinanced as cash-out transactions.o Not allowed in the state of Texas, regardless of seasoning.CAIVRS: All borrowers must be screened using CAIVRS (Credit Alert Interactive Voice ResponseSystem), except for streamline refinances.Non-Borrowing Spouse A Non-borrowing spouse or domestic partner is a person who has an ownership interest inthe security property. Non-borrowing spouses or domestic partners are required to signthe security instrument and other applicable documentation in order to perfect a lien inaccordance with the governing state law. The option to waive any property right by virtueof being the owner’s spouse or domestic partner must be in accordance with applicablestate law. CAIVRS is not required for non-borrowing spouses or domestic partners in communityproperty states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas,Washington and 300,JUM7302FHA Fixed Rate with Jumbo AddendumFor Correspondent Lenders OnlyPage 6 of 27

CREDIT HISTORY(CONTINUED)CREDIT SCORES /NON-TRADITIONALCREDITThe following guidelines apply for non-borrowing spouses or domestic partners in communityproperty states: Debts of a non-borrowing spouse must be counted in the borrower’s qualifying ratios The non-borrowing spouse or domestic partner’s credit performance and credit score isgenerally not a consideration. SSN for non-borrowing spouse must be validated with SSA The credit report must indicate the non-borrowing spouse’s SSN (when an SSN exists) wasmatched with the SSA, or the file must contain separate documentation indicating that theSSN was matched with the SSA, or provide a statement that the non-borrowing spouse doesnot have an SSN. Where an SSN does not exist for a non-borrowing spouse, the creditreport must contain at a minimum, the non-borrowing spouse’s full name, date of birth,and previous addresses for the last two years. DOCUMENTATION 620 Minimum FICO Score for all transaction types regardless of AUS recommendation.The following criteria must be used to determine each individual borrower's RepresentativeCredit Score using the "middle/lower" method. All borrowers are required to have at leastone (1) valid score.If there are:o Three (3) valid credit scores, the middle score of the three (3) must be selected.o Three (3) valid credit scores with two (2) of the same scores, the duplicate scoremust be selected.o Two (2) valid scores, the lower of the two (2) scores must be selected.o One (1) valid score, the available score must be selected.After selecting the Individual Credit Score for each borrower, the Decision Score isdetermined.If there is:o More than one (1) borrower, the lowest selected credit score among all the borrowersis considered the Decision Score.o Only one (1) borrower, the selected credit score for the borrower is considered theDecision Score.Borrowers with non-traditional credit are not acceptable. A loan considered to have nontraditional credit is when one or more borrowers do not have a credit score and/or areestablishing a credit history through non-traditional means such as a rental history, utilitypayments, etc.As determined by AUS, or for manually underwritten loans as per HUD Handbook 4000.1,Chapter 5.If the borrower is not the sole owner of the account, all non-borrower parties on the accountmust verify in writing that the borrower has full access and use of the funds.The maximum age for credit documents is 120 days for existing property and for newconstruction. Document age is measured from the date of the document to the date thenote is signed. Credit documents include all income, employment, asset information andcredit reports.See Underwriting section for Verbal Verification of Employment Guidelines.An IRS Form 4506-C must be signed at closing and included in the file for personal andbusiness tax returns, if business tax returns are applicable. (excluding Non-Credit QualifyingStreamlines)Refer to Underwriting for 4506-C and Income Validation Requirements.When signed income tax returns are required, IRS validated transcripts are acceptable inlieu of the live signature requirement.HUD-92561 “Borrower’s Contract with Respect to Hotel and Transient Use” required for 2-4unitsLoan Underwriting and Transmittal Summary (HUD 92900-LT) most recent version posted atHUD FORMS.HUD Addendum to URLA (HUD 92900-A) most recent version posted at HUD UM7302FHA Fixed Rate with Jumbo AddendumFor Correspondent Lenders OnlyPage 7 of 27

DOWN PAYMENT ESCROW HOLDBACKSAll Minimum Required Investment guidelines as per FHA Handbook 4000.1 Chapters 4 and 5must be met and fully documented.Cash on Hand is not permitted.Loans secured by the First Time Homebuyer Tax Credit are not a source of acceptable funds.Grants/secondary financing involving Neighborhood Stabilization Program funds are notpermitted.Sweat Equity is not permitted. Non-bank Correspondent Lenders may manage repair escrow funds up to a total of 1,000.Any amount greater than 1,000 must be managed by an escrow agent or title company.Correspondent Bank lenders may manage the funds regardless of the repair escrow amount.See Appraisal Standards & Guidelines for complete requirementsESCROWS Escrow waivers not permitted under any circumstances. No exceptionsFLIPPINGREQUIREMENTS Refer to FHA Handbook 4000.1 Chapter 1-General Mortgage Eligibility.Refer to Appraisal Standards & GuidelinesGEOGRAPHICRESTRICTIONS Properties may be located in all U.S. states, including the District of Columbia.U.S. Territories not allowed (e.g. Puerto Rico, American Samoa, Northern Marina Islands,Guam, etc.)See website for state specific Geographic Restrictions: Geographic RestrictionsCommunity Property States (Arizona, California, Idaho, Louisiana, Nevada, New Mexico,Texas, Washington and Wisconsin):o Debts of a non-borrowing spouse must be counted in the borrower’s qualifying ratios.o The non-borrowing spouse’s credit performance is not a consideration.Hawaii:o Properties located in Lava Zones 1 and 2 are not allowed. GIFT FUNDSEligible Donors: A Family Member; Refer to Identity of Interest Transactions for FHA’s definition of a FamilyMember A close friend with a clearly defined and documented interest in the borrower The borrower’s employer or labor union A charitable organization that does not replenish available gift funds with sellercontributions A governmental agency or public entity that has a program providing homeownershipassistance to:o Low- or moderate-income families; oro First-time homebuyersIneligible Donors: Any person or entity with an interest in the sale of the property, including but not limitedto:o The buildero The seller (except gift of equity for relative)o The developero The real estate agent (unless they meet HUD’s definition of a family member)o The mortgage brokero Other interested party to the transaction Any gift or down payment assistance source where the provider is reimbursed either directlyor indirectly by the seller or any interested third party, commonly known as “seller-funded”DPADocumentation for Gift Letters: Gift Letters must comply with all requirements per FHA Handbook 4000.1 Chapter 4 and 5Source of M7302FHA Fixed Rate with Jumbo AddendumFor Correspondent Lenders OnlyPage 8 of 27

It must be determined that the gift funds were not provided by an unacceptable source andwere the donor’s own funds.Donor’s cash-on-hand is not an acceptable source. Gifts from Entities: Follow all requirements per the FHA Handbook 4000.1 Chapter 4 and Chapter 5GIFT FUNDS(CONTINUED)Gift of Equity: Only family members as defined in “Identity of Interest” section may provide equity creditas a gift on a property being sold to other family members.Gifts as Cash Reserves (TOTAL SCORECARD) Deposited Prior to Closingo Excess gift funds in the borrower’s account may be used as cash reserves (1- and 2unit properties only) and may be included in the borrower’s account balance whensubmitting to TOTAL. The gift should be identified separately as gift funds on theFHA Loan Transmittal and 1003. Provided at Closingo Excess funds from gifts remaining after loan closing may NOT be used as cash reserves.Gift must be submitted to TOTAL as “gift funds” and not included in borrower’saccount balance.Gifts as Cash Reserves (Manual Downgrades) Gifts may not be counted as part of the borrower’s reserves under any circumstances formanually underwritten transactions Refer Reserve Requirements - Manually underwrittenloans.Gift Transfer DocumentationIf the gift funds:Then: Are in the borrower’saccount Are to be provided atclosing,and Are in the form of acertified check from thedonor’s accountAre to be provided atclosing,and Are in the form of acashier’s check, moneyorder, official check, orother type of bank check Obtain: A copy of the withdrawal document showing that thewithdrawal is from the donor’s account, and Proof of the deposit and/or bank statement showing thedeposit, and Donor’s bank statement is required.Obtain: Bank statement showing the withdrawal from thedonor’s account (any large deposits must be sourced),and Copy of the certified check.Note: To avoid funding delays, copies of these documentsmust be provided and cleared prior to docs.Have the donor provide: Withdrawal document or cancelled check for theamount of the gift, showing that the funds came fromthe donor’s personal account, and Donor’s bank statement reflecting the withdrawal fromthe donor’s account is required and must support thedonor had sufficient funds for the amount of the gift.Note: To avoid funding delays, copies of these documentsmust be provided and cleared prior to docs.FHA Fixed Rate with Jumbo AddendumFor Correspondent Lenders OnlyPage 9 of 27

Are to be provided atclosing, andGIFT FUNDS(CONTINUED) Are in the form of anelectronic wire transfer tothe closing agent(typically these are giftsfrom governmental orcharitable entities) Are to be provided atclosing,and IDENTITY OFINTERESTTRANSACTIONSAre in the form of a Letterof Legal Obligation (LELO)Obtain a: Copy of incoming wire evidencing deposit intosettlement agent’s account on or before the day ofclosing and identifying the gifting entity as listed in theunderwriting conditions. Donor’s bank statement supporting the donor hadsufficient funds for the amount of the gift. If gift was deposited into settlement agent’s accountafter closing docs were signed, Citizens will proceedwith loan funding upon receipt of copies of settlementagent’s dated disbursement checks verifying that loanproceeds were not disbursed until after gift funds werereceived. Citizens will not allow gifts wired from private giftdonors unless the wire can be conclusively identifiedwith an account that has been fully documented andsourced.Note: To avoid funding delays, copies of these documentsmust be provided and cleared prior to docs.Obtain a LELO which is an alternate method ofproviding funds at closing.Note: To avoid funding delays, copies of these documentsmust be provided and cleared prior to docs. An Identity-of-Interest Transaction is a sale between parties with an existing businessrelationship or between family members. Business relationship refers to an association betweenindividuals or companies entered into for commercial purposes.Family member is defined as follows, regardless of actual or perceived sexual orientation,gender identity, or legal marital status: Child, parent or grandparent;o A child is defined as a son, stepson, daughter, or stepdaughter;o A parent or grandparent includes a stepparent/grandparent or fosterparent/grandparent Spouse or domestic partner; Legally adopted son or daughter, including a child who is placed with the borrower by anauthorized agency for legal adoption; Foster child; Brother, stepbrother; Sister, stepsister; Uncle; Aunt; or Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-lawof the borrowerMaximum LTV for Identity of Interest and Tenant/Landlord Transactions: Follow Requirements per FHA Handbook 4000.1 Chapter 2.A –Allowable Mortgage ParametersINVESTMENTPROPERTIES 1-unit

7150,7200,7202,7250,7252,7300,7302,JUM7300,JUM7302 FHA Fixed Rate with Jumbo Addendum Page 1 of 27 For Correspondent Lenders Only. FHA Fixed Rate with Jumbo Addendum . General Description: FHA Fixed Rate principal and interest level payments for the life of the loan. Follow published FHA guidelines if item not addressed below.